Beyond markets : the notion of social institution' in the work of Arrow and Hurwicz

This paper challenges the prevailing narrative that mathematical economics, particularly in the post-war era, neglected the study of social institutions. According to the common view, the concept of institutions was largely abandoned following the decline of institutionalism, only to be revived decades later by the new institutionalism. This account, however, overlooks a central ambition of many post-war mathematical economists: to construct a formal framework capable of analyzing the organization of society, including its institutional dimensions. Focusing on the intellectual trajectories of Kenneth Arrow and Leonid Hurwicz - two key figures in the development of general equilibrium theory - this paper traces how their engagement with formal modeling gave rise to distinct yet overlapping efforts to conceptualize institutions. Rather than discarding the notion of institutions, Arrow and Hurwicz were deeply concerned with it. However, instead of studying the concrete characteristics of economic and social institutions through empirical methods, they sought to formalize institutional questions through mathematical abstraction - recasting institutions as organizational structures amenable to rigorous analysis within a general equilibrium-inspired framework. By closely examining the work of Arrow and Hurwicz - beginning with their collaboration at the Cowles Commission on general equilibrium theory - this paper supports the broader observation that a central project among post-war mathematical economists was to push economic analysis beyond the market model. Rather than confining their work to supply-and-demand-based frameworks, they sought to expand the scope of formal analysis to encompass a much wider range of social interactions. This expansion was grounded in a focus on fundamental questions of coordination, communication, and control, with particular attention to the role of information in shaping institutional arrangements.