Institutional Normativity and the Evolution of Morals: A Behavioural Approach to Ethics

Journal of Business Ethics · 2010 · Volume 95 · Issue 2

Abstract

This article explores the normative nature of institutions. The starting point of my investigation is Kahneman, Knetsch and Thaler’s notion of the reference transaction from which I derive a recursive relationship between normative judgements and social practices (i.e. regular, routinised actions in a social group), an implication of which I call the “self-justification of practices”. Drawing on John Dewey, I demonstrate how prevailing practices influence normative standards and thus how institutions become normative entities. I then show how, despite the conservative bias of normative standards, institutional change comes about. Finally, I enquire into the possibility of normative critique of prevailing practices and institutions.

Keywords

normativity, reference transaction, institutions, Veblen, Dewey, taxation, state regulation

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