Monday, October 16, 2006

A Reviewer Who Has Read Moral Sentiments

A review of a book, ‘Understanding Institutional Diversity’, (Princeton University Press, 2005) by Professor Elinor Ostrom, Arthur F Bentley Professor of Political Science at Indiana University by Professor Richard Wagner, of George Mason’s University, includes an example of the correct use of Adam Smith’s moral philosophy, as stated in Moral Sentiments.

It’s on the Stationary Bandit blog ( of which I have no other details.

Richard Wagner’s forthcoming review (in the Journal of Economic Behavior and Organization) raises an important issue largely ignored by Ostrom and many fellow New Institutional Economists. She accepts the definition of institutions as the rules of the game. Professor Wagner writes that “The danger in thinking of institutions as rules of the game is to think that legislation can serve directly as an instrument to change societal outcomes in some intended manner.” Implicitly institutions as rules of the game skews the analysis in favor small scale state planning. It biases policy proposals. It ignores that people do not respond like automatons. Sometimes they ignore rule changes and maintain their behavior (consider the effects of Prohibition, as Professor Wagner). A more fruitful approach views are "articulated descriptions of conduct." That is, rules emerge from social interaction rather than by decree. The latter approach has a place in Ostrom's framework. Hopefully, future research will pursue this agenda."

I hope the research does pursue the agenda because Adam Smith has much to offer political science and economics in the matter of what might work and what doesn’t.

The sentence that institutional rules of the game ‘ignore’ that ‘people do not respond like automatons’, is perfectly Smithian. He warned about ‘men of system’ who believed that they could arrange people and their behaviours as if they were ‘wooden chess pieces’, when in fact ‘every single person’ had ‘a principle of motion’ of their own (TMS VI.ii.2.17: p 234).

I haven’t read her book, so I cannot comment on its merits, but it covers an interesting topic.


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