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The Institutional Proposals of Arild Vatn

(refers to the book: Vatn, Arild. 2005. Institutions and the Environment. Cheltenham: Edward Elgar; Source: Re-Embedding the Market: Institutionalizing Effective Environmentalism. Arran Gare)

"In this paper I will examine proposals, such as those promoted by Arild Vatn in his book Institutions and the Environment, to develop institutions able to achieve this re-embedding."

Arran Gare:

It is first necessary to consider the more basic issue of defining what is an institution. Institutions have been defined by institutionalist economists in different ways. Vatn is concerned to uphold and develop the tradition of institutionalist economics that goes back to Thorstein Veblen, who was strongly influenced by C.S. Peirce, William James and John Dewey, and beyond them, to Charles Darwin and the historical school of economics. According to Peirce, instinct, action and habit formation precede rational deliberation, which always presupposes habits associated with action. Habits were understood as dispositions to act, although when confronted with failure, people could reflect on and modify their habits. Institutions are complexes of such habits, formed through evolution of societies, but capable of being consciously modified or even deliberately created. Successive institutionalists proposed narrower views about actions and institutions. The Austrian institutionalists such as von Mises and von Hayek argued that institutions, for instance money, evolved spontaneously and could not be planned, and all change should be left to the spontaneous activity of people rather than being planned. The neo-institutionalists, reconceiving action through game theory, effectively assimilated institutionalist economics to mainstream economics with some modifications, with individuals assumed to be calculating, power hungry egoists, reaffirming the traditional Hobbesian notion of homo economicus. To advance the idea of institution of the classical institutionalist economists, Vatn utilized the work of Peter Berger and Thomas Luckmann, influenced by Marx, Durkheim, George Herbert Mead and Alfred Schutz. From their perspective, institutions emerge when patterns of activity come to be stabilized, taken to be objective, and then internalized in people’s actions. For instance, if a couple end up having meals regularly, and their children come to expect these regular meals, mealtimes become an objective reality. The members of the family then internalize this objective reality in the way they organize their activities. Mealtimes have then become an institution, and patterns of eating have been institutionalized. They involve typified responses to typified expectations and are conceptualised and evaluated in this way. However, incorporating Mead’s insights, there is more involved than this. Each individual develops the capacity to take the perspective of each of the others on their own activities and on themselves, and then to take the perspective of the whole family on each individual. In this way they develop a conception of themselves in relation to each other and in relation to the family, while still being capable of spontaneous action, reflecting on these identities and values accorded to their institutions and practices. Societies, including their communities and organizations, consist of patterns of such institutions inter-related with each other through which individuals chart their lives and forge their identities, thereby maintaining and reproducing these institutions, communities, organizations and societies and the relations between each of these. Conceived in this way, people form institutions which then form them, including their conventions, attitudes and normative evaluations. On the foundation of these they are also able to reflect upon these institutions and associated conventions, attitudes and normative evaluations and to consciously set about changing them or creating new institutions. While the focus of Berger and Luckmann was on the emergence of institutions from below, they also allowed that institutions could be create from above, by State action for instance. Conceiving of people and institutions in this way challenges the conception of homo economicus, that is, that people are calculating egoists with a hierarchy of preferences. It allows that people can evaluate and live in very different ways with different ways of reasoning according to different institutional contexts. It facilitates examination of what is involved informing institutions, changing them, and evaluating them not only for the values they uphold and their effectiveness in realizing goals, but for the kinds of people that will be formed by these institutions. This has been the focus of Vatn’s work. One of the major problems that has to be addressed when considering institutions is the issue of power. Transforming or creating institutions takes place in a social environment already structured by institutions which provide opportunities or limit what people can do, and these opportunities and limits are themselves matters of power relations. The issue of power is not treated in any depth by Vatn, although he acknowledges its importance. Berger and Luckmann did consider power in their social theory in noting that the most important form of power in society is the power to define reality. They did not ask the further question of who has the power to define reality, although clearly those who do have this power will also have the power to redefine reality. The social theorist whose ideas are entirely commensurate with those of classical institutionalist economics of Veblen and Berger and Luckmann’s theory of institutions, but which has provided a thorough analysis of power is Pierre Bourdieu. Like Veblen, Bourdieu argued that learning is first and foremost a matter of developing habits, or as he put it, developing a habitus. Like Berger and Luckmann, Bourdieu examined the social construction of what we take to be reality, and like Mead, Bourdieu saw one of the most important motives driving people is the struggle for recognition. Later, Bourdieu introduced the notion of field into his social theory, providing an alternative to the notion of system commonly used by sociologists. This concept enabled Bourdieu to deal with macro social dynamics, overcoming the deficiency of the sociologists influenced by Mead such as the symbolic interactionists and Berger and Luckmann in their capacity to deal with these macro-dynamics. In doing so, Bourdieu developed the means to analyse the emergence of fields and the relationship between different fields, including global fields. The concepts of habitus and field are ideal for advancing institutionalist economics, and Bourdieu (2005)went on to apply these concepts to analysing the social structures of the economy

To capture the complexity, diversity and subtleties of power, Bourdieu referred to capital rather than power. The power to define reality, for instance, is defined by Bourdieu as symbolic capital, and it is associated with being recognized as having the legitimacy to define reality. Much of Bourdieu’s work was devoted to understanding the nature of this symbolic capital and the struggles to achieve it. This work was particularly important for explaining the autonomization of fields, differentiating them and their logic from other fields. However, Bourdieu saw other forms of capital as important, for instance social capital, the network of people who one knows, and cultural capital, the appropriate sense of taste and associated practices required to get on, as well as economic and political capital. Capital is defined as what is required to continue participating successfully in the different fields, clearly a concept generalized from Marx’s study of the bourgeois mode of production. Vatn also argued that societies have to be understood in the context of their environments. This is not the set of items that people are likely to come across. He equated the environment with the biosphere, including not only all the species of life and ecosystems, but the interlinked bio-geochemical processes that keep the whole biosphere functioning (p.231). It is necessary to take the environment in this sense into account when formulating policies, and the main problem is to workout what kinds of institutions are required to formulate adequate and effective policies that can augment rather than undermine these processes so that societies improve the health of these ecosystems. Then it is necessary to work out how to transform existing institutions or how to create new institutions that are capable of formulating and implementing these policies. However, the problem here is that such ecological processes are the ultimate basis of power. As ecologists came to realize, the struggle for survival and the consequent nature of ecosystems is essentially a struggle to access and transform usable forms of energy. This idea has been taken up in anthropology and human ecology and engendered a theory of social power based on control of the triggers which release transformations of energy, put forward by Richard Newbold Adams (1975), then further developed by Stephen Bunker (1985) and Alf Hornborg (2001 & 2013) to analyse the structure of exploitation and ecological destruction in the global economy. Hornborg has also shown the relationship between these structures and the forms of technology that have developed on the basis of such controls over energy transformations. In considering both action and what kind of institutions can be created it is necessary to face up to the problem that power for the most part tends to accrue to those who control the most effective triggers for the transformation of energy, and these are the people whose environmental impact is likely to be greatest and most destructive (Gare, 2000)."