Economy and society. From Parsons through Habermas to semiotic institutionalism.

Theory and methods

Théorie et méthodes

Risto Heiskala

Economy and society: from Parsons throughHabermas to semiotic institutionalism

Abstract. The great transformation to modernity made the economy the majororganizing factor of the social synthesis, thus bringing forth the issue of theeconomy/society relationship as the central problem of modern social theory. Thisarticle deals with two broad approaches to this problem: Parsons’s and Habermas’svariants of structural-functionalism, on the one hand, and various currents of(neo)institutionalism, on the other. An attempt to synthesize the benefits of theseconflicting approaches is made from the point of view of semiotic institutionalism.What emerges is a general theoretical framework, which is better equipped than theoriginal structural-functionalist and institutionalist conceptions for the analysis ofthe economy/society relationship.

Key words. Economy and society – Habermas – Institutionalism and neo-institutionalism –Parsons – Semiotics – Sociology

Résumé. Les grandes transformations vers la modernité ont fait de l’économie leprincipal facteur organisateur de la synthèse sociale, portant sur le devant de la scène laquestion de la relation économie/société en tant que question centrale de la théorie socialemoderne. L’article s’intéresse à deux grandes approches de cette question: les variantesstructuro-fonctionnalistes de Parsons et Habermas d’une part, et divers courants du(néo)institutionnalisme de l’autre. L’auteur s’efforce de faire la synthèse des points fortsde ces deux approches conflictuelles du point de vue de l’institutionnalisme sémiotique. Ilen émerge un cadre théorique général plus adapté que les conceptions structuro-fonctionnalistes et institutionnalistes à l’analyse de la relation économie/société.

Mots-clés. Economie et société – Habermas – Institutionnalisme et néo-institutionnalisme –Parsons – Sémiotique – Sociologie

Social Science Information © 2007 SAGE Publications (Los Angeles, London, New Delhi andSingapore), 0539–0184

DOI: 10.1177/0539018407076648 Vol 46(2), pp. 243–272; 076648

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I. Introduction

The relationship between the economy and the rest of social reality hasbeen a central theme in modern social theory (for some of the most clas-sical examples see Durkheim, 1984; Marx, 1971; Simmel, 1990; Smith,1976; Sombart, 1987; Weber, 1968) simply because the emergence ofthe modern world can be characterized as the “great transformation”,which made the economy the major organizing factor of the social syn-thesis and thus brought forth the problem of political regulation of theeconomy (Polanyi, 1944). Recent debate on globalization shows that,even if the approaches of different authors vary, they all agree that therelationship between the economy and the rest of social reality is an evenmore burning question today than in the time of the classics (cf. Castells,2000; Held et al., 1999; Hirst and Thompson, 1999; Sassen, 2001).

The centrality of the economy in the modern world could make usthink that among the social sciences it is economics towards which oneshould turn for an illuminating account of the economy/society relation-ship. Curiously enough this is not the case, and it is sociology rather thaneconomics that one will have to consult for an analysis of this relation-ship. To understand why this is so, we will have to spend some time withthe basic concepts of these two modern disciplines.

Textbooks on economics (such as Varoufakis, 1998) teach us that theestablished neoclassical paradigm in economics is based on the followingpremises:

1. People and corporate actors live in an environment characterized byscarcity.

2. They have relatively stable preferences.3. Their preferences are transitive (if the actor prefers A to B and B to

C, she will always prefer A to C).4. Their action is rational in the sense that it is motivated by an attempt

to maximize the realization of their preferred states of affairs andthey choose the best means for bringing forth this output.

5. Provided that external factors do not interfere, their maximizingtransactions bring forth the state of equilibrium.

6. They act in a state of perfect and costless information.

If these premises are fulfilled, it is possible to model the workings ofthe actual economies and carry out an econometric study. This is whatmost economists today do to earn their living, even if some of them aremore ambitious and try to expand the paradigm to a universal human

244 Social Science Information Vol 46 – no 2



science that would replace other social sciences (Becker, 1976). In bothcases neoclassical economists work with a conceptual framework thatdoes not recognize the economy/society problem at all because theyeither interpret all human practices as economic action (cf. Becker,1976) or do not find other types of action relevant to their study of soci-ety (neoclassical normal science).

The neoclassical paradigm is the dominant form of economics today,but there are some critical voices within the discipline. Among the mostlegitimate of these heterodox voices is economic neo-institutionalism,which directs its criticism to the sixth premise (see North, 1990, 1998;Williamson, 1975, 1994). Economic neo-institutionalists do not believethat buying and selling are costless and therefore they maintain thateconomists should pay attention to transaction costs. They also empha-size that this is not merely a minor correction to the otherwise perfectlyworking neoclassical model. Wallis and North (1986), for example, esti-mate that more than 45 percent of the national income of the US wasdevoted to transacting at the end of the 1970s. Therefore neoclassicaleconomic models often give misleading results and can, even at theirbest, explain no more than about one half of the workings of moderneconomies such as the US.

Economic neo-institutionalists do not claim that the neoclassical par-adigm should be rejected. They simply say that it should be comple-mented with the analysis of transaction costs and institutional paths,which vary significantly according to the context. At the same time theyobviously propose a form of economic analysis which seems betterequipped for recognizing and analysing the economy/society problemthan the orthodox neoclassical paradigm (for more on this, see section3.1 below). However, the sociologist still has many reservations. Theseinclude the aforementioned premises 1–5, including the assumption thathuman life is maximizing. For the sociologist this economic approach tohuman life is far too narrow an interpretation of the social reality. Life ismaximizing and economizing, but it is also something else, and thissomething else cannot be adequately analysed if it is understood as noth-ing other than a set of marginal conditions for economic transactions.This is a conviction that unites classical sociologists such as Durkheim(1984) and Weber (1968), as well as their followers, in spite of all theirdifferences. Therefore, if sociology is the study of modern societiesengendered by what Karl Polanyi (1944) termed the “great transforma-tion”, the problem of the relationship between the economy and the restof social reality emerges as a central or even the most central problem ofsociology (Österberg, 1988; Wagner, 1994).

Heiskala Theory and methods 245



The most influential attempt to synthesize the inheritance of classicalsociologists and spell out its implications in the conceptualization of theeconomy/society relationship is Talcott Parsons’s social theory. Today itis often neglected as an outdated conceptual framework, and indeedthere are many convincing criticisms against it (some of which will bespelled out later in this article). Yet the problems addressed by Parsonsare still with us, and there are few other sociological conceptions withcomparable breadth of range available. Therefore it is worth a try to seewhether the Parsonian frame of reference can be cleared of its obvioustheoretical problems and updated so that it is capable of addressing theactual issues of the economy/society relationship, such as the problem ofglobalization. What follows is an attempt to do this by critically recon-structing the Parsonian approach.

The article opens with an introduction to the orthodox structural-func-tionalist paradigm of Parsons and Neil Smelser, followed by a revisionof it by Jürgen Habermas in his theory of communicative action, and acritical discussion of both the orthodox and the revised frame of refer-ence (section 2). Six criticisms are recorded and they all point in thedirection of a search for an alternative approach. This kind of alternativeapproach is discovered in institutionalism. Section 3 is a discussion ofdifferent forms of institutionalism, including neo-institutionalism ineconomics, its pragmatist predecessors and the more recent phenome-nologically oriented approaches, such as Berger and Luckmann’s socialconstructionism. All these approaches are usually seen as alternatives tostructural-functionalism. Departing from this practice, section 4 makesan attempt at a synthesis. We first outline the basic characteristics of asemiotic approach to institutionalism and then make an attempt at recon-structing the structural-functionalist conception in the frame of referenceprovided by semiotic institutionalism. The article closes with a discus-sion of the benefits of the reconstructed conception in regard to the moreorthodox structural-functionalist and institutionalist approaches, and tothe actual needs of social research.

2. Structural-functionalist economic sociology

2.1. Parsons: the AGIL scheme of the social system

Already in his first published book, The Structure of Social Action(1968), Talcott Parsons attempted to create a synthesis of the work ofclassical European sociological authors. At the heart of this synthesis of




Weber, Durkheim and others was what Parsons called the “unit act”.This was a description of the nuclear unit of action. It followed the pat-tern of economically rational action with the exception that, in additionto environmental conditions (the field of economic calculation orWeber’s instrumentally rational action), the scheme included normativepressures (Weber’s value-rational action). Parsons maintained that everyhuman act is guided by both kinds of pressures simultaneously, althoughin varying degrees, depending on the kind of action. This argument hadseveral critical edges, including the one directed at economics, whichclaims that there is no such thing as purely maximizing action.Economists are right in maintaining that all action is maximizing, butthey get it wrong in believing that this is the whole story: all action isvalue-rational and bound by norms as well.

The scope of this argument was expanded in Economy and Society(Parsons and Smelser, 1984). The explicit task of that book is to locatethe economy within the more extensive social system and integrate theframe of reference of the economist and the sociologist. This is done byintroducing what Parsons and Smelser call the AGIL scheme. This is atheoretical scheme based on a biological metaphor and, consequently, itpresents systems as entities aiming at survival. The scheme outlines fourmajor tasks that every system must be able to perform in order to secureits duration in time: adaptation to the environment (A), which producesresources for the system; goal attainment (G), which defines the tasks ofthe system in relation to its environment; integration of the system (I),which prevents it from falling apart due to internal tensions; and latentpattern maintenance (L), which provides motivational energy and anabstract blueprint for the system to be used in situations in whichchanges in the environment or other factors make the redefinition of thenature of one or more of the other three subsystems and their mutualrelations necessary (see Figure 1).


Long time span Short time span

External tasks A GAdaptation Goal attainment

Internal tasks L ILatent pattern maintenance Integration

FIGURE 1The AGIL scheme on the level of general systems theory



The scheme is defined on the level of general systems theory, andParsons later applied it to numerous different objects. In Economy andSociety, however, it was introduced on the level of the social system (1984:19, 53), and it is without a doubt the most influential of Parsons’s manyAGIL schemes. On that level it is the function of the economic subsystem(A) to provide resources for the social system; goal attainment (G) is thefield of polity occupied by the state and related organizations; internal inte-gration (I) is maintained by the system of norms; and finally latency (L) isprovided by values transmitted from one generation to another by social-ization institutions such as religion, family and education.

The AGIL scheme of the social system was Parsons’s way of makinga creative synthesis of the various ways in which all the classical sociol-ogists maintained that the economic sphere is not a self-sufficient socialrealm but one that rests on the other parts of the social reality. The econ-omy is one of the four subsystems of the social system, and as such hasits own relative autonomy and money as a specialized medium of itsown. Yet its ability to work is thoroughly dependent on the power, influ-ence and commitment to values provided to it by relations of interchangewith the other three subsystems.

The AGIL scheme thus provided Parsons and Smelser with a way oflocating the economy within a wider social reality. At the same time italso provided them with the means of defining the tasks of economicsociology as well as the relationship between economics, politology andsociology. Because of the relative autonomy of the subsystems, botheconomics and politology were assigned one shell of the social systemas an object of study: A for the economist and G for the politologist.Sociology was assigned two shells (I and L) and the totality (AGIL). Thetask of the specialized field of economic sociology was to supplementthe economist’s work, which circulated around the medium of money,with two other types of study. First, it was the task of the economic soci-ologist to study the relationship between the economic subsystem andthe other subsystems of the social system (this involved the study of thesystemic interchanges between the specialized media of the four sub-systems: money, power, influence and commitment to values). Second,within the economic system, there were several subsystems such as thebanking sector, individual firms, even households insofar as they actedin the capacity of an economic actor, all of which could be split intoAGIL schemes and analysed accordingly (on the functional differentia-tion of the economy as a social system see 1984: 39–46).

The AGIL scheme of the social system was Parsons’s way of definingthe fields of basic social sciences and the nature of the social reality.




However, taken alone it gives a limited conception of his understandingof the human condition. Therefore it is important to add that he laterunderstood the social system as one subsystem of a wider AGIL scheme,in which the entire social system was put into the shell integration (I).This wider scheme is presented in Figure 2.


A GThe behavioural organism The personality system

L

a g

The cultural system

The economic system/resources Polity/power

l iValue commitments/motivation Norms/integration

FIGURE 2The social system within a wider context of the human condition

In Figure 2 the cultural system (L), which communicates with the socialsystem (I) through value commitments, provides the basic definition ofreality for the social system. Goal attainment is maintained by the person-ality system (G), while the human being as a mere behavioural organism(A) provides basic resources and energetic conditions. This wider AGILscheme introduces, among other things, more human sciences in additionto the already mentioned basic social sciences. The most important new-comers include anthropology, as the study of the cultural system, and psy-chology, as the study of the personality system, as well as the twomediating disciplines between these two subsystems and the social sys-tem: social anthropology and social psychology. The human being as amere behavioural organism is studied by biology, which rarely has anystraight implications for the study of society (unless of course one adheresto the socio-biological point of view, which Parsons himself did not hold).

2.2. Economy and society in Habermas’s theory ofcommunicative action: System and the Lifeworld

With the above conception presented partly in Economy and Society andpartly in other publications (see Alexander, 1983, 1987; Hamilton, 1983),Parsons outlined a complete description of the social and cultural reality,with the economy and economics neatly in one shell as one subsystem



of a much wider AGIL scheme. This is how he provided a structural-functionalist frame of reference for economic sociology, and he did itwithout neglecting the specific strengths of economics, provided it didnot overstep the limits of its competence.

Parsons’s conception was received with enthusiasm, up to a point. TheAGIL scheme of the social system is probably the most influential con-ceptual framework ever presented by a sociologist. It widely organizedthe self-understanding of the sociological community in the US andabroad in the 1950s and 1960s, that is immediately before the expansionphase of academic sociology in Europe (see Genov, 1989). Not surpris-ingly therefore the Parsonian description of the research areas of differ-ent disciplines still looks very familiar when compared to the academicstructure of the faculties of social sciences in many European universi-ties today.

On the other hand, however, Parsonian structural-functionalism wasnever the only game in town in US sociology, which was already at thetime rather empirically oriented and often outright hostile to social the-ory. Even in the field of social theory there were rivals and alternativeconceptions such as pragmatists, micro-sociologists, Weberian conflicttheorists and, later, Marxists. After a period of relative theoretical hege-mony of 15 or so years, these rivals took over, and from the early 1970sonwards Parsons was out of fashion. This was due mostly to the rapidchange of the political climate in the late 1960s, and even if most criti-cisms of his conception were extremely bad work in theoretical terms(see for example Gouldner, 1971; Mills, 1959), Parsons was out for thenext 15 years. This was not completely due to politics because, in addi-tion to political reasons (both real and falsely attributed accusations ofconservatism), there were also theoretical reasons for second thoughtsabout the structural-functionalist conception. Some of these theoreticalcriticisms will be spelled out in the next subsection.

It is against the background of Parsons’s rise and sudden fall thatJürgen Habermas, in his Theory of Communicative Action (1984, 1987),starts his discussion on Parsons with the phrase “Who now readsParsons?” – an allusion to a similar phrase on Spencer in the beginningof The Structure of Social Action. His intention, however, is different.While young Parsons meant that there actually was no longer any reasonfor reading Herbert Spencer, Habermas believes that, even if Parsons’sstructural-functionalism cannot be taken as it is, it still provides the mostfruitful point of departure for reconstructive social theory aiming at adescription of the totality of the social reality.

Habermas transforms the Parsonian AGIL scheme of the social sys-tem by making a distinction between two broad social spheres, which he




calls the System and the Lifeworld. Shells A and G of the Parsonianscheme, the economy and the administrative system, make up the Systemin Habermas’s reformulation. Just as Parsons claimed, both of these arebased on specialized media: money in the case of the economy and powerin the case of the administrative system. Consequently they can be analysedwith monological structural-functionalist models, just as Parsons hadthought. The analysis of shells I and L, or the Lifeworld, however, requiresdifferent conceptual tools. Contrary to what Parsons had thought, influ-ence and commitment to values are not formal media comparable tomoney. Rather, they are elements of the human culture. Culture againmust be studied as a dialogical process of communicative action in theLifeworld. This gives rise to a reformulated version of the AGIL schemeof the social system (see Figure 3).


SYSTEM 1 SYSTEM 2The economic system The administrative system

THE LIFEWORLD

FIGURE 3Habermas’s reformulation of the Parsonian AGIL scheme of the social system

Habermas maintains that the Lifeworld is the basic form of humanexistence. Primitive societies, such as the Australian tribes studied byDurkheim in his Elementary Forms of Religious Life (Durkheim, 1964), didnot include systemic elements at all. The economic system and the admin-istrative system therefore emerge from the Lifeworld as a result of a slowprocess of historical evolution. Once the specialized media of money andpower emerge in the process of modernization, the respective systems gainrelative autonomy from the Lifeworld. But even then workings of the sys-temic spheres of society rest on cultural support provided by the Lifeworld.

Habermas conceptualizes the Lifeworld with an ordinary speech act ashis point of departure. He claims that, for a speech act to be understood,interlocutors must be able to specify their stand with respect to three valid-ity claims made by the act: whether it is true, whether it is morally justi-fied and whether it is psychologically authentic. According to Habermas,these are all validity claims made by any ordinary speech act, but at thesame time they are also the basis of three institutionalized discourses ofthe modern Lifeworld: scientific, morally practical and aesthetic practicaldiscourse. This makes it evident that Habermas’s conceptualization ofthe Lifeworld departs from the Parsonian scheme not merely in the sense



that it is dialogical rather than monological, but also because Habermaspresents the Lifeworld so that, in addition to value commitments and com-munal norms (L and I in the Parsonian social system), it includes the entirecultural system and the personality system of the wider Parsonian AGILscheme of the human condition (i.e. shells L and G in Figure 2).

Equipped with this reformulation of the structural-functionalist frameof reference, Habermas is ready to analyse the economy/society rela-tionship in modern societies. One essential part of Habermas’s discus-sion on the topic is his analysis of what he calls the colonization of theLifeworld. The background of this phenomenon is that Habermas seesthe differentiation of the economic and the administrative subsystem ingeneral as a rational course of historical evolution, because giving up thedialogical nature of one part of the human existence in the case of inter-action mediated by money and power brings forth increased resources(the economy) as well as improved safety and more justice (the adminis-trative system). In this sense social differentiation is progress. However,in the modern world the differentiated systems grow so strong that theyoften expand their specific logic to those fields of the Lifeworld that can-not be adequately dealt with in terms of money and power. The com-mercialization of the social sphere, the productivity evaluations at theuniversity and the intervention of the welfare state in the family are exam-ples of processes in which the risk of the colonization of the Lifeworldarises. To cure these problems, says Habermas, we need political actionfor the defence of the Lifeworld.

2.3. What is wrong with Parsons and Habermas?

Both Economy and Society, by Parsons and Smelser (1984), and TheTheory of Communicative Action, by Habermas (1984, 1987), provide acomplete description of social and cultural reality, with economy andeconomics in one shell as one subsystem of a much wider social reality.This is how they both outline a frame of reference within which thestudy of the interchanges between the economy and the rest of socialreality can be carried out. This is an obvious benefit, but in addition tothe benefits there are problems involved in both conceptions. The con-ceptions are different, and Habermas’s conception solves some of theproblems included in Parsons’s original scheme. At the same time it stillleaves some problems unsolved and causes some others of its own. Thiswill become evident as we now turn to the list of six problems discov-ered by various critics of these two conceptions.




1. The social system as a nation-state. Both Parsons and Habermasequate the social system to the nation-state. This does not leave themcompletely without tools for analysing the interchanges between thenation-state and its environment because the theme of boundary mainte-nance is already present in Parsons’s conception, and without a doubt atleast many OECD countries can be, even in the context of globalization,profitably analysed as social systems. However, in the globalizing worldthe assumption of national borders as the borders of the social systemcannot be taken as a theoretical premise; it is instead a hypothesis whichshould be studied empirically in every case.

2. The social system as an organism. Due to the biological metaphor,it is instrumental to the Parsonian approach that systems described asAGIL schemes aim at their survival (Swinn, 1998). This may be an ade-quate description of some systems (the human being, the family, a busi-ness firm, etc.), but it is difficult to believe that nation-states (or theworld-society) could be profitably conceptualized as an entity that setsits survival as a task and then tries to figure out best strategies for imple-menting this task. This criticism affects the core of the Parsonianapproach. As far as Habermas is concerned, his approach is less vulner-able to this kind of criticism because he does not present shell G as theplace where societies think but attributes this function to the Lifeworldand emphasizes the dialogical (and potentially conflict-ridden) nature ofthe cultural dialogue. Yet he still follows Parsons in supposing that soci-eties are relatively clear-cut and self-sufficient wholes.

3. Is culture the same to everybody? The Parsonian conceptionassumes that, in the process of socialization, cultural values and cogni-tive frames are transmitted in the same form to every member of society.As shown by ethnomethodologists and some others, this is clearly anunrealistic assumption (Garfinkel, 1984). Here Habermas is much moreelegant and explicitly presents a conception in which the cultural framesof different actors vary, and must therefore enter a dialogue to under-stand each other.

4. The lack of the concept of habit. In The Structure of Social Action(1968) Parsons took the economist’s understanding of rational action ashis point of departure, and ended up with the unit act in supplementingthis model (Weber’s instrumental action) with normative pressures(Weber’s value-rational action) (Joas, 1996). If this conception is com-pared to Weber’s famous typology of action types, what he left out wastraditional and affectual action. Later on, the personality system addedaffectual action to his theoretical conception, but what was permanentlycut out was the theme of habit or traditional action. Due to this,




Parsons’s conceptualization of culture resembled the court of law in thesense that, in addition to certain residual categories such as attitudes, itwas norms and values which had, given the lack of the concept of habit,to cope with the entire field of traditional action (see Heiskala, 2000:65–76; for an explanation of the neglect of the concept of habit inParsons’s work, see Camic, 1986). The reformulation by Habermas doesnot bring any significant improvement to this problem, becauseHabermas understands culture as communicative action in the fieldwhere people consciously try to transmit meanings instead of being,most of the time, in a state of half-conscious habitual behaviour. It hasbeen one of the central currents of recent social theory to coin concep-tions which fill up this empty space with concepts such as routine(Giddens, 1976), habitus (Bourdieu, 1990) and habit (Joas, 1996).

5. Structural interchanges and generalized media. In The Structure ofSocial Action (1968) Parsons followed Weber in stating that all socialtheory should be, at least in the last instance, made from the actor’s pointof view. This all changed in his systems-theoretical phase, and from TheSocial System (1951) onward he understood socialization and institu-tionalization as the two great forces which created the structure of thesocial system and the mental structure of actors in such a manner thatthere was no necessary reason for taking the actor’s point of view as astarting point as long as the actor’s values or the constraints of the envi-ronment could be seen as motivational forces causing the action(Heritage, 1984). This change is also present in the AGIL scheme of thesocial system, which has no place for action and where everything hap-pens by means of structural interchanges of the four specialized media(money, power, influence and commitment). As stated in the previoussection, it is one of Habermas’s main criticisms of Parsons that, even ifmoney and power can be seen as specialized media, the Lifeworld obeysa different, communicative logic. In this sense Habermas is not vulnera-ble to this criticism. However, remnants of Parsons’s conception stillmake their way into Habermas’s theory because the reverse side of hisemphasis on the cultural nature of the Lifeworld is that the economy andthe administrative system are not analysed in cultural terms, as if moneymeant the same thing to everybody (cf. Zelizer, 1994), and the adminis-tration is seen as a mechanical machine with no cultural variation (cf.Powell and DiMaggio, 1991; Scott, 2001).

6. Power without conflicts. Parsons understood power as a generalizedmeans for bringing forth changes in the environment. This conceptionitself is very useful, which seems to be the reason it is still in use in sev-eral non-Parsonian theories (cf. Giddens, 1976; Heiskala, 2001; Mann,




1986). However, in Parsons’s systems theory this conception led him todownplay political interest conflicts in the analysis of goal attainment.Shell G of the social system was therefore characterized by policy ratherthan politics in the original Parsonian AGIL scheme of the social system(which is why accusations of conservatism are justified in this respect).This problematic assumption is preserved in Habermas’s description ofthe administrative system in his reformulated System–Lifeworld schemeeven if Habermas makes (somewhat modest) attempts at analysing con-flicts in the field of the Lifeworld.

These six critical points by no means exhaust the spectrum of criti-cisms that have been made and can be made of Parsons and Habermas.However, together they constitute such a burden that many critics haveconcluded that attempts to eliminate all the problems within the struc-tural-functionalist approach are not worth the effort, and it is thereforemore reasonable to turn to other currents of social theory. This is whatwe, too, are going to do in the next section, while searching for theoret-ical tools for an alternative conception. It is not in our interest, however,to completely reject the structural-functionalist approach; instead weprefer to reformulate a theory of the structural-functionalist conceptionin such a way that it can be freed from all these problems. Such a rede-fined conception will be developed in the next two sections, the first ofwhich paves the way for the second by dealing with different currents ofinstitutionalist thought.

3. The challenge of institutionalism

A generally accepted definition of “institutionalism” does not exist.Different authors use the term – with or without the prefix “neo” – in dif-ferent ways and for different purposes. One attempt to cover most of thedifferent uses is presented in the scheme of the three pillars of institu-tionalist thought by W. Richard Scott (2001). The scheme differentiatesthe regulative, the normative and the cultural-cognitive pillars of institu-tionalist argumentation. This results in a very broad definition ofinstitutionalism, with Talcott Parsons, for example, as a normative insti-tutionalist. Broad as the definition is, it is useful for many purposes,including the organization of an extensive and extremely helpful book-length literature review, which is the way Scott himself uses the scheme.However, the scheme has two limitations. First it is sometimes difficultto tell apart approaches concentrating on regulative rules and those con-cerning normative expectations. Second, the definition of the third pillar




as cultural-cognitive cuts out some of the most important arguments ofpragmatist institutionalism and biases the interpretation of the pillartowards the phenomenological frame of reference. In what follows, reg-ulative institutionalism is represented by economic neo-institutionalism,and more specifically by Douglas North’s version of it (section 3.1).What Scott calls normative institutionalism is not dealt with at allbecause it was the subject matter of the previous section. What Scottcalls cultural-cognitive institutionalism is redefined as pragmatist, phe-nomenological and semiotic institutionalism (section 3.2 and 4.1).

3.1. Institutionalism in economics

In his Institutions, Institutional Change and Economic Performance(1990) North makes a distinction between transformation costs and trans-action costs. Transformation costs are “the resource inputs of land, laborand capital involved … in transforming the physical attributes of a good(size, weight, color, location, chemical composition, and so forth)”, alladequately analysed by neoclassical economics (North, 1990: 28). Thisis not the case with transaction costs, which North sorts into two classes:costs of obtaining information and enforcement costs.

He maintains that modern Western societies are as close to the neo-classical fiction of perfect markets with costless information as anyknown society has been. However, even in these societies actors spend agreat deal of their time on acquiring information, and even then theresult is far from the state of perfect information. What prevails insteadis a chronic lack of information and its asymmetrical breakdownbetween different actors. In most other societies, and in past history, thesituation has often been much further away from the neoclassical model.Enforcement costs, again, are costs of implementing norms. They, too,are an integral part of any economic system, as institutions (defined as“rules of the game”, whether formal or tacit) reduce uncertainty and thusmake economic exchanges and long-range economic planning possibleand profitable (property rights is one of North’s favourite examples andthe only one he discusses at some length).

In terms of economic history, neoclassical economics predicts the emer-gence of more and more efficient forms of economic action, while tech-nology develops, and the competition forces less efficient actors out of themarket. This should result in convergence between different societiesbecause less-developed societies can imitate more-developed ones (whichsignificantly reduces R&D costs) and compete with cheaper prices of




labour and some raw materials. This sometimes actually happens (onJapan and South-East Asia, see Krugman, 1999). More often, however,inefficient economic practices prevail, and the global economy in generaldoes not seem to be developing towards more equal division of income.This is an unsolvable puzzle for the neoclassical economist but not for aneo-institutionalist. North claims that the pattern of persistent unevendevelopment can be explained by what he calls “path dependence”. In thecourse of history different societies have developed different institutions.Institutions frame economic action, and it is up to institutions whether thetransfer of innovations and organizational patterns from one society toanother is easy, difficult or impossible. Moreover, moving from one insti-tutional path to another is costly, difficult and often outright impossible.Therefore the structures of uneven development tend to be quite persist-ent, even if the problems involved are not always unsolvable. However, theexistence of the phenomenon of path dependence shows that the adequateframe of reference for the study of problems, such as that of uneven devel-opment, is not neoclassical economics. Rather it is an issue of the eco-nomic historian studying traditions, cultural schemes and historicalsuccession, or, as North puts it, institutions.

Economic neo-institutionalists do not claim that the neoclassical par-adigm should be rejected. They simply state that it should be completedwith the analysis of transaction costs and institutional paths, which varysignificantly according to their context. At the same time they obvi-ously bring forth a form of economic analysis which seems much moreacceptable from the sociologist’s point of view than the orthodox neo-classical paradigm. However, many of the sociologist’s reservations arestill left untouched. These include premises 1–5 mentioned in theIntroduction, including the assumption that human life is maximizing.For an institutionalist criticism of these premises, we must turn topragmatist institutionalism.

3.2. Pragmatist and phenomenological institutionalism

In the Introduction economic neo-institutionalism was found to be aninteresting but somewhat limited approach to the economy/society puz-zle. Put in Parsonian terms, it can now be said that its view of the socialtotality is restricted in the sense that it limits its concerns to the problemsspecific to shell A of the social system.

But if there is economic neo-institutionalism (as there has been forsome 30 years), there must be an earlier form of institutionalism preceding




it, without the prefix “neo”, and indeed there is the tradition of Americaninstitutionalist studies of the economy by Wesley Michell, Thorsten Veblen,John A. Commons and Walton Hamilton, in the first half of the 20th cen-tury. This tradition, too, emphasizes institutions instead of abstract marketgames but it is still rather different from economic neo-institutionalism.This is evident from the quite critical reception of the older tradition ineconomic neo-institutionalism (see a set of critical comments on variousauthors compiled by Oliver E. Williamson, who himself is one of the lead-ing current economic neo-institutionalists; Williamson, 1994: 78). The rea-son for these rather impolite comments (such as George Stigler’s remarkaccording to which institutionalist approaches could provide nothing“except a stance of hostility to the standard theoretical tradition. There wasno positive agenda of research”) is that the older tradition of institutional-ist thought is not really a form of economics but rather a form of social andcultural theory. What the economists consider a complete failure and lackof results turns out to be a discourse aiming at different results from thoseof economics. And this of course is the very reason for discussing it here.

The older school of institutionalist thought was critical of the econo-mist’s premises in a rather similar manner to most sociologists andanthropologists. As stated by Geffrey M. Hodgson (1994: 60 and pas-sim), what the institutionalists did not believe was the economist’sassumption of rational, maximizing behaviour by agents with given,stable and transitive preferences (cf. points 1–4 in the list of premises ofneoclassical economics in the Introduction). Instead they maintainedthat actors do not necessarily maximize; their preferences change con-stantly and are rarely transitive. Institutionalists also found the assump-tion of equilibrium as a state towards which the economy always strives(point 5) unrealistic. Instead they saw the economy, as well as other partsof reality, as an open and evolving system. Finally they emphasizedchronic information problems in the economy and other fields of humanaction (point 6). They also maintained that these information problemsinclude severe ignorance, radical uncertainty and divergent perception ofa given reality. Therefore most of the information problems cannot besimply transformed into problems of probabilistic risk, which has beenthe economist’s strategy for reducing the problem of uncertainty(Hodgson, 1994; on the crucial significance of the problem of uncer-tainty, see also Beckert, 1996).

The work of the older tradition of economic institutionalists wasbased partly on American pragmatist philosophy (C.S. Peirce, WilliamJames, John Dewey and G.H. Mead). It is no wonder then that the con-cept of habit was central to it. This is, among other things, evident in the




institutionalist definition of institution. One version of this definition isgiven by Walton Hamilton who, in the Encyclopaedia of the SocialSciences in 1932, writes that an institution is

a way of thought or action of some prevalence and performance, which is embeddedin the habits of a group or the customs of a people.… Institutions fix the confines ofand impose form upon the activities of human beings. (Hamilton, 1932: 84)

This definition implies a very broad understanding of the concept ofinstitution according to which, “when they are shared and reinforcedwith a society or a group, individual habits assume the form of socio-economic institutions” (Hodgson, 1994: 64).

As shown by Joas (1996), the institutionalist understanding of thenature of social action is completely different from the economist’s con-ception. While the economist thinks that people’s choices can be calcu-lated if we are familiar with their preferences and the structure of theenvironment, an institutionalist does not restrict attention to mechanicaleconomic choices but instead puts emphasis on habitual action and insti-tutions, on the one hand, and on the creativity of action emerging in situ-ations of crisis, on the other. If we recall the point made by Joas andalready dealt with in section 2 above, we can see that this train of thoughtalso has relevance in the context of Parsons’s systems theory. Parsons’sunit act, and the mature systems theory based on it, applies a basicallysimilar model of action to that of the economist. The only difference isthat, in addition to conditional constraints, Parsons introduces normativeconstraints. As we noticed above, this cuts the concept of habit out of theanalysis of action. Now we can also see that at the same time it has impli-cations for the way institutions are defined. From the Parsonian point ofview a system of action is institutionalized to the extent that actors in anongoing relation orient their actions to a common set of normative stan-dards and value patterns (Scott, 2001: 15). Thus “the primary motive forobedience to an institutional norm lies in the moral authority it exercisesover the individual” (Parsons, 1934: 326) and when a normative system isinternalized in the process of socialization, “conformity with it becomes aneed-disposition in the actor’s own personality structure” (Parsons, 1951:37; see also Parsons et al., 1953). From the point of view of pragmatistinstitutionalism, this Parsonian normative mechanism is but one specialcase of institutionalization because institutionalization may but does nothave to be normatively regulated and conscious. In pragmatist institution-alism, institutions are seen as socially shared habits some of which areconscious, some tacit; and there is a continuum of different institutionsfrom explicitly and formally defined ones, with formal sanctions, to mere




half-conscious or unconscious regularities in interaction, without othersanctions than the mere existence of the tradition. Compared to structural-functionalism, this again provides a possibility for describing society as amuch more flexible entity in constant flux and with internal contradic-tions. This can be elaborated on by a brief excursion to Peter Berger andThomas Luckmann’s conception of institution in their Social Constructionof Reality (1966).1

Berger and Luckmann define institution as a social process duringwhich “[i]nstitutionalization occurs whenever there is reciprocal typifica-tion of habitualized actions by types of actors. Put differently, any suchtypification is an institution” (1966: 54). Compared to the structural-functionalist definition of institution, this definition is more flexible, asstated above. In addition it does not assume that all institutions clingfunctionally together, but allows the existence of contradictory institu-tions and social conflicts. In fact Berger and Luckmann interpretParsons’s functionalist theory as one form of legitimation because it doesnot recognize this institutional variation and conflict. Moreover, Bergerand Luckmann’s approach to institutions is supplemented by an analysisof socialization, presenting it as a local process which creates differenthabits for different persons. In any orderly society there are many simi-larities between the local processes of socialization of different persons,but this, as well as variation according to gender, social class or area ofinhabitancy, is a matter of empirical study not to be taken as given.

What emerges now is a much more flexible social theory thanParsons’s structural-functionalism. This theory allows variation in insti-tutions and personalities; it presents conflicts as a routine part of thesocial process and therefore presents the functional interplay of socialinstitutions as a matter of empirical study; and it also interprets habits as“the enormous fly-wheel of society” (William James; quoted inKilpinen, 2000: 13). In this way it challenges Parsons’s theory. It is achallenge to Habermas’s theory, too, because Habermas shares manyfeatures of Parsons’s conception. Moreover, while Habermas does notassume culture to be a monological entity, his analysis of culture isbased on the theory of communicative action, which models speech actsas rational action the purpose of which is the speaker’s conscious inten-tion to transmit messages. Even if it is obvious that culture includesmany situations such as this, the model of two or more conscious inter-locutors is far too narrow a scheme to cover the entire culture. This isimmediately obvious when we compare the theory of communicativeaction to the institutionalist interpretation of culture as a form of habit-ual action part of which is conscious and another part not.




4. Towards a synthesis: economy and society in semioticinstitutionalism

This criticism can be taken as a complete refutation of Parsons’s struc-tural-functionalism and Habermas’s reformulation of it. Here, however, adifferent route is taken. This alternative route is an attempt to treat theseformulations in the same way as Parsons treated classical sociologists, andHabermas treated Parsons. In other words, in what follows we make anattempt to critically reconstruct their theoretical approach so that it will nolonger be vulnerable to the criticisms made in the preceding two sections.

The point of departure for the reconstructive attempt is the institu-tionalist conception of society, according to which society is a set ofhabits articulated on various levels of conscious recognition (from com-pletely unconscious to explicitly defined and codified), having variousdurations in time (from passing fashions to solid conventions) and a dif-ferent extent of diffusion (from strictly personal habits to collectivelyshared traditions). It is a contingent historical issue, whether these habitsrelate to each other by forming a relatively coherent and functionallyinterrelated social system or by separating themselves from each otherto form either independent or conflicting patterns.

The particular quality of the variant of institutionalism presented hereis semiotic and it therefore interprets the social process as a flow ofsigns. After outlining the basics of the semiotic approach (section 4.1),we move towards a semiotic institutionalist interpretation of theHabermasian System–Lifeworld scheme (section 4.2).

4.1. Semiotic institutionalism

It is not possible to go into the details of the semiotic approach here (seeHeiskala, 2003), but a short discussion on four points will clarify thenature of the semiotic variant of institutionalism before an attempt is madeto apply the semiotic approach to reconstructing the Parsons–Habermasapproach to society.

1. Semiotic institutionalism maintains that meaning is a habit of inter-pretation. As such it is usually socially constructed, even if it is at the sametime part of a continuum of habits extending from conscious reflections tohabits that characterize the human being as a mere behavioural organism.

2. Social actors are often conscious of those meanings that direct theiraction. However, this is not always so. In the social process the precon-scious, unconscious and rejected meanings often flow, with causal




effects to that process. The social reality then is not transparent to socialactors.

3. The flow of meanings is semiotically structured. This is to say thatmeanings are transmitted by means of signs that consist of the signifier(the material part of the sign) and the signified (the meaning effect of thesign) (de Saussure, 1983). That is the case whether we are dealing withthe process of communication or the process of thought (there is no suchthing as presemiotic thought). The structuring of the social meaningtakes place in the form of semiosis by which some signifiers and signi-fieds are articulated together due to continuous repetition. This is howthey form a structure that makes communication and thought possible.

4. There are many levels in the articulation of meaning on which theidentity of the sign (i.e. the reverse side of the existence of the meaningstructure) can be consolidated. The most familiar of these is the reflectivelevel, on which we meet different forms of knowledge, whether expertknowledge, everyday knowledge in the sense of Berger and Luckmann orsome intermediate yet conscious and explicit complex of meaning.Below the reflective level of semiosis we find the level of prereflectivearticulation of meaning, on which habits of interpretation are not con-scious. They can be rejected as Freud’s unconscious meanings or mean-ings forced to the margins of the field of social discourse by symbolicviolence à la Bourdieu (Bourdieu, 1990; Freud, 1991); but they can alsobe such habits of interpretation which have not yet got their semioticshape as beliefs (Peirce, 1931–58: vol. 5; 487). The articulation of reflec-tive meanings rests in many ways on this prereflective level of semiosis,which Foucault called the “mur-mur” preceding language, and MichaelPolanyi “tacit knowledge” (Foucault, 1970; Polanyi, 1983). Finally onthe level of reflective semiosis rests the constitutive level of the articula-tion of meaning. There, meanings are not just explicit but in addition arebacked by sanctions. On this level relations of meaning are thereforenorms, which not only describe the surrounding reality but are in additionsemiotic interventions which have the force to constitute and alter socialreality. These signs tell not first how things are but also how things shouldbe. There are several types of such constitutive articulations of meaning,but the most obvious type is the legal sign. In a democratic society it isenacted in the parliament, interpreted by a bureaucratic staff in the courtof law and implemented by the bureaucracy of the police, and in the lastinstance secured by the rifles and bayonets of the army, another bureau-cracy. Therefore there is no joking about the law.

Equipped with this telegraphic introduction to some basic conceptsof semiotic institutionalism, we now reformulate the Habermasian




System–Lifeworld scheme in semiotic terms. The reformulation takesplace in the form of a discussion on social constraints (section 4.2),which is followed by a discussion on the benefits of the reformulatedconception in comparison to the original Parsonian and Habermasianapproaches (section 5).

4.2. Semiotic interpretation of the System–Lifeworld scheme

If we accept that the System–Lifeworld scheme adequately describes thesocial reality, what kind of constraints do we face as members of soci-ety? To begin with there are constraints of scarcity emanating from theeconomic system. Secondly there are constraints of organized violenceemanating from the administrative system. Thirdly there are normativeconstraints emanating from the Lifeworld. Finally, as the Lifeworld inHabermas’s scheme also includes, in addition to values and norms, theentire Parsonian cultural system, there are constraints characteristic ofcommunication in general. How are these constraints transferred to us?Semiotically speaking, the answer is simple: by signs. The economicsystem is organized by the monetary sign. The administrative system isorganized by the legal sign. We face normative constraints in the form ofritually affirmed symbols, and communicative constraints are mediatedto us by frames and grammars regulating the formation of well-formedlinguistic and other signifying expressions (see Figure 4).

The monetary sign is numbers on the screen, credit cards, or notes andcoins, depending on whether we are dealing with large or small amountsof money. In all cases it is a peculiar sign in the sense that its signifiedis a promise to pay. This promise is made peculiar by the fact that it isgiven in a scarce environment. Monetary signs are therefore differentfrom the signs of natural language, for example, in that monetary signsdisappear once they are used (or more correctly, are transferred to the


The monetary sign The legal sign(the constraints of scarcity) (the constraints of organized violence)

The ritually affirmed symbol and the sign proper(the normative and communicative constraints)

FIGURE 4Social semiosis as a System–Lifeworld scheme



possession of the other party of the transaction). The same sign can, inthe event that it actually is a monetary sign, be used only once.

The legal sign, which organizes the administrative system, does notdisappear in use. It is a different form of constraint. Its signified is not apromise to pay but a threat to punish. It is not scarcity but organized vio-lence, an ability to realize the threat to punish if need be, which is theback-up of the legal sign. Both kinds of sign are valid and socially effec-tive in the sense that they enable the mutual coordination of the acts ofsocial actors as long as the promise and the threat are convincing. If,however, the trust in the promise and the threat is lost, the monetary signand the legal sign cease to be valid; the currency and the existing lawthus lose their constitutive force to pattern the surrounding semiosis.This is what happens in cases of bankruptcy, devaluation of a currencyand erosion of the state organization (e.g. Enron, economic crisis inArgentina and the collapse of Soviet Union).

The Lifeworld imposes on us constraints different from, but no lesscompelling than, those mentioned above. Normative constraints aretransmitted to us in the form of ritually affirmed symbols. Here we aredealing with the sacred dimension of signs which makes them emotion-ally moving and thus charges the signs in question (flags, wedding rings,corporate logos, religious symbols, quotations from classical thinkers,etc.) with the power to direct our action.2 This normative constraint ismediated to us in the form of interaction, on the one hand, and by social-ization, on the other. In the course of the socialization process symbolstransform the consciousness and identity of the subject. In interactionthe symbolic constraints may rest on ritual repetition, and in such a caseit is the subject’s own affectual reaction which is the drive for action.Even in cases in which the subject is not emotionally touched, symbolsmay have directive force because the subject still faces the normativeforce of the behavioural grammars prevailing in the social environment.

Finally there are the Lifeworldly constraints emanating from the natureof communication. It is not possible to speak as one wishes, at least notif one wants to be understood. Instead we are obliged to use establishedlinguistic structures and to obey grammars of normal behaviour in orderto communicate meanings without directing attention from the contentsof our message to the form of transmission. These are structural con-straints that have been extensively studied by anthropologists, linguists,semioticians and ethnomethodologists. What we are dealing with here isculture in the widest sense of the word, including not only the rituallyaffirmed symbols studied by Durkheim and others but also culture as theframe for interpreting reality or a huge set of schemes for acting. In other




words this is culture not as the distinction between the sacred and theprofane but as the distinction between sense and nonsense.

Figure 4 and the above discussion show how the entire social reality canbe interpreted as a totality of social semiosis. Very often the problem withcultural interpretations, which usually emerge either from anthropology orfrom cultural studies, is that they do not make distinctions between differ-ent types of signs. Interpretations of “society as text” (Brown, 1987) there-fore often lose sight of many (most?) central problems of social theory (asan example of this in the context of the economy/society relationship, seeDerrida, 1974, 1981). The approach presented here seeks to avoid this pit-fall by making the distinction between monetary signs, legal signs, rituallyaffirmed symbols and signs proper, and by a related analysis of the differ-ent ways in which the solidity of each of these different types of sign isarticulated and sanctioned. This research thus retains traditional social the-oretical questions and, at the same time, makes it possible to find newanswers to the old questions.

But what actually do we gain by adopting this new theoretical lan-guage game?

5. Conclusion: how does semiotic institutionalism overcomethe limitations of the structural-functionalist approach?

From the institutionalist point of view, the major benefit of the above con-ception is a macro-approach to society. Habits are central to institutionalistargumentation, and it is easier to study habits in micro- than in macro-contexts. Therefore approaches such as ethnomethodology and research ontopics such as firms and other organizations have been the major field ofstudy in sociological institutionalism. Adopting the System–Lifeworldscheme and redefining it in the frame of reference of semiotic institution-alism provides us with an institutionalist macro-conception of society.

Such a macro-conception however can be adopted only if it does notimply adopting with it all the problems and shortcomings of structural-functionalism. Therefore the six criticisms of the structural-functionalistapproach must be discussed explicitly to see whether the reformulatedscheme is actually free from those problems.

1. The scheme is not tied to the idea of a nation-state. The semiotic con-ception is based on the notion of an open structure. Such a structure maybe relatively consolidated but it does not have to be. Therefore it is possi-ble to analyse nation-states with the scheme, but the question whether, towhat extent and in which senses such nation-states are relatively clear-cut




entities within the global semiosis is a contingent issue and thus a problemof empirical study.

2. Society is not an organism. The semiotic identity of signs is relativeto the existence of a semiotic structure. However, the concept of structurein the semiotic sense does not imply functionalism and the related idea ofstructures as entities aiming at their survival. According to the semioticview it is more appropriate to see social reality in a Weberian way as atotality of “patterned mess” (Mann, 1986), and leave it to empiricalresearch to study the nature and the degree of patternedness in each case.

3. Culture is not the same to everybody. The notion of open structureincludes the idea that signifying processes are local. Socialization doesnot imprint the culture in the same form in every member of society. Inmost societies there may be predominant socialization patterns, but thisagain is a matter of empirical study, and even if such patterns are found,no two persons in any society have exactly the same socialization historyand thus exactly the same cultural identity or habitus. One of the sideeffects of this conceptualization is that differential socialization can belocated as an important source of both social change and social conflicts.

4. Habit is the enormous fly-wheel of society. The conception is basedon the pragmatist understanding of habits as the substance of social life.The related differentiation into several levels of habitualization andarticulation of semiotic identities of signs provides a tool for analysingthe degree and nature of the institutionalization of the social system.This type of analysis of course is something that cannot be carried out inthe field of pure social theory. In addition it requires empirical socialresearch on actual societies.

5. There is cultural variation even in the System. The reformulationimplies a generalized medium through which all shells of the schemecommunicate, namely the sign. This is a step away from Habermas inthe direction of Parsons’s original scheme, even if the functionalist aspectsof the Parsonian scheme are dropped. In addition it is also in accordancewith the Parsonian scheme to distinguish different types of sign (the mon-etary sign, the legal sign, the symbol, the sign proper), depending on thenature of the articulation of the sign in question. At the same time thisstep towards Parsons does not give up Habermas’s conviction, accordingto which there is cultural variation in the Lifeworld. Contrary to Haber-mas, however, this variation is not limited solely to the Lifeworld butcharacterizes the System as well. The scheme actually makes the dis-tinction between the System and the Lifeworld relative, and turns it intoan empirical problem of detecting the type of semiotic articulation ofsigns in all social interaction.




6. In addition to capacities, conflicts too are an important dimensionof power. It is rational to adopt the Parsonian conception of power as acollective resource the amount of which can be increased by technolog-ical and social innovations and cooperation. However, there is no reasonfor denying the allocative aspect of power and the related interest strug-gle or politics. Moreover it is important to interpret the concept of inter-est here in the wide Weberian sense, with both material and idealinterests included.

The list shows that the pitfalls detected in section 2.3 can be avoidedbut it does not tell us whether there is something that can be done withthe new conception. This is a somewhat tricky problem, as the emer-gence, reproduction and collapse of social systems are not, according tothe view adopted in this article, a question of theoretical interference buta matter of empirical study. However such empirical study revolvesaround the question of social order, and luckily enough social order is amatter that can be theorized.

In the case of relatively integrated social systems, a fairly uniformorder prevails. An extreme form of integrated social system is theParsonian relatively self-sufficient social system as a nation-state, withlittle or no interchange with the world outside, with a relatively coherentcultural sphere, laws grounded in the culture and an economy based onboth. Moreover, in such a completely integrated social system, there isno sign of motivational problems (anomie) or internal conflicts.

This theoretical case is one apex (that of Order) of the triangular the-oretical field the other two apexes of which are Conflict and Chaos (seeFigure 5).


ORDER

CONFLICT CHAOS

FIGURE 5The field of social semiosis



When we move from the Order apex towards the Chaos apex of thetriangle in Figure 5, we move towards the situation of Durkheimiananomie, whether it is a question of the lack of overlap and integrationbetween the different elements of the social system or the erosion of itsparts. Either way, we move towards a situation where there are either nodefinitions of reality or there are so many definitions of reality that itcomes down to the same thing, virtually. When again we move from theOrder apex towards the Conflict apex, what we meet is a party forma-tion in the Weberian sense of conflicting interest groups, based on eithermaterial or ideal interests or both. These three extreme cases can alloccur in the form of habitual repetition (even if, in the case of chaos, thehabits of interpretation are fragmented).

Most empirical objects of study cannot be placed at one or anotherapex of the triangle. Instead they lie somewhere in the triangular fielddefined by the three apexes. It is the task of the sociologist to study theworld-society and smaller wholes articulated within it, and to ask whatare the most important phenomena in terms of order, conflict and chaos,and what are the relationships between different levels. Such studies arenecessarily empirical in nature. Semiotic institutionalism is one possibleconceptual frame for organizing this kind of empirical study. We havetried to show above that this synthetic approach combines the benefits ofstructural-functionalism (ability to move on the macro-level) and insti-tutionalism (ability to conceptualize the flow of structures) withoutremaining tied to the shortcomings of the two approaches (the lack ofmicro-perspective and flow in the case of structural-functionalism, anddifficulties in moving on the macro-level in the case of most forms ofinstitutionalism). Therefore semiotic institutionalism is better suitedthan either of the above-mentioned one-sided conceptions to studyingthe changing (and constantly flowing) economy/society relationship inwhat can be called the age of a rapidly changing world-society (seeHämäläinen and Heiskala, 2007).

Risto Heiskala is Professor and Head of the Department of Social Sciences andPhilosophy at the University of Jyväskylä, and Docent at the University of Helsinki. Hehas been a member of the executive committee of the European Sociological Association(ESA), the coordinator of the ESA Social Theory Network and the editor of Sosiologia,journal of the Finnish Sociological Association. His main research areas are social the-ory, cultural theory, modernization and globalization. His recent publications includeSocial Innovations, Institutional Change and Economic Performance (Edward Elgar,2007, co-edited with Timo Hämäläinen), Society as Semiosis. Neostructuralist Theory ofCulture and Society (Peter Lang, 2003), Action, Habit and Structure. Towards aConstructionist Synthesis in Social Theory (Gaudeamus, 2000; in Finnish, currently in




the process of translation into English), and Towards Artificial Society (Gaudeamus,1996; in Finnish). Author’s address: Department of Social Sciences and Philosophy,University of Jyväskylä, FIN-40014, Finland. [email: [email protected]]

Notes

1. Strictly speaking The Social Construction of Reality emerges from the tradition ofphenomenological sociology of Alfred Schutz (see Heiskala, 2003: 272–8). However,there are so many pragmatist influences that it is safe to integrate their approach into theinstitutionalist tradition as well. This is so for theoretical reasons, as we see from their def-inition of institution, as well as from the perspective of the history of ideas, because theirbook is one of the root texts for a current which is called neo-institutionalism in economicsociology and the study of organizations (Powell and DiMaggio, 1991).

2. Note that, contrary to a common and much broader use in which terms “symbol” and“sign” are treated as synonyms, the use of the term “symbol” is here restricted so that itrefers not to all signs, but to a specific class of signs which are emotionally touching, witha pattern of ritual affirmation of that emotionally touching nature involved.

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Economy and society. From Parsons through Habermas to semiotic institutionalism.

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