FC: Cher Douglass, pourriez vous nous décrire votre vision du "changement institutionnel"? Est-ce une vision darwinienne du changement?
DN: Modeling the process of change must derive its inspiration from evolutionary biology but in contrast to Darwinian theory in which the selection mechanisms are not informed by beliefs about the eventual consequences, human evolution is guided by the perceptions of the players in which choices—decisions—are made in the light of these perceptions with the intent of producing outcomes downstream that will reduce the uncertainty of the organizations—political, economic, and social—in pursuit of their goals.
Institutional change is a deliberate process shaped by the perceptions of the actors about the consequences of their actions.
The immediate vehicle by which the actors attempt to shape their environment is by altering the institutional framework in order to improve their (and their organizations’) competitive position.
FC; Pourriez vous décrire en seulement quelques points ce processus (les lecteurs de ce blog étant, en moyenne, des fainéants ;-))?
DN: Let me state five propositions that describe this process:
- The continuous interaction between institutions and organizations in the economic setting of scarcity and hence competition is the key to institutional change.
- Competition forces organizations continually to invest in new skills and knowledge to survive. The kind of skills and knowledge individuals and their organizations acquire will shape evolving perceptions about opportunities and hence choices that will incrementally alter institutions.
- The institutional framework provides the incentive structure that dictates the kinds of skills and knowledge perceived to have the maximum payoff.
- Perceptions are derived from the mental constructs of the players.
- The economies of scope, complementarities, and network externalities of an institutional matrix make institutional change overwhelmingly incremental and path dependent.
- Institutions are the rules of the game—both formal rules, informal norms and their enforcement characteristics. Together they define the way the game is played. Organizations are the players. They are made up of groups of individuals held together by some common objectives. Economic organizations are firms, trade unions, cooperatives, etc.; political organizations are political parties, legislatures, regulatory bodies; educational organizations are universities, schools, vocational training centers. The immediate objective of organizations may be profit maximizing (for firms) or improving reelection prospects (for political parties); but the ultimate objective is survival because all organizations live in a world of scarcity and hence competition.
- New or altered opportunities may be perceived to be a result of exogenous changes in the external environment which alter relative prices to organizations, or a consequence of endogenous competition among the organizations of the polity and the economy. In either case the ubiquity of competition in the overall economic setting of scarcity induces entrepreneurs and the members of their organizations to invest in skills and knowledge. Whether through learning by doing on the job or the acquisition of formal knowledge, improving the efficiency of the organization relative to that of rivals is the key to survival.
- [...] There is no implication in proposition 2 of evolutionary progress or economic growth—only of change. The institutional matrix defines the opportunity set, be it one that makes income redistribution the highest pay-off in an economy or one that provides the highest payoffs to productive activity.While every economy provides a mixed set of incentives for both types of activity, the relative weights (as between redistributive and productive incentives) are crucial factors in the performance of economies. The organizations that come into existence will reflect the payoff structure. More than that, the direction of their investment in skills and knowledge will equally reflect the underlying incentive structure. If the highest rate of return in an economy comes from piracy we can expect that the organizations will invest in skills and knowledge that will make them better pirates.
- The key to the choices that individuals make is their perceptions about the payoffs, which are a function of the way the mind interprets the information it receives. [...] The implication of the foregoing paragraph is that individuals from different backgrounds will interpret the same evidence differently; they may, in consequence, make different choices [...] The result is that multiple equilibria are possible due to different choices by agents with identical tastes.
FC: Pouvez vous revenir sur ce processus d'apprentissage qui est central dans cette vision des institutions.
[...] Humans attempt to reduce that uncertainty (or convert it into risk) by learning. The cumulative learning of a society embodied in language, beliefs, myths, ways of doing things—in short the culture of a society—not only determines societal performance at a moment of time but through the way in which it constrains the choices of the players contributes to the nature of the process through time.
Humans scaffold both the mental models they possess—belief systems—and the external environment—institutions. The focus of our attention, therefore, must be on human learning, on what is learned and how it is shared among the members of a society, on the incremental process by which the beliefs and preferences change through time, and on the way in which they shape the performance of economies through time.
[...] Equally crucial are the policies that we enact to alter the performance of an economy. Even when we have a “correct” understanding of the economy and the (more or less) “correct” theory about its operation, the policies at our disposal are very blunt instruments. They consist of alterations in the formal rules only, when in fact the performance of an economy is an admixture of the formal rules;
the informal norms, and their enforcement characteristics. Changing only the formal rules will produce the desired results only when the informal norms that are complementary to that rule change and enforcement is either perfect or at least consistent with the expectations of those altering the rules.
FC: Certes les règles formelles ne font pas tout...Pensez vous que l'Histoire et les expériences passées peuvent aider à l'émergence d'institutions qui permettent le développement? En bref, quelle est la place du temps dans cette construction?
[...] time is important because it is the dimension in which human learning occurs and there is no implication in the foregoing brief description of the process of learning that suggests that we get it right. Indeed throughout history we have gotten it wrong far more often than we have gotten it right. The rise and fall of communism in the twentieth century is only a recent illustration. It is probably correct that if “reality” stayed constant the feedback from the policies we enacted would gradually lead us to get it right, but change and therefore persistent uncertainty is our lot which guarantees that we will continue to get it wrong at least part of the time.
[...] Let me conclude by talking again about time. [...] it is clear that change is an ongoing continuous affair and that typically our institutional prescriptions reflect the learning from past experience. But there is no guarantee that the past experiences are going to equip us to solve new problems. Indeed an historic dilemma of fundamental importance has been the difficulties of economies shifting from a political economy based on personal exchange to one based on impersonal exchange. An equally wrenching change can be the movement from a “command” economy to a market economy. In both cases the necessity to restructure institutions—both economic and political—has been a major obstacle to development; it still is the major obstacle for third world and transition economies. The belief system that has evolved as a result of the cumulative past experiences of a society has not equipped the members to confront and solve the new problems.
FC; Merci Doug, c'est terriblement d'actualité.
Nota Bene: fake interview obviously, extraits de D North "Institutions and the Performance of Economies over Time" dans le Handbook of New Institutional Economics (ed Ménard et Shirley) de 2005.