Its kind of hard to comment on this passage if I don't know what the whole
book is about. There is also the problem of knowing how complete it is,
some of what I comment on may be dealt with elsewhere. People may want to
follow traditions because they give solace and undermining the traditions
may threaten social order, but this doesn't say how traditions come up in
the first place, which I assume is what Akerlof is trying to explain.
Also, just going by this passage alone (it may be elaborated on elsewhere)
the last couple paragraphs where you explain why people follow tradition,
isn't that just speculation?
Also, have you read Ben Fine's work on "Economics imperialism?"
(particularly his book on social capital) He has alot of good criticisms
of the school of orthodox economics Akerlof is associated with (market
imperfections, new information economics) trying to explain social
institutions and such.
> here's a passage from the book I'm writing. Comments and criticisms
> are welcome.
>
> Custom.
>
> This kind of organization is often termed tradition, convention,
> mores, or social norms. These terms are not synonymous, but all refer
> to ways of organizing the economy and society that center on precedent
> as the guiding principle. Unlike with the U.S. legal system, precedent
> need not be enshrined in official or formal institutions but can work
> in a generally decentralized way.
>
> Conventions typically refer to a narrow arena, such as that of driving
> on the right-hand side of the road. Traditions and customs, on the
> other hand, refer to a more complex array of interacting and often
> mutually-reinforcing conventions.
>
> In India, the caste system is an extremely persistent tradition. It
> has limited and shaped the way that people choose their occupations,
> spouses, social lives, and more. It rations jobs among people.
> Indirectly it rations goods, too: those in the higher castes do better
> in terms of their living standards. Since independence (1947), the
> Indian government has struggled to undermine and abolish the system,
> again with only limited effectiveness.
>
> The United States has suffered from the similar durability of racist
> institutions, especially against African-Americans. Traditions often
> involve cultural, racial, linguistic, and gender differences and do
> not distribute the benefits of coordination equally.
>
> It would be a mistake to assume that systems relying on precedent are
> exotic, ancient, or immoral. For example, consider the issue of how to
> ration scarce public roads. Informal "rules of the road" (conventions)
> have developed and persist. In Los Angeles, for example, when making a
> left turn at a stop light, it is customary to pull into the
> intersection when the light turns green – and then turn left only
> after the on-coming traffic has passed.
>
> Like markets, customs are typically decentralized and thus vary
> between areas. In other cities, you see people turning left
> immediately after the light turns green. But in my experience, people
> who have lived in Los Angeles see their custom as the only way to deal
> with the left turn issue.
>
> We also see custom playing a role in corporations. This has been
> labeled "corporate culture." Like other traditions, these cultures
> vary between corporations. Another modern tradition is the general
> respect for others' property rights and for contracts. There are also
> a whole set of customs about politeness.
>
> How and why do customs persist? It is not my purpose here to present a
> final answer. But we can see some possibilities. The actual answer
> likely depends on which tradition is being discussed.
>
> There may be a built-in logic insuring the persistence of this system
> even though it ostensibly conflicts with the "modern" market and
> government. Consider the roles of information and motivation in the
> traffic example. Individuals get signals from watching other drivers.
> The motivation of most is to get to the destination safely and in a
> reasonable time. But it is expectations that make tradition persist.
> Because people expect each other to turn left only after the on-coming
> traffic has gone, they act on those predictions. Because the tradition
> works, people continue to expect such behavior. So custom involves a
> self-fulfilling prophecy or a virtuous circle. Of course, if one is
> the victim of a tradition, as with racism or the caste system, it's a
> vicious circle.
>
> In trying to understand the persistence of custom, economics Nobelist
> George Akerlof posits a society of total individualists. His
> conclusion is that customs persist due to sanctions applied to those
> who violate tradition. This would be especially true if the tradition
> is grossly inefficient or grossly unfair to some people.
>
> This analysis suggests that the persistence of tradition arises
> because of external forces, arising from other types of coordinating
> institutions. The state can punish those who break traditions (as
> especially before Indian independence or the end of Jim Crow).
> Traditions can persist because of an informal democratic consensus on
> their benefits, especially a consensus of those who benefit the most.
>
> Such a system can also persist because it meshes with the distribution
> of economic wealth and power: since they benefit most from the caste
> system, the wealthy are often also those of the "high castes." This
> might help explain the caste system's resistance to market forces and
> government efforts. As noted in chapter 1, markets do not encourage
> greater equality of wealth and in fact encourage greater inequality
> over time. In most eras, the same rule applies to politics. When the
> wealthy are over-represented in and by the government, the politicians
> tend to perpetuate the caste and class systems.
>
> Another response to Akerlof's argument is that people are not totally
> individualistic – and that traditions are more complex than he
> imagines them to be. Individuals often care deeply about what others
> think of them. They can get pleasure or pain from their perceptions of
> others' attitudes. This is especially true in most small towns and
> old-fashioned agricultural areas. They also identify with others and
> see shared interests in the community. Tradition cannot be totally
> separated from democratic consent, discussed below. Further, the most
> persistent traditions are intimately tied up with the entire system of
> family and kinship, religion and education. They are not simply rules
> that are imposed on an isolated bunch of individuals.
>
> In this view, tradition gives purpose to people's lives. It allows
> them to make sense of the universe, both natural and social. It can
> give solace in hard times. If any part of the complex web of
> traditions is broken, it threatens to undermine the entire system.
> This would threaten people with anarchy and anomie, the feeling that
> nothing makes sense.
>
> In the end, the people see precedents as part of the natural order and
> to obey them. This in turn perpetuates the customs.
> --
> Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
> way and let people talk.) -- Karl, paraphrasing Dante.
>