An introduction to the French economics of conventions

Robert Salais Ecole Normale Supérieure de Cachan

(Fellow at the WIKO, 2005-2006)

Kolloquium «Die sozialen Strukturen der Ökonomie»,Institut für Soziologie, Freie Universtität BerlinVortrag gehalten am 30. November 2005

A tale story of the 1980

Once upon a time, there were six French economists, four from INSEE, four from Ecole Polytechnique (not totally the same people) and one from University, who decided in 1986 to create a new branch of Institutional economics. They kindly worked together during two years and edited a special issue of la Revue économique (The economics of convention) in 1989. Who were they and what was their centre of interest? Jean-Pierre Dupuy, the outsider: paradoxes of standard rationality François Eymard-Duvernay and Laurent Thévenot: investments of form Olivier Favereau: Keynes and convention in David Lewis André Orléan: mimetism and speculation in financial markets Robert Salais: socio-history of the category of unemployment

Main assumptions

• Parsimony of presuppositions; what precisely acting people need to coordinate with others and to achieve their goals?

• Convention oder Institution• Refusing any extension of the market model beyond cases of

strict likelihood (but what could be such cases?)• Pervasive uncertainty and forward-looking action require

mutual expectations, that is, a common framework of coordination, however:- how, for people, to build a common framework of action? - has such framework to be substantial, procedural or only a plausible premise for action?

Methodological choices

• Neither market, nor global regulation, but situated coordinationof actions

• To explain from an external (and often normative) point of view (explicative approach)

• Or to understand from an internal point of view what, for actors, is going on in their coordination (comprehensive approach)?

• Giving priority to the processes through which people find solutions for problems of coordination

• Plurality of solutions, worlds, ways of coordinating• Illustration: a man and a woman are to enter a room and arrive

at the same time to the door. What is the elementary mechanism by which they solve their problem of coordinationin this situation?

David Lewis and his conception of conventions

A regularity R in the behaviour of members of a population P when they are agents in a recurrent situation S is a convention if and only if it is true, and is common knowledge in P, that, in any occurrence of S within members of P,

(1) Everybody conformsconforms to R;to R;(2) Everybody (2) Everybody expectsexpects that other people will conform to that other people will conform to

R;R;(3) Everybody (3) Everybody prefers to conformprefers to conform to R, under the to R, under the

condition that others do the same, for S is a condition that others do the same, for S is a problem problem of coordinationof coordination and the conformity of all to R is a and the conformity of all to R is a coordination equilibrium in Scoordination equilibrium in S (D. Lewis, 1969, (D. Lewis, 1969, ConventionConvention, HUP), HUP)

Let us play with seminal examples of convention

• David Hume: two rowers in a boat (do they contract before?) • To meet again after being lost each other (what are mutual

expectations?)• The philosopher drives his car. Why are we driving on the right

side? Are we obeying to prescriptive rules or following a convention?

• Tensions between singularity and generalisation• Conventions as tools for de-singularising situations:

- searching for similarities with other situations- giving access to equivalent possible worlds- a plurality of conventions for the same goal

• The salience of the precedent

Towards economics and social sciences

• Keynes’ chapter 12 in The General Theory of Employment, Interest and Money,or the preference for conformity

In practice, we have tacitly agreed, as a rule, to fall back on what is, in truth, a convention. The essence of this convention… lies in assuming that the existing state of affairs will continue indefinitely, except in so far we have specific reasons to expect a change. This does not mean that we really believe that the existing state of affairs will continue indefinitely…”

• Social and statistical categories (Desrosières and others), or the building of common knowledge about S and R:

“il faut traiter les faits sociaux comme (s’ils étaient – Desrosières) des choses” (Durkheim, RMS)- conventions as constructed frameworks of social realities;- common knowledge incorporated into institutions and public policies- example: unemployment as category

Labour conventions Convention

of

unemployment

Wage Exchange value Price

Effective work timeand quality

Product User Market

Expected work

Time and qualityUse value

Utility

Moment 2 Moment 3Moment 1

CONVENTION OF PRODUCTIVITY

What influences and development?

• The EC is part of a wider development of social sciences in France: the cognitive turn (Latour, Callon, Lascoumes,…)

• Diffuse influence in France into institutional, labour, social or innovation economics, sociology, economic and social history, labour law (becoming a quasi-obliged theoretical reference, among others) through theses or researches

• Many researches about how public policies work, especially in employment and labour market issues

• Efforts to enlarge the scope of theory towards institutions, normative (theories of justice) versus pragmatic aspects

• But: - too weak access to institutional resources- influence on the political debate and the framing of

public policies = 0

Some references

• Desrosières, A. (1993), La politique des grands nombres, Paris, La découverte (English edition: Harvard University Press)

• Dupuy, JP, Eymard-Duvernay, F. et al; (1989), L’économie des conventions, special issue Revue économique

• Lewis, D. (1969), Convention, Harvard University Press• Livet, P. (1994), La communauté virtuelle, Combas, Editions de l’éclat• Orléan, A. (ed.), 1994, L’analyse économique des conventions, Paris, PUF• Quéré, L. and Rallet, A. (ed.) (1993), Les conventions, special issue of

Réseaux, 62, november-december• Salais, R. and Storper, M. (1993), Les mondes de production, Paris,

Editions de l’EHESS (English edition: Harvard University Press, 1997)• Salais, R. and Thévenot, L. (1986), Le travail. Marchés, règles, conventions,

Paris, Economica• Salais, R., Chatel, E. and Rivaud-Danset, D. (eds.) (1998), Institutions et

Conventions. La réflexivité de l’action économique, Paris, Editions de l’EHESS

Labour conventions

Labour conventions

Schema1: Le travail et le produit

Conventions de travailConventions de travail

Temps de travail réel et qualité

Produit Utilisateur

ConventIon

de

chômage

Salaire Valeur d’échange Prix

Marché

Temps de travail attendu et qualité Valeur

d’usageUtilité

Moment 1 Moment 2 Moment 3

CONVENTION DE PRODUCTIVITE