Academic journal article
By Dolfsma, Wilfred; Verburg, Rudi
Journal of Economic Issues , Vol. 42, No. 4
The idea that institutions matter, nowadays, is commonplace. This should not be taken to imply that widespread agreement exists among the social sciences or even within disciplines about the nature and the role of institutions. Following the process of differentiation between the social sciences in the nineteenth century, each discipline has seen its own theoretical development, which has colored each perspective on institutions. Now that the notion of institution is widely recognized as a foundational concept in social theory, and an important subject of research in sociology, economics, history, politics, organizational theory, etc., it proves a difficult task to fit the various bits and pieces together. The fact that despite renewed attention to the institution concept, Hodgson (2006) recently published an article with the title "What are Institutions?" may be a case in point.
One important reason, we believe, for this disarray is the variety of perspectives on the "polarity between the individual and the social" (Burman 1979, 374-5), or between agency and structure. This issue concerns conflicting views on how social phenomena are to be studied and explained. The agency point of view takes the explanation of social facts to be rooted at the level of the individual, i.e. an explanation is to be built from the (given) preferences, expectations and motives or behavior of rationally acting individuals. It is argued that social phenomena are to be understood as the result of individual actions oriented toward the (expected) actions of others. This point of view is handsomely captured by Elster, when he claimed that "there are no societies, only individuals who interact with each other" (1989, 248). Objecting that social phenomena cannot be reduced to the properties of the individual parts but ought to be studied within the social system in which they occur, adherents of the structural approach emphasize that society is a reality sui generis. Individual behavior, interdependent and interwoven with behavior of others, unintentionally gives rise to structured regularities in processes, relatively autonomous with regard to the intentions and preferences of individuals. As Durkheim expressed this point of view: "The first and fundamental rule is: Consider social facts as things" (Durkheim  1947, 14).
This paper proceeds as follows. The setting for the agency-structure debate is briefly laid out in the first section without any intention to discuss exhaustively the vast literature on this central issue in the social sciences. The next section elaborates on how the concept of the institution is implicated in this discussion, introducing the notion of tension, perceived to exist by actors between institutions and their legitimation in the socio-cultural values subscribed to by a society or community. Given that such tensions need to be activated to induce institutional change, a following section argues the importance of the three constituent elements of order and institutions--interests, power and social-cultural values--in this respect. Taking social-cultural values and the legitimation these supply for institutional settings as a point of entry in our analysis of institutional change, the next two sections explore how perceptions of tensions that arise between institutions, concrete practices and behavior may be seen to produce such change. The sixth section discusses three types of tensions, drawing out the conditions of institutional change within our theoretical perspective, while section seven offers two exemplary cases. A concluding section ensues.
Agency and Structure
Given that in the social sciences opinions range from the view that structures or institutions "determine" individual behavior on the one end to the idea that social structures or institutions are the unplanned outcome of the interplay of individual behavior at the other end of the spectrum, divergent explanations of institutions and institutional change abound. …