DEFINING INSTITUTIONS AS RULES TOWARDS A GENERAL THEORY OF

INSTITUTIONS.1

Esteban Ruizponce Madrid

Las instituciones son vida humana

objetivada, heterónoma, que se

independiza de sí.

Luis Recasens2

Introduction

One of the main problems faced by students of institutions seems to be the general

conceptual confusion about its nature. This confusion is evidentiated by the

ambiguity in the definition of terminological instruments and concepts, due in part

to the multiplicity of methodological approaches and theoretical perspectives used

in studying institutions, partly due to the general lack of terminological and

conceptual systematization observed in the political science.

This paper offers a proposal for a terminological and conceptual

systematization towards the building of a general theory of institutions. Originally

imagined as a claim for legal institutionalism,3 the paper ended up by proposing the

concept of rule – presented as a pattern of regularity – as the basic unit for

analysis for a theory of institutions. The basic idea is that institutions are nothing

else than rules –or better approached- systems of rules. The paper claims that a

reconceptualization of ideas such as “rule”, “norm”, “law” can serve for clarifying

our understanding of institutions, solving semantic problems and constructing

building blocks towards a more precise theoretical framework.

Although recognizing that genealogical, functional or teleological

approaches could complement the proposed idea, this paper is exclusively focused

1 De Legibus, Review of The Harvard Law School Association of Mexico, A.C. Year III, Number 3. México, 2005. Págs. 110 2 Luis Recasens – Sinches, Filosofía del Derecho, Editorial Porrúa, México, 1996. Free translation

from Spanish: “Institutions are objectivized human life, heteronomous existence that independizes from itself”. 3 I had a first approximation to this idea on my LL. M. thesis: Alternative Design of Legal Institutions

to Promote Politcal Development under the supervision of Professor Unger. Harvard Law School, 1994.

on the building of concepts. It is therefore and effort for isolating the essence of

institutions at the ontological level. The main goal is to build a precise definition of

the object of inquiry. However, such task required foundational theoretical

developments, conceptual comparisons and a proposal for classification that are

offered as building blocks for constructing a general theory of institutions that are

offered as building blocks for constructing a general theory of institutions, that can

incorporate systematically the wide of institutions, that can incorporate

systematically the wide range of diffuse concepts and current perspectives in an

ordered framework.

Notwithstanding then its importance, questions about the origin of

institutions, and then its functioning within particular contexts or their products are

not matter of this study. Rather, its aim is one of ordering ideas under a consistent

logic paradigm to produce clarity, precision and systematization. Although the

contribution of the paper intends to be far beyond the solution to the semantic

problems of the topic, a simple ordination of currently existing concepts into a

systematic framework seems to be valuable enough to justify the research.

However, the paper can be considered as a first step in developing the intellectual

apparatus – general theory- for a new conceptualization of the social phenomena

through “institutions”.

An additional contribution, intended to be specially useful for the seminar´s

feedback is the intentional selection of “alternative literature” mainly originated in

sources of Legal Theory, State Theory and Philosophy. The particular goal here is

to complement the bibliography of the very interesting and useful approaches of

the three “new institutionalisms” in current political analysis. Although some

authors were inescapable, the paper preferably presents as sources the references

of texts normally omitted by American literature, under the assumption that such

“import” would enrich and complement the dominant view of the topic.

The paper is divided in three chapters. The first is devoted to set the

foundational paradigm that justifies the election of the concept “rule” as basic unit

of analysis. The second develops a consistent extrapolation of the concept “rule”

into a systematic exposition of “patterns of regularity”. This chapter offers a

classification when developing the argument for identifying institutions as complex,

abstract and autonomous systems of rules. It also builts a distinction between the

concepts of “institutions” and “organizations” and explains the relevance of the

level of formality as a precise criteria for the classification of norms. The final

chapter accommodates the basic building blocks for a general theory of institutions

as rules, preparing the field for a synthetic definition of “institution”, that is offered

as conclusion.

I. “RULES” AS THE UNIT OF ANALYSIS.

1.1 Parmenides: the Foundation Stone.

Although interesting by its implications, conclusions and practical consequences,

the central idea presented here is a theoretical apparatus. For building of a general

theory of “institutions as systems of social rules” it is indispensable to begin at a

foundational level. Let´s take as a starting point and original ideal derived from the

Greek concept of ĸοσμοσ,4 cosmos or “order”.

The Greeks had a high conception of the universe as “order”. They imagined

the world as a set of subjacent rules overlapping at different dimensions of

existence: rules for gods, rules for men, rules for things and rules for these rules.

Their intuition signaled everything with and underlying rule. For Pitagoras of

Samos, the numbers and its rules were the key behind music, architecture and life.

For Heraclitus of Efeso, the rules of permanent change were the secret of

existence and for Parmenides of Elea, the logical principles of identity and non-

contradiction and his dual conception of the world as sensible and intelligible were

the basic ruling of the divine code of the cosmos.

From these conceptualizations, Parmenides´ idea of the duality of the world

better serves as initial stone for introducing the thesis of this paper: Parmenides

practically invented the concept of concept. He argued against Heraclitus that

4 Manuel García Morente. Lecciones Preliminares de Filosofía, Editores Mexicanos Unidos 1978

p.80

behind the apparent chaos of the sensible world in permanent change, it existed

and underlying order defined by a unique, eternal, and unchangeable being. While

things appear to our senses as multiple, dynamic and chaotic, human

understanding opposes to all phenomena the basic principles derived from logic.

While the sensible world is out of the reach of human understanding and appears

to the senses as the kingdom of chaos, the intelligible world the reach of human

knowledge and appears to the mind as the kingdom of cosmos. The sensible world

is the one that we see and we touch but that we cannot understand. On the other

hand Parmenides proposes a world that we don´t see and we don´t touch, but that

we can understand, because is subject to the rules of logic: identity and not-

contradiction. This is the intelligible world, the world, the world concepts, the world

of thinking. Parmenides concludes –paradoxically- that the latter is the authentic

one in the human experience. The former is just an illusion caused by our

imperfect senses. The great corollary of this philosophy is that the essential

properties of the being are the same essential properties of thinking. All can be

summarized in the axiom “One and the same thing is being and thinking”. Elea´s

school is the remote precedent of both Rene Descartes´ rationalism and Hegel´s

and Kant´s idealism where “all real rational and all rational is real”. This is the

philosophical premise that we recognize as a root of this paper´s proposal to wich

we now turn.

1.2 Rules as Understanding.

The human mind cannot understand or learn from chaos. There is a frame in the

mind that makes “order” on things to be assimilated as knowledge. Thinking is

organizing things in the mind. First, elaborating unities of analysis by creating

concepts, as general abstractions from reality. Second, by inter-relating these

concepts with one another. Third, by creating new concepts from this associations.

Fourth, by preparing a frame for channeling new information and fifth by

confronting new empirical data.

A relevant implication arises: all human knowledge is ordered according to

some rules to be internalized as human understanding.

1.3. The Unit of Analysis: Rules as Patterns of Regularity.

Once the drafted of this rapid synthesis of a theory of mind allow us to assume as

valid the paradigm of a logic “order” in the “real” intelligible world of concepts, a

relevant implication arises: all human knowledge is ordered according to “rules”. All

reality has to be ordered by “rules” to be accessible by human understanding.

Furthermore, rules are the raw matter for interpretation of the world. But an

additional element has to be considered: rules can serve as “conceptual atoms” in

the building of theory. The main objective of this paper is to deal with a clarification

of basic concepts towards a general theory of institutions. This paper proposes the

use of the concept of “rule” as the social level as the unit of analysis for a better

understanding of institutions as sources for interpretation of regularity and

predictability of human conduct.

Besides the impressive discovery of some Rules of Functioning in the Mind.

As factor of thinking – that seems to close the circle for rationalists – it is relevant

for this papers to focus on the effects side of the paradigm: the possibility of a

general theory of rules as consequence of thinking. The main point is to prove the

validity of the concept of “rule” as “basic unit of analysis” for developing a “general

theory of institutions”.

The syllogism goes as follows: First premise for anything to be understood

by humankind it has to be ordered. Such ordination causes a framework. Such a

framework is structured by rules. Second premise: Rules are conceptual unit of

analysis that can be integrated into a wider scheme. Such as scheme shall be

constructed as a systematic container. The container is structured in sets of rules.

Final conclusion: A systematic understanding of the concept of “rules” and rules

ordered as sets can help us in understanding reality. Reality can be analytically

fragmented at its social sphere.

II. ARTICULATING THE CONCEPT OF “RULES” INTO “INSTITUTIONS”.

2.1.1. LAWS OF NATURE.

Precisely because the main focus of the paper is within the scope of the social

sciences, our generalizations about “rules” begin with the analysis of “Natural

Laws”. The point pursued by including rules that don´t lead to the creation of

institutions is to evidentiate the application of the “principle of order” both to

observed and intended patterns of regularity.

Eluding the large epistemological discussion deserved by the

conceptualization of “Natural Laws” can be offered as a clear example of so called

“Natural Laws” can be offered as a clear example of the application of the idea that

concepts reshape the world, for making it accessible to human understanding, and

that such ordering is produced by using “rules” as unit of analysis.

Perhaps contrary to commons-sense, this paper claims that “Natural Laws”

are not in “nature”, but in our minds that interpreted some facts from the world –

natural phenomena in this case- as ordered systematic patterns of regularity.

Obviously it can be said that the original data comes from the sensorial world

where the rules are “embedded”. This is not the point of discussion. Of course the

rules are embedded in nature, but the claim for this argument is that they become

acting “laws” just up to the moment that human mind extracts from them some

sense, by abstracting the concepts, isolating the phenomena, and relating it with

prior information towards the construction a systematized new body of knowledge,

oriented no only to interpret, but also to transform reality.

The central point of the argument would rather be that the intellectual

apparatus that is built by the human mind, further develops itself independently of

its original empirical cause, growing both at the level of abstraction and at the level

of applied theory that feedbacks reality.

Although the building of these rules is normally assumed under the idea of

“discovering” rather than under the one of “invention”, it is clear that the

constructed intellectual apparatus is a new autonomous creation, independent from

its sensorial origin. The key argument in defending this eccentric view if offered by

the creation not only of before-unexistan concepts, but also by the re-creation to

the world with before-unexistan realities: by systematizing the “rules” and

developing “frameworks”, humankind has acquired the capability of transforming

the world by re-shaping reality. All technological advancement is offered as

evidence of this “added value” created through “systems of rules” – concerning

nature in this case- that appear as new independent entities with “own – life”.

The consequence of this discussion about natural laws is relevant of

conceptualizing institutions by analogy: once rules are abstracted and integrated

as a system, they pass to form a different entity with its own-life, independent of its

origin, and with added power to influence in return the world that originally offered

that raw matter for this construction.

2.1.2. LAWS OF SOCIETY: HUMAN NATURE.

It similarly occurs with the “natural laws” of society. Once assumed the “principle of

order” discussed above, it is clear that the ambitious original pursue of the

founders of sociology as “the physics of society” was to “discover” the internal logic

embedded in the functioning of society, “inventing” the “rules” to be systematized

into a new corpus of knowledge with transformative capabilities.

Contrary to most of the products of social sciences that offer theories whose

validity is relative to some formative context, there are a limited number of

“discoveries” about “human nature” that appear to be a constant regardless of time

and place. Durkheim´s division of labor sociology; Paretto´s theory of Power and

Elites in political science and Chomsky´s theory of Generative Grammar in

linguistics are among the few “laws” proved to rule the social world. These rules

are the hierarchical equivalent to the described “laws of nature” and belong to the

world of what Hans Kelsen calls “the world of being”, Herman Heller calls

“normality” and I call “observed regularity” in opposition to their corresponding

contraries: “world of shall – being” and “normativity” that I will call “intended

regularity”.

Arguably the hierarchical equivalent between both “laws” of nature and society is

proposed on the basis of their universality and objectivity. If accepted, the

existence of such laws, their descriptive form coupled with its embeddedness in

human nature, make them absolute and unchangeable, derived from natural

constrains. Mathematics and logic, as language of thinking and abstract

formulations, are a good example for sustaining the existence of this unchangeable

and universal pattern of regularity shared by all members of humankind.

2.2 RULES FROM THE FORMATIVE CONTEXT.

2.2.1. CULTURAL RULES OF PERCEIVED REGULARITY.

Another set of regularities to be considered is the one corresponding to rules

embedded in the formative context of each society, product of history, and

tradition. These rules articulate the particular values, views, civic traditions and

common past of each society through patterns of regularity embedded in symbols

and rituals that we generally call “culture”. Although most of these rules are not

explicitly intended to rule human behavior, and shall not therefore be considered as

“normative”, they do modulate human conduct in a perspective manner. These

rules embedded in culture are part of something similar to the “collective

unconscious” that implicitly shapes behavior, acting as a functional unintended

regulation that is not evaluated axiologically by society but that “rules” anyway.

Although human product, these rules appear to everyone as given, simply

being part of “the context”. Product of past human action and intention, these rules

are present in social routines and perceived as regularity by members of society.

These sets of rules change according to cultural evolution, as well as their

perception of normality.5 An extension of these conceptualization can include

dominant intellectual paradigms, ideological propaganda and share values

promoted and diffused by mass media and education. In all cases the embedded

rules affect “perception”. Although in the short term and within a given society, this

type of “rules” could appear to their contemporaries as natural formations equally

strong, universal, eternal and absolute as “natural laws” or “laws of human nature”,

they rather belong to the “cultural” world whose validity is limited to the sphere of

temporality and relativity.

Robert M. Unger offers a lucid explanation: “…The formative context – that I

also call and order, framework or structure of social life- exerts a major influence

upon the form and course of social routines, including routines as important as the

future of the society…A formative context of social life is made up of extended sets

of institutional arrangements…The other component of formative context is

imaginative. It consists in a set of enacted preconceptions about the possible and

the desirable forms of human association: assumptions about what relations

among people should be like in different domains of social existence…A formative

context puts a particular version of society in the place of the indeterminate

possibilities of social life…”6

The central point here is that such “regularity” does not appear to be

intended by anyone in society, but rather as a product of history embedded in

culture. A complex argument for disclosure of their intentionally shall be done. It is

important to point out that such “regularity” is valid just because it is perceived as

such. These two characteristics cross an essential qualification of these rules as

“relative” in opposition to the mentioned “Laws of Society” that claim universality,

objectivity and untemporality. “Rules of Perceived Regularity” are neither

“objective” nor “universal” or embedded in human nature, although sometimes they

are perceived or defended as such by insiders, constituting what Roberto Unger

calls the “imaginative part” of the “formative context”, that is always an “artifact”

5 Michelle Foucault’s Archeology of Knowledge, in Paul Rabinow´s introduction to Foucault

Reader, Pantheon Books, New York, 1984, p. 1-27- 6 Roberto M. Unger. False Necessity, second book of Politics, a Work in Constructive Social Theory, Cambridge University Press, 1987, p. 58.

although it happens to appear as given. The other part of the formative context

requires particular attention to which we turn now.

2.2.2. ETHICAL RULES OF INTENDED REGULARITY: NORMS.

At this point a delicate jump becomes necessary for further generalization of

“rules”, because a different kind of “abstractions of regularity” are to be

incorporated to a complete conceptual framework of “rules”: There are some rules

that don´t have as their original impute an empirical phenomena embedded in the

world of nature or society, but rather a conception of values and paradigms

accepted as desirable by some societies in a particular historical context. Those

“rules” or “intended regularities” belong to Kelsen´s “world of shall being” or to

Heller´s level of “normativity”. They are specifically designed to “rule” human

behavior and interaction. Although they follow a process of creation by abstraction,

similar to the one described concerning natural and social “laws”, these rules count

with the additional element of being product of explicit human intention and

constitute the other product of explicit human intention and constitute the other part

of Unger´s definition of the “formative context” as “extended sets of institutional

arrangements”.

This set of rules are “normative” because they are intended to regulate

human conduct by a dialectic process that 1) uses social reality as thesis:

capturing and abstracting the empirical phenomena of human behavior; 2) uses a

particular ethical conceptualization as antithesis: opposing o the social phenomena

a set of social values, and 3) synthesize a desirable behavior in a norm of conduct

or “rule of intended regularity” whose fulfillment is expected and otherwise

enforced. Therefore, the logical structure of the “norm” is: If “A” is… “B” shall be;

otherwise “C”. Where “A” is a fact of reality, “B” is the normative conceptualization,

and “C” is the sanction. This logical structure is presented at several levels of

formality that serves as the right criteria for their classification. As explained below,

among the wide range of existing “Rules of Intended Regularity” at least four

normative orders can be identified: Juridical, social, religious and moral. All four

dimensions of norms generate social behavior through the formalization of ethical

reason and its societal scale of values.

All three steps of the dialectic process are defined within the historical context of a

given society because they are “particular historical products.”7 This is the cause of

James Coleman´s statement: “…The concept of a norm, existing at a macro social

level, provides a convenient device for explaining individual behavior, taking the

social system as given…”8 This is why these norms are also “relative”, because its

validity and its enactment as institutions is limited to a particular historical moment

in particular society. In a similar direction Huntington defines: “The institutions are

the behavioral manifestation of the moral consensus and mutual interest”.9 Both

elements –moral consensus and mutual interest- refer to the transformation of

social routines and ideological values in normative frameworks determined by the

ethical paradigms of a particular society. Finally, the norms of “rules of intended

regularity” are indeed “artificial”, because essential to the nature of these rules is

that its matter is not particularly determined by empirical basis, but rather

specifically rooted in ethical conceptions for organizations society with the aim of

gaining predictability in human conduct combating the essential uncertainty derived

from the behavior of beings attributed with freedom.

2.2.3. PRAGMATIC RULES FOR RGANIZED REGULARITY.

A final set of rules emerges from the social context. While norms or the “Rules of

Normativity” are explicitly created to respond to the ethical paradigm of society,

“Rules of Organized Regularity” are explicitly created to respond to the practical

paradigm of the formative context. Although each one responds to different

rationale both are “Rules of Intended Regularity” embedded in the social formative

context and created to transform it. While the former –Rules of Normativity-

7 Herman Heller. Teoría del Estado, Fondo de Cultura Económica, México (1934), 1987, p. 199. 8 James Coleman, Foundations of Social Theory, Harvard University Press, 1990. P. 241.

9 Samuel Hungtinton, Political Order in Changing Societies, Yale University Press, 1968, p. 10.

perform under the axiological sphere of society, the latter – Rules of Organized

Regularity- perform under the logic of pragmatic reason.

The Rules of Organized Regularity are created to respond to practical

problems presented by the formative context. While the “Rules of Normativity” use

“norms” to frame “values” and the “Rules of Perceived Regularity” use “symbols” to

feedback cultural settings, the “Rules of Organized Regularity” perform their task

by allocating resources and entitlement, to solve practical problems of collective

action.

This last kind of rules can be also called “corporative” or “constitutive”

because they tend to create tangible entities in the process of organizing resources

and entitlements. Although the rules are –again- a separate abstract apparatus that

determine the relations among sets of elements, the “Rules Organized Regularity”

can be called “organizations”. This idea is further developed below.

Finally, it is important to point out that, although all three qualities of “artificial

rules from the formative context” can be analytically distinguished with precision,

they indeed interact in reality and can even evolve from one type to another

because as Herman Heller asserts: “…Al human organization perdures to the

extent that it is re-created…”10

III. B. Implications.

2.3. Norms Classified by its Level of Formality.

An important omission in analyzing institutions as “rules”, is a more systematic

focus on its level of formality. As “norms”, institutions can assume different form

and different levels of formalization: the same normative prescription can be

contained in a moral, a religious, a social and a legal “Rule”. Different level of

formalization creates several overlapping frameworks of “moral consensus and

mutual interest”11 reinforcing often the same axiological content.

10

Herman Heller, Teoría del Estado, México, Editorial Fondo de Cultura Económica, 1987, p.268. 11

Samuel Hungtinton, Political Order in Changing Societies, Yale University Press, 1968, p. 10.

A consistent theoretical systematization has to be base on both a clear

conceptualization of the elements of a system and on the right section of the

criteria for classification. One of the main claims of this paper is the clarity,

precision and consistency are often missed in the study of institutions due to lack

of clear conceptualizations and adequate criteria for its systematization.

Concerning the normative order of the “rules of intended regularity” the most

frequent mistake is to intend a classification of norms and institutions by tis content

or objectives ignoring that “…It has never been…its normative content the decisive

element in distinguishing all different species of norms. Instead, it is the authority to

which the establishment and warranty of such norm is attributed…”12 So wide is the

scope of human intention that a criteria of classification based on of human

intention that a criteria of classification based on of human intention that a criteria

of classification based on content can lead to enormous and useless catalogues of

norms.

Similar result is obtained if a classification of norms is done on a simple

dycotomical basis without ontological justification. For example, although useful in

principle, the binomial classification of norms into regulatory and constitutive13

lacks analytical importance if excluding arbitrarily a whole system of norms just

because they are “idiosyncratic” and furthmore, a dual classification of “social”

norms into “individual” and “social” produces a weak framework –if any- without

any clarity, consistence and systematic precision, situation that evidentiates a lack

of understanding of the social phenomena.14

12

Herman Heller, Teoría del Estado, México, Editorial Fondo de Cultura Económica, 1987, p. 201. 13 Originally owed to Maurice Horiou. See: La Teoría de La Institución y la fundación, op. Cit. 14

This critic is directed to Jack Knight´s Institutions and Social Conflict, Cambridge University Press, 1992, p. 66 – 83. Although Knight´s idea of considering Institutions as Social Rules is fully subscribed by this paper, the approach used by author in elaborating his Implications for a Theory of Social Institutions is very poor: “…This analytical distinction between “regulative” and “constitutive” rules is commonly used to distinguish rules that are used to aid action in particular situations from those defining the proper course of action in specific contexts, the institutions; see, for example, Hollis, 1987. To the extent that regulative rules are idiosyncratic rules of thumb, my conception of social institutions would exclude them. As I suggest below, a crucial feature of institutions is that they rules are shared by the members of the community. And some of these institutional rules have more of the features of regulating behavior than of constituting it. Compare a rule that defines a unique course of action from one that, though restricting certain strategies, leaves open a range of strategic alternatives. In defining social institutions a strict regulative-constitutive distinction is inappropriate (Rawls, 1955). A more suitable distinction is one between

This paper claims that for a classification to be precise and useful, it has to be

sustained on an ontological framework directed to the essence of the concepts.

This paper proposes to analyze the wide range of “rules of normativity” by its level

of formality, to clarify both the nature of the institution that arises from them and its

insertion in a corresponding system of rules, knowing that “…A norm is a property

of a social system…”15

The criteria proposed here is based on the level of formality of the “rule of

intended regularity” that is determined by the entity that establishes the norm, who

puts it in place who does its foundation. The hypothesis is that the channel used in

both the process of formation of a norm and its enactment as a pattern of intended

regularity, will define the kind of system it belongs to. The particular nature of a

norm can therefore be identified by looking at its level of formality. This criteria

produces a classification of institutions as norms in four spheres of validity: a)

“Moral Institutions” based on “norms established by social values internalized into

personal conscience”, b) “Institutions of Social Coexistence” based on “norms of

political correctness established by community”, c) Religious Institutions based on

“required membership” norms established by churches” and, d) Juridical

Institutions based on “obligatory norms established by the state”. The usefulness of

this criteria and its precision can be confirmed by checking the source of authority

of the norm that will also correspond to the system of vigilance and coercion

established for tis fulfillment.

For example, the norm “you shall not kill” is simultaneously a moral norm

controlled by personal conscience, a social norm sanctioned with repudiation, a

religious norm ordered by the church and a legal norm enforced by the state.

Depending upon who is in charge of the enforcement of the rule, (personal

conscience, society, the church or the state) it is determined to what framework the

norm belongs. This is an important point, because it provides for a clearer view of

“the game”: “…A formative context of social life is partly made up of extended sets

of institutional arrangements, some of them organized according to explicit norms,

personal rules that are maintained by individuals to regulate their own behavior and social rules of either a regulative or a constitutive nature that are maintained by the group…” 15

James Coleman, Foundations of Social Theory, Harvard University Press, 1990, p. 241.

other less articulate…”16 In the tradition of Continental political science you would

expect to interlink “institutions” within a higher system: the political system and/ or

the legal system are the traditional products offered as “synthesis” of this process.

However, while Europeans overemphasized the focus on society. It would be

relevant to overcome this dycothomy in a more comprehensive theory of

institutions. The concept of “formative context” coupled with a conceptualization of

“institutions as rules” that include the civil society, the normative system and the

state, seems to advance this process of synthesis into a superior theoretical

framework.

A final point about formality is worth mentioning. As observed, the superior

level of formality is the incorporation of routine, a behavior, a consensus, an

arrangement or a set of values to the level of legal formality where the state is the

guardian that monopolizes public force as legal coercion. In the Roma-Germanic

legal tradition, the law is recognized to be not only the source for “legal

institutions”, but the master institution itself”17 for its capacity for intended

transformations of the formative context. Within the traditional approaches of the

nowadays out of fashion European “Theory of State” 18 law appears as “the

institution that provides unity and permanence to the State”,19 recognizing law both

as political product and cause of social organization.20 All this arguments seem to

be recently discovered by American scholars in a slow transition from the

microanalysis, case-oriented, empirical approach, towards a more comprehensive

theoretical conceptualization of society and its organization by legal frameworks.

Historical institutionalism seems to be working –perhaps not on purpose- in this

direction.21 I think that some interesting efforts can be done to find a balance using

16

Roberto M. Unger, False Necessity, Cambridge University Prees, 1998, p. 58. 17 Arturo González – Cosío, Desbandada hacia el Presente, UNAM, 1990. 18

A long tradition of important political thinkers such as Jellineck, Heller and Kelsen constructed a sophisticated intellectual apparatus for a comprehensive explanation of society and its political organization, using the legal structure of the state as main variable. 19 Herman Heller, Teoría del Estado, Fondo de Cultura Económica, México (1934) 1987. 20

Fernindand La Salle, ¿Qué es una Constitución?, Editorial Colofón, México, 1990, p. 62 21

Particularly Skocpol (op. Cit.) and its followers.

the legal system as an “institutional” explanatory variable22 towards a “Legal

Institutionalism”.

2.4. Difference between Institutions and Organizations.

The primary theoretical distinction between “organizations” and “institutions” has

not always been clear. Both because a system of rules has as an important part of

its function the ability to make order or “to organize” several elements into an

observed, perceived or intended regularity; and because all abstract system of

rules end up impacting reality in concrete forms; institutions are often confused

with organizations.

The disorganized coexistence of a multiplicity of points of view, rooted in

different conceptual approaches, have create a multiplicity of ideas about what an

organization is, and how far or how close its concept is to the one of “institutions”.

While some authors identify both concept as synonyms, others assign to each one

very different nature. Intending to solve this confusion, a quick review of the main

points of debate are grouped in three “arguments” that are represent in a

discursive manner by three scholars: Rawls, Heller and Horiou. The idea is to gain

from each perspective the part of the truth that it holds, while maintaining clarity in

the building of a precise concept of “organization”, consistent with the “general

theory of institutions as rules” presented by this paper.

I) John Rawls´ Case for Institutions: Institutions and Organizations

are Abstract and Concrete Aspect of the same Phenomena.

The approach that distinguishes both conceptualizations by their belonging to the

world of ideas and the world of things is very attractive by its simplicity and clarity.

However, most of its exponents have often mistaken the usefulness of the

distinction by merging both conceptualizations in a single concept, using the word

“institution” to comprise these two very different realities. Although very clear in its

22

For a discussion on this topic see my LL.M.thesis. Op cit.

focus, this approach has often been a source of confusion due to this semantic

incapacity. While the distinction is right, its terminology is wrong. This is a classical

approach widely used among legal theorists

Harvard Emeritus Jurist John Rawls summarizes this discussions as

follows: “…An institution may be thought in two ways: first as an abstract object,

that is a possible form of conduct expressed in by a system of rules, and second,

as the realization in the thought and conduct of certain persons in a certain time

and place of the actions specified by these rules…”23

Under this approach an “institution” results both and abstraction and a

concretion, betraying the useful distinction obtained, by dissolving it into the same

term. It appears easy to treat the problem as a simple semantic confusion to be

solved by re-naming: To the first concept corresponds the term “institution” and to

the second the term “organization”. Thus, institutions and organizations can be

interpreted under this approach as the abstract and concrete aspects of the same

phenomena.

However, this simple recognizing the substantial contribution of this

approach –and partially adopting it later- this paper claims that both concepts

explain two radically different entities. The first corresponding to what shall be

called “institution”: a system of rules; and the second called “organization”: a

concrete expression of regularity. The confusion is also due to the fact that both

conceptual entities share the common substance of the organizational activity as a

process that produces order Let´s try to solve this problem by using the second

approach defended by the European “State Theory”.

II) Herman Heller´s Case for Organization: All Institutions “Organize”

or Produce “Organization”

As “systems of rules” all institutions tend to “order” or “organize” several elements.

Similarly, organizations as “concrete expressions of ordering” also perform its

duties by “organizing”. The activity of organizing is considered by the classic

23

John Rawls. A Theory of Justice. Harvard University Press, 1971, p.55.

exponents of the European “State Theory” as something more than a simple

technical procedure. According to this approach, its relevance arises from its

creative capacity. Having as a starting point the Aristotelian paradigm of “the whole

is prior and superior to its parts”,24 theorists of the State explain all human

cooperation as a “structure” of collective intention that produces and added value

called “power”. The key point here is that such productions is possible due to an

organizational activity that presupposes some ordination by intentional rules.

Consequently, in this approach it is the concept of institution the one that is

presented by Rawls, by presenting here is perfect opposite.

Intending an empirical approach, Herman Heller conceptualizes and

organization as an “Autonomous Structure” where three elements appear to

constitute a “Collective Action Unit”: 1) Human action towards a cooperative

ordering of resources, with 2) A normative ordination of that cooperative action that

consciously pursues some goals, and that 3) Produces some specific “organs”

devoted to achieve an unitary effect.”25

The second element mentioned by Heller is the key to understand the

process of absorption of the concept of institution by the concept of organization.

When a “system of rules of intended regularity” or in Heller´s words a

“normative ordination” provides the framework for the emergence of a “concrete

expression of ordering” we are in presence of an “organization”. Therefore, the

concrete concept of organization empirically implies in some sense the abstract

concept of institution. However, conceptually, the Aristotelian paradigm permits the

inverse relationship in theory, as explained below.

An organization in its genealogical sense is less than the “set of rules” that

precede it, because it is just a single expression of a wider creative capacity,

implied in the mission for intended regularity of the preceding institutional

framework, that can be actualized in an infinite number of concrete entities.

However, if analyzed as a “concrete expression of regularity” an

organization is more than its precedent “set of rules”, because its existence implies

24

Herman Heller, Teoría del Estado, México, Editorial Fondo de Cultura Económica, 1987, p. 249. 25

Aristotle, La Política, Editorial Bruguera, México, 1978, p. 58.

an assimilation of the sense of order of the precedent “set of rules”, both as the

articulative rationale in the coordination of human cooperative action, and in the

creation of concrete autonomous entities with an unitary effect.

III Horiou: All Organizations are one Type of Institution: Constitutive or

Corporative Institutions. However the Contrary is Not True.

A last approach for the conceptual differentiation of organizations and institutions,

can be taken from a sociological Continental tradition, internalized by European

jurisprudence Although significant contributions to “institutionalism” were done by

relevant European thinkers, -such as Comte and Durkheim- specially in the

sociological field, the original foundations for a theory of institutions were perhaps

more properly set by Maurice Horiou,26 the French constitutionalist that

revolutionized legal theory by introducing the concept of “institution” to legal

dogmatism. Originally a lawyer educated in the classic tradition of French

Administrative Law, Horiou introduces the theme as an innovative legal concept

useful for better allocating legal attributes and rights to organizations. In Maurice

Horiou´s view an institution is the result of “…the elements of social organizations

considered as a whole…”27

Although perhaps apparently rudimentary to current literature, Horiou seems

to be the first to propose a more comprehensive use of this concept as a unit of

analysis for socio-legal disciplines.

In his 1916 classic book La theorie de l´institution et de la foundation the

author proposes an interesting concept: “…an institution is an idea that finds in a

social environment its actualization and persistence. For the idea to be transformed

in a concrete reality, a power is created for providing the necessary organs for its

existence. Under the direction of such created organs, and according to already

26

In this opinion I follow the lessons of the Mexican humanist Mario de la Cueva, La Idea del Estado, Universidad Nacional Autónoma de México, 1987, p. 153. 27 Maurice Horiou, La Teoría de la Institución y de la Fundación, Abeledo-Perrot, Buenos Aires,

1968, p. 34.

established rules, several manifestations of adhesion occur among the members of

the social group interested in the actualization of the idea…”28

The contribution is important: the essence of the institution is that of an idea.

Around that idea, organs and persons are gathered, according to some established

rules, to create concrete realities. The point is one of clarity: the institution is an

idea that can be transformed through rules into concrete reality. Such concrete

reality can be identified as an interested social group, adhering to created organs

under “…an effectively ordered structure…”29 The theoretical result is different if we

focus on “institutions” as products or in “institutions” as factors. The former idea

focusses on organizations, the latter on institutions. Institutions are closer to be the

rules of the game, while organizations represent the players.

2.5 Some Precisions and The Concept of “Organization”.

Additional contributions are worth to mention: Horiou emphasizes the foundational

feature of institutions as their primigenious essence: in the simplest terms an

“institution” is something (essentially an idea) that is instituted, founded,

established. This point is relevant if considered as the basic notion of autonomy

and further independent development of institutions, and its “permanence” across

time, both generally accepted as key features of the concept of “institution”.

Secondly, the institution “…is a product of history with undefined duration…”. This

proposal can be extrapolated up to the logical necessity of inclusion of institutions

within particular historical contexts. Third, Horiou recognized the instrumental

capacity of institutions as vehicle for ideology. And finally, to him we owe the first

classification of institutions that prevalent even today, in some current American

studies.30

28

Mario de la Cueva, La Idea del Estado, Universidad Nacional Autónoma de México, 1978, p. 153. 29 Herman Heller, Teoría del Estado, México, Editorial Fondo de Cultura Económica, 1987, p. 248. 30 Knight recuperates Hollis´ binomial classification of rules into regulative and constitutive, very similar to Horiou´s. See Jack Knight, Institutions and Social Conflict, Cambridge University Press, 1992, Ch 3. Note 18 in p. 67; and Martin Hollis, The Cunning of Reason, Cambridge University Press, 1987.

According to Horiou, two main types of institutions exist: a) “Institution-things”, that

are “…ideas that live and diffuse in the social environment but neither become nor

generate a “proper community” because they are not in themselves a principle for

action…”, and b) “Institution-person”, that is “…a live social body with internal

autonomy that can fulfill by itself its destiny…”. While the former is identified by

Horiou with the legal norms, the latter is also called by him as “corporative

institution”, that can be better identified with the concrete entities conceptualized as

“organizations”.

Conclusively, while all “institutions” are abstract entities or “ideas”, some of

them can become concrete entities, such as the “corporative institutions” that we

identify with “organizations”. Extrapolating this conclusion it is possible to say that

“organizations” are a concrete species of the wider gender of “institutions”.

III THE CONCEPT OF INSTITUTION AS A SYSTEM OF RULES:

TOWARDS A GENERAL THEORY.

3.1. A Rule is a Pattern that denotes Regularity.

The philosophical intuition takes from Parmenides´ insight on to Heller´s

“systematic structures” is that, to the apparent chaos of the world it can be

opposed a systematic cosmos of ordered regularity. Such idea can be recaptured

now for the task of defining institutions.

While Natural laws can be recognized as patterns of observed regularity

apprehended by the human mind, rules belonging to the social context appear as

artificial patterns of intended regularity, within the structure of the formative context,

that reveals a dialectic relationship between the social world as given and the

social world as desired. These set of “intended regularities” are what Douglas

North calls “the rules of the game in society, or more formally, the human devised

constraints that shape human interaction… [and that]…reduce uncertainty by

providing a structure to everyday life…”31

3.2. The concept of “Rule” as Basic Unit of Analysis.

According with this approach, the basic unit of analysis for building a general

theory of institutions is the concept of “rule” –specifically understood as a “pattern

that denotes regularity” within the “formative context” of human interaction. These

artificial rules interpret manmade regularities of behavior, that reduce uncertainty

within the kingdom of free will, by providing a structure to social life ordering

symbols, values and resources.

Such ordering follows three corresponding rationales: a) rules embedded in

civic society, following a historical reason and a cultural tradition, that define the

collective identity of a social community, b) rules embedded in the normative

system of society, intended to transform it by following and axiological reason, that

regulates human behavior for social coexistence, and c) rules embedded in the

economic and political organization of societ Such ordering follows three

corresponding rationales: a) rules embedded in civic society, following a historical

reason and a cultural tradition, that define the collective identity of a social

community, b) rules embedded in the normative system of society, intended to

transform it by following and axiological reason, that regulates human behavior for

social coexistence, and c) rules embedded in the economic and political

organization of society that following a pragmatic reason, tend to create concrete

entities for the allocation of resources and distribution of entitlements, providing

order and articulation to collective action.

These three species of rules are just conceptual abstractions that serve as

analytic apparatus to understand –and eventually transform- the complex structure

of reality in its social aspect. As “patterns of regularity” they share the internal logic

of all rules, as principles of order. But as rules derived from the social formative

31 Douglas North, Institutions, Institutional Change and Economic Performance, Cambridge

University Press, 1990, p.3.

context they belong to the world of presumptive regularity, always relative and

subject to contingent factors, but always open to intended transformation.

3.3. Institutions as Systems of Rules

But a rule is not by itself an institution. The heuristic value of the conceptualization

of institutions as rules rests on the idea of a systematic interaction of several

patterns of regularity. This ordering of rules produces a qualitatively different entity

with additional value. A single rule cannot be sustained by itself without other rules

´support. As well as the law of universal gravity: “matter attracts in direct relation to

the square of the distance in between two bodies”, depends on previous

conceptualizations about “matter”, “velocity”, “volume”, and theories as “entropy”,

“centrifugal force”, etc.; the building of institutions also depends on a superior

systematic connection among a set of related “rules of intended regularity”. As

John Rawls says: “…By an institution I shall understand a public system of

rules…”32

A “system” is not a simple aggregation. It is an interconnection of mutually

dependent elements. It is she dynamic version of the scheme, where the

movement of each elements affects the position of the other elements, according

to a superior mechanism that provides coherent internal logic to the whole.

The institution´s essence will be better identified as the abstract rationale

that provides systematic order to a set of “rules of intended regularity”. Being the

whole “…necessary prior and superior to its parts…”33 it is rather the ordered

structure that systematizes several elements, the entity that we shall call

“institution”. All independent “patterns of regularity” are by themselves just parts of

a superior “institutional whole” that provides them with a shared mission and a new

ontological quality.

Therefore, institutions are just abstractions but abstractions as “real” as

Parmenides´ intelligible world. Their abstract essence does not prevent them from

32

John Rawls, A Theory of Justice, Harvard University Press, 1971, p.55. 33

Aristotle, La Política, Editorial Bruguera, México, 1978, p. 58.

performing important roles in shaping reality. By proposing or altering an

ordination, the “Rules of the Game” affect preexisting elements, creating,

transforming and destroying routines and arrangements, and even producing

concrete entities.

3.4. Institutions as Abstract, Autonomous and Transformative Entities.

A system is also an autonomous ordering of elements, according to some

rationale, that produces a new entity, independent of the parts that precede it. By

performing its mission, the institution acquires autonomy from its formative context

and adopts “own life”. Conceptualized as such, institutions are autonomous

systems of rules or “ordered sets of patterns of regularity” that exist per se,

independently of their concrete expressions. In this sense they are intangible and

do not exist as real things, just as concepts. They can be considered as intellectual

apparatus inferred from reality and –relevant for social rules- intended to alter

reality. Once established, institutions in turn have the power of influence the

formative context that originally gave them existence by introducing a new ordering

for existing elements. In other words, they have a “transformative capacity” of the

context. In fact they are built for that objective. In this sense, all “Rules of Intended

Regularity” perform as reproduces and fixers of both behaviors, ideology and

power.

However, institutions can be conservative or transformative. Normative

frameworks, for example, have the explicit power not only for setting constraining

rules of the game –limits to public action- but also to encourage or discourage the

development of particular trends and impulses, in the materialization of political

energy and the transformation of social organization. The assertion does not imply

that normative frameworks have power enough by themselves to substantially

transform society, but it recognizes their power to generate intended

transformations or controlled affirmations, modifying social impulses, either for

reform, or for fixing conservative trends according to the status quo.”34

34

Robert M. Unger, Plasticity into Power, Cambridge University Press, 1989.

3.5. Towards a General Theory of Institutions.

Once an institution exists as a new autonomous entity different and essentially

independent of its parts, it appears immersed in a wider scenario, where other sets

of patterns of regularity in turn interact, in dependency of a superior system. For a

conceptual building of a “General Theory of Institutions”, a crucial step beyond

systematization is the incorporation of such “systems of rules” into complex

structures that comprise overlapping order of social regularity towards a superior

conceptual synthesis. This was the process that Europeans followed for reaching

their concept of “State” as an historical product that represented for them the

supreme synthesis of collective human action. A similar methodology can be used

in building a general theory of “society”, taking institutions as an explanatory

variable. Such a theory can incorporate in a consistent framework several

theoretical approaches, better interpreting social reality by “structures of regularity”

integrated by rules systematized as institutions.

CONCLUSION: A SYNTHETIC CONCEPT OF INSTITUTION.

An INSTITUTION as 1) an abstract 2) whole 3) set of rules of intended regularity 4)

interconnected 5) under some rationale 6) into a systematic 7) principle of order 8)

that gives them unity 9) and permanence 10) within the structure of a superior

formative context.

10) Once established 11) the institution acquires autonomy 12) from its

original formative context, 13) appearing as a new complex entity, 14) with creative

capacity and 15) “own life”, 16) intended, 17) to transform reality. 18) Institutions

can assume different forms, 19 ) according to their rules: a) prescriptive, b)

normative or c) constitutive. 20) The later type serves as a framework of the

creation of concrete expressions called “organizations”.

A CONCEPTUAL PRECISION:

INSTITUTIONS VS. ORGANIZATIONS

A CONCEPT OF INSTITUTION A CONCEPT OF ORGANIZATION

GENDER SPECIES

FACTOR PRODUCT

RULES OF THE GAME PLAYERS OF THE GAME

1. A system of rules intended regularity.

2. A “structure” for collective intention.

3. Order-organizational design and

intention.

4. Abstract, in the world of ideas.

5. Abstract idea An autonomous

intellectual apparatus: original proposal

6. A possible form of conduct expressed

by a “System of Rules”:

a) Prescriptive.

b) Normative.

c) Corporative: organizational.

7. Persistence.

8. Principles of ruling.

9. 9Not a live social body.

10. Normative, regulatory.

11. Synthesis: the Normative Legal System.

12. Horiou:

a) Ability as regulatory foundation.

b) Instrument for ideology.

c) Product of formative context.

13. It is not –and cannot be- a legal person.

And abstraction cannot be subject law.

1. A concrete expression of regularity.

2. A Collective Action Unit.

3. Order – organizational activity.

4. Concrete, in the world of things.

5. A concretion of the idea plus organs

and members: adhesion to the idea.

6. The realization of actions specified by

rules:

a) Cooperative human action.

b) Normative ordination [direction]

towards goals.

c) Organs: unitary effects.

7. Undefined “duration”

8. Principles for action.

9. Live autonomous social body.

10. Corporative, constitutive.

11. Synthesis: the State and the Economic

Organization.

12. Moore:

a) Organizational capacity.

b) Concrete [specific] mission.

c) Product of authorizing environment

13. You can assign legal attributes –

obligations and rights- to organizations,

not to institutions: somebody will

respond.

CURRICUAL VITARUM

Esteban Ruizponce Madrid

Licenciate in Law (with honors), Universidad Iberoamericana. Licenciate in Political

Science and Public Administration, Universidad Nacional Autónoma de México

(UNAM). Master in Laws, LL. M. (with honors), Harvard Law School. Master in

Public Policy, John F. Kennedy School of Government, Harvard University. S.J.D.

(candidate), Harvard Law School. Ph. D. in Political Economy (candidate), Oxford

University.

Advisor on legal, political and economic matters. Former Assistant Director

of the Legal Department, Delegación Venustiano Carranza, Distrito Federal.

Former Director of the Legal Department, Secretaría General de Gobierno, Distrito

Federal. Former Director of the Legal Department and Associate Director, Radio

Televisión y Cinematografía (RTC), Secretaría de Gobernación.

Former Attorney, Trust Division of Banco Nacional de México (BANAMEX).

Former Director of the Legal Department, Cámara de Restaurantes. Former Legal

Advisor, Confederación Nacional de Cámaras Industriales (CONCAMIN).

Lecturer and Professor at several Universities in various countries.

Author of articles on Law, Politics and Economics. He also writes essays

and novels.

He has obtained academic and professional awards, including the Mejores

Estudiantes de México Medal, the Premio Nacional de Mérito Académico from the

Secretaría de Educación Pública, and the Fulbright, Mac Arthur, OAS, Rowe and

Harvard University Scholarships.