Addressing Limits to Mainstream Economic Analysis of Voluntary and Nonprofit Organizations

The article outlines the contours of an “Austrian”-theory-inspired perspective on the study of non-profit and voluntary social processes and institutions while using as a background and vehicle the Austrian economics criticism of mainstream neoclassical economics. The argument proceeds in two steps: First, it focuses on the explicit and implicit role welfare economics theory and efficiency/optimality models have come to assume in theorizing essential aspects of the non-profit sector. It points out the intrinsic limits of neoclassical economics in this respect. Second, it follows the logical implications of the arguments advanced in the first step to the reconstitution of a broader theory of social order that (a) circumvents the incapacitating reliance on maximization models of rationality and general equilibrium logic and that (b) pivots in a natural way on the notions of voluntary social actions, associations, and processes.

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