1.2 Institutions as sets of rules and norms
Brett goes further than referring to rules and norms. He talks about ‘sets of rules’ (and by extension he might as well say ‘sets of norms’). This is important, as I indicated in relation to my colleague’s challenge. Institutions – as rules and norms – don’t exist in isolation, but rather can be seen to be connected with each other in any given society.
Douglass North is one important theorist who has promoted this idea. It can be taken too far! One of North’s followers put it like this:
Douglass North, the Nobel Laureate, made clear that institutions are the rules of the game in a society Characteristically, each rule performs a distinct function. But its effectiveness hinges on being complemented and supplemented by others. Together, the rules form a hierarchic structure of mutually supporting directives that influence jointly and can impact decisively the development of nations.
That is taking the idea of the connectedness of institutions too far. Sometimes ‘directives’ are ‘mutually supporting’, sometimes they are not. Nonetheless, rules do overlap, as is better suggested in the following statement:
Social, political and economic institutions overlap and affect each other – and they seldom relate to isolated spheres of human action and interaction. Change in one institutional sphere will impact on other institutional spheres.
This valuably suggests that when looking at institutions with a view to changing them – changing the rules and norms – you need to look for these connections. You need in fact to see the whole institutional landscape in which the change will take place.
As Brett indicates, the rules and norms are not necessarily written down: norms very rarely are. Some rules will be, but in all these cases – and in any others – written rules will be complemented with unwritten ones, and those unwritten rules can be the ones that act most powerfully on us as ‘incentives or sanctions’.
And, of course, different people will interpret the rules in different ways – and some will break them or work outside them.
You might like to think about and comment on these last two points, perhaps in the light of the (I think) useful idea I cited above of institutions as the ‘rules of the game’. But now I want to pick up another key point raised in the statement from Brett: the relationship between ‘institutions’ and ‘organisations’.