The following is a (long) review of Francesco Guala’s recent book Understanding Institutions. The Science and Philosophy of Living Together (Princeton University Press, 2016).
Twenty years ago, John Searle published his influential account of the nature of institutions and institutional facts (Searle 1995). Searle’s book has been a focal point for philosophers and social scientists interested in social ontology and its claims and arguments continue to be hotly disputed today. Francesco Guala, a professor at the University of Milan and a philosopher with a strong interest in economics, has written a book that in many ways can be considered both as a legitimate successor but also a thoroughly-argued critique of Searle’s pioneering work. Understanding Institutions is a compact articulation of Guala’s thoughts about institutions and social ontology that he has developed in several publications in economic and philosophy journals. It is a legitimate successor to Searle’s book as all the central themes in social ontology that Searle discussed are also discussed by Guala. But it is also a strong critique of Searle’s general approach to social ontology: while the latter relies on an almost complete (and explicit) rejection of social sciences and their methods, Guala instead argues for a naturalistic approach to social ontology combining the insights of philosophers with the theoretical and empirical results of social sciences. Economics, and especially game theory, play a major role in this naturalistic endeavor.
The book is divided into two parts of six chapters each, with an “interlude” of two additional chapters. The first part presents and argues for an original “rules-in-equilibrium” account of institutions that Guala has recently developed in several articles, some of them co-authored with Frank Hindriks. Two classical accounts of institutions have indeed been traditionally endorsed in the literature. On the institutions-as-rules account, “institutions are the rules of the game in a society… the humanly devised constraints that shape human interactions” (North 1990, 3-4). Searle’s own account in terms of constitutive rules is a subspecies of the institutions-as-rules approach where institutional facts are regarded as being the products of the assignment of status function through performative utterances of the kind “this X counts as Y in circumstances C”. The institutions-as-equilibria account has been essentially endorsed by economists and game theorists. It identifies institutions to equilibria in games, especially in coordination games. In this perspective, institutions are best seen as devices solving the classical problem of multiple equilibria as they select one strategy profile over which the players’ beliefs and actions converge. Guala’s major claim in this part is that the relevant way to account for institutions calls for the merging of these two approaches. This is done through the key concept of correlated equilibrium: institutions are figured out as playing the role of “choreographers” coordinating the players’ choices on the basis of public (or semi-public) signals indicating to each player what she should do. Institutions then take the form of lists of indicative conditionals, i.e. statements of the form “if X, then Y”. Formally, institutions materialize as statistically correlated patterns of behavior with the equilibrium property that no one has an interest to unilaterally change her behavior.
The motivation for this new approach follows from the insufficiencies of the institutions-as-rules and institutions-as-equilibria accounts but also to answer fundamental issues regarding the nature of the social world. Regarding the former, it has been widely acknowledged that one the main defect of the institutions-as-rules is that it lacks a convincing account of the reason of why people are motivated in following rules. The institutions-as-equilibria approach for its part is unable to account for the specificity of human beings regarding their ability to reflect over the rules and the corresponding behavioral patterns that are implemented. Playing equilibria is far from being human specific, as evolutionary biologists have recognized long ago. However, being able to explain why one is following some rule or even to communicate through a language about the rules that are followed are capacities that only humans have. There are also strong reasons to think that the mental operations and intentional attitudes that sustain equilibrium play in human populations are far more complex than in any other animal population. Maybe the most striking result of this original account of institutions is that Searle’s well-known distinction between constitutive and regulative rules collapses. Indeed, building on a powerful argument made by Frank Hindriks (2009), Guala shows that Searle’s “this X counts as Y in C” formula reduces to a conjunction of “if X then Y” conditionals corresponding to regulative rules. “Money”, “property” or “marriage” are theoretical terms that are ultimately expressible through regulative rules.
The second part of the book explores the implications of the rules-in-equilibrium account of institutions for a set of related philosophical issues about reflexivity, realism and fallibilism in social ontology. This exploration is done after a useful two-chapter interlude where Guala successively discusses the topics of mindreading and collective intentionality. In these two chapters, Guala contends, following the pioneering work of David Lewis (1969), that the ability of institutions to solve coordination problems depends on the formation of iterated chains of mutual expectations of the kind “I believe that you believe that I believe…” and so on ad infinitum. It is suggested that the formation of such chains is generally the product of a simulation reasoning process where each player forms expectations about the behavior of others by simulating their reasoning, on the assumption that others are reasoning like her. In particular, following the work of Morton (2003), Guala suggests that coordination is often reached through “solution thinking”, i.e. a reasoning process where each player first asks which is the most obvious or natural way to tackle the problem and then assumes that others are reasoning toward the same conclusion than her. The second part provides a broad defense of realism and fallibilism in social ontology. Here, Guala’s target is no longer Searle as the latter also endorses realism (though Searle’s writings on this point are ambiguous and sometimes contradictory as Guala shows) but rather various forms of social constructionism. The latter hold that the social realm and the natural realm are intrinsically different because of a fundamental relation between how the social world works and how humans (and especially social scientists) reflect on how it works. Such a relationship is deemed to be unknown to the natural sciences and the natural world and therefore, the argument goes, “social kinds” considerably differ from natural kinds. The most extreme forms of social constructionism hold the view that we cannot be wrong about social kinds and objects as the latter are fully constituted by our mental attitudes about them.
The general problem tackled by Guala in this part is what he characterizes as the dependence between mental representations of social kinds and social kinds. The dependence can be both causal and constitutive. As Guala shows, the former is indeed a feature of the social world but is unproblematic in the rules-in-equilibrium account. Causal dependency merely reflects the fact that equilibrium selection is belief-dependent, i.e. when there are several equilibria, which one is selected depends on the players’ beliefs about which equilibrium will be selected. Constitutive dependency is a trickier issue. It assumes that an ontological dependence holds between a statement “Necessarily (X is K)” and a statement “We collectively accept that (X is K)”. For instance, on this view, a specific piece of paper (X) is money (K) if and only if it is collectively accepted that this is the case. It is then easy to see why we cannot be wrong about social kinds. Guala claims that constitutive dependence is false on the basis of a strong form of non-cognitivism that makes a radical distinction between folk classifications of social objects and what these objects are really doing in the social world: “Folk classificatory practices are in principle quite irrelevant. What matters is not what type of beliefs people have about a certain class of entities (the conditions they think the entities ought to satisfy to belong to that class) but what they do with them in the course of social interactions” (p. 170). Guala strengthens his point in the penultimate chapter building on semantic externalism, i.e. the view that meaning is not intrinsic but depends on how the world actually is. Externalism implies that the meaning of institutional terms is determined by people’s practices, not by their folk theories. An illustration of the implication of this view is given in the last two chapters through the case of the institution of marriage. Guala argues for a distinction between scientific considerations about what marriage is and normative considerations regarding what marriage should be.
Guala’s book is entertaining, stimulating and thought-provoking. Moreover, as it is targeted to a wide audience of social scientists and philosophers, it is written in plain language and devoid of unnecessary technicalities. Without doubt, it will quickly become a reference work for anyone believing that naturalism is the right way to approach social ontology. Given the span of the book (and is relatively short length – 222 pages in total), there are however many claims that would call for more extensive arguments to be completely convincing. Each chapter contains a useful “further readings” section that helps the interested reader to go further. Still, there are several points where I consider that Guala’s discussion should be qualified. I will briefly mention three of them. The first one concerns the very core of Guala’s “rules-in-equilibrium” account of institutions. As the author notes himself, the idea is not wholly new as it has been suggested several times in the literature. Guala’s contribution however resides in his handling of the conceptual view that institutions are both rules and equilibria with an underlying game-theoretic framework that has been explored and formalized by Herbert Gintis (2009) and even before by Peter Vanderschraaf (1995). Vanderschraaf has been the first to suggest that Lewis’ conventions should be formalized as correlated equilibria and Gintis has expanded this view to social norms. By departing from the institutions-as-equilibria account, Guala endorses a view of institutions that eschews the behaviorism that characterizes most of the game-theoretic literature on institutions, where the latter are simply conceived as behavioral patterns. The concept of correlated equilibrium indeed allows for a “thicker” view of institutions as sets of (regulative) rules having the form of indicative conditionals. I think however that this departure from behaviorism is insufficient as it fails to acknowledge the fact that institutions also rely on subjunctive (and not merely indicative) conditionals. Subjunctive conditionals are of the from “Were X, then Y” or “Had X, then Y” (in the latter case, they correspond to counterfactuals). The use of subjunctive conditionals to characterize institutions is not needed if rules are what Guala calls “observer-rules”, i.e. devices used by social scientists to describe an institutional practice. The reason is that if the institution is working properly, we will never observe behavior off-the-equilibrium path. But this is no longer true if rules are “agent-rules”, i.e. devices used by the players themselves to coordinate. In this case, the players must use (if only tacitly) counterfactual reasoning to form beliefs about what would happen in events that cannot happen at the equilibrium. This point is obscured by the twofold fact that Guala only considers simple normal-form games and does not explicitly formalize the epistemic models that underlie the correlated equilibria in the coordination games he discusses. However, as several game theorists have pointed out, we cannot avoid dealing with counterfactuals when we want to account for the way rational players are reasoning to achieve equilibrium outcomes, especially in dynamic games. Avner Greif’s (2006) discussion of the role of “cultural beliefs” in his influential work about the economic institutions of the Maghribi traders emphasizes the importance of counterfactuals in the working of institutions. Indeed, Greif shows that differences regarding the players’ beliefs at nodes that are off-the-equilibrium path may result in significantly different behavioral patterns.
A second, related point on which I would slightly amend Guala’s discussion concerns his argument about the unnecessity of public (i.e. self-evident) events in the generation of common beliefs (see his chapter 7 about mindreading). Here, Guala follows claims made by game theorists like Ken Binmore (2008) regarding the scarcity of such events and therefore that institutions cannot depend on their existence. Guala indeed argues that neither Morton’s “solution thinking” nor Lewis’ “symmetric reasoning” rely on the existence of this kind of event. I would qualify this claim for three reasons. First, if public events are defined as publicly observable events, then their role in the social world is an empirical issue that is far from being settled. Chwe (2001) has for instance argued for their importance in many societies, including modern ones. Arguably, modern technologies of communication make such events more common, if anything. Second, Guala rightly notes in his discussion of Lewis’ account of the generation of common beliefs (or common reason to believe) that common belief of some state of affairs or event R (where R is for instance any behavioral pattern) depends on a state of affairs or event P and on the fact that people are symmetric reasoners with respect to P. Guala suggests however that in Lewis’ account, P should be a public event. This is not quite right as it is merely sufficient for P to be two-order mutual belief (i.e. everyone believes P and everyone believes that everyone believes P). However, the fact that everyone is a symmetric reasoner with respect to P has to be commonly believed (Sillari 2008). The issue is thus what grounds this common belief. Finally, if knowledge and belief are set-theoretically defined, then for any common knowledge event R there must be a public event P. I would argue in this case that rather than characterizing public events in terms of observability, it is better to characterize them in terms of mutual accessibility, i.e. in a given society, there are events that everyone comes to know or believe even if she cannot directly observe them simply because they are assumed to be self-evident.
My last remark concerns Guala’s defense of realism and fallibilism about social kinds. I think that Guala is fundamentally right regarding the falsehood of constitutive dependence. However, his argument ultimately relies on a functionalist account of institutions: institutions are not what people take them to be but rather are defined by the functions they fulfill in general in human societies. To make sense of this claim, one should be able to distinguish between “type-institutions” and “token-institutions” and claim that the functions associated to the former can be fulfilled in several ways by the latter. Crucially, for any type-institution I, the historical forms taken by the various token-institutions I cannot serve as a basis to characterize what I is or should be. To argue for the contrary would condemn one to some form of traditionalism forbidding the evolution of an institution (think of same-sex marriage). The problem with this argument is that while it may be true that the way people represent a type-institution I at a given time and location through a token-institution I cannot define what I is, it remains to determine how the functions of I are to be established. Another way to state the problem is the following: while one (especially the social scientist) may legitimately identify I with a class of games it solves, thus determining its functions, it is not clear why we could not identify I with another (not necessarily mutually exclusive) class of games. Fallibilism about social kinds supposes that we can identify the functions of an institution but is this very identification not grounded on collective representations and acceptance? If this is the case, then some work remains to be done to fully establish realism and fallibilism about social kinds.
Binmore, Ken. 2008. “Do Conventions Need to Be Common Knowledge?” Topoi 27 (1–2): 17.
Chwe, Michael Suk-Young. 2013. Rational Ritual: Culture, Coordination, and Common Knowledge. Princeton University Press.
Gintis, Herbert. 2009. The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences. Princeton University Press.
Greif, Avner. 2006. Institutions and the Path to the Modern Economy: Lessons from Medieval Trade. Cambridge University Press.
Hindriks, Frank. 2009. “Constitutive Rules, Language, and Ontology.” Erkenntnis 71 (2): 253–75.
Lewis, David. 1969. Convention: A Philosophical Study. John Wiley & Sons.
Morton, Adam. 2003. The Importance of Being Understood: Folk Psychology as Ethics. Routledge.
North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge University Press.
Searle, John R. 1995. The Construction of Social Reality. Simon and Schuster.
Sillari, Giacomo. 2008. “Common Knowledge and Convention.” Topoi 27 (1–2): 29–39.
Vanderschraaf, Peter. 1995. “Convention as Correlated Equilibrium.” Erkenntnis 42 (1): 65–87.