The Merchants' Loggias Alone Will Create a Desert out of the City

Institutions - The Vocabulary of Good Social Life/19

by Luigino Bruni 

published in Avvenire on February 2, 2014

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Our well-being depends greatly on the quality of institutions. Marriage and universities, banks and State, Church and trade unions are obviously quite different things, but similar, too, because they are all institutions. Societies that are locked in "social traps" are characterised by inefficient and, at the same time, corrupt institutions, and by a high percentage of people with low or non-existing sense of the civic or of the institutional. It's a deadly process, which is often decisive and it hurts everyone. It makes the best part of the youth emigrate, attracted by better institutions in other countries. The history and the present of the peoples tell us that societies do not create widespread prosperity and good social life without the right institutions.

People's lives become poor and the peoples decline when societies create, select and nurture institutions that the economist Daron Acemoglu and political scientist James Robinson call "extractive", where the elite use institutions to extract income and attain personal and group advantages. These scholars contrast extractive institutions by those that they call "inclusive": the ones found in countries that are prosperous in their economy and civilisation, too, and that are practically identified with the Anglo-Saxon institutions ("Why Nations Fail", 2012). In reality, the boundary between inclusive and extractive institutions is much less clear than these two authors think, because the two forms coexist within the same community or nation, and, more importantly, they evolve into each other. In all social contexts and environments there are institutions created for the sole purpose of benefiting a select few, while extracting resources from others that live together with these, but are generated by explicit instances of the Common Good. But it is even more true that many institutions that are born inclusive turn extractive with time, and institutions that are created extractive become inclusive. European history is very relevant in this regard.

Market economy would never have emerged at the end of the Middle Ages without certain institutions: guilds, corporations, courts, banks, big fairs and even the basic institutions of the monasteries. Some of these were intentionally oriented towards the common good (brotherhoods, hospices for the poor, pawn broking institutions...). But many others (like corporations) were created to protect and promote the interests of their members (bakers, shoemakers, apothecaries ...), and ensure monopoly revenues for certain classes of merchants. The civil strength of the urban communities did, however, turn some of the singular interests into the interest of many, and not infrequently of all: many achievements of modernity , including political and civil ones, are the result of institutions born extractive and turned inclusive. Most of the economic institutions are extractive and closed originally, but is the coexistence with other political, civil, cultural and religious institutions that often opens up and elevates the original interests. The common good does not only need altruism, benevolence and their institutions. The "wisdom of the Republics", as Giambattista Vico reminded us, lies mainly in being able to create institutional mechanisms capable of transforming even the singular interests into the Common Good.

This alchemy, however, works only in the cities and their many and varied institutions "where the arts are protected, and the spirit is free" (Antonio Genovesi, Lessons of Civil Economy, 1767). All institutions are likely to become extractive or not to evolve into inclusive ones if there is no pluralism of institutions, if no new institutions are born and if they not are placed next to each other. The loggia of the merchants, the palace of the captains of the people, the convent of Saint Francis often took up the different sides of the same square, where each matured in contact with the others, without mergers, confusion or incorporation. And on that same square there were lively and interested citizens, artisans' workshops and artists, storytellers and the wagons of Thespis (with strolling players, the translator) that handed out dreams and beauty, especially to the children and the poor. Democracy, welfare and rights have emerged from this constant looking at each other, from the clashes with and controlling of one another, and from the co-existence of peers on the same square. Today, the global economic institutions are experiencing a strong extractive drift (also literally: think of the raw materials of Africa!) because other political cultural and global spiritual institutions are missing from around them, that could enter into dialogue, argue or control them on a reciprocal basis.

There is a second consideration, too. In our society there are many originally inclusive institutions (because they were generated by ideals, sometimes very high ones), which over time have ossified and their good fruits have become wild, if not poisonous. This involution of ancient good institutions, which in our age of epochal transition are particularly numerous, often depends on the inability to change the historical responses, to become attached to those given decades or centuries before, forgetting that the demand for the Common Good that had generated them. It so happens that great and noble institutions - here I think of many public institutions, but also of the many wonderful religious orders - gradually and unconsciously turn into extractive realities, which do not extract as much or only economic resources but enormous moral energies of their members and promoters, and end up depleting them and depleting themselves in the burdensome and costly management of structures that have lost the original demands of yesterday, and respond to demands that no longer arise today. The original purpose and the "vocation" of the institution is ever more distant in the background, and its main mission becomes self-preservation and the postponing of its own death.

Furthermore, in the life cycle of good institutions there are crucial moments in which it is decided whether the future direction will be greater inclusion or turning around and regressing into themselves. These moments are called crisis, in particular the type of crisis that emerges because of a mismatch between the mission of the institution and its organizational structure. The wine that starts feeling that its container skin flasks are too tight and constricted will soon make the first cracks appear. Much of the art of the leadership in these institutions consists in understanding that these crises are not resolved by insisting on the ethical dimension and on the motivation of individuals, but the structure has to be changed. The dialogue between the historical structures of an institution and the foundational demands are the essential and vital exercise for every institution, especially for those that were born of high ideals. The ideals of the people do not last long if they do not become institutions; but these institutions can die if they do not let themselves be converted by the ideals ("the demands") that generated them.

Inclusive and generative institutions are high forms of common goods. Like any common good they require nurturing, care and maintenance of their floodgates, groundwater and undergrowth. The period of institutional crisis that we are experiencing could become dramatic if the distrust of corrupt and inefficient institutions increases the neglect and non-maintenance of our fragile democratic, economic and legal institutions, and increases the escape from the institutions that characterizes our social era. Devoting time, passion and skills to reform institutions that are ailing today is perhaps the greatest expression of civic virtue. The first major care given to institutions, especially those that aren't healthy, is inhabiting them and not leaving them in the hands of their ruling élites only. This is to be immediately followed by creating new political, global, civil and spiritual institutions that place the economic ones aside (to be reformed because they are too pervasive, non-democratic and powerful) and curb the drift of our extractive capitalism, bringing the market back to its deepest inclusive vocation.

The loggias of the merchants have grown too much, they bought the neighbouring buildings, hired the storytellers, and some would like to occupy even the convents to gain more profit. If economic institutions are left to themselves in the global village, they will eventually be the only inhabitants of squares that in turn will be becoming more and more deserted. We must fill our global city squares with new institutions again if we want to see the return of the shops, artists and jobs.

 

Translated by Eszter Kató

Further commentaries by Luigino Bruni in Avvenire are available through the Avvenire Editorial

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