A nice visual illustration of the idea of institutions as public goods. Note the word ‘institution’ is here used to mean more than formal organisations. The Stanford Encyclopaedia of Philosophy provides this quote from sociologist Jonathan Turner
a complex of positions, roles, norms and values lodged in particular types of social structures and organising relatively stable patterns of human activity with respect to fundamental problems in producing life-sustaining resources, in reproducing individuals, and in sustaining viable societal structures within a given environment.
This is fancier, but similar to the way institutions were defined in the institutional economics of the American school in the first half of the 20th century which acquired a greater focus on formally analysable forms of the same in the latter day ‘new institutional economics’ of people like Oliver E. Williamson.
Anyway under this broadened definition of institutions they are those things that sustain human cooperation (Competition is a form of cooperation – discuss). And those things that sustain human cooperation (including of course competition) are public goods. Which is something that I’ve been going on and on about. Now I have the visual above to display in presentations and so on. Very natty it is too. Seeing is believing.
The broad sense of institutions can be contrasted with laws, which usually simply forbid. Institutions are a positive description of social agreements and movements (the institution of marriage for example). One of those Frenchies (Delueze?) said that where laws advance then institutions retreat, where there are more laws there are less institutions, and less room for them. Sometimes laws circumscribe or colonise social institutions, as what church and state did to the institution of marriage, relegating the old ways to ‘common law’ marriages (in those areas in which the Napoleon failed to control) while the elite got on with protecting their privilege from their own bastards which their privilege positions allow them to produce. The recent expansion and focus on gay marriage, of course, would not be an issue if, in the West, the original institution of marriage had not been hijacked by lawyers, lawmakers and the ideology of the church during the medieval period. Yes, more lawyer bashing.
“The broad sense of institutions can be contrasted with laws, which usually simply forbid.”
I disagree with pretty much all of that sentence. Laws are institutions. But leaving that to one side, lots of institutions are prohibitive – taboos of various kinds. And I would have thought that most laws facilitate activity. The law of contract, companies, trusts, wills, administration, constitutions and on it goes.
Yeah. Law is an institution. I don’t know about taboos, I guess they are practices and as such are part of an institution, but are they institutions in themselves?
I think some of these were institutions first. State and market like to tidy things up through time, make them reliable and predictable. Maybe laws are just institutions that were written down for some reason.
That definition looks like a definition of culture. It reminds me of Michel Foucault’s “power” which is his word for culture. That is to say, such a broad definition causes the term to lose meaning. It’s wishy-washy.
That video, on the other hand makes a clear statement: institutions can save transaction costs. Trade is improved if there is a police force rather than having every trader employing his own private security squad. Should each trader do their own insurance or should insurance be centralised? Depends which is more efficient. Saying institutions are “public goods” doesn’t seem to tell me anything.
Back to the definition. “Positions, roles, norms and values” What about rules? At least some institutions are formed through rules. My inclination is to oppose norms to rules, or at least distinguish them. “Position” strikes me as opinion which is hardly an institution. Wishy-washy.
I don’t know about “new institutional economics” but in the 1990s there was a movement in political science called “new institutionalism” in which people promoted the idea that institutions matter. Institution meant such things as the parliament or the electoral system or the way cabinet was formed. Surely a useful concept.
The new institutionalists were reacting to the earlier reaction to the analysis of politics as merely the formal structure. More goes on than what the formal structure indicates but the new institutionalists thought that that view had gone too far.
I agree with them and have argued here that in government the structure—the strict, formal institutions—is everything, that culture plays no role in that structure, that there is no room in that structure for culture.
“Competition is a form of cooperation”
That is the case that “I Pencil” makes. As far as I can see, competition cooperates to the extent that the parties agree on a time and place to haggle. It degrades the word cooperation.