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The Fiction of Institutions: the Institution of Fiction - Shandean Postscripts to Politics, Philosophy, & Culture

About The Fiction of Institutions: the Institution of Fiction

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In an unusually entertaining article for The New York Times on the fall of Bear Stearns F.D.R.’s Safety Net Gets a Big Stretch
, the following quote occurs.

'As Walter Bagehot, the British financial journalist, wrote in “Lombard Street,” a 19th-century book on the monetary system, “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact, his credit is gone.”'

A good amount of philosophical, psychological, and sociological cogitation could be stirred to life by that quote. One could also imagine an evolutionary psychologist inventing a nice story about how social intelligence and deception combine to make a 'person' worthy of credit.

What I would like to observe is something else. Walter Bagehot touches on an aspect of all human institutions that philosophers count on and historians ignore.

As far as we know humans are the only life forms evolved on our planet who have developed flexible and changeable institutional structures, such as states, bureaucratic entities, organized religion, voluntary associations, and, most importantly today, business institutions, such as the modern corporation. Such institutional entities are always a "fiction." They are not "fictional" in a trivial way but "fictional" to some important extent that says something about human society, history, and how we come to understand and misunderstand the world we have created for ourselves.

I put the word "fiction" in quotes here to signal the idea that I believe that these institutional entities are not un-"real" social structures, but that they are social structures created by human beings and treated by us "as if" they were natural and/or monstrous phenomena. These institutions are socially constructed "as-ifs": "as if" the business institution of the corporation is a person or an "agent"; "as if" the institution of the Monarchy was the sovereign King and all aspects of the monarchy were an extension of the King-himself; "as if" the "Pricipate" of Augustus restored the Republic and as if the Imperator Augustus were the "Son of God" and "the Prince of Peace;" "as if" the "free market" were an imitation of Darwinian naturalism. These "as-ifs" can be extended to all historical periods and all human institutions back to our existence as hunter-gatherers. Each "as if" then becomes part of an interconnected chain of "as-ifs"... "as if" the institution were an agent with a personality; as if the agent owned a physical "bank"; as if the bank contained the money in a box; as if the money were backed by "gold" and "silver"; as if gold and silver were worth anything; as if gold could buy your life by the hour or the day. I use the term "fiction" as a placeholder for these chains of "as-ifs" that are assumed and "forgotten" when we encounter social institutions. I use the term in the same sense as the term "legal fiction" is used by lawyers.

Calling an institutional "fictional," and at the same time recognizing those institutions as part of the structure of our social reality, seems to me to capture the counterfactual nature of many aspects of complex society. These "as-ifs" are part of a collectively written fiction about ourselves, our history, and our society. Yet these institutional "as-ifs" only come about when society develops complex settlements. Hunter gatherers don't need institutional "as-ifs"; they simply have stories and myths about the world around them. These stories are not meant to justify their own institutions "as if" the institution was created by nature, but to justify life and nature itself, "as if" the human story were a narrative and we could make sense of the world. Hunter gatherer societies simply do not have the same kind of institutional "entities" that agricultural settlements develop out of necessity.

The joke is on us. The way ancient humans misattributed personality and agency to natural phenomena, we misattribute personality and agency to institutions. Ancient humans did not understand and could not control natural phenomena; yet we act in relation to our own historically developed institutions, "as if" they were a phenomena of nature that we do not understand and cannot control. Institutions do not act. People act. A corporation does not "do" anything. People do things, individually and collectively in the name of the corporation. But the agency of the corporation is something that we accept because it is structured into our society at every level of economics and law. We even use "branding" in totemic and semi-religious ways, "as if" we could assume the attributes (coolness, power, abundance, success, sexual prowess) of the shared corporate "personality" by wearing or displaying the brand. The institutions we have created have become as Gods and Monsters to our own eyes. They seem to have created us. And the more this "seeming" is not within our individual control, and we do not organize ourselves for collective control, the more we attribute to those institutions the personality and activity that is in fact our own.

At times of crisis, when institutions or parts of institutions crumble, the fictional aspects of such institutions suddenly seem obvious. The idea of the divine right of kings seems absurd to us now. It seems an obvious fiction in order to justify the larger institutional structure of Monarchy. And yet old fictions often reappear when sophisticated institutions breakdown. Aspects of the divine right of kings reappear in the United States all the time, under the guise of manifest destiny and nationalism of course, but more directly in the idea that a President, whether McKinley or Bush, confers with God when making his decision on the best way to kill and conquer foreign peoples. When the current fiction of institutions breaks down what we tend to find are older fictions reappearing. (Sometimes you wonder whether reality itself is just fiction all the way down.) But it is the weight of my argument that we actually perceive these institutional fictions as a sort of "unreality" and "absurdity" of these institutions. It takes a fair amount of self-deception and (continuous) postponement of disbelief to go along with these institutional fictions. Some people are in fact better at self-deception than others and it is these people that fit in best with the corporate institutions.

What I have been writing about here are aspects of ideology. When talking about the "as ifs" of institutions I am digging into some of the social aspects of the fiction of ideology. These social constructs must at some level merge with cognitive structures of our brain. When we move to such concepts as self-deception I fear I am bringing the circle around to evolutionary thinking. As Robert Trivers has said, the ability to decieve oneself can confer advantage in some circumstances; because those who are best at deceiving themselves are also best at decieving others about themselves. The fiction of institutions merges with the ability to deceive others and oneself about the institutions we work with and within. Thus begining with the idea of "credit", we can end with the idea that "credit" in our society, for massive institutions especially, is a kind of evolutionary arms race between deception and discovery, where self-deception plays a large part.

10 March 2008
New York City

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