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Institutional Economic Theory Economics 451 University of Missouri-Kansas City. Institutional View – assumptions about human nature/behavior humans have a natural (biological) existence nature of the species genetic structure etc – relationship of head and hands

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Institutional Economic Theory

Economics 451

University of Missouri-Kansas City


Institutional View – assumptions about human nature/behavior

  • humans have a natural (biological) existence
  • nature of the species
  • genetic structure etc – relationship of head and hands
  • human reproduction is bi-sexual – requiring two genders
  • human infants require physiological care for an extended period in the early stages of life (unlike fish for example and many other species)
  • human children, without the production of which there would be no more humans, usually are nurtured within a group of other humans (family, tribe, community etc.) for an extended period , often several years.
  • Assertion – hypothesis – proposition -- Most people adopt the cultural habits and behaviors of the group they associate with, especially early in life, e.g., most children adopt the religion and language of their parents, family, community.
  • Language contains cultural relationships – conceptualizations, -- cognitions
  • If all behavior is traced to self-interest, by someone saying that all behavior is self-interest, i.e., I gave money to my mother because I felt guilty, therefore it was for my own self-interest, not hers, that the money exchanged, or other e.g., ad infinitium


  • Social patterns derive from culture not from the behavior of individuals -- Robert Lowie
  • Most student of human behavior agree on this principle, but only recently and there are some holdouts – economics -- motives -- psychological basis limited to motives and motives are a well-spring of economic conduct from which all other economic activity flows, eg. Utility maximization or profit motive.
  • Biology -- spontaneous generation – ancient myth, living organisms derive from other living organisms
  • Terms and terminology
  • Levels of discourse – or generalization -- physical/social
  • all human actions are social
  • all human actions are physical (genetic)
  • The act of sitting down—bending the knees is a wholly physical (hereditary—genetic) act, but sitting down to hold court or eat is a wholly social act (not determined by the structure of the body). Of course, the fact that we can sit down as we do (unlike a dog or a cow) permits, but does not cause us to sit.

Primacy of individuality – start with the “basic nature of man” to explain the antics of man

  • Primacy of culture – start with the “particulars” of a culture
  • Humanness is unique in nature and cannot be explained by biology.
  • Each generation is different, man is a function of its inputs, programming.
  • Even a super genetic race could not resolve its tax problems in a maternity ward. (Dewey on adult/child response to problems)

Basic Hypotheses about Human Nature

      • no fixed or inherent human nature
      • a product of inputs– no antecedent social nature
      • nothing in particular, socially speaking
      • a social creation
      • a constant process of becoming, more unique and more conforming --humanness is an emerging phenomena

The Concept of Culture – What is a culture ‑ how has the concept evolved

  • Society– is the organized aggregate of individuals who follow a given way of life.
  • Culture – is a way of life
  • Civilization – used in various languages – has been confusing
  • Civility – to civilize
  • Cultivation– Neolithic civilization
  • From Germany – used in modern sense by GustovKlemm in 1843
  • From whom Tylor got it and introduced it into English in 1871
  • Voltaire put aside King lists, dynasties and battles and sought to locate what is essential
  • in history, mainly culture—as it manifests itself in customs, beliefs and forms of government.
  • Its absence helps explain deficiencies in social theory
  • Counters the view that social conditions evolve due to external forces cannot explain
  • changes in society.

Leslie White, The Science of Culture

White writes, "Man is unique: he is the only living species that has a culture. By culture we mean an extrasomatic, temporal continuum of things and events dependent upon symboling. Specifically and concretely, culture consists of tools, implements, utensils, clothing, ornaments, customs, institutions, beliefs, rituals, games, works of art, language, etc. All peoples in all times and places have possessed culture; no other species has or has had culture. In the course of the evolution of primates man appeared when the ability to symbol had been developed and become capable of expression. We thus define man in terms of the ability to symbol and the consequent ability to produce culture."

White's definition clearly is a tongue twister. Yet the terms once defined do clarify the concept of culture.


The Extrasomatic Character of Culture

White discusses the "extrasomatic" character of culture using the baby as illustrative of the process

of "acculturation."

Soma" is the Greek term for body. Thus somatic is of or relating to the body; physical or corporal.

  • As such "extrasomatic" means apart from or beyond the physical body.
  • The child is born without culture. It has the capacity to speak, to belief, etc. But the language

which it will speak and the beliefs which it will hold to be either sacred or profane is a learned condition.

These are transmitted to the child by adults.

Still another example ;is the transmission of traits from one isolated culture to another.

The contacts of Europe with non‑Europeans during the age of discovery. Before that, again with

respect to the Europeans, was the transmission of the culture of the East to the West following the

contact of the Polos with the Khans of China.

To future emphasize the nature of the extrasomatic as­sumption regarding culture White stresses

the fact that the English language does not exist independent of those who speak it or listen to it.

Yet we treat it as if it had a life of its own independent of those who use it.


Culture as a Nontemporal System:

It is possible to view humankind as a whole as a nontemporal system.

That is there is a collection of conditions which in their entirety constitute the culture of humankind or the culture of the sub‑group.

The pattern when identified with all humankind is "culture." When the patterns of a specific group are identified it is referred to as "a culture.“

As a final point, obviously even within the pattern of a group there are sub‑cultures. The most evident are those of caste, class and race. "


Note that the concept assumes the existence of a set of conditions or a set of patterns which transcends the individual or any group of individuals.

  • It is an assumption that "cultural patterns" in essence "have a life of their own.“
  • It requires the active agent of a human being to "set down" the symbols or to transmit and/or receive the symbols. The point is that the "name identification" of the individual is not critical to the transmission process.
  • "Man" in its generic sense has a number of characteristics which qualify him for culture.
  • Erect posture.
  • An opposable thumb.
  • Stereoscopic, chromatic vision.
  • Gregariousness.
  • The ability to symbol.

Only a slight difference in the brain makes the difference between being just able to carrying on the symbolic process and not being able to.

Symbolingability is illustrated in the capacity of the species to assign a religious significance to water as holy water.

A second example is the ability of human kind to trace out extended family relationships.


White divides the components of culture into four categories: ideological, sociological, sentimental or attitudinal, and technological.

  • The ideological sector: These are the beliefs of the tribe. They extend from the belief that the world is flat to the idea that process is central to the history of human kind, to the idea that symboling is a central aspect of human existance. Even the discussion of the symboling process is dependent upon symboling.
  • The sociological component: These are the customs, institutions, rules and patterns of interpersonal behavior.  Included are marriage patterns, behavior toward relatives, behavior toward those with whom you work and behavior with strangers. 
  • Sentiments: The loves and the hates, from relatives to inanimate objects.
  • Technology: White does not accept that human kind is the unique tool maker. He rightly points out that other animals not only use tools but invent tools. That which he insists separates the species homo sapien from the rest is "The use of tools in the human species is, on th whole, a cumulative and progressive process; it is this that distinquishesneolitic from paleolithic cultures, and the Age of Coal and Steel from the Middle ages. In the human tool process, one generation may begin where the preceding generation left off."


Of the four mentioned categories of culture‑‑ the technological is that which is most basic. White writes: "The technolgical basis of cultural systems is rather easily demonstrated. All living organisms can maintain themselves as individuals and perpetuate themselves as species only if a certain minimum adjustment to the external world is achieved and maintained. There must be food, protection from the elements, and defense from enemies. These life‑sustaining, life‑perpetuating processes are technological in a broad, but valid, sense; i.e., they are carried on by material, mechanical, biophysical, and biochemical means."

White continues, "It is fairly obvious that the social organization of a people is not only dependent upon their technology but is determined to a great extent, if now wholly, by it. both in form and content. As a matter of fact, a social system might well be defined as the way in which a society makes use of its particular technology in the various life‑sustaining processes: subsistence, protection forom the elements, defesne from enemies, combating disease, etc.... A hunting people will have one type of social organization as a consequence of this kind of activity, i.e., the use of certain technological implements; an agricultural, pastoral, or industrial people will have another cast to its social system."


The influence of the technology upon the social organization of a particular culture is expressed in two ways.

There is the direct effect of the technological instruments upon the behavior of human organisms.

Second on the social level the instruments relate to one another in a manner designed to make an integrated coherent, social system possible.


Implications of Concept of Culture for Social Analysis

  • The absence of the concept of culture thwarted the efforts of earlier scholars like Locke, Hume and Rousseau to account for the existence of common activity patterns among societies.
  • Concept of culture is revolutionary because it resolves, at long last, the mystery of humanness, thus completing the secular revolution begun in early times. The concept does three things:
  • it squares with Darwinism‑ group elaboration & transmission of culture to other members of the group and new generations
  • it explains diversity of human societies that are greater than the individual differences
  • it explains the amazing stability and persistence of this diversity ‑ imposition of sanctions
  • Mores principle
  • Is it just that the Zuni Indians of New Mexico have one set of symbols and the alluts of Alaska another and that is all there is to it.
  • This is the concept of cultural relativism, or so‑called moral agnosticism, nihilism

Real vs Ideal Culture

Standards of behavior vs real behavior

B. Malinaskwi

Trobriand Islanders ‑ incest taboo‑ they show horror at it and seek ways to thwart supernatural punishment.

Trobrinaders‑ spirit conception of offspring ‑ matrilineal, mothers brother has important social position and it would be subversive for father to be biologically connected.

Forces in Culture: Creative—Permissive—Restrictive


Humanity's two aspects

 Culture as the combination of symbols and tools S x T = C

What is a symbol?

What is a sign?