| This paper examines the way the institutional economics of Radhamakal Mukerjee can inform modern nonprofit economics. A brief survey of Mukerjee’s work highlights several elements of his theory that yield useful implications understanding the nonprofit sector. First, Mukerjee’s theory implies that this sector’s role is in helping the economies to better accommodate broader societal values, rather than in addressing market failure. Second, his theory suggests that the nonprofit sector provides an institutional framework for the pursuit of common interest that are not reducible to individual utility maximization. Finally, as he considered the state to be inherently coercive, he believed the nonprofit sector to be the only meaningful outlet for citizenship behavior, thus advancing an original theory of complementary state-non profit relationship. This paper concludes with calling for more institutionalist research on the economics of the nonprofit sector. |