Fixation of Belief and Membership: A Contribution to the Understanding of the Detrimental Outcomes of Institutions

The contribution of institutions to growth or to stagnation (or even 'collapse') is a recurrent question in economics. The paper analyses the causalities according to which institutions generate behaviour that is detrimental to prosperity. Departing from mainstream explanations ('dysfunctionality', 'extraction'), it argues that institutions are composite concepts, which include forms and contents that evolve with time and contexts, and imply cascades of processes involving individual cognition and social interactions: yet certain beliefs may be subjected to processes of 'cumulative fixation', in contrast with refutable ones (e.g., scientific beliefs), and these processes are key mechanisms of stagnation. The article shows that some institutions can be related to others via sequential ordering, and that in an evolutionary perspective norms governing group membership (via, e.g., kinship, class, occupation) constitute 'core' institutions: more than others, these induce a cumulative fixation of beliefs and shape economic outcomes due to their key property, i.e. the generation of social classifications that orient individual behaviour vis-à-vis other individuals ('we'/'them', 'superiors'/'inferiors'). When contexts change, this ordering may evolve in asymmetries, where some beliefs and norms absorb or crowd-out others via mechanisms of cumulative causation, self-reinforcement and lock-in. Being more 'core', stable, than others, membership institutions drive such evolutions due to common features: beliefs that exhibit a high degree of fixation, deontic force and nonrefutability and provide high cognitive and emotional rewards, thus reinforcing incentives to adhere to them and having the greatest ability to persist whatever their economic effects.