Economic Institutions

In this paper, I present a challenge to Adam Smith’s specialization recommendations, at least according to the “unzany” interpretation suggested by his famous pin factory example. I present it while attempting the style of a notable fiction writer from the Indian sub-continent, as befits the challenge. I have adapted the style slightly for the Western setting.

First, we explain the conception of trustworthiness that we employ. We model trustworthiness as a relation among a trustor, a trustee, and a field of trust defined and delimited by its scope. In addition, both potential trustors and potential trustees are modeled as being more or less reliable in signaling either their willingness to trust or their willingness to prove trustworthy in various fields in relation to various other agents. Second, following Alfano (forthcoming) we argue that the social scale of (...) a potential trust relationship partly determines both explanatory and normative aspects of the relation. Most of the philosophical literature focuses on dyadic trust between a pair of agents (Baier 1986, Jones 1996, Jones 2012, McGeer 2008, Pettit 1995), but there are also small communities of trust (Alfano forthcoming) and trust in large institutions (Potter 2002, Govier 1997, Townley & Garfield 2013, Hardin 2002). The mechanisms that induce people to extend their trust vary depending on the size of the community in question, and the ways in which trustworthiness can be established and trusting warranted vary with these mechanisms. Mechanisms that work in dyads and small communities are often unavailable in the context of trusting an institution or branch of government. Establishing trust on this larger social scale therefore requires new or modified mechanisms. In the third section of the paper, we recommend three policies that – we argue – tend to make institutions more trustworthy and to reliably signal that trustworthiness to the public. First, they should ensure that their decision-making processes are as open and transparent as possible. Second, they should make efforts to engage stakeholders in dialogue with decision-makers such as managers, members of the C-Suite, and highly-placed policy-makers. Third, they should foster diversity – gender, ethnicity, age, socioeconomic background, disability, etc. – in their workforce at all levels, but especially in management and positions of power. We conclude by discussing the warrant for distrust in institutions that do not adopt these policies, which we contend is especially pertinent for people who belong to groups that have historically faced (and in many cases still do face) oppression. (shrink)

The financial crisis was caused by the complex, constantly growing web of regulations designed to constrain and redirect modern capitalism. This complexity made investors, bankers, and perhaps regulators themselves ignorant of regulations previously promulgated across decades and in different “fields” of regulation. These regulations interacted with each other to foster the issuance and securitization of subprime mortgages; their rating as AA or AAA; and their concentration on the balance sheets (and off the balance sheets) of many commercial and investment banks. (...) As a practical matter, it was impossible to predict the disastrous outcome of these interacting regulations. This fact calls into question the feasibility of the century-old attempt to create a hybrid capitalism in which regulations are supposed to remedy economic problems as they arise. (shrink)

Despite growing interest in workplace democracy, the question whether nonworker stakeholders, like suppliers and local communities, warrant inclusion in the governance of democratic companies, as workers do, has been largely neglected. We inspect this question by leaning on the boundary problem in democratic theory. We first argue that the question of who warrants inclusion in democratic workplaces is best addressed by examining why workplace democracy is warranted in the first place, and offer a twofold normative benchmark—addressing objectionable corporate power and (...) upholding efficiency—to assess the principles of democratic inclusion on offer. Against this benchmark, we next argue that the All-Affected Principle is unfit due to its over- and underinclusive extensional results, and that the All-Subjected Principle, whose variants we examine alongside their extensional results, holds more promise when coupled with independent considerations of justice or a constrained variant of the All-Affected Principle. These combinations need not entirely preclude, but speak against, nonworker stakeholder inclusion. (shrink)

Consequentialism is often criticised as being overly demanding, and this overdemandingness is seen as sufficient to reject it as a moral theory. This paper takes the plausibility and coherence of this objection – the Demandingness Objection – as a given. Our question, therefore, is how to respond to the Objection. We put forward a response that we think has not received sufficient attention in the literature: institutional consequentialism. On this view institutions take over the consequentialist burden, whereas individuals, special occasions (...) aside, are required to set up and maintain institutions. We first introduce the Objection, then explain the theory of institutional consequentialism and how it responds to the Objection. In the remainder of the paper, we defend the view against potential challenges. (shrink)

Commercial republicanism is the idea that a properly-structured commercial society can serve the republican end of minimizing the domination of citizens by states (imperium) and of citizens by other citizens (dominium). Much has been written about this idea in the last half-century, including analyses of individual commercial republicans (e.g., Adam Smith and Immanuel Kant) as well as discussions of national traditions of the same (e.g., in America, Britain, France, the Netherlands, and Italy). In this chapter, I review five kinds of (...) arguments that have been historically offered for how commercial society so understood advances the republican ideal of non-domination: first, by simply realizing non-dominating relationships in the marketplace itself (Instantiation); second, by encouraging the growth of a wide middle class that can offer a counterweight to other, dominating classes (Internal Check-and-Balance); third, by increasing the wealth and power of republics vis-à-vis other, dominating states in the international arena (External Check-and-Balance); fourth, by helpfully nurturing bourgeois-civic virtues in republican citizens (Cultivating Virtue); and finally, by transforming dangerous passions into more readily regulable, even socially beneficial material interests (Sublimating Vice). I end the chapter by briefly considering commercial republicanism’s prospects as a continuing research program. (shrink)

The approach to the study the role of strategic alliances in the conditions of digital business transformations has been further developed in the article. In the course of a critical analysis of the content of scientific publications of modern scientists who studied the behavior, peculiarities of activity and the meaning of strategic alliances, it was established that the role of strategic alliances in the conditions of digital transformations does not disappear, but brings new advantages, requiring the maximization of returns from (...) more dynamic partnership relations, which requires more in-depth study of such benefits. Dynamics analysis of the number of concluded agreements in the field of strategic partnership in the period of 2014-2023 demonstrates their increase starting from 2017, which led to the activation of digital business transformations. In the course of research, it was determined that the role of strategic alliances in the conditions of digital business transformations is to ensure strategic flexibility under the conditions of continuity of digital transformations, improve competitive positions on the market, increase their innovativeness and efficiency, improve organizational stability and the ability of companies to learn, create opportunities for obtaining synergistic effect. It develops the ability of companies to proactively manage changes, contributes to the joint solution of strategic tasks and goals of partner companies, provides significantly greater opportunities for the development of innovative processes through the development and implementation of new methods and forms of work, new solutions in economic sectors, innovations in management, contributes to survival in market competitive environment and is an important competitive imperative to ensure overall long-term digital transformation. (shrink)

Standard economic models predict large economic gains from liberalized immigration. However, those models assume that immigrants would have no effect on the causes of economic prosperity in destination countries. Immigrants could reduce the quality of economic institutions in destination countries, thus undermining the economic gains from liberalized immigration. This paper uses an epidemiological model to investigate how heterogeneously distributed immigrants affected the economic institutions of American states over the 1980–2010 period under the assumption that institutions are highly responsive to changes (...) in the immigrant population. We find that state economic institutions do not change much in response to immigrants. (shrink)

Some meritocratic defenders of capitalism rely on the principle that cooperators should receive a share of the product commensurate with their contribution. However, such defences of capitalism fail due to a dilemma. Either they rely on an understanding of contribution that arguably will be reflected by the capital-labour split in suitably idealized capitalist economies, but cannot serve as a plausible standard of merit; or they rely on an interpretation of contribution that is a plausible standard of merit, but which won’t (...) tend to be reflected by the capital-labour split in capitalist economies. (shrink)

What, if anything, is wrong with price gouging? Its defenders argue that it increases supply of scarce necessities; critics argue that it is exploitative, inequitable and vicious. In this paper, I argue for its moral wrongness and legal prohibition, without relying on charges of exploitation, inequity or poor character. What is fundamentally wrong with price gouging is that it violates a duty of easy rescue. While legal enforcement of such duties is controversial, a special case can be made for their (...) legal enforcement in this context. This account distinguishes, morally, price gouging by corporations from that of individual entrepreneurs. (shrink)

This paper addresses how to think about the permissibility of introducing deadweight costs on candidate recipients of goods in order to attain better outcomes. The paper introduces some distinctions between different kinds of value dimensions that should be taken into account when such judgements are made and draws from the literature on comparisons across different value dimensions in order to canvas what sort of situations one might arguably face when evaluating ordeals. In light of the distinctions drawn and the possibilities (...) canvassed, the paper proceeds to outline what circumstances indicate which of the possible situations one is in. (shrink)

I envision new directions in the methodology of experimental games in the field of developmental, environmental and resource economics. Although there have been extensive discussions on experimenta...

Individuals often face administrative hurdles in attempting to access health care, public programmes, and other legal statuses and entitlements. These ordeals are the products, directly or indirectly, of institutional and policy design choices. I argue that evaluating whether such ordeals are justifiable or desirable instruments of social policy depends on assessing, beyond their targeting effects, the process-related burdens they impose on those attempting to navigate them and these burdens’ distributive effects. I here examine specifically how ordeals that levy time costs (...) reduce and constrain individuals’ free time, and how such time-cost ordeals may thereby create, deepen and compound disadvantages. (shrink)

Even though one of the founding aspirations of our field was to foster mutually beneficial exchanges between economics and philosophy, economists never paid much attention to our work. Now that pra...

At the centenary of Frank H. Knight’s Risk, Uncertainty, and Profit (1921), we explore the continuing relevance of Knightian uncertainty to the theory and practice of entrepreneurship. There are three challenges facing such assessment. First, RUP is complex and difficult to interpret. The key but neglected element of RUP is that Knight’s account is not solely about risk and uncertainty as states of nature, but about how an agent’s beliefs about uncertain outcomes and confidence in those beliefs guide their choices. (...) Second, RUP is Knight’s only effort in this area. His subsequent career led elsewhere, so he did not engage with subsequent interpretations of this work. Third, much of the current literature emphasizes that decisions must be different under the two states of nature with a consequent misunderstanding of entrepreneurial agency. This paper addresses each challenge in sequence. First, we explicate Knight’s (1921) approach and explain why that approach is murky. Second, as a complement to Knight’s interpretation, we examine Frank P. Ramsey’s approach to subjective probabilities to help clarify Knight’s murky approach. What links Knight and Ramsey is a shared pragmatism about entrepreneurial agency under uncertainty that depends upon the beliefs about, and confidence in, their judgments of possible outcomes. This Knight-Ramsey approach does not require actor’s behaviors to be determined by the class of uncertain environment (whether risk, uncertainty, or ambiguity) they face. We focus on the response by the entrepreneur to the existence of uncertainty in all its forms. We argue that this reductive account provides a foundation to examine common problems in management, including managerial hubris, the interaction between entrepreneurs and venture capitalists, and the need for experimentation (such as prototyping and market research) in advance of new product and venture launches. Third, we critique current literature that favors epistemic purism about the ontology of risk and uncertainty and ignores Knight-Ramsey pragmatism in meeting uncertainty, such as using formal and informal institutions for uncertainty mitigation. Our account locates Frank Knight’s subtleties in entrepreneurial behavior firmly in the literature on entrepreneurial agency a century later. (shrink)

We report general and consensus results of a survey administered to a defined population of economic science academics in Mexico. Our results include insights on economic opinions, scientific aspects of economics, scientific activities, countries' economic performances and methodological orientation. Our outcomes show areas of consensus which, at least partially, are consistent with findings in previous studies. Comparisons between our results and those of other studies suggest that consensus could be constant over time and that economics academics in Mexico seems to (...) show similar levels of skepticism about the importance of rationality assumption as those in other latitudes. (shrink)

The aim of this work is to illustrate the psychological contributions of Pragmatism and of the Original Institutional Economics (also referred to as OIE or institutionalism), and their relevance for improving the process of social valuing and, as a consequence, the effectiveness of policy action. As a matter of fact, both institutionalist and pragmatist theories were well acquainted with various strands of psychology, and some of them also provided relevant contributions in this respect. Moreover, these theories reveal, along with various (...) differences, significant complementarities, both between themselves and with important concepts of social psychology and psychoanalysis. The work will address the following aspects: (I) The main characteristics of pragmatist psychology with particular attention to their social implications. For space reasons, we will focus attention on the contributions of authors – John Dewey, William James and George Herbert Mead – more oriented to social sciences. (II) The psychological contributions of institutionalism. We will pay particular attention to Thorstein Veblen's theory of instincts and John Rogers Commons' theory of negotiational psychology. We highlight that these theories present, despite a number of differences, relevant complementarities. (shrink)

Existen insospechados parecidos de familia. En sus clases de Ciencia y Filosofía Política en la Universidad de Yale, Seyla Benhabib suele insistir en que las personas se terminan pareciendo mucho más a sus propias instituciones que a los Estados o a las naciones en las que viven. Esta aseveración resulta inquietante. De todos es sabido que podemos identificarnos más o menos con nuestra propia nación, pero la idea de que, en verdad, todos vayamos a terminar pareciéndonos mucho más a ciertas (...) instituciones solo es comparable a una de esas experiencias culinarias que proporciona Dabiz Muñoz, calificadas por él mismo como “de romperte la cabeza”. Laureado con el Nobel en 1993, el economista e historiador Douglass C. North sostuvo que los seres humanos idean las instituciones para crear orden, reducir la incertidumbre y estructurar la interacción socio-política. (shrink)

Although the philosophical literature on social institutions has been insightful for social scientific studies, the application of its core concepts, such as collective intentionality, to real inst...

In just over 30 years, Geoff Hodgson has made substantial contributions to institutional economics, evolutionary economics, economic methodology, the history of economic thought and social theory. To mark his seminal work, this volume brings together original contributions by world-leading scholars in specific areas that have played a significant role in influencing his thinking or represent key debates to which he has contributed. Building on some of the most significant philosophical and methodological foundations underlying Hodgson's work, the volume is organised around (...) the recurring themes of institutions, evolution and capitalism. (shrink)

This article is the introductory chapter to a festschrift in honour of Geoff Hodgson. In work spanning four decades, Geoff Hodgson has made many path-breaking contributions to institutional economics, evolutionary economics, economic methodology, the history of economic thought and social theory more broadly. Hodgson’s reputation as a prolific and important writer, whose work transcends traditional disciplinary boundaries, is matched by his credentials as an academic entrepreneur, whose involvement in the formation of two international scholarly societies and the foundation of the (...) Journal of Institutional Economics has expanded the opportunities for constructive dialogue among social scientists. To celebrate Hodgon’s fantastic career, this volume brings together 19 original contributions by world-leading scholars in specific areas that have played a significant role in influencing Hodgson’s thinking or represent key debates to which he has contributed. The chapter introduces these contributions, and summarizes a conversation with Hodgson that is also included in the volume. (shrink)

This paper uses the evolutionary frame provided by the Victorian jurist Henry Sumner Maine to describe the process by which trust can be seen as the product of a gradual development that starts with small-scale communities and later allows market exchanges to develop themselves. I also argue, using the work of Elinor Ostrom (1990), that trust emerges first within small-scale communities, where first- and second-degree collective action problems need to be resolved. The development of a social disposition to trust is (...) closely linked with an institutional context that encourages individuals to take the externalities of their actions into account. This is made possible by customary mechanisms, as the development of social trust at this stage cannot rely on a mighty “Leviathan”. Therefore, this paper questions the claim that social trust is the product of market exchanges. Market exchanges might favor the further growth of social trust, hands in hands with the right institutional frame. However, this growth is not just the transposition of a previously acquired disposition to trust. The work of Henry Sumner Maine interestingly underlines the importance of the co-development of institutions and trust, from its origin in small communities to its expansion to market exchanges. Both Ostrom’s and Maine’s perspectives underline the fact that trust and trustworthiness are complementary and question a-rational perspectives on trust. This paper also elaborates on the claim, coming from the literature on contract law, that focusing on sanctioning mechanisms can be highly counterproductive. (shrink)

Can taxation and the redistribution of wealth through the welfare state be conceived as a modern system of circulation of the gift? But once such a gift is institutionalized, regulated and sanctioned through legal mechanisms, does it not risk being perverted or corrupted, and/or not leaving room for genuinely altruistic motives? What is more: if the market’s utilitarian logic can corrupt or ‘crowd out’ altruistic feelings or motivations, what makes us think that the welfare state cannot also be a source (...) of corruption? To explain the standard answers to the abovementioned questions as well as their implications I will first re-examine two opposing positions assumed here as paradigmatic examples of other similar positions: on the one hand, Titmuss’s work and the never-ending debate about it; on the other, Godbout’s position, in-so-far as it shows how Titmuss’s arguments can easily be turned upside down. I will then introduce and reinterpret Einaudi’s “critical point” theory as a more complex and richer anthropological explanation of the problems and answers considered herein. Through the analysis of these paradigmatic positions I will develop two interrelated arguments. 1) The way these problems are posed as well as the standard answers to them are: a) subject to fallacies: the dichotomy fallacy and the fallacy of composition; b) too reductive and simplistic: we should at least try to clarify what kind of ‘gift’ or ‘corruption’ we are thinking about, and who or what the ‘giver’, the ‘corrupter’, the ‘receiver’ and/or the ‘corrupted’ party are. 2) The answers to these problems cannot be found by merely following a theoretical approach, nor can they be merely based on empirical evidence; instead, they need to take into account the forever troublesome, ambiguous and unpredictable matter of human freedom. (shrink)

In this article, the hypothesis according to which the institutional change is determined by the mobilization of social capital is exposed. It is analysed what consequences derived from this fact in relation to the processes of deinstitutionalization of the policy. It proposes an interpretation of academically relevant results about the meaning of the term ‘deinstitutionalization’, explains some of the most important antecedents on institutional theory and, fially, proposes some fundamental ideas to advance the philosophical reflction about the so-called new institutionalism.

Fair Trade is under fire. Some critics argue, for instance, that there is no obligation to purchase Fair Trade certified products and that doing so may even be counter-productive. Others worry that well-justified conceptions of what makes trade fair can conflict. Yet others suggest that the common arguments for Fair Trade cannot justify purchasing Fair Trade certified goods, in particular. This paper starts by sketching one common argument for Fair Trade and defends it against this last line of criticism. In (...) particular, it argues that we should purchase Fair Trade certified goods because doing so benefits the poor even though there are other ways to alleviate poverty. It then considers how other common arguments for Fair Trade fare in light of similar criticism and concludes that they may well succeed. (shrink)

What does being money consist in? We argue that something is money if, and only if, it is typically acquired in order to realise the reduction in transaction costs that accrues in virtue of agents coordinating on acquiring the same thing when deciding what thing to acquire in order to exchange. What kinds of things can be money? We argue against the common view that a variety of things (notes, coins, gold, cigarettes, etc.) can be money. All monetary systems are (...) best interpreted as implementing the same basic protocol. Money, i.e. the thing that we coordinate on acquiring in order to lower our transaction costs, is, in all cases, a set of positions on an abstract mathematical object, namely a relative ratio scale. The things that we ordinarily call ‘money’ are merely records of positions on such a scale. (shrink)

Although Minsky’s interpretation of Keynes’s macroeconomics and essential message clashes with authoritative alternative interpretations, it has become increasingly influential during the years following the Global Financial Crisis, even in mainstream circles. This paper offers a critical evaluation of Minsky’s Financial Instability Hypothesis from the perspective of the alternative Austro-Wicksellian paradigm. Although some of the similarities and/or analogies between Minsky’s approach and that of the Austrian School suggest a more than merely superficial affinity between the two theoretical frameworks and although some (...) scope for cross-fertilization between both approaches can be found, both theoretically and empirically, at a fundamental conceptual level both theories remain incompatible and difficult if not impossible to reconcile, in particular in terms of fundamental causality and in terms of policy conclusions and prescriptions. Despite the fact that Minsky’s policy conclusions are multifaceted and somewhat eclectic, they manifest a lack of familiarity with the conclusions of the Austrian analysis of the problems of central planning by Big Players such as Big Bank and Big Government. Both approaches also offer contrasting interpretations of the historical experience of the Global Financial Crisis. (shrink)

This article focuses on the justification of taxation, in other words the principled rather than the technical aspect of taxation. We first show how democracy is on the one hand required for legitimate taxation, and how on the other hand democratic communities are dependent on taxation, and argue there is no vicious cirle. We then present a typology of ways of justifying taxation, according to which taxation can base its legitimacy on (1) meeting basic needs, (2) financing public goods, (3) (...) redistribution, or (4) (dis-)incentivising certain types of conduct. We then discuss the applicability of each of these types of justification on the global level, arguing that all of them do apply to the global level. The article further concludes that different normative justifications guide us towards different designs of taxation in practice, so the background justification has to be made clear, especially when designing new taxation systems. (shrink)

Many economic theorists hold that social institutions can lead otherwise irrational agents to approximate the predictions of traditional rational choice theory. But there is little consensus on how institutions do so. I defend an economic internalist account of the institution-actor relationship by explaining economic rationality as a feature of individuals whose decision-making is aided by institutional structures. This approach, known as the subjective transaction costs theory, represents apparently irrational behavior as a rational response to high subjective transaction costs of thinking (...) and deciding. The theory has two attractive features. First, it reconciles rational choice theory with the increasing body of evidence cataloguing putative errors in economic decision-making. Second, it vindicates the explanatory power of individual choice against externalist challenges; the subjective transaction costs theory keeps economic rationality in the head. (shrink)

A recent trend in international development circles is ‘New Institutionalism’. In a slogan, the idea is just that good institutions matter. The slogan itself is so innocuous as to be hardly worth comment. But the push to improve institutional quality has the potential to have a much less innocuous impact on aid efforts and other aspects of international development. This paper provides a critical introduction to some of the literature on institutional quality. It looks, in particular, at an argument for (...) the conclusion that making aid conditional on good institutional quality will promote development by reducing poverty. This paper suggests that there is little theoretical or empirical evidence that this kind of conditionality is good for the poor. (shrink)

A recent trend in international development circles is ‘New Institutionalism’. In a slogan, the idea is just that good institutions matter. The slogan itself is so innocuous as to be hardly worth comment. But the push to improve institutional quality has the potential to have a much less innocuous impact on aid efforts and other aspects of international development. This paper provides a critical introduction to some of the literature on institutional quality. It looks, in particular, at an argument for (...) the conclusion that making aid conditional on good institutional quality will promote development by reducing poverty. This paper suggests that there is little theoretical or empirical evidence that this kind of conditionality is good for the poor. (shrink)

(2013). Herding, social influence and expert opinion. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 35-44. doi: 10.1080/1350178X.2013.774845.

At the end of World War II, F. A. Hayek denounced the then-popular idea of central planning by arguing that, if pursued to its logical conclusion, it would entail totalitarianism. But there were at least two problems. First, judging by his example of Nazi Germany, state control over the economy appears to be a consequence, not a cause, of the monopolization of political power. Second, he conflated socialism and mere interference in the market with central planning. Therefore, history did not (...) so much falsify Hayek's prediction as bypass it: Once the vogue for central planning faded in the West, Hayek's book became irrelevant—except, ironically, in Germany. There, it was read as a manifesto for “good planning” through the rule of law. Alongside other “neoliberal” writers, Hayek had a profound (if little acknowledged) influence on the shape of the emerging Federal Republic and, through it, on the whole European institutional framework. (shrink)

(2013). Science-mart: privatizing American science. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 75-81. doi: 10.1080/1350178X.2013.774858.

Previous literature has demonstrated the important role that trust plays in developing and maintaining well-functioning societies. However, if we are to learn how to increase levels of trust in society, we must first understand why people choose to trust others. One potential answer to this is that people view trust as normative: there is a social norm for trusting that imposes punishment for noncompliance. To test this, we report data from a survey with salient rewards to elicit people’s attitudes regarding (...) the punishment of distrusting behavior in a trust game. Our results show that people do not behave as though trust is a norm. Our participants expected that most people would not punish untrusting investors, regardless of whether the potential trustee was a stranger or a friend. In contrast, our participants behaved as though being trustworthy is a norm. Most participants believed that most people would punish someone who failed to reciprocate a stranger’s or a friend’s trust. We conclude that, while we were able to reproduce previous results establishing that there is a norm of reciprocity, we found no evidence for a corresponding norm of trust, even among friends. (shrink)

By assembling authors with a wide range of different disciplinary backgrounds, from philosophy, literature, political science, sociology to medical anthropology ...

The article provides an overview of the basic concepts and principles of the theory of institutions as well as of the mechanisms of emergence and evolution of social institutions. It introduces a distinction between formal and informal institutions based on the the criterion of the enforcement agency of institutions. Finally it discusses the problem of path dependence.

This article argues that the (epi)genetic, cultural, symbolic, and environmental transmission channels are insufficient to explain the structure of modern human societies. Economic exchange of knowledge embodied in goods and services constitutes an additional transmission channel that makes more efficient use of limited human cognitive capacity. Economic exchange results in a gradual shift in societies from task-based division of labor to cognitive specialization. This shifts scarce cognitive resources away from production and into learning. It accelerates learning and reinforces the drive (...) towards specialization. Cognitive specialization may constitute another “major transition” towards a higher level of aggregation in human societies, with properties that differ from symbolic transmission. Collective control of individual market-based exchange is ensured by means of economic institutions that put a constraint on individual behavior. (shrink)

In The Construction of Social Reality, John Searle develops a theory of institutional facts and objects, of which money, borders and property are presented as prime examples. These objects are the result of us collectively intending certain natural objects to have a certain status, i.e. to ‘count as’ being certain social objects. This view renders such objects irreducible to natural objects. In this paper we propose a radically different approach that is more compatible with standard economic theory. We claim that (...) such institutional objects can be fully understood in terms of actions and incentives, and hence the Searlean apparatus solves a non-existent problem. (shrink)

This article addresses several issues raised by Nichols, Gintis, and Skyrms and Zollman in their comments on my book, The Grammar of Society: The Nature and Dynamics of Social Norms . In particular, I explore the relation between social and personal norms, what an adequate game-theoretic representation of norms should be, and what models of norms emergence should tell us about the formation of normative expectations.

Das Werk Erich Hoppmanns wird durch drei Ideen geleitet. Erstens, eine Idee ontologischer Natur, dass der Markt ein komplexes Phänomen ist. Zweitens, eine Idee methodologischer Natur, dass der Markt mittels einer Systembetrachtung analysiert werden soll und nur Erklärungen des Prinzips möglich sind. Drittens, eine Idee normativer Natur, dass die Steuerung des Marktes mittels Regeln erfolgen soll, die gemäß dem regulativen Ideal der Freiheit konzipiert werden müssen.

According to the dominant "nexus of contracts" and "collection of assets" views of the firm, the firm is a either a fiction or an aggregate. Although legal personality is important in both accounts, everything is said to be achieved by private contract alone and the law's role in creating legal entity status is dismissed. The paper challenges both these aspects by reconsidering an alternative "real entity theory" that dominated debates at the turn of the twentieth century. This forgotten view holds (...) that the firm is neither a fiction nor an aggregate but a real entity, and underlines the creation of legal entity status as a fundamental role of the law. The paper discusses this view's ontological and legal insights, clarifies the proposition that the firm is a real entity, and proposes it as a starting point for a theory of the firm. (shrink)

Dans cet article, nous offrons un large aperçu des interactions entre cognition, systèmes de croyances et institutions, et comment elles affectent la performance économique. Nous estimons qu'une meilleure compréhension de l’émergence des institutions, de leurs propriétés de fonctionnement et de leurs effets sur les résultats politiques et économiques doit commencer par une analyse des processus cognitifs. Nous explorons la nature de l'apprentissage individuel et collectif, en soulignant que la question n'est pas de savoir si les agents ont une rationalité parfaite (...) ou limitée, mais plutôt de savoir comment les êtres humains raisonnent ou choisissent réellement, individuellement et collectivement. Nous avons ensuite lié les processus d'apprentissage à l'analyse institutionnelle, fournissant des arguments en faveur de ce qui peut être qualifiée d’« institutionnalisme cognitif ». En outre, nous montrons qu’un traitement complet du phénomène de sentier de dépendance devrait commencer au niveau cognitif, se poursuivre au niveau institutionnel, et aboutir au niveau économique. (shrink)