Business Companies, Institutional Change, and Ecological Sustainability

By Soderbaum, Peter | Journal of Economic Issues, June 2000 | Go to article overview

Business Companies, Institutional Change, and Ecological Sustainability


Soderbaum, Peter, Journal of Economic Issues


Peter S[ddot{o}]derbaum

An increasing number of scholars understand that there are many theories of science rather than just one. Logical positivism, with its emphasis on objectivity and value neutrality, is still there. In recent years, however, and especially for the social sciences, a number of other views of science have been added that emphasize subjective aspects of the investigator. Hermeneutics, action research, narrative analysis and social constructivism are examples of such additions to the repertoire of theories of science.

In this essay, I will discuss the crucial role of schemes of interpretation in social science research on specific phenomena such as a "business company" or a "market." Each scholar brings to such constructs a particular world view and a specific conceptual framework. It is very probable that those who are acquainted with neoclassical economics will think of business companies in terms of profit-maximizing firms and of markets in terms of supply and demand. Institutional economists, while not always denying the possible relevance of neoclassical schemes of interpretation, also will consider other ways of viewing the world.

The reasons why institutional economists will look for other schemes of interpretation are ideological as well as scientific. As argued by Gunnar Myrdal [1978], values are always with us in social science research. As scholars, we cannot claim value neutrality in preferring one scheme of interpretation (or one set of schemes of interpretation) over another in relation to specific phenomena. While there is some role for objectivity in a traditional sense, there is also a role for subjectivity and ideology. [1]

Schemes of interpretation are differently institutionalized. Neoclassical theory, for example, offers schemes of interpretation that are highly institutionalized in many parts of the world. Alternatives to the neoclassical view are offered today mainly through other departments, such as economic history, business administration, sociology, political science, and various interdisciplinary bodies that focus on human ecology, ecological economics, and the like. Institutional theory is one of the alternative schemes of interpreting the world that competes with neoclassical theory. The increasing popularity of institutional theory in the social sciences as a whole, for instance in sociology [Scott 1995] and economic history, suggests that this group of theories plays an important role and may even be dominant in the social sciences.

Ideological and philosophical "competition goes on in society as well as in universities. A current example where different philosophies confronted each other in relation to trade, environment and development was the ministerial conference of the World Trade Organisation (WTO) in Seattle. Experts who may not know of any economic theory other than the neoclassical, met opinions expressed by actors with other backgrounds and with different ideas about trade and globalization. The experts representing my own and other countries would have benefited from these diverse ideologies if they had received a more pluralistic education in economics. One may, in fact, question whether a person can be an expert economist at all, if he or she is limited in terms of competence to the neoclassical language and ideology. In addition to competing views within economics, there is a need for a degree of transdisciplinary competence. Speaking more than one language can often be helpful.

Traditional ideas of science as being outside the sphere of politics and ideology appear increasingly out of place in relation to issues of environment and development. Neoclassical theory is political economics, and departments of economics are political entities that have to respect the imperatives of democracy. Something similar holds for institutional theory, although the institutional language may be less restrictive and more in line with normal imperatives of democracy.

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