Institutional Evolution

“Institutional Evolution” by Douglas W. Allen feels like an extension of Jane Jacobs’ “Systems of Survival”. The subject matter is much the same with Allen covering such matter historically. I hold to the terminology that I found useful while reading Systems of Survival: There are institutions that specialize in voluntary transactions, and others that specialize in involuntary transactions. Jacobs calls these the ‘commercial’ and ‘guardian’ styles of system respectively and that they are immiscible, even though they need each other. That dichotomy also illuminated the actions described in 1493 of the early Spanish in the Philippines where alternately their involuntary instincts led them to throw out the local Chinese and their voluntary instincts led them to welcome them back.

Allen proposes that the arcane and counterintuitive features of the English aristocracy came into being and persisted for several hundred years. In short it was a costly system of signaling between aristocrats, especially the king, that they relied on each other. Such logic leads to just those properties outlined by Jacobs. Allen describes the English aristocracy as having consciously dismantled itself—surely a remarkable event.

There is a marvelous quote of Marx and Engles (Communist Manifesto) at 0.04 thru the book:

The bourgeoisie, whenever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors”, and has left remaining no other nexus between man and man than naked self-interest, than callous “cash payment” . . . . It has resolved personal worth into exchange value, and in place of the numberless indefensible chartered freedoms, has set up that single, unconscionable freedom—Free Trade. I had never seen, or at least focused on that passage before. I cannot imagine a sentiment so foreign to me. I just want a sandwich; I don’t want to make the waiter like me. My understanding of feudal times is that the serfs seldom left their master’s estate because they had no money to buy a meal on the road—almost like slavery?

Marx seemed to view quid-pro-quo as evil. I view it as the greatest invention of mankind. It is probably older than using fire, but not as old as the tribal values that Marx wants us to live by. It is true that man has social proclivities, but it would seem that they don’t scale to a size suitable to tourism. Lee Corbin suggests that a pure Marxist would say that the traveler would go into a restaurant and those working there would implicitly presume that since everyone contributes to the commonweal, just as do the restaurant workers, then the traveler must also, and so provide a meal. Marx was not fond of the theory of evolution which currently indicates that any population of cooperators will spawn some sub-population of cheaters.

Having finished the book I feel I have a slightly better grasp of where Marx was coming from—a place where the order of things was more cultural and more personal. It seems to me now that the world is connected together more as a matter of logic than personalities. That logic is not the logic of central planning, however; it is the sort that economists try to fathom.

I suspect that the behavior of aristocrats was signals, mainly to other aristocrats, that “I am one of you.”. I will be there for you in emergency and I expect the same from you. Such signals towards the king were especially strategic. It is not so much what you do for me from day to day as it is for unforeseen circumstances; we must stick together. This is sort of in line with the theme of the book that what was expected of the aristocrat was not easily measured. If is perhaps a cultural analog to the genetic Handicap Principle.

I have finished reading the book. Chapter 9, the conclusion, is very good. It mitigates reading the book. Actually reading the book answered many questions that I had wondered about and never found the time to find answers to, such as when the modern idea of police arose. I believe the points made in the conclusion even though I doubt how many of the anecdotes support those conclusions. The anecdotes are quite worthwhile. Coming back to Samuel Pepys many times is a good focus for the book. I have never read the diaries but they are so often quoted and I enjoyed the fresh sampling in this book. I had never known that Pepys ran the navy for a long time—he does not come across as pretentious in his diary.

Perhaps this book logically follows “Systems of Survival” and I think it might perhaps precede Ostrom’s “Understanding Institutional Diversity”. Perhaps I will give that book another try.