Institutional economics is distinct from other theories in four majors ways: 1) The concept of culture is an integral part of the analysis, 2) it operates from the view that economies are controlled by the joint interconnected forces of technology and institutions; not by economic laws, 3) it uses an evolutionary instrumental method, and 4) it advances the position that values and value judgments are a legitimate subject for scientific analysis1. This last feature is the broad topic for this paper. A more specific concern of the paper is to explain the theory of institutions and ceremonial valuation within Institutional economics. A tenet of this paper is that imagination is the source of ceremonial values. John Dewey's idea that a hazardous world impels men toward the invention of the ceremonial arts is a valuable one. The implications of this idea have not been fully connected to the institutional theory of value. Imagination infers a causal relationship between what is imagined and an existential consequent.
Also, a stab is taken at an important and nagging
question: Are some institutions "better" than others? This is tantamount
to the question: Are some institutional values "better" than others? All
of this is undertaken by way of explanation and perhaps clarification of
the theory of valuation of John Dewey, as taught and elaborated within
the oral tradition at Kansas City. Any errors that may find their way into
the explanation are mine; any insights are most likely those articulated
by John Hodges or Joe Brown, or both.
The Veblenian Dichotomy
The sum total of behaviors that differentiate humans from other mammals is called "culture." Culture has evolved over time just as species have changed over time, although the change is not analogous. Culture is not, however, an undifferentiated conglomeration and it is a fundamental principle of Institutional economics that there are two culturally organized and interconnected aspects of human life2. This means that there are two ways of knowing (the method problem), two ways of doing (the behavior problem) and two ways of valuing (the value problem). One aspect is technological and the other is institutional3. All social structures have these two heritages: Both are aspects of human behavior and both help explain human activities, including economic activities. Both aspects of human behavior are required to analyze the functioning of the economy. Thus, the way we make a living is, at bottom, a function of these two learned behaviors. They are the "stuff" of which the economy is made.
Technology is a learned aspect of human behavior. It forms correlated patterns based upon and deriving from a functional process. This functional process is an instrumental or tool using process. This means that the technological aspect of behavior comes from tool using activities. Technology means patterns of behavior that are instrumentally verifiable and justifiable. But technology is not merely tools. It is best understood as internal to man, a part of human behavior. It is not like a coat that can be put on or taken off. No society has ever existed that was devoid of this aspect or type of behavior. For example, writing is a behavior that derives directly from language and writing instruments -- from sticks to computers. It is a behavior of most people and like many other behaviors of people such as driving, painting making steel, playing music or golf, or sailing, it would be impossible without tools.
As a process the technological aspect is cumulative and progressive. It is a process of tool and skill accumulation through elaboration and combination of existing tools.
Little else will be said here of the technological aspect, rather the other major aspect, viz., the institutional aspect of culture, is the subject. An institution is a pattern of learned behavior. These patterns come from and are verified and validated by ceremonial processes. The institutional heritage is based upon a ceremonial system derived from myths, legends, and traditions. In defining institutions this way I am departing from the more conventional definitions and from that advanced by Foster4.
Although there is enormous diversity of institutional patterns of different societies in different parts of the world, and also great differences in institutional patterns of the same society over time, as, e.g., the differences between ancient and modern Italian society, nevertheless, it is possible to identify some major features of institutions.
Generalizations regarding institutions:
1. Power, authority, class inequality, rank, status, superior/subordinate are based on the institutional aspect and all purport to rest on differences in competence and hence are quasi-technological; Veblen described this as "ceremonial adequacy."
2. Norms justify and sanctify the above. Some are deemed of major importance to the welfare of society - a prosperity code - and observance of these is binding on all members. The norms determine right/wrong, good/evil, friends/enemies, and such. They also purport to rest on tested, quasi-technological, standards.
3. Preliterate societies had legends, mythical stories to authenticate the above. These tend to evolve into ideologies/ theologies under the supervision of professional or semi-professional functionaries, e.g., religious theologies; secular ideologies, as, doctrines of capitalism and Marxism.
4. Emotional conditioning paves the way to emotional arousal when appropriate symbols are invoked. Emotional confirmation tends to reinforce ideological commitment. Thus, although Marxism and capitalism are primarily secular doctrines, emotional commitment raises them to the level of religious commitment on occasion. Modern commitments to nationalism and economic ideologies make them more significant than religious commitments, and also make them the most dangerous sources of conflict.
5. Legitimacy is conferred by ritual and ceremony.
6. Institutions are past-binding and involve combined continuities and discontinuities with antecedent institutions.
7. The method of knowing, or arriving at the validity of institutional values: tradition, authority, self-evident truths, faith.
8. The inequalities and authority defined by institutions are usually supported by the socialization process. Every society possesses a set of social traditions, beliefs, and habits that are deemed necessary, revered, and faithfully taught to each oncoming generation . "Norms" are standards for such judgments as right and wrong, truth and falsehood, beautiful ugly. Sometimes we follow the sociologist, William Graham Sumner and use the word "mores" to refer to those social traditions that if violated, result in extreme punishment. Taboos are negative mores usually supported by religious, state, or philosophical authority. The mores are more coercive than the main cluster of norms and tend to control such aspects of life as sex, family, religion, and selected aspects of obedience to the state. The norms and mores teach belief in the correctness of the inequalities of authority. When nations began to adopt public education systems, they were rapidly turned into instruments for teaching patriotic allegiance to the state, the prevailing economic institutions and, in countries that support religious schools, religious institutions. Most of the socialization process by adults of the young takes place informally, however, rather than by way of formal education.
The deep commitment that the members of a tribe or social system have to their system of authority and its norms, statuses, ideology and rituals would be puzzling to understand were it not for emotional conditioning. Beginning in early childhood, the young are taught that their institutions are of the greatest importance and that which makes life worthwhile. The young are taught to participate in activities designed to arouse emotional commitment, and over time the young along with adults derive emotional satisfaction from their beliefs. In the absence of emotional indoctrination, our commitment to prevailing institutions would be relaxed and more the subject of critical examination from time to time. It is the combination of ideology, theology and emotion that elicit the violence one sees in different parts of the world, as in Northern Ireland, the Middle East, and South Africa. It is the combination of ideology and emotion that accounts for the devotion most Americans feel toward the capitalist system, and the devotion most citizens of the Soviet Union feel toward what they mistakenly call communism. The members of each system are systematically fed propaganda that distorts reality and represents the opponent in the worst light, while representing its own system in the best light. This mixture of ideology, propaganda, and emotion encourages intolerance, dogmatism, and at times fanaticism.
A great deal of informal education takes place in teaching the young that the institutions are of supreme importance: they are our prosperity code; they make life worthwhile. The combination of norms and ideology and emotional conditioning gives institutions great stability and resistance to change.
9. The institutions form a network of means of which they support and reinforce each other. Family indoctrination teaches respect and reverence for church and nation, and church and state support family. Institutions support great inequalities between humans and, its beneficiaries or vested interests have the strongest of reasons to support and perpetuate the status quo.
One of the most powerful reasons institutions are past-binding and resistant to change, is that the entire population has been taught to believe in the truthfulness and worthiness of its institutions. It is seen as a prosperity code whereby society prospers if it holds fast to the traditional way of life, but calamity and decline befall the society that departs from tradition. In addition, vested interests have a supreme incentive to perpetuate arrangements of which they are the chief beneficiaries. They usually exercise a major influence over communication systems, including educational ones.
Our medieval ancestors found no intellectual difficulty in holding to the conviction that a minority of people - monarchs, nobles, and clergy - should control the majority in all of the affairs of life. It was "obvious" to them that some kinds of people should dominate others. Beginning in the 18th century intellectual inquiry questioned traditional authority as it had never been questioned before, and this questioning has continued more or less actively ever since. But the process has not ushered in an egalitarian society by any means , and has not, by some standards, ushered in a really functional political democracy. Notwithstanding our tradition of questioning authority, there is practically universal acceptance of the belief that it is "obvious" that those who possess money should dominate the economy.
People's commitments to such beliefs in the virtue of their own institutions and hostility to the opponent's beliefs is clearly fundamentally different from the kind of intellectual activity that accompanies the domain of science and technology. In the latter domain, the way of knowing involves asking questions that are testable, and that involve testing competing hypotheses, of rejecting authority as the way to get at truthful statements, and of avoiding to the greatest extent possible biases that prejudice findings. Our institutional commitments, on the other hand, are the result of the fact that we have been indoctrinated from childhood to believe they are true. Faith in the authority of immemorial beliefs and traditions is seen as the path to truth. By the time the young have reached adult life, they like their elders, "feel in their hearts" that their myths are true.
10. Although institutions tend to resist change, they do change. Most change (major) is due to the fact that technological innovations change the environment over time to such a great extent that the traditional institutions ceases to function effectively. To cite two revolutionary times: the technological revolution that ushered in domestic plants and animals brought with it such extensive changes in the environment, that most institutions underwent major changes, although in some cases they were modifications of antecedent institutions. The technology that ushered in the industrial society also changed the environment so greatly that traditional institutions became dysfunctional by way of conflicting with the requirements of industrial activity, and were modified significantly although, again, the new institutions were modifications of antecedent institutions.
11. The ways of knowing in the institutional realm are different from the ways of knowing in the realm of science and technology. The surest path to truth, according to medieval European thought, was by faith in the authority of the holy book, and by revelation, divine inspiration. Confidence in tradition as a path to truth seemed confirmed by the fact that tradition had been a sure and reliable guide to humans from time immemorial; its longevity was evidence of its truth. In every stable society some ideas are so widely accepted without question that they are seen as self-evident truths, truths that could be accepted a priori as the foundation upon which to build systems of thought. These would be concepts, held to be beyond challenge because they are held by faith, rest on authority (divine or otherwise), and achieve the status of self-evident. They are also seen as absolute, final, eternal, truths.
12. Institutions are especially resistant to change when there is a populous society with long-standing and entrenched traditions. There are situations, however, in which Institutions are comparatively weak or fragile and, where they offer comparatively little resistance to change. A frontier is a place where institutions are likely to be weak, permissive, and offer less resistance to change. All populations, as in some of the Pacific Islands, often see their institutions shattered when outsiders with more formidable technology impose control. The question of whether institutions may make a positive contribution to change, facilitate change, is controversial and will not be considered here.
13. Institutions are not simply non-technological, they are pseudo-technological, in the sense that they purport to be functional. They purport to 'make-possible' some essential activities and outcomes upon which the well-being of the society depends. Thus the semi-divine pharaohs subsequently provide abundant crops: correct religious observances are followed by planting, cultivating and harvesting and abundant crops. The fact that desired consequences follow correct religious practices are seen as proof of the efficacy of the institutional practices and hence the correctness of valuing these institutions.
Thus, applying the critical methods of knowing of science to the institutional values is opposed; as Dewey said, there is a strong social pathology against running the institutional values over the same comb that we do other statements that purport to be true.
14. The path to truth in the realm of technology is probably as old as the institutional path to truth, and took the form of discoveries and inventions, accidental or otherwise, of a tool-making-using character. Childe has pointed out that when early humans observed the consequences of certain patterns of action, compared them with other patterns of action, and concluded that this was better than that in a contextual situation they were engaging in sciencing, in truth-making, no matter how tentative or halting the process. It was by such processes that the funds of tool-skills developed over time. This process has developed in modern times to the point that it is extraordinarily effective, and loosely called the scientific method. Contrary to institutional truth, it does not rely on authority, tradition and faith; rather, it employs ideas and statements that are capable of testing and verification or falsification.
15. Since every set of institutions provides for or defines inequalities, ranks, statuses, it is quite understandable that those who are better off in the social hierarchy should seek to perpetuate it for themselves and their children. Those in the middle and upper social/economic classes in our society din into their children the importance of acquiring knowledge and skills that will enable them to enjoy the same benefits. They are strong advocates of the prevailing system of authority and preach its merits and belong to interest groups that promote the system.
16. The norms and mores are not commands in the sense that statutes and laws coming from legislatures and judicial bodies are. They exercise the influence they do because they are part of a cultural stream going far back into the history of a society; they have tradition on their side, and they seem to people to be part of immemorial belief. They owe their strength to the fact that they have become a deeply entrenched feature of social life and organization, and that is one reason why they are so tenacious, so enduring, and so difficult to change. Some of our norms and mores have their roots in antiquity as the predominance in our society of the Judeo-Christian tradition, our system of private property , our intense competitiveness, and our belief in the use of military methods to resolve conflicts. Modern "political" democracy is quite young, seen in terms of the history of civilizations, yet soon after the American revolution and subsequent adoption of a Constitution, legend-building began. Consequently, today most Americans seem to look upon the founding fathers of the nation with something of the same awe that another society looked upon the Ark of the Covenant.
17. All institutions are in practice different mixtures or combinations of traits. We may say that this activity is predominantly institutional, and that predominantly technological, but we are unable, in view of present knowledge, to assign a verifiable quantitative score to them.
18. Some institutions are more functional, permissive, or less dysfunctional than others. Thus, large numbers of children were once seen as functional both from the point of view of individual families and society. Now, while having many children may be seen as functional from the point of view of the family, they are coming to be seen as dysfunctional from the point of view of society. Poverty has been growing in some parts of the world in the 2Oth century, as in most of Africa, and in parts of Asia. Population is growing in that part of the world faster than economic growth, and poverty become more widespread. Furthermore, population imposes great strain on the environment, especially where the environment is fragile.
The Institution of Private Property
Next is a departure from the main course of the discussion to inject a discussion of a particular institution. One of the most important institutions of modern times is private property. It is the cornerstone of the market economy or capitalistic economy. There is an important instrumental component of private property in the sense that some property contributes to the efficiency of every day life. In the absence of defined and accepted social traditions, life would be far less secure and orderly than it is. If social practice decreed that strangers could use ones clothes, tools, living quarters, vehicle, and such, without permission, vast amounts of time would be wasted in making secure the necessities for productive use. This is so obvious as to need no elaboration. To be sure, there are societies, as among the Eskimos living north of the Arctic Circle before the invasion of the white man, in which a neighbor could borrow tools without asking permission, but there were well-defined rules regulating such practices.
As an institution, property developed as a major control device following the invention and acceptance of domestic plants and animals. Property in ancient civilizations was undoubtedly a continuation of and modification of property as it existed in Neolithic societies, but it was elevated from a subordinate to a major institution. Property ownership took different forms in different ancient civilizations, but they all had this important feature in common: ownership of land assured ownership for all practical purposes of the dominant agricultural technology. Those who owned the land were able to coerce those who did not own land, and they were able to reap the chief benefits of the vast wealth that a mature agricultural civilization could produce. In ancient Egypt the ownership of most land resided in the hands of the god-king. There was a hierarchy of noblemen and government bureaucrats, but they owed their position and wealth subject to the pleasure of the pharaoh.
Rulers have seen themselves as prime causal agents for the good of the society. Since the institutions conferred ultimate authority upon them, it is understandable that the community also came to see the rulers as having the destiny of the community in their hands and responsible for their welfare. This was certainly the climate of opinion in medieval Europe. High clergymen and monarchs saw themselves as having the well-being of the population in their hands. The institutional power of the medieval ruling class was gradually transferred to the middle class primarily through the institution of property. The authority to give major commands was divorced from hereditary lineage but retained by way of the institution of property.
In the institutional quarrel between the old and new order, the issue was a sociological one of right to class, status, and power, although it was argued in terms of the presumed productivity or nonproductivity of the middle class. In this situation the middle class advanced arguments that justified their right to income in terms of their productivity. Since the middle class won in the end, the argument that money was productive became entrenched in middle class belief systems. Money now conferred on the middle class wealthy the authority and right to give commands that was once limited to the old rulers. The middle class no longer claimed the right to authority in terms of divine will and hereditary rights, but it acquired the power that property ownership possessed under feudalism. So the notion developed to the effect that capital funds were creative. The well being once ascribed to ancient and medieval rulers was transferred to the middle class. The middle class stepped into the shoes of the old rulers. The new institutions decreed that instead of monarchy or nobility entitling one to give commands, property entitled one to give commands. And it was necessary to have saved money or have access to it by other means that one could give major commands. The institutions conferred authority from one to another group. Under the new institutional situation, money was the prerequisite for giving commands, the middle class saw their power as evidence of creative potency. Not unlike the ancient and medieval rulers perception of creative potency they confused an institutional arrangement for ability to "make possible" the rise of industrial society. They fell into the trap of the fallacy of composition. They believed that because the institutions conferred power, that this explained how the industrial system was made possible. They reasoned that what was true for the individual in an institutional context accounted for the general, that what was true of the individual was true of society. This fallacy in folk and economic theory has persisted to the present. This new prosperity code (ideology of the middle class) represented the activities of business entrepreneurs as the dynamic force behind the creation of wealth and, above all, it glorified the thrift of the parsimonious businessman and create a new cultural hero. According to this new code, capital funds accumulation and investment are the creative force in the economy. Thus a new authoritarianism was made to seem normal, rational, and inevitable. This should not be interpreted to mean that the new capitalist ideology justifying a new power system was consciously devised for that purpose.
Economists are accustomed to saying that property is the fruit of productive work, otherwise it is the right of inheritance. It is undoubtedly true that throughout recorded history, most property is a product of tool-skills and labor, but throughout most of that time those who performed the work seldom had the right to benefit from it personally.
The present-day institution of property was inherited from medieval Europe. The latter was inherited from ancient - particularly Roman - civilization and their origins go back to the earliest civilizations and beyond recorded history. Modern property is different from that in medieval times because it has been modified as a result of the enormous differences between an agricultural and industrial economy.
The Modern Corporation
In the industrial economy a major form of organization is the business corporation. The modern corporation is an effective and flexible form of property far better suited to the requirements of complex industrial production than individual proprietorships and partnerships. Its ability to gain access to large sums of money for the purchase of expensive plants and equipment, limited liability of shareholders, potential immortality, and ability to employ specialists are all too well known to require more than mention.
At the same time, the corporation perpetuates many of the characteristics of feudal society. Its structure is one of hierarchy and authority, of superior and subordinate, and in which the superior is the only legitimate authority over the subordinate. A pattern of relations using the skills of many different specialists in an industrial setting might operate more functionally if the relations were more equal and collegial, but the parent-child feudal ideal has proven too tenacious to permit that adjustment in most cases. This preoccupation with hierarchy leads to a distribution of income and other rewards within the bureaucracy deemed appropriate to maintaining a level of expenditures appropriate to that status. Rewards are distributed in the bureaucracy appropriate to one's status - the medieval policy. This creates special problems for many specialists; they must abandon their specialization and enter the managerial hierarchy in order to move up the institutional hierarchy and be seen as successful; in terms of prestige, status, and income. Within broad limits, managerial rewards are not tied directly to the earnings of the corporation. There are unclear limits on the extent to which personal profits are the chief motivation of business managers because maximization of personal profits would conflict with stockholder interests.
The perpetuation of feudal patterns in the corporation generates a great deal of anxiety and insecurity and conflict. Specialists are required to produce products efficiently, which means increased interdependence and cooperation of people of low and high status; higher status persons must depend upon lower status persons. In an hierarchical system, the subordinate, say employee, is dependent upon the superior, say employer. In technological situations, the relationship is one of interdependence; each side has something to offer. Each side gains from cooperation, but inherited practice concentrates legitimate power in the hands of the superior even though he has decreasing ability to do so because of scientific and technological developments.
The hierarchical system tends to thwart the personal goals of many of the people in a corporation. Modern western societies judge success in terms of relative status and prestige determined in terms of wealth. But status and prestige tend to be monopolized by the hierarchy in the modern corporation because it has "inherited the rights and privileges of...the traditionalistic king and his nobility, and the entrepreneurial owner-manager. Consequently, to be socially defined as 'successful' in our culture, requires the accumulation of wealth and honorific status."
The corporation perpetuates the characteristics of feudal society and has carried over into modern times many of the inherited rights and privileges of monarchs and the nobility. The medieval notion of sovereignty has been endowed and "conferred" upon private property and supports the hierarchical form of organization in the corporation. The head of the corporation has the ultimate authority in the chain of command. He or she can veto the commands of all the lower ranks. Conditions exist within most corporations, which create exaggerated perceptions for the need for an authority figure. The relationship of the superior to the subordinate within the corporation has many of the aspects of the adult/child relationship.
Imagination and the Source of Myth
Imagination is a distinctly human proclivity to make things up and constitutes an enduring feature of life. So persistent and pervasive is this bent that it must almost be considered an instinctual feature of human life. The use of imagination is found in the presence of uncertainty. Typically, when confronted with a deficiency in knowledge or understanding, the behavior is to make something up. The fabrication of explanations, sometimes out of thin air, is not restricted in its impact to the ceremonial aspect of human behavior. Imagination influences the instrumental aspect of behavior also, but here little will be said of this latter influence.
All cultures both past and present have powerful myth and legend creating capacities. This is partly because they seek explanations for things they do not understand. All kinds of imagined casual linkages are established on the basis of myth and superstition because no other adequate or psychologically acceptable explanation exists. This explains the origin of myths; we simply we make them up. The fertile imagination that can dream up E=MC2, can also dream up a river god. It is not surprising that the myths usually pertain to instrumentally important aspect of human activity, because even the imagination of the individual can not imagine what it can not perceive. The trouble with the ceremonial imagination is that since it was never based on any demonstrable cause and effect it can not (usually) be "disproven" by this means.
Foster's view of institutional adjustment (and what I will call social adjustment) depends in part upon an individual psychology of perception of the objective circumstances of possible achievement. When he (Foster) says that the principle of technological determination is the impetus to adjustment I read him to mean that there must be a perception of what can be done as opposed to what is now being done. This is a critical part of instrumental efficiency. No argument is necessary as to the fact that social conditioning, both of a technological and an institutional character, are part of the existential reality of the individual, this it seems now goes without saying. But, only individuals can perceive, societies can not. The psychology of perception means that behavior is the control of perception. The ability to control perception and adjust it to meet the contours and requirements of instrumental function depends upon the relative strength and depth of the layers of ceremonial imagination and practice that are heaped on top of the instrumental capability. If enough of these can be peeled back an adjustment toward a more instrumental efficiency is possible, but, there is no guarantee that such adjustments will occur. Just how close that perception is to the functional or instrumental reality is a critical feature in the adjustment process. There is of course no guarantee that perceptions will be in accord with instrumental reality. Adjustments in perception may miss the mark sometimes by a large measure. And the instrumental reality may be seen as unacceptable because it will cause too significant a change in the status relations of the community5. Whatever may be the outcome, a prerequisite to institutional adjustment is the perception of a gap between what is instrumentally possible and what is being done6.
Means-Ends-Continuum
The evolutionary method incorporates what is known as the means-ends continuum. This continuum is based on the idea that there is no final end toward which the economy is moving. Rather it moves via an endless succession of means, each of which becomes an end. This is a continuous process. When a problem occurs its solution becomes an end-in-view. Means to solving this problem are evaluated and selected. If the problem is solved life does not stop but, armed with new knowledge from the previous problems, goes on to confront other problems.
The means-ends continuum based as it is on the idea that there is no final end and that means become ends is a deceptively simple idea. It can have very complex implications. First, how are means chosen, especially when there are several ways to solve the problem. Second, once chosen how is it known if they are workable. And third, if they are not workable what is to be done about it. All of these questions involve not only how we know, but what is known, and what is valued. In the case of stopping at the stoplight the problem is relatively simple. To stop the brakes are applied. But how was it "known" that this would in fact stop a car? One could just as well have put their foot on the accelerator, or on the dash, or out the window. The answer is of course that it was known by experiment and learned by trial and error. It is also known that the only reliable way to stop is to put on the brakes. Nobody would seriously entertain praying as a means of stopping a car -- at least they would not actually use it very long. The selection of means is based on what is known and how it is known. This selection process is based not only on the "immediate" consequences of a choice, but also the future consequences. Means, as a way of arriving at an end, cannot be separated from that end since the very arrival at an end has consequences for where we will be able to go once we have arrived. Those who advocate the position that the end justifies the means do so at risk of never getting anywhere and almost certainly not where they intended. The continuum of means and ends is based on attempting to understand the consequences that stem from choosing alternative means. And the process of selecting these means is built on the proposition that continuity of the life process is important and valuable. But how is it to be known which means will yield which consequences? Institutionalists think that individuals and groups (societies) base these selections on two different ways of knowing and doing. One way is based on experiment, science, and empirical evidence, it is technological. The other is based on superstition, myth and belief in supernatural forces, it is institutional. Both ways however posit a fact based cause and effect relationship. Nobody believes in supernatural forces without believing in the "fact" of those forces. Those who advocate prayer as a means of stopping a car, think there is a cause and effect relationship, just as do those who advocate the use of brakes. Or as one pundit put it, those who have never seen a dog except in pursuit of a rabbit, may think the rabbit is the "cause" of the dog.
Institutions offer means to ends that are without causal or experimental linkages. Thus selection of an institutional means has little hope of solving a problem in a way that permits continuity or even of solving the problem at all. Excessive government spending is usually imagined to be the cause of inflation and is reduced to slow the rate of price increases. If this ever were the cause of inflation such a means (reducing spending) would be a genuine candidate to alleviate inflation, however if excessive government spending is not the cause, but only the ideologically based rationalization then reducing spending has only little more chance of slowing price increases than praying would to stop cars or human sacrifice to control the rise and fall of a river.
Are Some Values "Better" Than Others
At long last we arrive at the question of valuation and values. Before going further let us state two propositions. First, instrumental value theory is incompatible with cultural relativism. Second, and directly from Dewey, Judgments about values are judgments about the conditions and the results of experience objects; judgments about which should regulate the formation of our desires, affections and enjoyments. The purpose of the long and torturous discussion of institutions has been to relate the intellectually unsatisfactory character of this aspect of culture. Intelligent choice requires another basis. Without it choices about what is valuable and good lapse into provincialism. The relativist position would avow that whatever the cultural choices may be they can not be judged in relation to other past or present cultural choices. Presumably, the selection of what is liked is beyond question and even if it results in choices that hamper or make impossible continuity they are beyond judgment. Foolish choices are simply foolish choices. But a fool and his money are soon parted and a fool and his life are as well. The critical point here is that the instrumental character of the means-ends continuum will tolerate but small deviations. Foolish choices beget a stream of consequences that will in the extreme bring the life process to a halt. Attachment to and association with institutions that have become imbecilic may take a long time to display the full force of the undesirable consequences, but these consequences will eventually affect the continuity of the life process. Unfortunately one can not know in advance what will be the long term effects of valuations. This is why instrumental valuation is superior to institutional valuation. The former is inherently experimental, self-correcting if conducted with intelligence, and creative of change. Instrumentally based judgments and values owe allegiance to no one, are not emotionally loaded and are based on a "let's try it and see" attitude. Institutional valuation and values are inherently dogmatic, self-perpetuating, and resistant to change, any change. They owe allegiance to the past myths and legends, vested interests, and they are emotionally loaded by prejudice, chauvinism, provincialism and superstition. They are based on a "we mus'ent change what has been true" since antiquity. The entire discussion and theory of institutions has been directed at this point.
When the cultural relativism view is adopted there is no place for the instrumental evaluation of institutions. There is in effect no place for an instrumental theory of value . "When theories of value do not afford intellectual assistance in framing ideas and beliefs about values that are adequate to direct action, the gap must be filled by other means. If intelligent method is lacking, prejudice, the pressure of immediate circumstance, self-interest and class-interest, traditional customs, institutions of accidental historic origin, are not lacking, and they tend to take the place of intelligence."
This is not to be interpreted to read that the moral conflicts are a conflict between good and evil. This is dogmatism. All genuine moral conflicts are based on a conflict of goods. If the institutional theory is to be helpful it is to be understood that choosing between which institutions are to be effected is without possibility. No sane person purposely chooses to believe in one myth over another and to recognize institutions within the context of institutional economics is to see this as the nature of institutions. Thus most conflicts of any importance are conflicts between things which are or have been satisfying, not between good and evil. But to make instrumental judgments the conditions under which the act of judging or liking takes place must be known so that the consequences of that act can be assessed. "Consider the difference between the proposition "That thing has been eaten," and the judgment, "That thing is edible." No knowledge beyond obvious condition of the thing is required for the first statement. But to be able to judge the edibility of the thing requires a knowledge of its interaction with other things so that we can foresee its probable effects when eaten. The more connections and interactions we can ascertain (not imagine) the more we can judge the act.
To the question of whether an instrumental judgment of values within and across cultures is possible and desirable, I would answer yes. As a theoretical matter the aggregate life process (which I take as the material and biological) progresses and stands a better chance of adaptation when an experimental and flexible basis of judgment is used to establish the basis for choice. Intelligence is recommended over ritual and ceremony.
The position derived from cultural relativism is that values are not legitimately subject to appraisal on a comparative basis. No comparison between cultures is possible. If a practice of human sacrifice is part of the value system of a culture no scientific comparison of this with the practice of prayer in another culture is impossible since cross-cultural comparison would require a judgment of the two practices. Some like it hot and some like it cold, and that is all we can say about it.
In contrast to this position I maintain that we are capable of assessing the impact of both valuation and values on the continuum of means and ends and on the life process of the culture.
The instrumental theory of valuation emphasizes
the same kind of human behavior that Veblen called "technological." He
acknowledged that some if not most value judgments are products of misinformation,
mistaken conceptions of causality and tribal beliefs, but not all, as cultural
relativism maintain. Some values are the product of critical ways of knowing,
and by the use of verifiable "instruments and techniques." Our ancestors
who lived tens of thousands of years ago did not know and use the scientific
method of knowing as we understand it today, but part of their knowledge
was the product of trial and error, comparison of results to different
kinds of activities. In their own way they were employing what has since
become known as the scientific method. Institutional values are tribal
specific, limited to their unique tribe, but instrumental values have wide
applicability.