How Do Institutions Steer Events?

An Inquiry into the Limits and Possibilities of Rational Thought and Action

John Wettersten

• Publisher: Routledge
• Year: 2017
• eBook ISBN:
  9781351930253
• Topic: Filosofia
• Subtopic: Storia e teoria della filosofia

Theories of explanation in the social sciences vacillate between holism and individualism. Wettersten contends that this has been a consequence of theories of rationality which assume that rationality requires coherent theories to be shown to be true. Rejecting these traditional assumptions about rationality Wettersten claims that the traditional explanations of rationality have placed unrealistic demands on both individuals and institutions. Analysing the theories of Weber and Popper, Wettersten shows that Popper made considerable progress in the theory of rationality, but ultimately stayed too close to the ideas of Hayek, he explains how this dilemma leads to difficulties in economics, anthropology, sociology, ethics and political theory, and constructs an alternative theory that rationality is critical problem-solving in institutional contexts. Wettersten contends that 'the critical consideration of theories followed by their improvement' dispenses with the need for justification and sees rationality as a social phenomena with an institutional basis. The main social advantages this view offers is that the degree of rationality individuals achieve may be increased by institutional reform without moralizing and that we can explain how institutions steer events insofar as we understand how they determine the problems which individuals seek to solve. It is argued that the central moral advantage of this view is that rationality is shown to be Spinozistic in the sense that it is natural and furthers morality and peace of mind.

Part 1
Philosophical Background: Weber and Popper

Chapter 1
The Limits of Weber’s Methodological Individualism

A fruitful place to start the search for a new individualist theory of explanation in the social sciences is Max Weber. A study of his view may begin an examination of, on the one hand, the role which theories of rationality have played in furthering and hindering explanations in the social sciences and, on the other hand, the relationship of social scientific theories to ethical theory. Weber’s theory was widely influential and has been especially important for recent attempts to develop individualist alternatives. His view brings the theory of explanation in the social sciences about as far as one can under the assumptions about rationality he made and which to a large extent are still shared by those working in the social sciences. By studying his view we can see the impact of these assumptions and the problems they lead to. We may thereby better understand those problems his successors have tried to overcome and to what degree they have succeeded.

In sum, the view of Weber presented here is as follows. Weber attempted to develop a theory of explanation in the social sciences in the framework set by the assumptions that rationality is coherent and requires justification. In order to explain social events under these assumptions he needed to supplement his individualist theory of explanation in the social sciences with a functionalist theory of societies. He was also forced to limit the explanatory power of social scientific theories. He could not explain social change, because his assumptions about rationality forced him to view it as beyond reason. His theory of historical explanation could not fill this gap. His assumptions of the coherent nature of rationality and the need for justification prevented him as well from developing an adequate response to the challenge of relativism. It led him in the direction of a too narrow view of ethics as dependent on system, which he could only overcome in an ad hoc manner.

Weber’s functionalism limits explanatory power

Weber’s theory of social scientific explanation is so influential and important because it plausibly and systematically combines (1) an individualistic theory of the force which produces social events with (2) a theory of how institutions influence the course of events. Weber attributes rationality to both institutions, which on his view turn out to be functioning systems, and to individuals insofar as they pursue their aims in accord with their beliefs. He gives both institutions and individuals a role in the explanation of social events without creating any conflict between them. He explains how institutions steer events, but the actions of individuals move events forward. All social events are explained as the consequences of the (rational) actions of individuals, but the context of their actions are institutions, which have their own properties and their peculiar impact on events.

This remarkable feat was not, however, accomplished without paying a price. His theories of institutions, of rational social change and of the explanatory power of social scientific theories have a limited range of application. The resulting view of society is so limited, that it cannot be effectively applied to any open and rapidly changing society, that is, any modern society. When Weber’s view is applied here social scientific theories lose their explanatory power to such a high degree, that they can hardly be enlightening. The roots of these limitations lie in the assumptions which Weber made about rationality.

The basis of Weber’s theory is an individualist theory of human action. According to this theory individuals act in accord with their beliefs in ways which are designed to achieve their goals. In order to understand why humans act the way they do and to explain the consequences of their action, we need to understand the beliefs of individuals. Weber analyzed, then, the beliefs of capitalists, that is, Calvinists, in order to understand why they acted the way they did and to explain this economic system. He relied heavily on comments by Benjamin Franklin, whom he took to be an articulate and representative figure. He found that according to the beliefs of Calvinists the accumulation of capital was a sign that God had blessed the person who was so fortunate. One could, then, explain why capitalists pursued the unending accumulation of wealth: they wanted a sign that they were blessed. They did not merely seek sufficient wealth to enjoy those activities which the possession of wealth made possible—as individuals had always done. Because they sought wealth as a sign that they were blessed and not for the goods they could buy with it, they used any wealth they had to accumulate even more. And this is what is characteristic of capitalists: they use wealth as capital and do not use it above all to consume. This behavior leads to the steady growth of wealth.

In order to turn the analysis of the individuals’ beliefs into a social scientific explanation, however, one must do more. One must explain how the actions of many individuals lead to some social results. Weber presumes, then, that in each society we may discern particular structures with systematic character. These structures are represented in the beliefs of the individual members of the society in question. The most general characteristics of any society are due to the fact that they receive the shape they have from assumptions or world views of its members. Such a view may be some religion and often is, since it is often religion which provides the most general and influential framework for the construction of institutions. Weber thus devoted an enormous effort to explain the sociology of various religions. The institutionalized rules of any society and the social structures they produce are products of the beliefs of individuals which, in turn, determine how individuals live.

In order to explain social events, we cannot, according to Weber, merely look at such beliefs but must look at the systems they produce—the ideal types as he called them. Though no society is completely structured in accord with some ideal type, all social structures meet traditional standards of rationality, that is, they embody principles, which provide for functioning systems, from which rules are deduced and which set social standards. We may study them just as we might if we presumed a holistic view of societies. We cannot derive what happens or why events occur from a system of established rules alone. We can, however, explain what social consequences systems have, by looking at the world from the point of view of its participants. If we understand how they view the world, what their aims are, and under what constraints they operate, we can explain how and why they pursue the goals they do and what the social consequences of these pursuits are. When individuals attempt to realize goals in the context of certain social systems, we may explain social events as sometimes intended and sometimes unintended consequences of their actions.

This theory explains how rational actions of individuals and institutional rules of society can be used together to explain events. Weber presumes that plans, strategies and aims of individuals regularly fit, hand in glove, with institutional rules. When a society has certain rules, individuals endorse these rules and act on them. And only the actions of these individuals are used to explain social events. Weber explains social phenomena as the consequences of the actions of individuals. But the (cumulative) effects of these actions can only be explained as the product of the workings of some ideal type, that is, of some system. His explanation, for example, of why individual Calvinists act as they do, to accumulate wealth as a sign they are blessed, is individualist. But the result, that is, the first functioning capitalist economic system, can only be explained in terms of the system of economic and religious beliefs, which are characteristic of Calvinist, that is, capitalist, societies. The individual pursuit of the accumulation of wealth leads to high levels of investment which leads to still greater accumulation of wealth. Other actors may exist, but their actions do not explain events, because they are not integral parts of the system. An example is the Jews in German society before the Holocaust. They did not share the religion of the majority. Their own society cannot even be studied as a system within a system, because Weber has no good way of connecting their society with that of the broader Christian society. On Weber’s view, religion was part of economic systems. There is no coherent system of which the Jews were an integral part. On Weber’s view the Jewish role in capitalist society is an aberration: Jews may charge usurious rates of interest to non-Jews, because their morality applies only to other Jews. It is no accident that in his sociological study of the Jewish religion he offers no economic analysis as he does for others: in the case of the Jews he can find no functioning, that is, isolated, Jewish economy. Yet insofar as economic activity is based on religion, a sociology of Jewish economic activity in non-Jewish societies must be possible. The limits of Weber’s theory become clear.

Weber’s theory of ideal types—his theory of social systems—serves the function of bridging the gap between the aims and plans of individuals and social rules. According to this theory social scientific explanation rests on the possibility of finding typical situations, in which large numbers of individuals find themselves. We may find such typical situations by abstracting from the real flow of events, but not too much. If we abstract too much, our theories would be empty, Weber thought. We explain, then, how individuals pursue aims in some (typical) situation and analyze the consequences of many individuals doing so. This theory bridges the gap between the use of individual actions to explain events with institutional rules by explaining individual behavior as examples of actions typical for a society. The typicality of these actions lies in their conformity to social rules or expectations.

Popper noted that the combination of holistic and individualist views was common towards the end of 19th and beginning of the 20th centuries. And Agassi has pointed out that Weber’s theory can be read in an individualist or in an holistic way. On this reading of Weber we can see society as a whole, in which some system functions in some particular ways, regardless of what individuals do, say or think. We may do this because we may only explain the functioning of society by reference to actors, who share the general principles of a society and act in accord with them. We must appeal to ‘ideal types’. We can also deem society to be a consequence of the actions of individuals who hold particular beliefs and aims. But these explanations will only have an interesting degree of explanatory power, if we find ideal types which are characteristic of the societies we are trying to understand. The discovery of ideal types requires us to treat societies as composed of functioning systems.

Insofar as we are successful in identifying such functioning systems, as we may be in cases of unified or simple or slowly changing societies, we cannot explain their change. The systemic nature of Weber’s ideal types prevents the application of his theory of explanation in the social science to the task of explaining social change. Weber postulated systems of rules, which provide stable contexts for the actions of individuals and which he uses to explain social events. Yet we know that social systems change and one task of the social sciences is to explain this change. But systems are stable. Weber offers a quite different approach to this problem, which reveals how limited his view is.

Weber cannot explain social innovation and institutional change

In order to explain how social systems change, Weber claims that there are creative, charismatic figures who bring about wide-reaching transformations of societies. These figures invent new systems and, with the force of their personalities, move other people to accept them. The most interesting aspect of Weber’s view is that this process is not rational. It can be observed, but by no means explained as other social events can. This is a direct consequence of the theory of rationality, which Weber presumed but never spelled out, simply because no one thought to question it. Rationality was deemed possible within a framework, but Weber could not explain the change of frameworks as a rational process. On his view such change took place beyond the limits of rationality. As a consequence it could be described, but not explained. The replacement of one system by another is always, on his view, an historical accident. Charismatic figures come now and then, but there is no rhyme or reason to their appearance.

Weber’s theory of the change of social systems creates, then, a sharp division between those events which are rational, in the sense that they take place within the confines of some system, and those which are arational, because they change such systems. At first blush this consequence may not seem like such an unfortunate result, and probably did not seem so to him. He can still give an historical account of any given change as due to the appearance of some (creative) charismatic figure. And no theory of how social science is possible today hopes to completely remove the role of creative, and therefore not fully explained, actions from descriptions of social events. Perhaps this limit on rationality and explanation would not be serious, if there were only great changes once in a while, where a Galileo or a Luther or a Hitler appears on the scene and changes society drastically. Perhaps the world seemed so to Weber.

But this is not the case. There are many small changes as well as large ones, which are difficult to explain within the confines of Weber’s theory of normal society. And this, then, leads to the breakdown of the strict separation between those times in which a charismatic figure exercises influence and normal society. On this reading charismatic figures are not merely great historical leaders such as Jesus or Muhammad or Alexander the Great, but also anyone who makes any innovation, regardless of how small. Weber has been read in this way by some, even though on this reading the explanatory power of the social sciences must be quite limited indeed.

But let us look at the progression from the charismatic figure to the institutionalization of rules as Weber sees it. To what degree may such a process be explained? We begin with a charismatic figure who gains a following. Those who follow him do so freely. The power and legitimacy of the rule of a charismatic figure comes from the power of his personality and the willingness of others to follow him. But there can be no explanation of why individuals follow a charismatic figure. Individuals do not do this to achieve aims given the logic of their situation. The normal means of explanation are not applicable in this case, because in this case individuals do not pursue their aims in the context of some stable institutional setting, but seek to change this setting. No reconstruction of how individuals see this change as leading to the satisfaction of their individual aims is possible.

This charismatic phase is followed by the institutionalization of those rules and perspectives, which the charismatic leader has advocated. During this phase we find the translation of the ideas of the charismatic figure into rules, which may be used to give the society structure, organization and effectiveness. Once these rules have been established, we find a normal period, in which the rules do not gain their legitimacy due to the influence of the charismatic personality, but rather due to the fact that they have been established. Only then can social scientific explanations explain how the individuals’ pursuit of their aims leads to social events.

Weber’s opposition of rationality and creativity and his identification of the rationality of society with the following of social rules enables him to construct a theory of the progress of all societies. There is no question that Weber denied that there could be any law which enables us to predict the course of history. It is quite easy to see that such a law would contradict his theory that new social systems are created by charismatic figures, whose ideas and influence cannot be rationally analyzed: both are beyond the limits of reason as he saw them. Weber does have a theory, however, of social progression, according to which the development of any social system takes a definite course. Any system starts with the ideas and influence of a charismatic figure. His ideas are then developed, spread, and above all institutionalized, so that they become a bureaucratic structure. This structure becomes increasingly rigid and can only be changed by some new charismatic figure. The continuation of this process seems to lead inevitably to an increasingly close-knit set of rules, which will obviously have their defects. Either a very strict and conservative society will develop and persist or a social collapse will be followed by a new charismatic figure. Perhaps the breakdown of any structure is inevitable. So, there is a predictable movement from one charismatic figure to structure to rigidity, to a new charismatic figure. And this, then, gives a general picture of the development of societies, without giving any means of predicting the course of history or explaining the rise of specific charismatic figures. We come close to the irrationalism of Nietzsche and his doctrine of eternal recurrence.

In order to explain how views are institutionalized, Weber develops a view of the ‘rationalization’ of society. On his view this amounts to the institutionalization of a system through the creation of a bureaucracy. It means the construction of rules, which determine how specific procedures are to be carried out. Rationalization in this sense is directly opposed to creativity or spontaneity or innovation. Weber needs to presume such an institutionalized system of rules, in order to explain how a society functions, but he cannot deem the rules themselves to be a product of some rational process.

One difficulty with this view is its very narrow view of the way any society can develop. It presumes that the increased rationalization of society will increase the rigor with which bureaucracies function. It does not allow for rational problem solving by loosening and reforming societal rules. Any reform of this later sort has to be introduced by some charismatic figure. This is a much too narrow view of such change. Weber’s theory of how a society may be rationally organized seems both unduly pessimistic and contrary to fact: some societies, indeed, all modern democracies, have been reformed by increasing their level of rationality by decreasing the specificity and range of rules and laws. Weber’s theory could not cope with such cases, because of his view that all rationality is systemic.

Historical explanations cannot fill gaps in social scientific ones

Although Weber’s theory of charismatic figures severely limits the possibility of explaining important social events, there may still be some hope that historical explanations of such events are possible. Weber distinguishes sharply between his theory of explanation in the social sciences and his theory of the explanation of historical events. That this separation should exist is by no means obvious. Historians certainly try to explain some individual events such as the rise of a leader to power or the outcome of a war, which other social scientists would ignore insofar as they do not seem relevant to understanding social organizations. And social scientists study social organizations in ways which historians might ignore. But one important kind of social event is the change of social organizations. How do they come about? What are their causes? Here the interests of the social scientists and the interests of the historians overlap; perhaps their methods also should.

We may seek to find in Weber’s theory of historical explanation that which we looked for, but could not find, in his theory of the social sciences, that is, a theory of how to explain changes of social organizations. We do find an important third aspect of Weber’s theory of the methods of the social sciences in his theory of historical explanation. Can we find historical explanations of individual events such as the ascendancy of charismatic figures within the framework of Weber’s theory which would enable us to explain the change of social systems?

Weber denied that there could be any historical laws, but he nevertheless held that historical studies could be carried out scientifically. The aim of historical studies, he said, is to give causal accounts of individual events. These accounts are based, he thought, on trivial laws, but the explanations themselves may be interesting. Individual events can be explained as products of the conjunction of various causes. An historical explanation of the influence of a charismatic figure cannot, of course, be complete, because both the new ideas put forth by charismatic figures and the willingness of individuals to follow such leaders are crucial events in any change of a social system...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Preface
• Introduction
• Part 1 Philosophical Background: Weber and Popper
• Part 2 Why the Social Sciences Need an Alternative Theory of Rationality
• Part 3 Fallibilist Institutionalism
• Conclusion: Spinoza’s Project and Social Science Today
• Appendix 1: Friedman’s Defeatist Methodology is Irrationalist
• Appendix 2: Kaufmann’s Fallibilist Ethic is too Romantic
• Bibliography
• Index