Abstract

Our economic system, the market economy, is a part of a broader system or “society.” We frequently study the operation of the market economy as if it were autonomous, even though there are many complex and mutual relationships between society, the economic system and the other systems – political, cultural, religious, legal, etc. – that form part of society. In a market economy we may identify several components: a frame or background in which the economic activity takes place, a set of ideas and theories, the values shared by this society, the set of institutions, norms and rules that control the economic behavior of people, and the incentives or motivations of the economic agents. The play of these elements defines the operation of a market economy. Is ethics an institution, or does it belong to the set of values and ideas? In this paper I will discuss the role of institutions, norms and rules in society, with special reference to the economic system, in order to gain insight into the relationship between institutions and ethics. I study first the concept and features of social institutions and norms; second, institutional change, and third, the relationship between ethics and institutions.