In the field of natural resource management there is a wide literature that has engaged critically with institutionalist “common property” or “collective action” literature. Hall, Cleaver et al (2014) call this approach critical institutionalism and make a distinction between this and mainstream institutionalism. Mainstream institutionalism refers to common property and collective action analysis that they link to the New Institutionalist Economics of North (1990) and Ostrom (1990), which I have also referred to here as rational choice institutionalism.
58 Hall, Cleaver et al (2014) identify three key themes that they say leaves mainstream institutionalism lacking: First, the assumption that communities are homogenous; second, avoidance of power and politics and third, inadequate analysis of social phenomena. They claim that the collective action tradition is based on the assumption of homogenous community, since heterogeneity would constrain the crafting of rules because the different agents within the community would have different interests. This in turn has meant that proponents of community based institutions have not adequately analysed the politics and power relations in these institutions. This has often meant that “big men” like local chiefs, politicians or entrepreneurs have gained more power because they are not only the leaders, they also represent the community. They also argue that a lack of analysis of power relations has also meant that marginal groups within communities have not been identified or they have not been allowed to participate in the decision making. Moreover, they argue that social analysis has been inadequate in the sense that norms, values and symbolic meaning of resources has been lacking. Since the “rules .. are ‘fuzzy’; people’s complex social identities and unequal power relationships shape resource management arrangements and outcomes” (Cleaver 2012, 9; here Hall et al. 2014, 73), critical institutionalism sees a need for political and social analysis as well as analysis of norms (Hall et al. 2014).
The theoretical work for analysing the way social institutions contribute to the rules and social structures comes mainly from economic anthropology and economic sociology starting with the substantivist tradition within anthropology that was closely linked to Polanyi (1957). He suggested that whereas in ”primitive” areas the economy was embedded in the non-economic institutions, in the industrialised West it had become dis-embedded from the social base/social institutions and should be re-embedded. Granovetter (1985) claims that in line with Polanyi the majority of social scientists think that the economy in pre-modern or tribal societies is profoundly embedded in social relations, but in modern market societies this is far less the case.15 However, according to him neo-classical economists and formalist anthropologists16 think differently. For them, the level of embeddedness of the economy in social relations is more or less at the same level in different societies. Consequently, neo-classical economic proponents believe their theory can applied to ”tribal” societies effectively (Granovetter 1985).
Granovetter disagrees with both of these views, for according to him the economy is less
15 Polanyi (1957) actually claimed that the economic sphere becomes disembedded from society in modern market economies.
16 In the debate between formalists and substantivists the formalists claimed that all societies including the ’primitive’ and tribal societies the economic behaviour can be analysed assuming the same ‘rational’
behaviour as in Western societies.
59 embedded in tribal societies than what the substantivist anthropologist17 and many development theorists have claimed (Granovetter 1985). On the other hand, he thinks that the economy is more strongly embedded in market societies than neo-classical economists think.
With the concept of embeddedness Granovetter is trying to locate a middle ground between the ”over-social” view of social action, where the community’s rules and norms largely guide what the individuals do, and the ”under-social” view where the atomized individual makes rational choices without the constraints of the community or the norms. According to Granovetter, the economy is always embedded in social relations and seeks understand how these structure economic actions. For Granovetter, ”[h]ow behaviour and institutions are affected by social relations is one of the classic questions of social theory” (Granovetter 1992, 53). Rational choice NIE would claim that the importance of social relations is minimal regarding the choices of an individual, because individuals are primarily motivated by self-interest. However, Granovetter notes that economic actions cannot be simply derived from the principle of profit maximization as social relations also influence the economic outcomes and heavily constrain individual action. (Granovetter 1992).
Several authors within this tradition have tried to identify the key social institutions influencing the way markets operate. Pujo (1996) shows how the social institution of gender influences the rice market in Eastern Guinea. Specifically, activities that require technology, e.g. husking or transport are controlled by men, because they have the funds to purchase technology and also because tasks where it is used are considered men’ jobs even by women (Pujo 1996). Hence, she argues that the rice market is embedded in other social institutions. She concludes that
“[rice] markets … are partially determined, regulated and perpetuated by a wide set of social institutions” Pujo 1996, 132, here Johnson 2003). Likewise, Harriss-White (1998) argues that in West-Africa the social relations of gender enable women to be active only in certain markets, e.g. selling perishable vegetables and fruits, which do not bring much in income. Regarding the social institution of religion, Harriss-White reports from India that
“religious affiliation can govern the creation and protection of rent, the acquisition of skills and contacts, the rationing of finance, the establishment and defence of collective reputation, the circulation of information, the norms that regulate the inheritance and management of property and those that prescribe the subordination of women” (Harriss-White 2005, 7).
17 Substantivists that opposed the views of formalists claimed that in primitive cultures assuming Western rational behaviour did not provide deep and meaningful analysis.
60 Harriss-White’s study of the Indian labour force shows that it is not just regulated by the state and the market, but that it is also ”socially regulated” by class, gender, and caste in addition to religion. Regarding the concept of ”social regulation”, Harriss-White wants to emphasize how social institutions influence the way the economic ones are functioning and that social institutions confer power on some people over others (Johnson 2004a; Harriss-White 2005).
2.5.1. Social relations and savings group performance
Within substantivist and economic sociology tradition there are several authors who have sought to analyse informal savings and credit groups in terms of how they are embedded in culture and in different social institutions (Geertz 1962, Ardener 1995, Bouman 1995, Hospes 1996). Geertz (1962) provides an interesting description in the 1950’s from Indonesia on a ROSCA in the process of transforming itself into an economic institution, whilst being embedded in social and cultural institutions. However, neither Geertz nor Ardener (1995) tried to analyse how social institutions influence the rules, norms and operations of the groups, what power dimensions the social institutions have and which specific ones influence groups. There are only a few studies that have sought to understand more specifically which institutions have an impact on group performance and how they do so. Hospes’ (1996) research on financial markets in Ambon, Indonesia is one of them, viewing financial systems as ”social systems sustained by actors who are not only participants of these systems but also of other social systems, such as ethnic community, an extension program, an office, a neighbourhood, a religious society, a group of entrepreneurs, that affect or somehow embed financial systems”
(Hospes 1996, 13). Hospes thinks the different forms of ROSCAs need to be studied and related to the differences in ”local economic, social and political developments, since the economic, social and political conditions affect the way informal groups operate” (Hospes 1996). Another author that has sought to understand which specific social institutions influence the rules and performance of savings groups is Johnson (2003). She explains the popularity of mutuals (SACCOs and also informal groups like ROSCA and ASCAs) in Central Kenya as a result of the social relations and cultural norms that people have in relation to land, in particular of meaning related to ancestors and social importance of inheritance. According to Johnson, mutuals are therefore popular because people are not willing to mortgage land to get a loan from the bank.
To conclude on embeddedness, the central contribution of economic sociology and anthropology is the realisation that economic institutions are always embedded in social and cultural institutions. Unlike NIE that only deals with the functions of institutions and is trying to
61 make them more effective through lowering transactions costs, the embeddedness approach allows for the institutions themselves to be analysed. Further, Harriss-White’s claim that social institutions ”regulate” economic ones and economic development emphasises the power dimensions of the social and cultural institutions (Harriss-White 2005; here Johnson 2006).
Regarding institutional change in relation to embeddedness, Williamson suggests that at the embeddedness level change takes place very slowly meaning that trying to change rules that are strongly embedded in social norms might be a very slow process and hence, it is important to understand which social norms enable or prevent the change of particular rules.