Government Failure
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Government Failure

Society, Markets and Rules

Wilfred Dolfsma

This highly unique book takes a fundamental look at when and how a government can fail at its core responsibility of formulating rules. Government, representing society, relates to the economy by formulating the rules within which (market) players should operate. Although market and business failure are much discussed in the economics literature, government failure is often overlooked. This book addresses this gap, exploring in detail what constitutes government failure.
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Chapter 9: Vulnerability of institutions and rules

Society, Markets and Rules

Wilfred Dolfsma


Institutionalist analysis has emphasized the durability and reproductive qualities of institutions in a system with differential levels and rates of evolutionary change. Durability is widely recognized as an essential dimension of institutions, but we add that durability only really makes sense if we also recognize that it implies vulnerability. Institutional reproduction is not inevitable and institutions are indeed vulnerable since institutional reproduction can fail such that institutions may no longer be re-identified, or identifiable across time. Thus, we consider vulnerability in terms of the susceptibility of an entity, such as an institution, to succumb to some force or influence that entails a loss of identity. The entity may be seen to lack the adaptive capability to ensure it is re-identified over time. Language, considered as an institution (Searle 1995, 2005), and its use in communication both in institutional reproduction and in institutional change offers ample scope to investigate the recursive institutional conditions of durability and vulnerability. Conceptualizing the durability and change of institutions is only possible through acknowledging the role of language. We ask what makes institutional reproduction a vulnerable process, as well as how, conceptually, possibly changing institutions may be re-identified over time. Identity in economic discourse is usually conceived in terms of the individual (see Fine 2009). Here, by contrast, we seek to extend its epistemological reach to offer an analytical entry point in the apprehension of institutional vulnerability.

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