How Did the Meaning of an Institution Get Distorted?

Abstract

We advocate a return of the term "instituciya" (institution) into active parlance of Russian social studies. Contemporary economists stick exclusively to the term "institut". The term "instituciya" is totally absent from university economics textbooks. We show that the meaning of "instituciya" is different from "institut". The founders of institutional economic tradition in the United States did say "institution", for which the proper Russian equivalent is "instituciya" rather than "institut". John Commons pointed out that all economic theories draw a distinction between activity (e.g., "production") and the objects created by that activity (e.g., "product"). Thus, institution is designated as collective action in control of individual action, whereas institutes are the products of that control. In Russia, the term "institute" locked in as the only name for both substances. Rare attempts to distinguish between them were rejected by the research community, mostly by disregard. We look at the common points against the reintroduction of the term "instituciya". They illustrate a path dependence, the inertia of mental models, and, importantly, a bias meant to protect personal and collective interests. We argue that the absence of one of the two key terms may hamper our understanding of the writings of John Commons, Gustav Schmoller and other great scholars; it creates a confusion. There is no need to replace mechanically one term by another because they complement each other and make a tandem. The recovery of the concept and term "instituciya" in Russian-language research papers would help focusing on culture-specific socio-economic practices of a particular community. It would facilitate the use of qualitative research methods and also cut down scholastic discussions unrelated to empirical material.