Abstract
Contemporary discussion concerning institutions focus on, and mostly accept, the Searlean view that institutional objects, i.e. money, borders and the like, exist in virtue of the fact that we collectively represent them as existing. A dissenting note has been sounded by Smit et al. (Econ Philos 27:1–22, 2011), who proposed the incentivized action view of institutional objects. On the incentivized action view, understanding a specific institution is a matter of understanding the specific actions that are associated with the institution and how we are incentivized to perform these actions. In this paper we develop the incentivized action view by extending it to institutions like property, promises and complex financial organisations like companies. We also highlight exactly how the incentivized action view differs from the Searlean view, discuss the method appropriate to such study and discuss some of the virtues of the incentivized action view.
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Notes
Searle has, upon occasion, made remarks that similarly indicate a close connection between institutional objects and actions. Consider: “Social objects are always... constituted by social acts; and, in a sense, the object is just the continuous possibility of the activity” (1994, p. 36). Or: “What we think of as social objects... are in fact placeholders for patterns of activities” (2005, p. 57). We think that a deep understanding of these points should lead one to reject the collective acceptance view in favour of the incentivized action view.
Any account of institutional reality must presuppose notions like abstract objects; it would be very odd to deny the theorist use of numbers when explaining social security numbers, winning lottery numbers, etc.
For a non-Searlean view that is mostly congenial to our way of looking at things, see Tieffenbach (2010).
This example adapted from Stalnaker (1989, p. 289).
A non-state issued, wholly electronic currency (www.bitcoin.org).
A further problem concerning money is the so-called problem of ‘free-standing \(Y\)-terms’, first raised by Barry Smith in his exchange with Searle (2003). The total number of notes and coins in circulation only amount to a fraction of the actual money in existence. This raises the question: where is the thing that Searle’s \(X\)-term is supposed to refer to? In Smit at al. (2011, pp. 17–20), we defend the view that, where fiat money is concerned, the actual ‘thing’ traded is the abstract ability to acquire goods and services.
An incentivizing agency may choose to protect only certain uses. We won’t deal with this complication here.
Namely where non-trivial, extra-legal third party disincentivization is involved.
Legally Somaliland is considered an autonomous region of Somalia, but it is typically considered a de facto state.
The difference arises in virtue of the fact that the interest of law is regulative, and its definitions implicitly amount to a commitment concerning where the state will and will not apply its incentivizing muscle. Our interests are descriptive, and supposed to capture what actually exists, not what the state commits itself to doing.
This puts us at odds with Searle’s controversial claim (1964) that, in some sense, the institution of promising suffices to make it true that one should keep one’s promises. We do not think that it is the job of a theory of promises to fully account for the normative status of promises—or, at least, no more than it is the job of a geological theory to account for the beauty of mountains.
A legal contract is just an agreement, or mutual promise, with an added incentivization mechanism, namely legal enforcement.
Searle himself has defended the use of thought-experiments in clarifying the nature of institutional facts (Searle 2005, pp. 20–21).
As happened in the case of US prisons. See Scheck (2008).
Above we portray institutional facts as no more than the more stable end of a continuum of which the other end is more loose incentive structures. An anonymous referee has pointed out that being at the end of such a continuum does not necessarily amount to being ontologically of the same kind as other points on the continuum. We agree but, in the absence of a positive argument in favour of viewing such a stabilized set of incentives as ontologically distinct from incentives in general, will keep our ontology sparse.
Alternatively, consider the Marxist claim that we mystify the social by reifying social relations. Our project can be described as the dereification of institutional facts.
An interesting example is of how these thing should be done is Cukierman et al. (1992), who tried to measure the de facto, as opposed to de jure, independence of central banks.
Or, as Hodgson (2006, p. 18) puts it: “[F]ormal institutions... always depend on nonlegal rules and inexplicit norms in order to operate. If laws or declarations are neither customary nor embodied in individual dispositions, then— “formal” or not—they have insignificant effects. They are mere declarations or proclamations, rather than effective social rules.”
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Smit, J.P., Buekens, F. & du Plessis, S. Developing the incentivized action view of institutional reality. Synthese 191, 1813–1830 (2014). https://doi.org/10.1007/s11229-013-0370-5
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DOI: https://doi.org/10.1007/s11229-013-0370-5