Fallible But Capable Human Beings

|Peter Boettke|At the APSA panel yesterday discussing the IAD framework and the contributions of the Bloomington School, I said in response to one question that in our book the one thing we could have done better is to engage in a comparative analysis with other approaches to political economy.  Our book mainly shows complementarities between Buchanan's framework and the Ostroms, and some Austrian aspects (Hayek and Lachmann in particular) and the Ostroms.  But for the most part the book is an exposition of the IAD framework as Paul and I understand it, the professional disputes that motivated it, and its subsequent evolution and development around various empirical puzzles, including of course the problems for social cooperation in situations of common-pool resources.  We also discuss, however, local public economies and the nature of the collective action problems face in this environment which are not exclusively common-pool resource problems.Anyway, in response to the question I suggested that they way I think about IAD is to begin thinking about economics.  We begin, in other words, with two propositions about the world --- individuals act rationally to pursue their plans, and order results without central command.  The intellectual puzzle we face is squaring these.  In traditional political economy, such as in the work of the Rochester school, and in particular the work of Barry Weingast, I argue this program is followed by respecting preferences and situations.  Preferences are treated as given, situations are exogenously established, the structure induced equilibrium falls out of the exercise.  Once we know preferences and we specify the situation, the model is a single exit model and we have a determinant result.  The contingency and the irony of human life is not explored in such a framework.  The structure induced equilibrium framework of analysis is powerful engine of inquiry in political economy.  But I don't believe it exhausts what we are trying to do analytically as political economists.The IAD framework as developed by Vincent and Elinor, on the other hand, retains the argumentative structure of rational choice and equilibrium properties, but sees the process of learning and discovery within diverse institutional arrangements as the object of study.  It is rational choice as if the choosers were human -- caught between alluring hopes and haunting fears; and institutional analysis as if history mattered -- path dependence, stickiness, and questions of scalability are never far from consideration.  Contingency and indeterminacy substitute for single exit models, but the logical structure of both rational choice theorizing and invisible hand explanations remain.  It is just that the heavy lifting intellectually is done by the institutional analysis, not the behavioral assumptions.  The equilibrium properties of human behavior are realized as a by-product of the process of learning and discovery, not the assumptions going into the analysis of the institutional filters of social cooperation.  It is the specification of the institution-specific filters and the processes they generate that we focus our analytical attention on.Man is a rational actor, but a fallible one.  But a fallible one that is capable of learning and discovering.  And we find men throughout history and throughout location, interacting with one another through a diverse set of institutions.  Yet some societies are capable of realizing the gains from social cooperation under the division of labor, while others fail to realize those gains.  It is about dynamic adjustment, about robustness to deviations from the ideal, or robustness to changes in the underlying structure, and not exclusively about the equilibrium of the game we find ourselves playing.