How Institutional Economics May Support the Analysis of Individual and Collective Capabilities

The analysis in this article starts from the recognition that institutions make an important part of the Capability Approach, as conversion factors from resources to capabilities and as affecting agency. The tradition of Old Institutional Economics is critical of the neoclassical view of the individual and agency and emphasises the importance of social context. Hence, there is some common ground between the Capability Approach (CA) and Old Institutional Economics (OIE). The purpose of this article is to explore how insights from OIE might enrich the CA both conceptually and empirically. This may be done for individual capabilities as well as for collective capabilities. A better understanding of collective resource-institutions and collective agency-institutions will also contribute to the analysis of capability expansion in the community economy through collective productive capabilities in commons, cooperatives and mutuals. The conclusion is that an understanding of institutions in the tradition of OIE may help to clarify the relationships between social norms and agency; complement the notion of constrained choice with enabling institutions; and point at how institutional transformation may support individual and collective capability expansion.