Institutions
Stable orbits in human systems
October 29, 2014 — June 10, 2022
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Our collective neurosocial operating system, for running distributed processes on our distributed hardware.
Douglass North, Elinor Ostrom, Daron Acemoglu, Ronald Coase and colleagues, broadly construed.
What are the effects of the social arrangements we construct for ourselves? We tend to talk openly about constructing or intervening in a limited subset of these, say “a robust free press” and “competitive markets”. Our lives are, however, the site of intersections of a whole swag of co-evolved systems; manners, notions of honour, legal systems, clientelism, slavery, freedoms, states (democratic or otherwise), property rights, religions… These systems have different degrees of legibility. For all that it is not clear how to measure these things, it is clear that they make huge differences to our society and how it works… Variation across the globe is also suggestive that they are contingent; The world you grew up in is not the only possible one. (Unless you are Francis Fukuyama circa 2000).
I’ll probably file social capital, whatever that is, here, since whatever use the term does reliably seem to have is about institutional function. An important class of institutions that keep on popping up are ones for management of commons so I slice off a chunk of this page for that.
Henry Farrell, Why Coase’s penguin didn’t fly:
Coase wanted to explain why we saw firms at all, given the benefits of market exchange. Why did we need miniature hierarchies with bosses and subordinates, if we could just buy and sell our services on markets instead?
His answer was transaction costs. Some transactions are too messy or awkward to be easily handled by putting out to the marketplace. Those are the transactions that are handled in-house through hierarchy. Other transactions, which are more straightforward, can be contracted for with outside providers, through market processes. Finally (although he doesn’t really discuss this) the balance can change over time, as new technologies emerge that make transactions more or less easy to carry out through hierarchy or markets.
This is a powerful insight, which provided a platform for the work of Oliver Williamson and many other organizational economists, as well as Benkler. Yet it has buried within it a crucial assumption — that change is driven by efficiencies. […]
[This highlights] an important problem which isn’t really discussed by Coase, and hence is not discussed by Benkler — power. Power relationships often explain who gets what, and which forms of organization are taken up, and which fall by the wayside. In general, forms of production that are (a) more efficient, but (b) inconvenient or unprofitable for powerful actors, are probably not going to be taken up, since those powerful actors will block them. Yet if one starts from an efficiency perspective, it is very hard to build power relations in, since one believes that change in practices and institutions is not driven by power relations but by efficiency.
[…] if you are an economist, as Coase is, you really ought start from the assumption that individuals are self interested. If self interested actors have the power to block changes that would hurt their self interest, they are going to do so.
The Seshat: Global History Databank brings together the most current and comprehensive body of knowledge about human history in one place. Our unique Databank systematically collects what is currently known about the social and political organization of human societies and how civilizations have evolved over time.
1 Impartial institutions
My term is not quite right, but I also do not like Yudkowsky’s term: Local Validity as a Key to Sanity and Civilization
You can also look at laws as a kind of game theory played with people who might not share your morality at all. Some people take this perspective almost exclusively, at least in their verbal reports. They’ll say, “Well, yes, I’d like it if I could walk into your house and take all your stuff, but I would dislike it even more if you could walk into my house and take my stuff, and that’s why we have laws.” I’m never quite sure how seriously to take the claim that they’d be happy walking into my house and taking my stuff. It seems to me that law enforcement and even social enforcement are simply not effective enough to count for the vast majority of human cooperation, and I have a sense that civilization is free-riding a whole lot on innate altruism… but game theory is certainly a function served by law.
The same way that money is both medium of exchange and store of value, the law is both collective utility function fragment and game theory.
In its function as game theory, the law (ideally) enables people with different utility functions to move from bad Nash equilibria to better Nash equilibria, closer to the Pareto frontier. Instead of mutual defection getting a payoff of (2, 2), both sides pay 0.1 for law enforcement and move to enforced mutual cooperation at (2.9, 2.9).
From this perspective, everything rests on notions like “fairness”, “impartiality”, “equality before the law”, “it doesn’t matter whose ox is being gored.” If the so-called law punishes your defection but lets the other’s defection pass, and this happens systematically enough and often enough, it is in your interest to blow up the current equilibrium if you have a chance.
2 In economic development
See economic development.