INSTITUTIONAL ECONOMICS AND PSYCHOANALYSIS: HOW CAN THEY COLLABORATE FOR A BETTER UNDERSTANDING OF INDIVIDUAL-SOCIETY DYNAMICS?

ARTURO HERMANN*

MAY 2005

* Isae, Rome, Italy; paper presented to the EAEPE Conference "Economics, History and Development", Crete, Greece, 28-31 October 2004; this work involves only the author; I wish to thank Sheryl Brandalik for her useful comments on previous versions of this work. The usual disclaimer applies. E-mail:a.hermann@libero.it a.hermann@isae.it

CONTENTS

Introductory Abstract.....................................................................................................3

PART I: THE INSTITUTIONAL ECONOMICS PERSPECTIVE
Introduction.....................................................................................................................5

1. Veblen’s Evolutionary Perspective..... .....................................................................7 
2. Commons’s Negotiational Psychology...................................................................13
3. Further Remarks........................................................................................................17

PART II: THE PSYCHOANALYTIC APPROACH 

4. The Basic Concepts..................................................................................................19
5. Further Developments...............................................................................................21
6. Psychoanalysis, Culture and Society......................................................................23

PART III: THE DEBATE AROUND SOME 
KEY PSYCHOANALYTIC CONCEPTS

 7. Psychoanalysis and Its Critics.................................................................................25
 8. Some Controversial Problems..................................................................................26
 9. Freud as a Social Reformer.......................................................................................29
10. A Summing-Up................................ ............................................................. ............31

CONCLUDING CHAPTER: HOW CAN INSTITUTIONAL 
ECONOMICS AND PSYCHOANALYSIS INTERACT?....................................................34

Appendix: The Individual’s Decision-Making Process: 
Preliminary Remarks.......................................................................................................39

References........................................................................................................................43

INTRODUCTORY ABSTRACT

The idea of carrying out this work stems from the observation that although institutional economics deals with the study of human actions and motivations in their historical evolution, there has been in many cases, as vividly expressed by Ayres (1936), a lack of scientific collaboration with other fields of the social sciences; in this regard, psychoanalysis is a case in point.
Indeed, examining the kind of collaboration realized so far between psychological theories and institutional economics, it becomes apparent that institutional economics — and also, as far as we know, economics at large — has established a fairly systematic link mainly with pragmatist and cognitive psychology; on the contrary, collaboration with psychoanalysis has until now assumed a scattered character, mostly in the form of fleeting remarks that have been unable to provide anything like an organized treatment. 
The same holds true, apart from some notable exceptions, for collaboration between psychoanalysis and social and historical sciences. 
Three groups of factors may have contributed to this situation: i) the difficulty for social scientists and psychoanalysts to go beyond the methodological scope of their complex disciplines; ii) a tendency among social scientists to interpret Freud’s work as being chiefly based on biological needs and thus, on these grounds, to be rather sceptical of its usefulness for analyzing social phenomena; iii) furthermore, the intrinsic multifariousness of psychoanalytic issues and the partly different views of psychoanalysts in this regard may have contributed to making it difficult for social scientists to feel at ease within the psychoanalytic field.  

In this regard, our analysis may be synthesized as follows: institutional economics, especially through Veblen's and Commons's contributions, has highlighted a number of aspects that provide a better understanding of the inner nature of social and economic relations. This has been realized through the elaboration of concepts which characterize, in their continual development, the core of institutional economics: these include, among others, ceremonial/instrumental behaviour dichotomy, instincts, culture, evolution, habits, path-dependency, tacit knowledge, technology, collective action, going concerns, working rules and social valuing.
By employing these concepts, institutional economics points out that institutions, policies, culture, ethics and morality are nothing but different aspects of the evolutionary collective action out of which social and economic phenomena emerge.
Nevertheless, as previously noted, it has been difficult for social scientists to employ psychoanalysis in their studies of social phenomena. However, we deem this kind of collaboration useful, as psychoanalysis addresses many issues relevant to the study of individual-society dynamics. In this sense, psychoanalysis can contribute to a more complete understanding of the role played by psychological conflicts and motivations in determining economic and social structures.
One of the most important insights of psychoanalytic theory is that the intellectual, affective and biological aspects of personality are intertwined in the complexity of each person and unfold in every aspect of individual and collective behaviour. Even when the expression of one of these aspects is more pronounced, this does not mean that the other aspects cease to operate, but only that they operate in the background, in a partly unconscious and indirect way that may nonetheless heavily impinge upon those elements appearing in the foreground. 
In the mutual working of these aspects, the role of symbolic meaning is of special importance for synthesizing and conveying the conflicts and the cultural and historical heritage associated with them. This implies that institutions are important for individuals not only with regard to their real functions but also for their symbolic meanings. Hence, the characteristics of every culture — including, of course, the family setting — are likely to play a pivotal role in determining the course that an individual life will take.
For instance, the act of feeding acquires importance for the child not only because it fulfils a biological need but also because it tends to be interpreted by the child as an expression of affection; and the child, through the elaboration of this and other symbolic connections, also expresses and develops its affective and intellectual potential.
The same complexity emerges if we follow how these early experiences spill over into their progressive socialization: in this instance, considering the different social contexts in which these experiences are rooted, the surprising element is that, whereas cultures vary widely in the characteristics of their eating habits, virtually all seem to attribute to them special importance in many family and social situations.  
Eating habits — for instance, in the form of typical recipes and restaurants — often contribute to identifying the distinguishing features of many cultures.
In light of the complexity of the factors underlying collective life, in our work we wish to point out the mutual benefits of a more systematic collaboration between institutional economics and psychoanalysis in the study of economic and social issues: on one hand, institutional theory would benefit from considering psychoanalytic concepts, in order to help shed a deeper light on the psychological and more individual-based side of institutional dynamics; relatedly, on the other hand, psychoanalytic theory would benefit in its application to social issues from considering institutional concepts, in order to help clarify the institutional and more collective-based side of psychological dynamics. In this regard, the interaction between institutional economics and psychoanalysis may help us analyze the role of following interrelated issues in the formation of institutional, social and economic structures:
:
•	The evolutionary and conflicting role of individual and collective actions and  motivations. 
•	The evolutionary and conflicting nature of habits, routines, organizations, institutions and social valuing.
•	The evolutionary and conflicting nature of individual and collective decision-making processes.
•	The possibility of economic and social reforms, and the role of policies and social value in any given historical context. 

This collaboration may greatly benefit from contributions provided by other disciplines as well. Indeed, we believe the issues of social sciences so complex and intertwined that co-operation between many disciplines becomes paramount for understanding their dynamics. In this respect, the fact that institutional economics shares important elements with historical analysis and with pragmatist and cognitive psychology constitutes an enriching element that can contribute to a more fruitful collaboration between these theories and psychoanalysis. 

The work is organized as follows: in part 1 we will analyze some contributions provided by institutional economics by centring our attention on some aspects of Veblen's and Commons's theories; in part 2 we will outline some elements of the psychoanalytic approach and in part 3 we will focus our attention on the most debated aspects of Freud's theory; finally, we will analyze some ways in which the interaction between institutional economics and psychoanalysis could be realized. 

PART I: THE INSTITUTIONAL ECONOMICS PERSPECTIVE

Introduction

In this chapter we will briefly outline the many contributions institutional economics has provided to the understanding of the complex factors underlying individual-society dynamics.
As is known, institutional economics originated in the United States in the first decades of the 20th century. Its cultural roots may be identified in the philosophy and psychology of Pragmatism — in particular in the theories of Charles Sanders Peirce, John Dewey and William James— and in the German Historical School, whose principles were utilized by a scholar, Richard T.Ely, who had a considerable influence on the formation of the first generation of institutionalists.
The principal exponents of institutional economics are Thorstein Veblen, John Rogers Commons, Wesley Mitchell and Clarence Ayres. Relevant contributions were also provided by J.Fagg Foster, David Hamilton, Walton hale Hamilton and Gardiner C.Means.
Significant contributions with important connections to institutional economics were provided by, among others, John Kenneth Galbraith, Fred Hirsch, Albert Hirschmann, Gunnar Myrdal, Karl Polanyi and Michael Polanyi.
Within institutional economics two main strands can be identified: (i) the old institutional economics (OIE), constituted by the first institutionalists and by subsequent scholars who shared its main concepts; and the new institutional economics (NIE), composed of later scholars adopting principles that have important references in the Neoclassical and Austrian traditions.
In our work, we focus chiefly on the old institutional economics, and in particular on contributions made by Veblen and Commons, but we are aware that many other contributions would deserve more attention.
In this regard, it is interesting to observe the significant links between the OIE and, among others, the following theories: (i) philosophical realism; (ii) the socio-economic theory of Amitai Etzioni, which we will address at more length in the appendix; (iii) a number of theories of technological innovation — often labeled as neo-Schumpeterian — which share many important concepts with the OIE: for instance, the importance of path-dependency processes and of the historical and cultural heritage associated with them in explaining the characteristics of technology and innovation in any given context.
The pivotal concepts characterizing the old institutional economics can be summarized as follows: ceremonial/instrumental behaviour dichotomy, instincts, culture, evolution, habits, path-dependency, tacit knowledge, technology, collective action, working rules and social valuing.
Within this conceptual framework, institutional economics stresses that the presence of an institutional context — with its values, norms, organizations, routines, customs and habits — represents a necessary factor for the performance of human activity in the socio-economic setting. In other words, every economic action possesses, simultaneously, also a social, institutional, historical and psychological dimension; thus, an understanding of economic actions requires a joint analysis of all these dimensions which, of course, necessitates  the adoption of an interdisciplinary approach.

The role of habits

The concept of habit has played a key role within the Pragmatist approach, also for its influence on institutional economics. In this regard, important contributions were provided by William James, who, in his Principles of Psychology, investigates the role of habits in both individual and collective dimensions.
In the individual dimension, the propension of the person to form habits is explained by James as a result of the circumstance that, in his words,

“Man is born with a tendency to do more things than he has ready-made arrangements for in his nerve centres....If practice did not make perfect, nor habit economize the expense of nervous and muscular energy, he would therefore be in a sorry plight.”, (James, 1890: 113).

In this sense, the set of personal habits plays the important function of reducing the conscious attention upon such habits. This entails the apparent paradoxical result that the person, although routinely performing a number of actions, is unable to know how he or she has performed them. This concept is expressed in the following passage,
 
"We all of us have a definite routine manner of performing certain daily offices connected with the toilet, with the opening and shutting of familiar cupboards, and the like. Our lower centres know the order of these movements, and show their knowledge by their 'surprise' if the objects are altered so as to oblige the movement to be made in a different way. But our higher thought-centres know hardly anything about the matter. Few men can tell off-hand which sock, shoe, or trousers-leg they put on first. They must first mentally rehearse the act; and even that is often insufficient—the act must be performed.", (James, 1890: 115).

The interesting aspect of this analysis is that, in describing some important features of personal habits, it also casts light on the role of collective habits in social dynamics. As a matter of fact, habits constitute the normal functioning not only of personal life but also, in a complex interplay of reciprocal influences, of collective life; the following passages express these concepts vividly,

"Habit is thus the enormous fly-wheel of society, its most precious conservative agent. It alone is what keeps us all within the bounds of ordinance, and saves the children of fortune from the envious uprising of the poor. It alone prevents the hardest and most repulsive walks of life from being deserted by those brought up to tread therein. It keeps the fisherman and the deck-hand at sea through the winter; it holds the miner in his darkness, and nails the countryman to his log-cabin and his lonely farm through all the months of snow; it protects us from invasion by the natives of the desert and frozen zones....It keeps different social strata from mixing.", (James, 1890: 121).

This analysis of habits is closely related to the role that the continual flux of actions plays on their formation; In fact, habits are acquired or eliminated cumulatively and are intimately connected with the system of values of the person. This is related to an important concept of Pragmatism, namely, that individuals do not unfold their personalities in abstract terms but out of their actions in both the individual and collective spheres.
In this sense, habits constitute the "psychological procedures" through which the emotions, motivations and values of the person are expressed. Consequently, habits are not "neutral" and "automatic" instances as they convey, partly at an unconscious level, all the complex, often conflicting, aspects making up the individual personality.
Thus, it is necessary to continually improve personal behaviour through acquiring "moral habits" and eliminating bad ones; this process is described in the following passages,

"No matter how full a reservoir of maxims one may possess, and no matter how good one's sentiments may be, if one have not taken advantage of every concrete opportunity to act, one's character may remain entirely unaffected for the better....There is no more contemptible type of human character than that of the nerveless sentimentalist and dreamer, who spends his life in a weltering sea of sensibility and emotion, but who never does a manly concrete deed....Every smallest stroke of virtue or of vice leaves its never so little scar. The drunken Rip Van Winkle, in Jefferson's play, excuses himself for every fresh dereliction by saying, 'I won't count this time!'  Well! He may not count it, and a kind Heaven may not count it; but it is being counted none the less. Down among his nerve-cells and fibres the molecules are counting it, registering and storing it up to be used against him when the next temptation comes. Nothing we ever do is, in strict scientific literalness, wiped out. Of course, this has its good side as well as its bad one. As we become permanent drunkards by so many separate drinks, so we become saints in the moral, and authorities and experts in the practical and scientific spheres, by so many separate acts and hours of work.", (James, 1890: 125, 127).

James’s theory, as well as those of other important pragmatist philosophers — such as J.Dewey and  C.S.Peirce — constitutes the main theoretical springboard from which institutional economics arose.
By developing these insights, institutional economics has stressed in many contributions the twofold nature of habits. Indeed, habits embody and synthesize, in an evolutionary way, all the principles, values and knowledge accumulated over time. In this sense, they exhibit in every context both the ceremonial and instrumental aspects highlighted by institutional economics.
As described effectively by Veblen, ceremonial behaviour is rigid, past-binding and based on a passive  acceptance of the norms followed. In contrast, instrumental behaviour possesses a matter-of-fact quality aimed at problem solving activities.
Within this ambit, technology-based activities are considered, especially in Veblen’s and Ayres’s analyses, the best example of instrumental behaviour. From these insights, it ensues that habits constitute a necessary factor for accumulating knowledge within institutions and, at the same time, an element which may hinder this process. However, as we will see in the next chapter, the role of technology in fostering economic and social progress is very complex as it requires the analysis of many interrelated aspects. 

1. VEBLEN’S EVOLUTIONARY PERSPECTIVE 

The previous analysis of habits constitutes the theoretical basis of Veblen’s (in particular 1914 and 1919) concept of the functioning of the human mind through habits of thoughts and life. 
In Veblen's theory habits assume such great importance because they represent a way of bringing together three basic concepts of his analysis: instincts, evolution and technology. Let us now briefly highlight some aspects of these concepts, beginning, once again, with habits. 

Habits

The existence of habits of thoughts and life that arise and change slowly and cumulatively implies, in Veblen’s analysis, that people do not behave out of a supposed "rational" decision-making process aimed at maximizing their "hedonism"; thus, they do not react instantly to different economic circumstances as assumed within the utility function framework. In fact, following norms may constitute a goal in itself since norms reflect the values and criteria through which society classifies and appraises human conduct.
In this sense, norms can suggest to the person the appropriate behaviour, and, as a consequence, the adequacy of individual behaviour is assessed through the criteria indicated in the norms. 
Indeed, the internalization of norms forms a part — often very important — of the individual’s personality, and, as a consequence, the decision-making process partly assumes an unconscious nature, in the sense that the person is not fully aware of the inner motivations driving his or her behaviour.  
The emergence and consolidation of habits and norms are seen, in Veblen’s analysis, as the result of a complex interaction between the individual’s characteristics — interpreted mainly through his concept of instincts — and the features of economic and social systems. This interaction is considered explicitly in an evolutionary perspective.
Any society, with its distinguishing characteristics, is the unique product of its economic and cultural evolution; in brief, it is embedded in its past, as expressed in this passage,

"Under the discipline of habituation this logic and apparatus of ways and means falls into conventional lines, acquires the consistency of custom and prescription, and so takes an institutional character and force....In human conduct the effects of habit in this respect are particularly far-reaching. In man the instincts appoint less of a determinate sequence of action, and so leave a more open field for adaptation of behaviour to the circumstances of the case....Cumulatively, therefore, habit creates usages, customs, conventions, preconceptions, composite principles of conduct that run back only indirectly to the native predispositions of the race, but that may affect the working-out of any given line of endeavour in much the same way as if these habitual elements were of the nature of an instinctive bias. Along with this body of derivative standards and canons of conduct, and handed on by the same discipline of habituation, goes a cumulative body of knowledge, made up in part of matter-of-fact acquaintance with phenomena and in greater part of conventional wisdom embodying certain acquired predilections and preconceptions current in the community", (Veblen, 1914: 7, 38, 39).

Instincts and Evolution

Veblen's focus on habits draws attention to important aspects of the nature of human development and the role played by instincts (or propensions). This analysis is of special interest for our discussion as it brings under a unitary interpretative framework the complexity of the aspects making up human personality — biological, intellectual, affective — by considering them in their evolutionary pattern. The following passages express these concepts neatly,

"....The instincts are to be defined or described neither in mechanical terms of those anatomical or physiological aptitudes that causally underlie them or that come into action in the functioning of any given instinct, nor in terms of the movements of orientation or taxis involved in the functioning of each. The distinctive feature by the mark of which any given instinct is identified is to be found in the particular character of the purpose to which it drives. "Instinct", as contra-distinguished from tropismatic action, involves consciousness and adaptation to an end aimed at....The ends of life, then, the purposes to be achieved, are assigned by man's instinctive proclivities; but the ways and means of accomplishing those things which the instinctive proclivities so make worth while are a matter of intelligence....The higher the degree of intelligence and the larger the available body of knowledge current in any given community, the more extensive and elaborate will be the logic of ways and means interposed between these impulses and their realisation, and the more multifarious and complicated will be the apparatus of expedients and resources employed to compass those ends that are instinctively worthwhile....all instinctive action is intelligent in some degree. This is what marks it off from the tropism and takes it out of the category of automatism. 
Hence all instinctive action is teleological. It involves holding to a purpose.", (Veblen, 1914: 4, 5-6, 6, 31).

Veblen’s analysis cannot be considered a complete theory of instincts, and, as we will see in the analysis of Freudian theory, this circumstance is typical of any theory of instincts. Notwithstanding this difficulty, we think that Veblen was able to grasp a point — to be taken up at greater length in the chapter on psychoanalysis — which we deem central for a better understanding of human behaviour: that instincts are the expression of the complex interplay between the biological, affective and intellectual aspects of personality.
In Veblen's analysis, workmanship and parental bent are held to be the most important human instincts, tending to prevail in a situation where other instincts that may act at cross-purposes — for instance, predatory instincts which may be expressed  through a framework of ceremonial and "acquisitive" institutions based on invidious distinctions — had little social grounds on which to express themselves. In this regard, Veblen seems to suppose that the first stage of human life was like this and, since then, a number of disturbing factors have caused a process of deviation which was reinforced by a process of cumulative habituation. This idea is expressed in the following famous passage,

 "....Human culture in all ages presents too many imbecile usages and principles of conduct to let anyone overlook the fact that dissearviceable institutions easily arise and continue to hold their place in spite of the disapproval of native common sense. The selective control exercised over custom and usage by these instincts of serviceability is neither too close nor too insistent....It appears, then, that so long as the parental solicitude and the sense of workmanship do not lead men to take thought and correct the otherwise unguarded drift of things, the growth of institutions — usage, customs, canons of conduct, principles of right and propriety, the course of cumulative habituation as it goes forward under the driving force of the several instincts native to man,— will commonly run at cross purposes with serviceability and the sense of workmanship.", (Veblen, 1914: 49, 49-50).

Technology

In this evolutionary process, as observed before, technological progress — by inducing more rational habits of thoughts and life — is deemed to play an important role in social evolution. Technological progress, in turn, depends on the characteristics of the capitalistic system which tends, although through a far from straightforward pattern, to substitute new systems of production for older ones. 
Technological progress modifies not only the material world but also, through a process of learning, adaptation and habituation, the ways of thinking and acting. This process, depending, as it does, on the interplay of many factors which are mostly uncertain and path-dependent, is not considered in Veblen’s analysis as having a teleological character.  
The reason why Veblen regards technological progress so crucial for changing individual behaviour arises from his observation that, along with the instincts of workmanship and parental bent, people also have an instinctive tendency to resist change.  
The extent to which workmanship and efficiency prevail on the tendency to resist change depends largely on the characteristics and intensity of technological progress. In fact, by inducing individuals to adapt themselves to new methods of production, technological progress brings out, through a process of habituation to new habits of thoughts and life, the workmanship instinct.
For this reason, technological progress is considered paramount in order for people to eliminate habits of thoughts based on more primitive stages of life — mainly based on ceremonial and "acquisitive" institutions — and to acquire a scientific and matter-of-fact mentality, which represents the essence of instrumental behaviour.
In Veblen's view — although not very clear for many aspects — the pivotal element of technological progress able to induce such profound social transformations can be summarized as follows: technology, in becoming more and more "colourless and impersonal", makes it increasingly difficult for the person to impute to his or her work instruments aspects of magical workmanship that go beyond their objective characteristics. 
For instance, the ancient handicraftsman who used simple instruments with great ability, could more easily have attributed to his instruments anthropomorphic characteristics than the worker operating in a big and impersonal factory. Through this process of imputation, according to Veblen, the rational and objective aspects of technology tend to be overlooked in favour of a magical and "ceremonial" vision of the world. 
This process of imputation, in his view, while not impinging upon the acquired ability of the workers, is likely to impair future technological advances by instilling in the workers habits of thoughts and life not oriented towards the progressive "rationalization" of technology.  
This tendency to "personify" the world never completely disappears with the development of technological progress, since it is considered by him a sort of congenital weakness of human nature. 
At present, we wish only to observe that although in Veblen’s analysis technological progress seems to acquire, in some respects, the character of an ineluctable drive, this does not imply that he considered human development in a deterministic way.
Even a superficial reading of his works shows that whenever confronted with the possibility of foreseeing a situation, Veblen was extremely aware of the difficulty of this task. In particular, at the end of his book — The Instinct of Workmanship and the State of Industrial Arts — Veblen was quite aware that technological progress, per se, was not sufficient to induce a more rationalistic behaviour (in substantive terms), due to the complex and interrelated role played by psychological, social, economic and technological factors in determining the dynamics between individuals and institutions. This complexity emerges clearly when he speaks of revulsion against technology, 

"Nor is it by any means a grateful work of spontaneous predilection, all this mechanistic mutilation of objective reality into mere inert dimensions and resistance to pressure; as witness the widely prevalent revulsion, chronic or intermittent, against its acceptance as a final term of knowledge. Laymen seek respite in the fog of occult and esoteric faiths and cults, and so fall back on the will to believe things of which the senses transmit no evidence; while the learned and the studios are, by stress of the same 'aching void,' drawn into speculative tenets of ostensible knowledge that purport to go nearer to the heart of reality, and that elude all mechanistic proof or disproof....Neither the manner of life imposed by the machine process, nor the manner of thought inculcated by habituation to its logic, will fall in with the free movement of human spirit, born, as it is, to fit the conditions of savage life. So there comes an irrepressible—in a sense, congenital—recrudescence of magic, occult science, telepathy, spiritualism, vitalism, pragmatism.", (Veblen, 1914: 333-334).

>From this passage it appears that Veblen regarded technological progress, at least in our view, only as a useful way to acquire more scientific-based habits of thoughts and not as a goal in itself. He believed that people, by acquiring these more technology-based habits of thoughts, would become more able to develop an improved assessment of all the matters regarding their lives. In this sense, Veblen’s theory appears to be very different from any positivistic position.  

Some Problematic Issues in Veblen's Theory

Veblen's analysis raises many important questions which, due to their complexity, demand a more in-depth examination:

(a)	One element of modern technology which Veblen considers paramount for reducing magic and ceremonial habits of thoughts is its supposed mechanical and "colourless" nature; in fact, in the presence of these characteristics, it is more difficult for individuals to impute magical and animistic traits to modern technology than to simpler instruments. However, we can observe that this mechanical character — which reminds us of the working rules of physical laws — is typical of any kind of technology. In fact, even in the use of the simplest instrument man has to consider its physical properties if he wants to use it effectively; and, with regard to the "colourless" character of modern technology, this is not an absolute trait, but, rather, a matter of human attribution that does not depend on the mechanical characteristics of the technology employed, but rests, at least in part, on the social and economic characteristics of the context in which it is employed. As a matter of fact, modern technology can be "colourful" and creative — for example, in the case of information and communications technology — whereas an old technology can be quite "colourless" and plain, as for an exploited worker in a poor agricultural setting. The "colour" we attribute to technology depends on what technology represents for us, which, in turn, depends on the complex interplay between individual and collective values and motivations; that is, it depends on the "colour" of our spiritual life and on the characteristics of the institutional and socio-economic framework (ISEF) considered. Furthermore, we can observe — in accordance with important psychological and psychoanalytic research — that, to the person, imputing a symbolic meaning to his or her work instruments does not necessarily imply an "irrational and primitive" psychological process, since it constitutes an expression of his or her relational and affective spheres; that is, it represents a symbolic and important expression of person's social links. Of course, the typical contents of these imputations may vary in different cultures and may also be the expression of psychological conflicts, but such variations concern only the contents of these attributions and not the process of imputation as such.

(b)	Veblen seems to regard the spiritual life or "the free movement of human spirit" at odds with the logic of the machine process, but this supposed dichotomy raises many problems: what is the meaning of spiritual life? In Veblen's analysis, spiritual life seems sometimes to be synonymous with "irrational and primitive behaviour"; for instance, in the quoted passage, he lumps under the same heading of "spiritual life" concepts as diverse as magic, occult science, telepathy, spiritualism, vitalism, pragmatism. These concepts are in some cases not only diverse but — we believe — quite antithetical, as for instance between magic, occultism and telepathy, on one hand, and spiritualism, vitalism, pragmatism on the other.
(c)	But now, let us assume that, following Veblen's reasoning, the machine process fully exerts its effect and thus the more primitive habits of thoughts and life will be gradually displaced; in this case will individuals lose their spiritual life in the sense that they will act in a "rational", machine-like way? In Veblen's analysis these fundamental questions are left unanswered, even though they assume great importance for the understanding of his theory. In fact, if we suppose that, following Veblen's analysis, in our society the main purposes of the working of the machine process are mainly related to the principles of "conspicuous consumption" and "pecuniary gain" — that is, to principles chiefly based on habits of thoughts and life, coming from primitive stages of life, having their roots in propensions at cross-purposes with workmanship and parental bent — the logical consequence of a successful functioning, in Veblen's terms, of the machine process would be a gradual reduction of conspicuous consumption, accompanied by a gradual substitution of the "productive" objective, related to "material serviceability", for the "pecuniary gain" objective, related to the dynamics of "exchange value", (cfr. in particular Veblen, 1919: 279-323; and also Veblen, 1904 and 1921). However, since in Veblen's analysis (in particular, 1899) conspicuous consumption is supposed to cover a substantial share of consumption in contemporary society, the results of a full operation of the machine process would be — skipping, for the sake of simplicity, the intermediate hypotheses — the following alternatives: i) a sharp re-organization of the production process oriented to matching the "true" needs of society; ii) otherwise, if such re-organization does not occur (or if it occurs with insufficient strength), this means that the "rationalizing effect" of the machine process has not worked strongly enough. Hence, such a result implies that the unfolding of the machine process has failed to instil more rational habits of thoughts and life.

(d)	Each of these two alternatives opens a beehive of questions: i) in the first case, what are the implications of a sharp reduction of conspicuous consumption? Will man live in an industrious and pacific society of the kind Veblen hypothesized existing in the past, in which the only difference could be the widespread application of the machine process to the production of the truly necessary items? And which criteria will be adopted to make this selection, and, relatedly, how will we decide the time and resources to devote to scientific research, the research fields worth following and the social goals associated with them?. ii) In the second alternative, why do people need to pursue conspicuous consumption and the related "pecuniary objective" of economic action which, as we have seen, have their roots in instincts that are at cross-purposes with workmanship and parental bent? If modern society is considered as a deviation from an older pacific and natural stage of life, why do workmanship and parental bent instincts fail to assert themselves neatly in our society?

(e)	Veblen does not address these problems directly. He tends to assume that, once upon a time, man lived in a pacific stage based on the full operation of workmanship and parental bent instincts; at a certain point, owing to the presence of external pressures (not clearly specified) related to the expansion of society, there occurred a progressive deviation from such a stage towards increasingly less genuine ways of thoughts and life which, by way of progressive habituation, asserted themselves as the ordinary way of living. However, this interpretation of human development meets with a problem: if people deviate increasingly from a pacific stage, this implies, as also asserted by Veblen, that the workmanship and parental bent instincts do not work strongly enough, maybe because of the presence of instincts at cross purposes with them which can assert themselves — through the process described by Veblen as "contamination of instincts" — as a response to external pressures. Now, considering that "external pressures" — whatever they may be — are likely to have, at least in part, a significant endogenous component, the consequence seems to be that this early stage was far less pacific and smooth than assumed by Veblen, resting, as it did, on an unstable equilibrium made up of conflicting instincts.

(f)	Owing to this complexity, in Veblen's reconstruction of human development the role of technology is far from clear: in fact, if in Veblen's analysis, technological progress associated with the evolution of capitalism is deemed to be the main cause of deviation from a pacific stage of life, why just now should it begin to exert the opposite effect? For instance, considering our present-day stage of internet technology, it does seem that — after about a century of massive technological progress since Veblen's time — the problems envisaged by Veblen are still remarkably in the foreground: this happens because, as observed before, workmanship and parental bent instincts are more complex than usually assumed and, furthermore, present an evolutionary character; they are, at least in part, endogenously determined. 

(g)	One explanation for this problem may be that the rationalizing role Veblen attributed to technology seems to derive from his implicit assimilation — obviously, only for this purpose — of "instrumental rationality" to "substantive rationality": thus, more rational ways of producing (e.g., how to produce) are likely to entail more "rational" or adequate ways of life (e.g., what to produce). One reason for this belief could be found in the role Veblen attributed to the instinct of workmanship and to its link, outlined before, with the instinct of parental bent. In this sense — as far as we understand Veblen's reasoning — technological progress, by fostering the instinct of workmanship, would reinforce the instinct of parental bent as well. However, as shown by the studies quoted and by many others, the problem is that instrumental and substantive rationality are related but different concepts, and so an increase in the former cannot be simply considered as a proxy for the increase in the latter. In particular, one reason why reality is so complex may depend on the fact that the instinct of workmanship is a more far-reaching concept than explicitly supposed by Veblen. In fact, if we conceive such an instinct — as seems to be implied in Veblen's analysis — not only as a set of technical abilities but also as a general propension to intellectual and cognitive constructive activities and, furthermore, following Veblen, hypothesize a significant interrelation with parental bent instinct, it becomes evident, as we will see in the next point, that technological progress constitutes only an instrumental part of the manifold expressions of the instinct of workmanship. In this regard, our impression is that advances made in this direction are not due to an abstract "rationalizing" role of technology per se but to the kind of links that technological progress establishes with social and economic objectives and the related process of social valuing. This implies, as shown by many studies, that technological progress is not "neutral" as regards the attainment of these objectives and, therefore, does not follow a deterministic pattern out of its "immanent rationality", but is partly moulded by the characteristics of any given context, being, as it is, deeply embedded therein. In this regard, an increased ability to analyse social problems — an ability which can also benefit from progress in psychological and social sciences — could well be regarded as a genuine expression of the instinct of workmanship that is likely to have played a relevant role in social evolution.

(h)	As also observed by Commons, one difficulty in Veblen's analysis resides in the lack of the concepts of social value and of reasonable value: that is, of the criteria to assess the difference between "what is going on" and "what ought to go on" (Tool, in Hodgson, Samuels and Tool, 1994, vol. I,  p.406). Veblen tends to reduce this problem to the dichotomy between prejudices and genuine behaviour. But this distinction already implies an implicit social assessment of what a prejudice is and what a genuine behaviour is: and what are the foundations of such assessments? Ethical, psychological, economic, juridical, social? and what interrelations may intervene between them?

At the end of this outline we can say that Veblen has provided fundamental insights into the comprehension of the links existing between the economic, technological, social and psychological aspects of society by analyzing the relations existing between the pivotal concepts that describe these links—that is habits, instincts, evolution and technology. 
In this sense, we would observe that some of our previous remarks, which highlighted a number of unclear points in Veblen's theory, do not reduce the validity of this theory but, rather, point out its great potential.
In fact, one of main source of these difficulties in Veblen's analysis may be found in the lack of any clear reference to psychological theories for developing his main arguments.  
Indeed, in Veblen's analysis many important psychological concepts are implicit, and in this respect Veblen had great psychological intuitions. Examples may be found (i) in his analysis of habits of thoughts and life, which he tended to regard as the result of the internalization (mostly at an unconscious level) of collectively shared norms and values; (ii) in his concept of instinct, in which he grasps the importance of considering both emotions and intellect as the entities making up human personality; (iii) in his study of human development, by pointing out the importance of symbols and fantasies.

As we will see later, these concepts — which he considers in their interrelatedness in order to inquire into the forces lying behind the development of societies — present a striking parallel with many psychological and psychoanalytic concepts: for instance the role of internalization of norms and model of behaviour in child development, the complexity of instincts, the role of Freud's notion of "compulsion to repeat" and the importance of symbols and fantasies in individual and collective action.
However, even with the aid of a great intuition, one cannot go too far into social and economic analysis without a clear and explicit theoretical foundation of these concepts. In this respect, we believe that psychological and psychoanalytic concepts may help illuminate important points of Veblen's analysis.

2. COMMONS’S NEGOTIATIONAL PSYCHOLOGY

Other important contributions to the understanding of the dynamics of individual and collective action are provided by Commons. As with Veblen, we will organize our discussion around a number of his key concepts.

Collective Action and Transactions

One of Commons’s most important insights (in particular, 1924 and 1934) is that collective action is a necessary element for an adequate performance of individual action. In this sense, collective action is considered the correct subject for the study of society; the dialectic and dynamic relation existing between individual and collective action is effectively expressed in this passage:

“Thus, the ultimate unity of activity, which correlates law, economics and ethics, must contain in itself the three principles of conflict, dependence, and order. This unit is a Transaction. A transaction, with its participants, is the smallest unit of institutional economics.”, (Commons, 1934: 58).

Transactions are classified into three categories — Bargaining, Managerial and Rationing — according to the relationship established between the parties involved. 
The first concerns the relation between individuals with equal rights — which does not necessarily correspond to equal economic power — for instance, between buyer and seller; the second regards the relations between people organized within an institution, for instance between a manager and his or her collaborators; and the third refers to the relations between the person and a kind of collective action where there is no direct involvement, as happens, in particular, in the policy action of Government. 
These transactions are quite diverse according to the degree of direct intervention of collective action but, at the same time, are extremely intertwined. In their various combinations, they make up the tangled weft of collective action. Such links appear clearly in the following passage, 

“These three types of transactions are brought together in a larger unit of economic investigation, which, in British and American practice, is named a Going Concern. It is these going concerns, with the working rules that keep them agoing, all the way from the family, the corporation, the trade union, the trade association, up to the state itself, that we name institutions....If we endeavor to find a universal principle, common to all behavior known as institutional, we may define an institution as Collective Action in Control of Individual Action.”, (Commons, 1934: 69).

It is interesting to observe the complex, conflicting and evolutionary role that institutions assume in Commons's analysis, as expressed in the following passage, 
“....Since liberation and expansion for some persons consist in restraint, for their benefit, of other persons, and while the short definition of an institutions is collective action in control of individual action, the derived definition is: collective action in restraint, liberation, and expansion of individual action....Thus conflict, dependence, and order become the field of institutional economics, builded upon the principles of scarcity, efficiency, futurity, working rules, and strategic factors; but correlated under the modern notions of collective action controlling, liberating, and expanding individual action.”, (Commons, 1934: 73, 92).  

The importance of this concept of institution lies in the fact that it does not consider individual and collective action as opposite entities, but on the contrary, as different but complementary aspects of the "human-will-in- action". As Commons explains, 

“The most important of all investigations in the economic affairs of life, and the most difficult, as we shall find, is the investigation of strategic and contributory factors. It is none other than a universal principle of human will in action—a principle that could not emerge with John Locke’s concept of a passive mind analogous to physics, and emerges full-fledged only when economics becomes a science of human will in all its activities.”, (Commons, 1934: 90).

The importance attributed by Commons to the human will does not mean, however, the adoption of a mere "contractual" view of institutions that overlooks the role of coercion and unexpected consequences of human action. As a matter of fact, Commons takes these aspects explicitly into account, but, instead of treating them as exogenously determined by some dusky and impersonal "structural factor" or "natural law", considers them as the outcome, more or less direct, of the joint action of all the "human will-in-action" in any given context.
In this sense, collective action is something more than the mere sum of individual actions. In fact, in many ways collective action has a bearing on individual behaviour and, furthermore, can generate effects which do not lie in the intentions of the individuals promoting it.
However, if collective action and its related institutional structure arise out of conflicts — which are also related, as Commons stresses in many occasions, to ignorance, passion and stupidity — it could hardly be the case that collective action is not influenced by the characteristics of individual action. But, and this constitutes one of Commons's most significant insights, such an individual action tends increasingly to take place within institutions — e.g., within a framework of collective action — rather than be the expression of a series of self-contained acts. 
Negotiational Psychology, Will-in-Action and the Process of Choice

In his analysis of institutions Commons underlines the importance of negotiational psychology for a better understanding of the role of collective action in individual behaviour and, relatedly, the role of individual behaviour in collective action.
Indeed, negotiational psychology involves the idea of conflict between different feelings and values, which find their manifold expression in the dynamics of individual and collective action. Within this process, the importance attributed to social psychology appears in the following passages, 

“ ....If it be considered that, after all, it is the individual who is important, then the individual with whom we are dealing is the Institutionalized Mind. Individuals begin as babies. They learn the custom of language, of coöperation with other individuals, of working towards common ends, of negotiations to eliminate conflicts of interest, of subordination to the working rules of the many concerns of which they are members. They meet each other, not as physiological bodies moved by glands, nor as "globules of desire" moved by pain and pleasure, similar to the forces of biological and animal nature, but as prepared more or less by habit, induced by the pressure of custom, to engage in those highly artificial transactions created by the collective human will....Every choice, on analysis, turns out to be a three-dimensional act, which — as may be observed in the issues brought out in disputes — is at one and the same time, a performance, an avoidance, and a forbearance....The psychology of transactions is the social psychology of negotiations and the transfers of ownership. Each participant in the transaction is endeavoring to influence the other towards performance, forbearance, or avoidance. Each modifies the behavior of the other in greater or less degree. Thus each endeavors to change the dimensions of the economic values to be transferred. This is the psychology of business, of custom, of legislatures, of courts, of trade associations, of trade unions....This negotiational psychology takes three forms according to the three kinds of transactions: the psychology of persuasion, coercion, or duress in bargaining transactions; the psychology of command and obedience in managerial transactions; and the psychology of pleading and argument in rationing transactions.
The fact that this is a behavioristic social psychology requires distinction to be made from the individualistic behavior psychology of those who reject ideas altogether as merely subjective and unmeasurable, basing their psychology on the glands, muscles, nerves, and blood currents, etc. Negotiational psychology is strictly a psychology of ideas, meanings, and customary units of measurement.
Negotiational psychology approaches more closely to the "Gestalt" psychology, which, however, is distinctly an individualistic psychology, concerned with the mental growth of the individual from infancy. The resemblance consists in the fact that the Gestalt psychology is a part-whole psychology, wherein each particular act is connected with the whole configuration of all acts of the individual.", (Commons, 1934: 73-74, 88, 91, 106).  

One consequence of this view, relevant also for our subsequent discussion, is that in Commons's view the difference between individual and social psychology tends to be blurred, in the sense that the one is considered the complement — a kind of alterego — of the other.
With regard to psychoanalysis, Commons agrees with its methodology although he considers it, along with all other psychological fields, a kind of individual psychology, as appears in the following passage,

"....Yet opinion and action cannot be separated in scientific investigation, for action is opinion-in-action and science measures the action while inferring the opinion. Habitual and customary assumptions are read into habitual and customary acts. Here the process of investigation is similar to psychoanalysis, but, instead of an individualistic science which investigates nerves or dreams as an explanation of individual behavior, social science investigates habitual and customary assumptions as an explanation of transactions.", (Commons, 1934: 698).
Now we can observe, anticipating a bit of our subsequent discussion, that psychoanalysis, especially in its recent developments, draws attention to the biological component of human psychology not as a way of disregarding the emotional, intellectual, and collective dimensions of the personal life but, on the contrary, in order to analyse all the complex interactions between the mental and biological components of personality.    
Furthermore, it is important to observe that Freud has always considered the collective dimension of life central for the study of individual psychology and has provided many contributions to these issues; he went so far on these grounds as to regard, in his Massenpsychologie undIich-Analyse (1921), collective psychology as the unit of analysis from which to understand individual psychology.  

Social Value and Policy Action

An important aspect of Commons's analysis is that his definition of transaction considers, in their interaction, all kinds of social and economic relations—from the more individualistic to the more collective; a crucial element in these dynamics concerns the role played by all these transactions in making up policy action.
In fact, in Commons's analysis policy action takes place not only within the sphere of rationing transactions, but also within the scope of the other two types of transactions (bargaining and managerial) which seem to regard more individualistic spheres of action; even in these cases individuals seek to attain their objectives through the aid of collective action, and then their actions tend in one way or another to influence policy domain.  
Even when the action seems utterly individualistic — for instance in the case of a single transaction where the buyer and the seller seem to act exclusively out of their personal interests — there is the presence, often implicitly, of a significant collective element. Indeed, even that transaction is created and regulated by a set of norms and institutions that are the expression of a number of collective interests—for instance, in the sphere of consumption, expressed by Antitrust Bodies, by Justice and Arbitration Courts, by Consumers and Environmental Associations, and, of course, by all the related institutions, legislation and regulations.

This view of a dialectic and dynamic interaction between individual and collective action brings to the fore the complexity of factors underlying economic structures and the paramount role played by past and future. In this sense, Commons's analysis takes into account the evolutionary character of economic systems, which he regards not as deterministic in nature but, as stressed before, as complex systems in which many forces are at play and where uncertainty is the rule. 
These aspects show the importance of the process of social value in the dynamics of collective action; within this context, the concept of reasonable value is employed by Commons to draw attention to the conflicting, imperfect and evolutionary nature of the process of social value; these concepts are effectively expressed in the following passages,  

“Each economic transaction is a process of joint valuation by participants, wherein each is moved by diversity of interests, by dependence upon the others, and by the working rules which, for the time being, require conformity of transactions to collective action. Hence, reasonable values are reasonable transactions, reasonable practices, and social utility, equivalent to public purpose....Reasonable Value is the evolutionary collective determination of what is reasonable in view of all changing political, moral, and economic circumstances and the personalities that arise therefrom to the Supreme bench.”, Commons (1934: 681, 683-684).

Reasonable value is by definition an imperfect entity whose characteristics may be interpreted as the synthesis of the conflicting and evolutionary components of collective action. In these situations it is important that every component of society find adequate expression through the forms of collective action. As we will see later on, the imperfection of social valuing is also caused by its partly unconscious and conflicting character, often embodied in habits of thoughts and life.

3. FURTHER REMARKS

Veblen’s and Commons’s analyses highlight the function that institutions, values, norms and habits have in the dynamics of society and the role played by technological, economic and psychological aspects in shaping such evolution. 
Within this ambit, many of Veblen's and Commons's concepts could be — without overlooking the differences existing between their theories and their overall vision of the world — jointly used in the study of society: for instance, Commons's concepts of institution, transaction, collective action, working rules, going concerns, reasonable value and negotiational psychology could highlight the interrelated and conflicting aspects of collective action, in particular in the sphere of the complex propensities and motivations of the person; relatedly, Veblen's concepts of habits, instincts, evolution and technology could help bring into better focus the inner motivations and conflicts underlying human action within its ISEF, with particular attention to the role of workmanship and parental bent propensions and the role played by habits as the carriers of any given historical heritage.   
Building on these concepts, subsequent contributions have developed the key concepts of institutional economics in many directions.
In this regard, an issue which receives growing attention is the process of formulation of economic and social policies in their relations with institutional dynamics. The relationship between institutions and policies was first pointed out by Commons and then developed by later institutionalists, for instance, in the following passage, 

“Policy is a primary concern of institutionalism for two basic reasons. First, it is not possible to understand the economy outside a policy context, and second, the instrumental philosophy to which institutionalism adheres is concerned with finding solutions to problems. The economy is the result of the working of social processes, and modern societies structure a good deal of their institutional processes through policy.”, (Hayden, in Hodgson, Samuels and Tool, 1994: 392).  

In this analysis a central role is played by the process of social valuing, which constitutes — more or less explicitly — the very core of policy making. The following passages effectively express this concept,
  
“To conceive of a problem requires the perception of a difference between ‘what is going on’ and ‘what ought to go on’. Social value theory is logically and inescapably required to distinguish what ought to be from what is....In the real world, the provisioning process in all societies is organized through prescriptive and proscriptive institutional arrangements that correlate behaviour in the many facets and dimensions of the economic process. Fashioning, choosing among and assessing such institutional structure is the 'stuff and substance' of continuing discussions in deliberative bodies and in the community generally. The role of social value theory is to provide analyses of criteria in terms of which such choices are made.", (M.Tool, in Hodgson, Samuels e Tool, 1994: 406-407).

In this way, it is possible to identify the multifarious levels of collective action, and in particular: i) the complexity of individual motivations and systems of value, where the relational or social dimension plays a paramount role; ii) the complexity of policy action, which involves not only governmental institutions but also every other level of collective action; iii) consequently, the fact that dynamics of institutions and dynamics of policies represent complementary aspects of collective action, where, in the first (the institutions) the stress is on structure, decision-making process and cultural evolution, while in the second (the policies) the focus is on action and results.
By thus furthering the process of social valuing, it would become possible to cast more light on the complex interplay between institutional framework and policies at the various level of collective action; this process, in turn, would help reduce the typical problems of policy action, which refer, as is well known, to the following interrelated factors:

•	Complexity and uncertainty of policy action, due also to the interrelations between policies and the consequent involvement of many institutions;
•	different opinions and goals of the actors involved in policy-making; 
•	difficulty — due also to path-dependency and lock-in phenomena — of prompting the economic and institutional changes which may be necessary for the effectiveness of policies. 

In the analysis of these problems, by clarifying the effects, the links and the conflicts existing between policies, institutional theory would help formulate policies more based on the motivations and experiences of people involved in collective action. This implies that a process of policy action of this kind, by involving a process of understanding the characteristics of any given ISEF, can provide better answers to questions which are central for institutional economics, such as:
 
a) Why do individual habits of thoughts depend heavily on the characteristics of the ISEF and tend to change very slowly?

b) Why don't institutions, in some cases, attain their established goals? 

c) What is the role of economic, social and cultural conflicts in shaping the individual’s habits and behaviour?

In this regard, the point we wish to stress is that Veblen's and Commons's theories — and, in the same vein, subsequent institutionalists' contributions — are constructed in an interdisciplinary spirit, where psychology plays an important role. This is a direct consequence of the methodological approach adopted by these authors, an approach which, having strong roots in the Pragmatist approach to philosophy and psychology, is based on a systematic analysis of the facts and experiences of reality. 
However, given the complexity of the issues at hand, it seems useful also to address other psychological theories in order to cast more light on a number of interesting questions. Before analyzing how the interaction between institutional economics and psychoanalysis can be realized, in the next chapter we will outline the main aspects of the psychoanalytic approach. 

PART II: THE PSYCHOANALYTIC APPROACH 

In this chapter we will develop the previous discussion by outlining some characteristics of the psychoanalytic approach which can help explain the difficulty of understanding the individual’s decision-making process.

4. THE BASIC CONCEPTS

In order to illustrate these concepts, the first question we need to answer is: what is psychoanalysis? Psychoanalysis can be defined (Laplanche and Pontalis, 1967) as a discipline, founded by Sigmund Freud, in which three levels can be identified:

A) A method of inquiry consisting essentially of explaining the unconscious meaning of speech, actions and imaginative productions of a person. This method rests upon the person's free associations, which guarantees the validity of psychoanalytic interpretations.
These interpretations can also be extended to human activities for which free associations are not available.   

B) A therapeutic method based on this inquiry for the treatment of neurotic disturbances and characterized by the controlled interpretation of transfert, defence and desire.

C) A group of psychological theories in which the data provided by the psychoanalytic methods of research and treatment are systematized. 

One key question raised by the previous definition is: what is neurosis?
A concise and very effective definition of neurosis — provided by Freud for the first time in 1894 — is that of a defence against incompatible representations. 
As observed by Fine (1979), psychoanalytic theory can be considered a development of this first insight.
A broad definition of neurosis is that of a psychological disturbance, where symptoms are the symbolic expression of a psychic conflict, which has its roots in the individual’s infantile life and constitutes a compromise between the desire and the defence. 
An essential feature of neurotic disturbances is that they bring about a hindrance to the normal psychological development of a person. The reason for this is that the neurotic person is, to varying degrees, unable to overcome the conflicts associated with his or her development stages.
A complete discussion of this definition is highly complex; for this reason, we must limit ourselves to a few remarks. 
One central insight of psychoanalytic theory is that much of our psychic life possesses an unconscious character.
In psychoanalysis the definition of unconscious assumes different meanings, one of which refers to the area of mental activity (e.g. feelings, emotions, thoughts) of which the person is unaware as a consequence of the process of "repression". 
But, why does a person need to activate such a "repression" process? One answer is that individual's infantile development of a person is a highly complex process that undergoes many conflicts.   
The conflict considered central by Freud within the scope of his theory of libidinal stages of development was the Oedipus complex. 
In broad terms, the Oedipus complex can be defined as the organized whole of a child’s loving and hostile feelings toward its parents. 
In the paradigmatic example, the affective desire and sexual fantasies of a child toward the parent of the other sex may trigger intense feelings of jealousy, rivalry and anger toward the “rival” parent. As a consequence of these feelings, the child may fear punishment, also because it may feel guilty for experiencing such feelings. All the emotions associated with this situation can become highly distressing for the child, and,  therefore, it tries to repress all related feelings. As a result of the attempt to repress (mostly at an unconscious level) the emotional conflicts associated with the Oedipus complex, much of its contents become unconscious.
Of course, the attempts to repress all the feelings associated with the Oedipus complex cannot be very effective, and so cannot help relieve the emotional distress. As a result of this situation — in which there is a desire, considered “bad”, and a corresponding defence trying to repress it — a neurotic disturbance arises, which may express itself in many different forms of behaviour and fantasies. 
The purpose of such a disturbance is, according to the previous definitions, to realize, in a symbolic, distorted and unconscious way, both the instances of the desire and the defence. In this sense, it represents a defence from incompatible representations. 
Needless to say, the dynamics of the Oedipus complex are far more tangled than could appear from this brief description. Owing to this complexity, throughout his research activity, Freud identified many aspects and forms of the Oedipus complex and many neurotic disturbances which may be caused by it.  
Freud’s conclusion that the Oedipus complex tends to represent a universal experience for human being has received much criticism. We will discuss this issue in more detail later on in our analysis of some aspects of object relations and cultural psychoanalysis. At present, we can observe that Freud was well aware that the Oedipus complex involves many aspects and may assume various forms and intensity according to the culture, society and family situations in which a child’s life develops. An interesting analysis of these aspects is contained in Totem und Tabu (1912-1913), Das Unbehagen in der Kultur (1930) and others. 
As shown in these studies, the Oedipus complex will assume different forms and intensities according to, among other factors, the personalities and conflicts of the child’s caretakers. Since these individual aspects also depend on cultural factors, the role of culture (and, more generally, of the collective dimension of life) appears clearly in shaping the characteristics of the Oedipus complex. In fact, as observed before, Freud considers individual and collective psychology as two complementary aspects of the same phenomenon—owing to the circumstance, stressed in particular in his Massenpsychologie undIich-Analyse (1921), that in ancient times group life was preponderant in human life and that only subsequently the person has gradually come to assume a more distinct role within the various groups of society.  
In this respect, the concept of the superego represents the psychological instance through which cultural values are internalized by the person and for this reason constitutes a fundamental link between individual and collective psychology. 
The Superego can be considered the heir of the Oedipus conflict, as it arises from the internalization of the prohibitions and of the moral and cultural values of the child’s parents—as perceived by the child.
In the early stage of psychoanalysis, many important contributions to these issues were also provided by Abraham, Ferenczi, Jones, Rank. 

5. FURTHER DEVELOPMENTS
 
Freud’s theory has been greatly extended to cover significant aspects of human development. A common pattern of these studies, though widely different in many respects, can be identified in the importance they all attribute to the role played by affective relations in the dynamics of human action and motivation.
Within this ambit, numerous studies have analysed key elements of infantile development and in particular the child-mother relationship in the early stages of infancy. Pivotal contributions were provided by, among others, Erikson (1968), A.Freud (1936), Hartmann (1964), Kernberg (1976, 1992, 1998), and M.Klein (1964, 1975). These authors have cast light on aspects that are crucial for a fuller understanding of human psychology. A.Freud, Hartmann and many others stressed the structure of the ego as a mediating factor between instincts and society, while Erikson adopted these insights for analyzing the role of identity in the formation of personality. In his work, Identity, Youth and Crisis, he considers the concept of identity and the factors which may concur to determine it. Identity is regarded both as an individual and a social concept, for which the analysis of individual behaviour would require a study of the characteristics of social setting in which individual action takes place; relatedly, social analysis should consider important features of the individual mind stressed by psychoanalysis. In this sense, Erikson provides new tools for broadening the scope of psychoanalysis without dismissing its main concepts. 
M.Klein analyzed, from a new perspective, the mechanisms underlying the child-mother relationship in the early stages of infancy. Particularly important are the mechanisms of scission and projection, through which the child tries to cope with ambivalence and aggressiveness towards its mother. As a result of the scission and projection of the child’s aggressiveness onto her, the mother is divided into “a good and a bad object". This stage is called “the schizo-paranoid position”.
Subsequently, as the child grows up, this stage may be overcome to varying degrees as the child recognizes that the mother is just one person and, as a consequence, tries to compensate for the imaginary attacks made against her. This stage is called “the depressive position”.
Klein’s theory casts new light on many social phenomena because by providing a better understanding of the conflicts that, while arising in the infantile development, may impinge upon the type of relationships adults establish among themselves. 
With regard to the issue of choice, Rangell (1969, 1971) observes that, even if psychoanalysis is primarily concerned with the problems of behaviour and choice, this issue is not often explicitly addressed in psychoanalytic work; in this regard, his studies show the intrinsic difficulty of the decision-making process in many individuals.  
In neurotic situations this process may be a very distressing activity because in the act of decision-making the person expresses his or her unconscious conflicts and fantasies. 
Other important contributions — often denominated as object and interpersonal theories even though it is difficult to identify a completely unitary framework — have been provided by the so-called "independent approach" (the former "Middle Group") in British psychoanalysis, whose most important exponents are Balint, Bowlby, Brierly, Fairbairn, Flugel, Glover, Khan, Klauber, Payne, Rickman, Sharpe, Strachey and Winnicott. This approach has many parallels with the American contributions to this field — in particular with the theories of Erikson, G.S.Klein, Kohut, Kernberg, Sullivan, P.Tyson and R.L.Tyson — and also with most of the authors quoted in the next chapter.
Such contributions have been, to varying degrees, critical of both Freud’s and M.Klein's theories on the grounds that, by tending to focus attention mainly on the biological side of instincts, the latter tend not to consider the full importance of the role of affection and object relations in individual behaviour. 
Although these contributions have triggered a lively debate, they tend to accept important aspects of Freud’s theories of instinct and libidinal stages of development and, in this sense, try to integrate and deepen Freud's theory rather than dismiss it. 
We would like to note that, as mentioned previously, Freud built his instincts theory in order to have a basic interpretative framework of human behaviour but was well aware of the complexity of the issue; indeed, throughout his research activity he continuously enlarged and restructured his theories. One important reason why he remained attached to a "biological" concept of instinct lies in his purpose of underlining the role of psychosexuality in human psychology. He feared that, were psychosexuality not sufficiently stressed, this concept would be overlooked, or unconsciously "repressed", in the analysis of human psychology.   
However, as also observed by some of these more recent contributions, Freud has always underlined the role of feelings, object relations and cultural factors in driving individual behaviour, providing important contributions in which he stressed that — mostly in an unconscious and sublimated way — libidinal relations are the necessary factor for the existence of society. In this regard, as already observed, he employs the term eros or libido as a synonym for love.
Moreover, he stressed that the unconscious is mainly constituted by representations which have been repressed as a result of a neurotic conflict.
Therefore, the objective of the psychoanalytic method is to help turn the “unconscious” into “conscious” - e.g. id versus ego - through the individual’s understanding of his or her conflicts.
Of course, this is not to say that Freud’s theories were perfect and that he considered all the importance of object relations and cultural factors in driving individual behaviour.
As a matter of fact, especially in his later work, he tended to regard instincts as opposing forces which, out of their conflicts, are supposed to shape human behaviour in a rather ineluctable way; this conception, especially as set forth in his theory of death instinct, led him to a pessimistic view of human development, in the sense that little can be done to reduce human aggressiveness. This rather pessimistic strain in Freud's analysis can be found in works like "Zeitgemässe über Krieg und Tod" (1915d) and "Das Unbehagen in der Kultur" (1930). 
In this regard, his formulation of the theory of death instinct — which, it is important to remember, Freud set out with the main aim of providing an explanation of human aggressiveness but was nonetheless always highly doubtful about its real validity — triggered many controversies among psychoanalysts and is now largely dismissed chiefly as a result of an increased psychoanalytic understanding of the role played by neurotic conflicts in the formation of aggressive behaviour (Fine, 1979).   
In this respect, we believe that Freud’s theory of death instincts hindered him from carrying out a deeper analysis of human aggressiveness and, also for this reason, one important strand of psychoanalytic research after Freud has been to put the interpretation of aggressiveness at the centre of the analysis.
Thus, aggressive behaviour (including that aimed at causing the death of the person concerned or of others) is not considered as an inevitable expression of "natural" instincts but as a dramatic expression of neurotic conflicts which, as we have seen, have their roots in the infantile life of the person.
Obviously, aggressiveness could not develop without the individual’s inborn ability to develop this sentiment, which can vary from person to person; however, the point is that, given these innate endowments, neurotic conflicts can play a great role in reinforcing aggressiveness, which, for this reason, cannot be realistically regarded as an ineluctable expression of "natural" instincts. 
Considering neurotic aggressiveness only as an expression of natural instincts is tantamount to regarding well recognised neurotic symptoms, depression or phobias for instance, a "natural" expression of human nature simply because man has an innate ability to experience sorrow or fear.
In this regard, it is notable that important studies have stressed the role of (mostly unconscious) aggressiveness in causing depression, phobias and virtually any other neurotic disturbance; furthermore, as we will see later on, aggressiveness may play a central role in shaping social and cultural contexts. 

Considering the complexity of these aspects, many researchers believe that the supposed contrast between instincts and object relations theories is unfounded as these theories are, rather than in opposition, complementary to each other. In this regard, these authors have adopted a more integrated view of the human personality, which more explicitly considers its complex needs and orientations. In this sense, the distinction between “biological”, affective and intellectual needs tends to be considered an expression of the various aspects making up the human personality, which need to be studied in their complex interaction. 
On the basis of this approach, it seems reasonable to assume that human needs are complex and interrelated and, as a consequence, a person wishes: 1) to be fed and protected; 2) to establish sound object and interpersonal relations; 3) more generally, to develop in an integrated way all the aspects of his or her personality. 

6. PSYCHOANALYSIS, CULTURE AND SOCIETY

Related to these strands of research, there is the issue of analyzing cultures and societies by employing psychoanalytic concepts.
As already observed, Freud did not take a clear stand on the question of the links between individual psychological disturbances and the characteristics of the ISEF in which these disturbances take place. This may be due to his aforementioned pessimistic view of human nature; another reason for Freud’s hesitance may be found in his desire to not further complicate an already complex issue.  
However, as already observed, Freud and his colleagues were well aware of the importance of the ISEF in explaining the dynamics of psychological conflicts and, relatedly, of the great potential of psychoanalysis for elucidating important aspects of cultures and societies. 
In fact, as observed before, Freud considers individual and collective psychology as two complementary aspects of the same phenomenon—owing to the circumstance, stressed in particular in his Massenpsychologie undIich-Analyse (1921), that in ancient times group life was preponderant in human life and that only subsequently the person has gradually come to assume a more distinct role within the various groups of society. As noted by Freud (1912-1913, 1921 and 1930) and many subsequent psychoanalysts, group cohesion tends to be based on the following processes: i) libidinal links among the members of the group; ii) projection of individual aggressiveness towards people and/or institutions lying outside the group; iii) identification with the group leader — who symbolizes the parental instance (typically, the father) — in order to remove the conflicts related to the Oedipus complex.
These processes — which operate in part at an unconscious level — can help explain the scission that often occurs within groups between “the good and right”, lying inside the group, and “the bad and mistaken”, lying outside it.  
In their analyses, these authors are aware that such factors may find different expressions in different groups and societies.
By using the Kleinian framework, Bion analyzed unconscious group dynamics by means of “The Therapeutic Group”, while Kernberg made significant contributions to the analysis of group behaviour with his approach based on the object relations theory.
Using a field study approach, important psychoanalytic-oriented contributions have extended their interests to the fields of anthropology and sociology.
In this regard, several authors have underlined the articulated role of aggressiveness in institutional and cultural contexts: i) on one hand, it concurs to shape in many ways any given ISEF through the mutual dependent actions of the individuals composing it; ii) on the other hand, cultural values, as perceived by any concerned person, may concur to influence the development of neurotic aggressiveness especially in early stages of individual life—for instance, indirectly through their influence on the child's caretakers and directly through their role of "cultural models" to be imitated and internalized by the child. 

A thorough analysis of these contributions is beyond the scope of this work, thus, we limit ourselves to a few remarks. Within anthropology, a strand of research fairly close to classical psychoanalysis has tried to verify the extent to which psychoanalytic concepts can be applied to the study  of primitive populations. Pioneering studies were carried out by Kardiner, Malinowski and Roheim. One of their findings has been that psychoanalysis can help explain a number of common patterns in the psychology of these populations, even if their cultures may vary greatly from one another. For instance, regarding the Oedipus complex, these authors find its dynamics in every culture considered, although its expression may vary as determined by the different cultures and family organizations.
A rather common interpretation of the findings of these studies is that they demonstrate the "irrelevance" of the Oedipus complex. However, such an interpretation is not in accordance with the authors' main conclusions and, as shown by, among others, Fine (1979), is based on a misunderstanding of the nature of the Oedipus complex. In fact, this complex — defined above as the organized whole of a child’s loving and hostile feelings toward its parents — may assume many forms and may also involve other caretakers of the child. The "universality" of the Oedipus complex is not a consequence of the operation of some abstract "natural law" but stems from the circumstance that the child — owing to a prolonged dependence upon its caretakers — establishes with them its first significant affective relations, which, in their complex vicissitudes and transformations, will constitute an important model of reference for the child’s future development.     
Needless to say, the specificity of every cultural context plays a great role in determining the forms of these early relations of the child. In this regard, the aspect we deem important to point out is that these cultural forms do not exist apart from the individuals involved but are partly determined by their thoughts and actions. This implies that the entire set of experiences, orientations, values, needs and conflicts making up the human personality concur to shape the related cultural forms as well. In this sense, as we also see later in the paper, psychoanalytic concepts may help, in an interdisciplinary spirit, to cast more light on the complexity of the relationships between the individual and his or her cultural context.   

In relation to these issues, a strand of research has stressed the role of cultural forms in the study of the psychological orientation of society. Leading members of this group are Fromm (1955 and 1970), Horney (1937 and 1939), Sullivan (1964) and Thompson (1964). Although these authors (in particular, Fromm and Horney) were more critical towards the psychoanalytic concepts of instincts and libidinal stages of development and reach different conclusions in their analyses, they all stress the importance of interpersonal relations, culture and society in the formation of personality. 
These authors analyze the structure and conflicts of contemporary societies (in particular Fromm and Horney) and the role of interpersonal relations, with their related cultural values, in the formation of psychological disturbances (in particular Sullivan and Thompson). 
A lively debate, still in progress, arose between this group and more “orthodox” psychoanalysts, and in 1956 some “Culturalists” created a new organization — “The American Academy of Psychoanalysis”.
Other fields of social sciences, often related to the Cultural Psychoanalysts, took an interdisciplinary perspective on the studies of cultures and societies. Among these, an important role was played by the "Frankfort School", whose leading members were Adorno, Fromm, Habermas, Horkheimer, Marcuse. 
These authors applied a number of psychoanalytic concepts, a neomarxist perspective, and a broad existentialist philosophy to the investigation of the problems of contemporary societies, in particular to the phenomenon of social alienation.

PART III: THE DEBATE AROUND SOME KEY PSYCHOANALYTIC CONCEPTS

7. PSYCHOANALYSIS AND ITS CRITICS

As seen in this outline, psychoanalysis is a highly complex discipline attempting, as it does, to explain psychological processes through an integrated approach. Due to this circumstance, psychoanalysis does not move along a smooth pathway. In fact, it is currently coping with two fairly related sets of problems:

i) The divergences among psychoanalysts regarding some aspects of Freudian theory.
 
ii) Criticism of psychoanalytic approach coming from both psychology and other disciplines.

With regard to the first point, we have seen that the main divergences in psychoanalysis do not affect the overall validity of the psychoanalytic discipline, but are part of the normal dialectic of every discipline that wishes to be truly scientific. Indeed, psychoanalysis, being above all a method of inquiry, is dynamic in character and, consequently, its hypotheses are only approximations — which, in their turn, require further verification — of some of the extremely complex processes occurring in the human mind. 
With respect to the second point, a thorough analysis would require a lengthy discussion, so we limit ourselves to a short outline.
Much criticism, differing in content and extent, has been levelled at psychoanalysis. The leit-motiv of the great majority of such attacks refers to the scientific status of psychoanalysis. According to these critics, psychoanalysis has no valid scientific status because its hypotheses cannot undergo the same tests of validation as those applied to the "truly scientific fields".
For instance, how can the existence of the unconscious or of the Oedipus complex be demonstrated?
In the opinion of some authors, these concepts are fantasies without any scientific validity. Of course, the problem of providing scientific validity to psychoanalytic theories is a very serious one. As we well know, the unconscious — by its very nature — cannot be seen, heard, or touched, so we can only “prove” its existence by analysing our feelings in their interaction with those of others. For the unconscious is a dynamic concept (Fine, 1979) — elaborated from a great number of observations mainly related to psychoanalytic experience —  which can help explain and synthesize some aspects of the structure of mental processes. 
However, the methodological approach underlying this criticism does not seem convincing. In fact, by carrying such criticism to its logical consequences, we would find that all the feelings involved in human relations should be considered groundless.
For instance, in a romantic relationship, a person could not dare say to his or her partner “I love you”, because the logical answer would be “how can you prove it?”; and, certainly, there are neither mathematical theorems nor laboratory experiments for proving such a statement.
On the same grounds, no one could formulate any reasoned opinion regarding personal feelings and attributes.
The same applies to the sciences dealing with human achievements, like arts and literature. For instance, no one could say with any claim of objectivity “what a beautiful poem this is” because there is no way to prove this statement by means of a “truly scientific methodology”. 
Furthermore, even the so-called pure sciences would be badly affected by this reasoning. Indeed, as shown by many institutionalist, pragmatist and psychoanalytic contributions, much of what we call "pure science" is interpreted through the experiences, feelings and perceptions of those dealing with it.
In this sense, we believe that psychoanalysis — as well as social sciences, philosophy and literature — is no less scientific than "pure sciences", the only difference being that it deals with issues that require a different scientific approach and which cannot be simplified to fit a classical laboratory experiment. In this regard, we do not agree with those who consider psychoanalysis, especially in the practical work of psychoanalysts, as an "intuitive art" well distinguished from science. Certainly, psychoanalysts work with the inner nature and conflicts of the individual, and their main goal is to help the person overcome such conflicts and, thus, bring out his or her true personality; and this task is achieved by applying a scientific method that is tested and revised as psychoanalytic experiences progress. In this process, the "inner artistic intuition" of the psychoanalyst in understanding his or her patient’s problems constitutes a paramount factor, which, however, is not separate from scientific investigation, but, rather, is reinforced and refined by the parallel increase of his or her scientific knowledge and experience. Furthermore, the significant connections existing between art and science should not be overlooked.  
The above discussion highlights the fact that psychoanalysis faces many of the typical problems of the social sciences. Of course, this is not to say that all criticism is groundless and that, as a consequence, psychoanalysis represents the world of soundness, perfection and truth.
In particular, we believe well founded the claim that psychoanalysis, in its main developments, has not sufficiently considered the contributions of other disciplines for a deeper understanding of the complex interaction between the individual and society.

8. SOME CONTROVERSIAL ASPECTS

In this section, we will try to bring into focus the most controversial aspects of the debate about Freud's theory, since they impinge upon the basic concepts of psychoanalysis and the development thereof. As observed before, two conflicting interpretations of Freud's work can be identified:

A) According to one interpretation, Freud tends to see psychic life as the arena for the perennial struggle between opposite instincts: for instance, in his continual elaboration — which we do not need for our purpose to follow in its complex evolution — of sexuality and self-preservation, or later on, of life (or love) and death (or hate). These instincts depend on the innate individual biological constitution and, therefore, tend in some instances to be regarded as deterministic in their unfolding. Psychic life is considered to be the result of the "kneading" of these instincts, but there appears to be no real dialectic or interchange between them: they stand, in a Faustian spirit, in an irreducible opposition, and little can be done to improve such a situation. 
Take, for instance, the concept of sexuality. According to this view, sexuality is an instinct which lies basically in bodily needs — like hunger and thirst — and therefore is supposed to be driven only by the principle of pleasure. Furthermore, this instinct is seen as lacking any self-regulating or integrating process as it is assumed to aim at an uncontrollable satisfaction regardless of any other human need or feeling. Such an instinct, of course, would render any social life impossible, and, as a consequence, must be repressed. However, this repression entails neurosis and — owing to the strength and pre-determined "biological" mould of these instincts — little could be done to reduce the trade off between neurosis and civilization. 
In this view, neurosis is seen as the necessary price to pay for moving from the principle of pleasure to the principle of reality—that is, through the education process, from the uncontrolled instincts of the child to the repressed, neurotic and "civilized" behaviour of the adult. However, as we will see in the following points, Freud's theory is far more complex than such simple biological determinism.

B) In this regard, a key point is that Freud, although he tends to construct his theory on the basis of conflicting instincts, does not seem to assert that these instincts have a deterministic development. In this regard, he expressly recognizes the importance for the development of every person of the joint action of the following factors: (i) the person's "innate" constitution, including the entire set of his or her "innate" biological and intellectual traits; (ii) the influence of "accidental events", by which he chiefly means the role played by the family and socio-cultural contexts. 
In order to explain the importance of these groups of factors in psychic development, he elaborated — in particular in Drei Abhandlungen zur Sexualtheorie — the concept of "complemental series".  

C) Considering the above outlined relation between neurosis and civilization, Freud's position is far more complex than the simple statement that neurosis, being based on the repression of instincts, is a necessary ingredient of social life. Certainly, in some passages he makes these kinds of statements, but, very importantly, he also stresses that neurosis is likely to sabotage the attainment of the objectives of civilization, because it is allied with the forces hostile to civilization that have been (only apparently) repressed. 
In order to show this process, Freud (1908) describes the case of a woman who — owing to the conditions in which she contracted the marriage and to the experiences of her married life — does not love her husband but would like to love him at any cost because this corresponds to the ideal of marriage with which she has been raised. She will thus repress (mostly at an unconscious level) her real feelings toward her husband and put great effort into playing the role of the affectionate wife. But the consequence of this repression will be the full emergence of neurotic symptoms which will take revenge upon the husband by causing him so much, and perhaps even more, trouble as would have been caused by the revelation of her real feelings.  
This example — which, of course, could also concern the husband and many other family and social situations — is interesting because it highlights the role of family and social factors in shaping, maintaining and transmitting what could be defined as the typical social forms of neurotic conflicts; in fact, in the example, the neurotic conflicts expressed by the wife in her married life have their roots, according to Freud's theory, in her infantile history where a paramount role might have been played by her innate biological constitution combined with the influences of her family and social life. In this regard, one of the central insight of Freud's analysis is that neurosis constitutes, for any individual, a joint and unique product of (i) his or her innate biological constitution combined with the characteristics of human biological development, in particular the prolonged stage of dependence in the early stages of life, and (ii) the characteristics of his or her ISEF, including , of course, the characteristics of family setting. 

D) The previous remarks lead us to underline another relevant point: even when Freud seems to adhere to a “hedonistic” view of human conduct — in the meaning of an unrestrained search for “pleasure”, regardless of any affective and social link — this does not seem to imply that he considers such orientation as an expression of natural and immutable laws but, rather, as an expression of neurotic conflicts which are, at least in part, specific to any given ISEF. Indeed, in these cases, as also shown by subsequent psychoanalysts, the obsessive search for "pleasure" acts — like, as observed before, any other neurotic symptom — as a defence from "incompatible representations" having their roots in the infantile story of the person.
This point is extremely important and is effectively addressed by Eagle (1984); in the concluding chapter, he clearly explains that the supposed contrast between "instincts" and "reality" — to which should correspond a conflict between an uncontrolled unconscious (the Freudian "es"), and an ego conceived as a necessary controlling and "repressing" factor for the existence of society — is to be interpreted not as an expression of "human nature" but as a distinctive trait of neurotic disturbances. Indeed, in these situations what is repressed (e.g., made unconscious) tends to refer to all the aspects of personality that, owing to neurotic conflicts, tend to assume an infantile and anti-social character. In this regard, it is also interesting to observe that these conflicts do not develop in isolation but assume at the same time both an individual and social dimension.
In this regard, Eagle observes that the more damaging expressions of this neurotic-driven aggressiveness, like nuclear wars and  mass-destructions, do not take place out of bursts of "instinctual behaviour", apart from and in opposition to social life, but are deeply rooted in ISEF's that can even be supposed to act as a repressing instance for the "instinctual behaviour" of the person. In this sense, as observed before, society acts as a key carrier for the expression of aggressive behaviour—also through the development of cultural forms and models that tend to be internalized in the ego and super-ego of the person. 
Of course, society also tries to curb aggressive behaviour but in the presence of relevant neurotic conflicts these attempts are not likely to be very successful, especially for reducing the more "institutionalised" (e.g., more rooted in the structure of collective action) forms of aggressive behaviour. This is another significant way to remark what Freud observed about the power of neurosis to sabotage the pacific existence of society. 
This implies that, for a deeper understanding of these phenomena, in the study of these conflicts both individual and collective dimensions should be considered, whatever be the particular focus of the analysis; for instance, in the study of individual conflicts, the characteristics of social and cultural forms should be taken into account; whereas, in the study of social and cultural forms, also the psychological orientation of the individuals composing such forms should be brought into analysis.

E) Perhaps one key element that could bring some unclarity to Freud's theory is his employment of the concept of sexuality: as a matter of fact, though Freud has always underlined the manifold character of sexuality, in his writings he speaks of "sexual instinct" and "repression or satisfaction of instincts" in a way that sometimes may seem to refer only to the biological side of the instincts: however, as we have seen, according to his theory, sexual instinct bears not only on the normal biological sexual activity but also on the affective involvement related to such activity, and on the so-called "sublimated" activities of the person linked, in a complex interplay with the affective and intellectual sides of his or her personality, to all the social, intellectual and artistic creations upon which society is based. The problem lies in the fact that the term "sublimation" carries two meanings, which, though blurred in most of our psychological experience, are neatly distinct at the conceptual level: (a) a means for the expression of neurotic conflicts, and (b) a means for the expression of the normal motivations of human personality. 
These different concepts of sublimation are outlined but not always clearly distinguished in Freud's analysis, and this may be one of the reasons for some entangled aspects of his analysis of society.

F) This unclarity emerges also in "Das Unbehagen in der Kultur" (1930) — the work where Freud  more extensively laid down his thesis on the necessity of repression of sexuality and aggressiveness for the preservation of society — but, in our view, it could be sorted out relatively easily. Here, in the first chapters, he speaks of sexuality and aggressiveness in broad terms, without specifying if he considers these psychological instances as a normal or a neurotic expression of individual and social life.
However, even without such previous specification, his description of these instances seems to be like that of a neurotic disturbance and, in fact, later in his paper, he makes clear that this is the case. He stresses that, in this respect, society acts like a neurotic individual that, through the instance of the superego — which, as observed before, constitutes the "moral conscience" as emerging out of a feeling of guilt related to the child's aggressive feelings towards its parents — tries to repress his or her neurotic expressions of sexual and aggressive "instincts". Having discovered the existence of neurotic societies, Freud wonders about the interesting possibility of employing psychoanalysis for the analysis of these social-based psychological disturbances. In this regard, Freud considers this kind of intervention possible but is rather pessimistic about its viability in contemporary societies. There are, in fact, on one hand, the difficulties in identifying the complex relations between individual and collective neurosis, and on the other hand, the problem of implementing policies aimed at improving social self-understanding. 

We can conclude this chapter by noting that in Freud’s theory the concepts of instincts and, within this ambit, of psychosexuality (the eros or libido) are very complex and far-reaching as they embrace all the aspects of human personality, including affective and intellectual. Therefore, his theory does not seem to imply that human needs can be reduced only to biological exigencies. Far from saying that the mind — e.g. the spheres of feelings and intellect — is something different from "instincts" and, as a consequence, substantially powerless against these, Freud seems only to remark that the study of the “mind” is to be considered in all its complex connections with the "body", simply because we do not live apart from our body. If, as stated effectively by Rollo May (1972), a person can safely say "Certainly, I am my body, but am also my mind", also the symmetric relation holds true, and then it would be appropriate to say "Certainly, I am my mind, but am also my body".

9. FREUD AS A SOCIAL REFORMER

As we have seen, Freud's theory provides important insights into the conflicts and problems of individual and collective life and the possibility of social change. However, notwithstanding these contributions, Freud is rarely regarded among social scientists as a social reformer. Rather, social scientists — owing, perhaps, to a rather pessimistic strain present in some of Freud's writings — tend to regard his theory as essentially "conservative", as it seems to imply that little can be done to reduce human aggressiveness.
Certainly, as we have seen, there is such a strain in Freud's theory. But, at the same time, as we have tried to show, his theory is more complex than this interpretation would suggest, as it contains aspects which clearly indicate the possibility of social change. For instance, in discussing the Communist revolution in Russia, he is not against such transformation but stresses the importance for social reformers, in order to build a truly better society, to have a better understanding of human nature. The following passages express these concepts clearly,
 
"The communists believe that they have found the path to deliverance from our evils. According to them, man is wholly good and is well-disposed to his neighbour; but the institution of private property has corrupted his nature. The ownership of private wealth gives the individual power, and with it the temptation to ill-treat his neighbour; while the man who is excluded from possession is bound to rebel in hostility against his oppressor. If private property were abolished, all wealth held in common, and everyone allowed to share in the enjoyment of it, ill-will and hostility would disappear among men. Since everyone's need would be satisfied, no one would have any reason to regard another as an enemy; all would willingly undertake the work that was necessary. I have no concern with any economic criticisms of the communist system; I cannot enquire into whether the abolition of private property is expedient or advantageous. [Here, there is a footnote in which Freud stresses that he is sympathetic towards the situations of economic deprivation] But I am able to recognize that the psychological premises on which the system is based are an untenable illusion. In abolishing private property we deprive the human love of aggression of one of its instruments, certainly a strong one, though certainly not the strongest; but we have in no way altered the differences in power and influence which are misused by aggressiveness, nor have we altered anything in its nature. Aggressiveness was not created by property. It reigned almost without limit in primitive times, when property was still very scanty...." (S.Freud, Civilization and Its Discontents, The Standard Edition, New York, Norton, 1961: 70-71).

However, notwithstanding these cautious remarks, later in the paper, when discussing the difficulty of mastering human aggressiveness, he observes that,

"....At this point the ethics based on religion introduces its promises of a better after-life. But so long as virtue is not rewarded here on earth, ethics will, I fancy, preach in vain. I too think it quite certain that a real change in the relations of human beings to possessions would be of more help in this direction than any ethical commands; but the recognition of this fact among socialists has been obscured and made useless for practical purposes by a fresh idealistic misconception of human nature [Cf. p.71 above (in the text)]", (S.Freud, Civilization and Its Discontents, The Standard Edition, New York, Norton, 1961: 109).     

These remarks highlight the importance of considering the psychological side of every project of social reform, by centring attention on the characteristics of neurotic conflicts and on the role of psychoanalysis in understanding and overcoming such conflicts; in this sense, collaboration among psychoanalysis, Marxism and other theories of social change (including ,of course, institutional economics) would be of particular interest, also for devising policies more effective in attaining the objectives of social reforms.
In order to better illustrate these issues, let us quote at some length a number of Freud's passages containing a clear explanation of the links intervening between individual and collective psychology,

"....What means does civilization employ in order to inhibit the aggressiveness which opposes it, to make it harmless, to get rid of it, perhaps? We have already become acquainted with a few of these methods, but not yet with the one that appears to be the most important. This we can study in the history of the development of the individual. What happens in him to render his desire for aggression innocuous? Something very remarkable, which we should never have guessed and which is nevertheless quite obvious. His aggressiveness is introjected, internalized; it is, in point of fact, sent back to where it came from—that is, it is directed towards his own ego. There it is taken over by a portion of the ego, which sets itself against the rest of the ego as super-ego, and which now, in the form of 'conscience', is ready to put into action against the ego the same harsh aggressiveness that the ego would have liked to satisfy upon other, extraneous individuals. The tension between the harsh super-ego and the ego that is subjected to it, is called by us the sense of guilt; it expresses itself as a need for punishment. Civilization, therefore, obtains mastery over the individual's dangerous desire for aggression by weakening and disarming it and by setting up an agency within him to watch over it, like a garrison in a conquered city.    
As to the origin of the sense of guilt, the analyst has different views from other psychologists; but even he does not find it easy to give an account of it....Perhaps, after some hesitation, we shall add that even when a person has not actually done the bad thing but has only recognized in himself an intention to do it, he may regard himself as guilty....What is bad is often not at all what is injurious or dangerous to the ego; on the contrary, it may be something which is desirable and enjoyable to the ego. Here, therefore, there is an extraneous influence at work, and it is this that decides what is to be called good or bad. Since a person's own feelings would not have led him along this path, he must have had a motive for submitting to this extraneous influence. Such a motive is easily discovered in his helplessness and his dependence on other people, and it can be best designated as fear of loss of love. If he loses the love of another person upon whom he is dependent, he also ceases to be protected from a variety of dangers. Above all, he is exposed to the danger that this stronger person will show his superiority in the form of punishment. At the beginning, therefore, what is bad is whatever causes one to be threatened with loss of love....A considerable amount of aggressiveness must be developed in the child against the authority which prevents him from having his first, but none the less his most important, satisfactions, whatever the kind of instinctual deprivation that is demanded of him may be; but he is obliged to renounce the satisfaction of this revengeful aggressiveness. He finds his way out of this economically difficult situation with the help of familiar mechanisms. By means of identification he takes the unattackable authority into himself. The authority now turns into his super-ego and enters into possession of all the aggressiveness which a child would have liked to exercise against it. The child's ego has to content itself with the unhappy role of the authority—the father—who has been thus degraded. Here, as so often, the [real] situation is reversed: 'If I were the father and you were the child, I should treat you badly.' The relationship between the super-ego and the ego is a return, distorted by a wish, of the real relationships between the ego, as yet undivided, and an external object ...I believe the line of thought which seeks to trace in the phenomena of cultural development the part played by a super-ego promises still further discoveries....If the development of civilization has such a far-reaching similarity to the development of the individual and if it employs the same methods, may we not be justified in reaching the diagnosis that, under the influence of cultural urges, some civilizations, or some epochs of civilization—possibly the whole of mankind—have become 'neurotic'? An analytic dissection of such neuroses might lead to therapeutic recommandations which could lay claim to great practical interest. I would not say that an attempt of this kind to carry psycho-analysis over to cultural communities was absurd or doomed to be fruitless. But we should have to be very cautious and not forget that, after all, we are only dealing with analogies and that it is dangerous, not only with men but also with concepts, to tear them from the sphere in which they have originated and been evolved. Moreover, the diagnosis of communal neuroses is faced with a special difficulty. In an individual neurosis we take as our starting-point the contrast that distinguishes the patient from his environment, which is assumed to be 'normal'. For a group all of whose members are affected by one and the same disorder no such background could exist; it would have to be found elsewhere. And as regards the therapeutic application of our knowledge, what would be the use of the most correct analysis of social neuroses, since no one possesses authority to impose such a therapy upon the group? But in spite of all these difficulties, we may expect that one day someone will venture to embark upon a pathology of cultural communities.", (S.Freud, Civilization and Its Discontents, The Standard Edition, New York, Norton, 1961: 83, 84, 85, 91, 92, 109, 110).        

These concepts constitute the basis of Freud's inquiries into the psychological processes and conflicts of collective life as set out more extensively in Massenpsychologie undIich-Analyse and Totem und Tabu. In particular, such insights may cast a deeper understanding on the (neurotic) characteristics of group cohesion, which is mainly based, as observed before, on the following (mostly unconscious) processes: i) libidinal links among the members of the group; ii) projection of individual aggressiveness towards people and/or institutions lying outside the group; iii) identification with the group leader — who symbolizes the parental instance (typically, the father) — in order to remove the conflicts related to the Oedipus complex.

10. A SUMMING UP

Freud’s theory of instincts is truly complex and, as with any other theory dealing with these issues, incomplete and tentative. Freud himself was well aware of this difficulty as throughout his work he continually revised his theory. One of the main aims of Freud’s instincts theory is to provide a framework for the elaboration of his psychosexual theory of human development which, as observed by many authors, represents one of his major contributions to psychoanalysis. 
In this regard, Freud's position is far more complex than the simplistic vision of instincts based only on biological exigencies: in fact, Freud made clear the many components of the concepts of instinct: in particular — as laid down more extensively in Massenpsychologie undIich-Analyse but also in Totem und Tabu, Das Unbehagen in der Kultur and other works — libidinal links between the members of any society, which include affection and emotions and may include neurotic conflicts related to them, play a crucial role in maintaining social cohesion.
In this sense, one of the most important insights of psychoanalytic theory is that the intellectual, affective and biological aspects of instincts are intertwined in the complexity of each person and unfold in all the aspects of individual and collective behaviour. Even when the expression of one of these aspects is more pronounced, this does not mean that the other aspects cease to operate, but only that they operate in the background, in a partly unconscious and indirect way that may nonetheless heavily influence the aspects appearing in the foreground. In this process, the role of symbolic meaning is of special importance in the synthesis of these aspects. 
For instance, the act of feeding assumes importance for the child not only because it satisfies a biological need but also because it tends to be interpreted by the child as an expression of affection; and the child, in making this and other connections, also expresses and develops its cognitive and intellectual faculties.
The same complexity emerges if we follow the unfolding of these early experiences towards their progressive socialization: in this regard, we can easily observe that the need to eat and drink and the pleasure associated with these activities are a universal feature of human beings; indeed, if we consider the social contexts of eating habits, the surprising element is that, whereas cultures vary widely in the characteristics of their eating habits, virtually all seem to attribute to such habits great importance in many family and social situations.  
Eating habits — for instance, in the form of typical dishes and restaurants — often help to identify the distinguishing features of many cultures.
One explanation of these phenomena may be that eating habits can express, partly at a symbolic and unconscious level, many individual and collective affective and cultural instances. In this regard, many factors may intervene in the explanation of the significance of eating habits: for example, practical reasons, in the sense that eating activities often occur during break or leisure time, and the fact that these activities are in many cases a source of experience and knowledge.

However, it is true that in Freud’s work these concepts are often implicit and sometimes, especially in his later theory of death instinct, he seems to assume a pessimistic view of human development, in that little can be done to reduce human aggressiveness. 
In this respect we believe that Freud’s theory of death instinct — which, however, it is important to remember, Freud conceived only as a very tentative interpretation of human behaviour — hindered him from carrying out a deeper analysis of human aggressiveness (but, refer also to previous footnotes), which was later done by other authors.
However, notwithstanding these shortcomings, it should not be overlooked that one of the central aspects of Freud’s theory is the discovery of a new method for the analysis of psychological disturbances, through which the person can reach a better self-understanding of his or her neurotic conflicts; this means that the reduction of neurotic conflicts is associated with a decrease in the neurotic aggressiveness related to them, and Freud explains the dynamics of this process in depth. Therefore, as already observed, even when he assumes that life has the character of an irreducible struggle between life and death instincts, he does assume neither that they are given, for every concerned individual, in any “fixed and immutable proportions”, nor that there is any systematic tendency across individuals for the prevalence of one or the other; consequently, little determinism is allowed in his theory, which, on the contrary, casts more light on the complexity of the factors at play in determining human behaviour.
Furthermore, if our needs were based only on a set of biological-based instincts, it would be difficult to explain the role of emotions, affection and intellect in psychic life. In this regard, the following points would require further investigation: i) Freud finds neurotic conflicts not only in our society but also — as analysed, for instance, in Totem und Tabu, 1912-1913 — in early societies; neurosis, therefore — and also the related characteristics of repression of sexuality and aggressiveness discussed above — seems to be a typical characteristic of human development and may assume different expressions in different societies and thus, in this regard, takes on a distinctive evolutionary character. ii) If the child seems to behave only out of its instinct-based needs, this does not happen only because it refuses to adapt to the principle of reality but because it does not know the requirements of the external world. In fact, for the working of the principle of reality, the child needs to grow and develop its cognitive and intellectual faculties; in this respect, education (at least a sound one) plays not only the role of showing the limits of individual behaviour but also that of helping the child to learn how to bring out its potential. These concepts are closely related; indeed, for a child learning the exigencies of the others is not only a necessary limitation of its behaviour but, more importantly, may concur, by helping it establish adequate relations with them, to a better expression of its personality. Furthermore, as shown by Freud and many others, intellectual faculties play a critical role from the very beginning of a child's development. iii) Even if a child's behaviour seems to be dominated by its biological-based instincts — for instance, in the case of hunger and thirst — this does not mean that affective and intellectual exigencies play a little role. In this regard, Freud has always underlined the child's need for parental affection. 

These findings have been confirmed by many important studies; a pioneering study in this field was made by Spitz (1945), who shows that children brought up in foundling hospitals tend to be affected by severe neurotic disturbances, even when their biological needs may have been fully satisfied. 
In this sense, the role of society is much more complex than simply “repressing instincts”: society also represents an irreplaceable setting for the development and expression of the complex and conflicting aspects of human personality. In fact, as we have seen, human instincts constitute a manifold entity where the affective, intellectual and, of course, biological aspects make up the individual personality; as these aspects cannot be developed in isolation, a society needs to be built in such a way to afford their expression, with, of course, all the complexities, conflicts and feed-back effects associated with such evolutionary patterns. Therefore, the ability of society to create an adequate environment for a full development of its members depends crucially on the characteristics of every culture considered; these, in turn, depend on the complex interplay of the individual and collective conflicts both between themselves and between the “materialistic” aspects of society.
In relation to these concepts, the consideration, especially by the "independent psychoanalysts", of the emotional orientation of a person as evaluation states and the importance attributed to the environment for the development of the "true self" (Rayner, 1991) have a striking parallel with important institutional concepts: in particular, social valuing and Commons’s theory of institutions as a means for controlling, liberating and expanding individual action. In this regard, an interdisciplinary use of these concepts may cast a deeper light on the characteristics of many social phenomena 
In this sense, the repression of instincts — meant as the whole set of familiar and social limitations not conducive to the full expression of the person's feelings and abilities — not only is unnecessary for the existence of society but may also be a cause of its destabilization. In fact, as we have seen, the repression of instincts can cause more neurotic conflicts which, by entailing further neurotic aggressiveness, constitutes one of the main causes of the impairment of the social fabric.
Needless to say, Freud’s theory is not free of contradictions but, given the complexity and the evolutionary nature of the issues at hand, it would have been very difficult for him to provide a “perfect theory”. In light of this difficulty, our remarks have not tried to identify “what Freud really said” but, rather, to stress a number of aspects along a new avenue of research.  
It is also worthwhile to note that, as emerges from the previous discussion, psychoanalysis is completely at odds, especially in its recent developments, with a conception of human nature as an expression of universal natural laws.
Certainly, psychoanalysis adopts a set of “universal hypotheses”, but these stem from the observation of a number of common human characteristics and are continually developed, refined and revised as a result of subsequent research. 
Examples of these basic hypotheses include the trauma of birth, the child’s need to be fed, cared for and loved by his or her caretakers, and the emotional conflicts associated with the process of growing up. By assuming these and other hypotheses, psychoanalysis has developed an articulated theoretical framework which takes into account the familiar and social contexts in which the child’s development takes place.

CONCLUDING CHAPTER: HOW CAN INSTITUTIONAL ECONOMICS 
AND PSYCHOANALYSIS INTERACT?

As we have seen, institutional economics and psychoanalysis provide many contributions to the understanding of individual-society relationships. For this reason, we believe that the interaction between these disciplines could help us better understand many social and economic problems. 
But, how can this interaction be achieved?
A first observation coming to the fore is that, as already observed, institutional economics has established a fairly systematic collaboration with pragmatist and cognitive psychology; instead, collaboration between institutional economics and psychoanalysis has until now assumed a scattered character, mostly in the form of fleeting remarks which have been unable to provide anything like an organized treatment. 
The same is true, more generally, for collaboration between psychoanalysis and social sciences. This does not mean that psychoanalysis has not tried to address the collective dimension of life. As we have seen, both Freud and later psychoanalysts have stressed the importance of the collective dimension of life and, in this regard, they have provided significant contributions to a number of social issues by applying the  psychoanalytic framework. However, as far as we know, these studies rarely make use in a systematic way of concepts related to disciplines lying outside their own field.  

Three groups of factors may have contributed to this situation: i) the difficulty for social scientists and psychoanalysts to go beyond the methodological scope of their complex disciplines; ii) a tendency among social scientists to interpret Freud’s work as being chiefly based on biological needs and thus, on these grounds, to be rather sceptical of its usefulness for analyzing social phenomena; iii) furthermore, the intrinsic multifariousness of psychoanalytic issues and the partly different views of psychoanalysts in this regard may have contributed to making it difficult for social scientists to feel at ease within the psychoanalytic field.

An interesting attempt to analyze the relationship between psychoanalysis and institutional economics was made by Schneider (1948). Although this work provides many useful insights — for instance, through an in-depth discussion about the possibility of linking cultural forms and psychological traits — it does not succeed, at least in our view, in clearly identifying the aspects where the collaboration between institutional economics and psychoanalysis could unfold.
The basic reasons for these limitations are to be found in the author’s interpretation of  Freud’s and Veblen’s theories. It is assumed that Freud attributes all the importance in human behaviour to the “instincts”, which are supposed to be mainly driven by the “principle of pleasure”. This interpretation leads the author to identify an anarchistic strain in Freud’s theory, which would have led Freud to the conclusion that the repression of “instincts” is necessary for the existence of society. As a consequence of this view, the author considers Freud’s theory inadequate for the analysis of human behaviour and turns his attention to the contributions of the “neo-Freudians”, who have, in his opinion, the merit of having played down the role of “instincts” and brought to the fore the importance of social aspects of life.  
The same line of reasoning is applied to Veblen’s analysis, though, in the author’s view, Veblen’s workmanship instinct makes his “anarchism” less definitive than Freud’s.
Needless to say, we find these conclusions, for the reasons set forth in the previous chapters, highly questionable. 
In addition to the previous discussion, we can observe that the claim that an instinct-driven behaviour is in itself anarchistic disregards the fact that, for instance, the life of animals — which is generally taken as a paradigmatic example of an instinct-driven behaviour — shows few signs of “anarchy” (whatever meaning one can attribute to this term) but, rather, a level of stability perhaps far greater than that of human life. Moreover, as evidenced by numerous studies, many species of animals show affective and cognitive attitudes in their behaviour. 

In the analysis of individual-ISEF dynamics, psychoanalysis can contribute to a more complete understanding of the role played by psychological conflicts in determining the ISEF structure.
For instance, by considering the conflicts related to ceremonial/instrumental behaviour — and, relatedly, between workmanship and parental bent instincts, on one hand, and more aggressive and "acquisitive" propensions, on the other — psychoanalysis can, first at all, help attain a more precise identification of the social value process through which it is possible to distinguish and appraise different behaviours; secondly, it can stress the reasons why the ceremonial behaviour thus identified is more likely to be brought about, to varying degrees, by neurotic conflicts. Indeed, a great part of the psychoanalytic literature discussed above reports examples of neurotic-based ceremonial behaviour. 
For instance, Freud investigates the neurotic reasons underlying ceremonial behaviour, which often takes the form of obsessive rituals, with reference not only to ancient populations (as in Totem und Tabu, 1912-1913), but also to contemporary ones (as in Massenpsychologie undIich-Analyse, 1921, and Das Unbehagen in der Kultur, 1930). 
Another important implication of psychoanalytic methodology as regards the analysis of ceremonial/instrumental conflict is that, even if ceremonial behaviour is more likely to express neurotic conflicts, this does not imply that instrumental behaviour would necessarily be neurotic-free. In fact, also a very rational problem-solving procedure may be determined by conflicts and neurosis if "rationality" lies only in its "instrumental" element without affecting its "substantive" aspect. 
It is important to stress that, as observed before, this statement does not seem in contradiction with Veblen’s view of instrumental behaviour as a way to eliminate ceremonially-based habits of thoughts. 
Within this ambit, psychoanalysis can contribute to the understanding of the conflicting and neurotic elements associated with each collective context by applying the instrumental procedure envisaged by Veblen and others (e.g. the scientific methodology). 
As seen in the previous chapters, a number of studies have shown, from a psychoanalytical perspective, how people tend to regard institutions. 
In fact, even institutions may be partly determined by — and may determine, as well — individual conflicts and neuroses. Furthermore, as already noted, institutions are important for individuals not only with regard to their real functions but also because of their symbolic meanings. This means that, to a certain extent, individuals regard institutions not in their reality but according to their own unconscious conflicts and fantasies which, in turn, are partly socially determined. 
In this sense, the characteristics of every culture — including, of course, the characteristics of the family setting — are likely to play a pivotal role in determining the course that individual conflicts will take.
In this respect, it is interesting to observe that even conflicts and neuroses, since they are in part socially and culturally determined, present an evolutionary character.
For instance, it is well known that in the feudal economy neurosis acquired a distinctive nature, different from the prevailing nature of modern-day neurosis; or, to consider another example, hysterical symptoms — which constituted the basis from which Freud’s theory sprang — seem to have drastically diminished over time, chiefly as a result of less repressive educational methods. 
At this stage, we can employ one of Veblen’s fundamental insights — the definition of institutions in an evolutionary way as an outgrowth of habits of thoughts and life — in order to include within this definition the psychoanalytic concept of neurosis. In this sense, institutions, and more generally, social and cultural forms, can be regarded as an outgrowth of habits of thoughts and life which may concur to form — and, at the same time, are partly formed by — individual conflicts and neuroses. Within this analysis, important psychological and psychoanalytic concepts can help attain a more complete understanding of the complex meanings of habits, which concur to determine their typical unconscious and rather 'sticky' nature: for instance, as noted before, the complexity of instincts, the role of internalization of norms and model of behaviour in child development, the role of the Freud's notion of "compulsion to repeat", the importance of symbols and fantasies in individual and collective life and the multiple and interrelated levels (in particular, individual, family-based, social and cultural) of the concept of identity.
It is important to note that this definition does not imply a negative concept of institutions but, rather, takes into account their conflicting and complex roles. Within this scope, the role of institutions in their complex and interrelated articulations — as stated by Commons (1934: 69) "....all the way from the family, the corporation, the trade union, the trade association, up to the state itself...." — as a necessary medium for the person to establish object and interpersonal relations would deserve paramount attention. 
In fact, institutions are in many cases, as stressed above, a necessary element for liberating and expanding individual action; this means that this concept implies also the consideration of psychological factors in these dynamics—as was accomplished by Commons through the elaboration of the concept of "negotiational psychology".
Furthermore, conflicts and neurosis should not be regarded as something “bad or abnormal” but as the expression of the structure of human personality, with all its problems, weaknesses, contradictions and ambivalences. As appears from this short description, some of the reasons why we believe the interaction between institutional economics and psychoanalysis useful is because it can cast more light on the following interrelated issues:

1)	The evolutionary and conflicting nature of individual and collective structure of values and motivations, and of the related decision-making process.
2)	The evolutionary interaction between individuals and institutions in the formation of interpersonal relations, expectations, identity and values, and the role of conflicts and aggressiveness in the dynamics of these processes.
3)	The evolutionary and conflicting nature of habits, routines, organizations, institutions and collective knowledge.
4)	The evolutionary and conflicting nature of ethics and morality.
5)	The possibility of economic and social reforms, and the role of policies. 

The link between psychology, institutions and policies

In the analysis of these aspects, the central point we wish to stress is that the analysis of institutions is intrinsically linked to policy dynamics. This implies that collaboration between institutional economics and psychoanalysis could also be utilized for the analysis of all the manifold aspects of policy action with particular attention, as highlighted in a previous work, to the problem of co-ordination between different policies. Since, as first shown by Commons, policy action is not limited to governmental activity but involves all the institutions and individuals concerned in one way or another with policy measures, the problem of policy co-ordination goes at the heart of the problem of "institutional" or collective co-ordination. Indeed, collective action and policies can be regarded as two aspects of the same complex phenomena: on one hand, every institution (and also every person living in a collective context) carries in its action, more or less explicitly, a set of policy objectives; and, on the other hand, policy action does not unfold out of an automatic working of some "natural law" but needs a well defined ISEF, with all the related set of conflicting values and objectives, for its accomplishment. 
This issue thus raises an interesting question which, of course, is related to every policy domain: should public policies be aimed at reducing psychological disturbances and, if so, what are the most suitable policies? With regard to the first question, we think favourably of policies addressed to reducing psychological disturbances. In fact, as we have seen, psychological disturbances, although occurring in the mind of the person, have an intrinsic social character, owing to the individual’s need to establish affective and intellectual relations with others. Also for these reasons, psychological disturbances tend to be a widespread feature of human beings; moreover, the most impairing forms tend to occur among the disadvantaged section of the population (Desjarlais and others, 1995). In this sense, psychological disturbances partly possess, as outlined before, an intrinsic social and evolutionary character. This implies that public policies can play an effective role in reducing psychological disturbances and, in virtually every industrialized country, there are examples of policies addressed to the therapy of these disturbances. Although the analysis of such policies is beyond the scope of this work, our general impression is that there may still be need for advancement especially in the area of prevention and diffusion of psychological and psychoanalytic knowledge.
The analysis of policy issues would not be possible without a thorough process of social valuing which, as already seen, constitutes one of the leading concept of institutional economics. This process calls for an adequate involvement of the individuals and groups making up collective life in any given context. 
In order to attain a more complete understanding of the factors at play in determining the structure and evolution of social valuing, this analysis would also benefit from a consideration of psychoanalytic concepts. 
In fact, as observed before, social value tends to take, at individual and collective level, a (partly) unconscious, symbolic and implicit character, being deeply embodied in the habits of thoughts and life typical of every society. Consequently, the nature of the problems and conflicts associated with these evaluations may render difficult the identification of all the aspects of these problems and their possible solutions.
This kind of analysis would also lead to a deeper understanding of the multifarious aspects of such concepts as capitalism, socialism, market, democracy, participation, competition, which are at the heart of policy action and that tend, by embodying different values and visions of the world often having a strong emotional component, to constitute an important part of the individual and collective social value process. 
We are aware of the difficulty of creating a stable collaboration of this kind but still believe that furthering this avenue of research may produce a fuller understanding of individual-society dynamics. In this regard, we wish to point out the mutual benefits of a more systematic collaboration between institutional economics and psychoanalysis in the study of social issues and the related policy options: on one hand, institutional theory would benefit from a consideration of psychoanalytic concepts, since it could help cast a fuller light on the psychological side of institutional dynamics; relatedly, on the other hand, psychoanalytic theory would benefit in its application to social issues from the consideration of institutional concepts since this can help cast a better light on the institutional side of psychological dynamics. The problems of social sciences are so complex, we believe, that the collaboration of many disciplines is necessary for understanding social phenomena. In this sense, the fact that institutional economics shares many elements with pragmatist and cognitive psychology constitutes an enriching element that can contribute to a more fruitful collaboration among these theories and psychoanalysis. Furthermore, significant exchange of ideas have already occurred among these disciplines and psychoanalysis. In conclusion, we can say that a great deal of work is necessary for a better understanding of the social, economic and psychological relations and conflicts upon which contemporary societies are based.  Bringing together psychological and socio-economic analysis can help cast more light both on the role played by social and economic factors in shaping the individual’s course of life and, relatedly, on the role played by each person in influencing these factors.

APPENDIX: THE INDIVIDUAL’S DECISION-MAKING PROCESS: PRELIMINARY REMARKS

Introduction

Needless to say, this issue is a very tangled one and even a superficial analysis of it would require many pages. Being aware of this difficulty, we will make a number of preliminary remarks by utilizing the concepts analyzed before.
A central aspect we wish to stress is the unitary character of the human mind. This implies that even if the mind can perform many different activities (e.g., cognitive, affective), they all represent only a part of the same system.
Another important element we would like to outline is the role played by psychological conflicts in the individual’s decision-making process. In fact, as observed before, psychological conflicts tend to be considered as a central attribute not only of any neurosis but also of the neurotic-free mind.
This is due largely to the fact that the cognitive, time, space and energy resources of the person are limited and thus can never achieve his or her goals completely. These constraints can be considered as intrinsic scarcity factors for which even economic progress cannot compensate.
When asked about his or her goals, virtually everyone would complain about not having enough inner attributes, energy and time to pursue all of them. This situation can easily trigger structural conflicts.
By the expression “structural conflicts”, we mean that the choice between different alternatives involves not only the necessity to renounce some of them but also the presence of conflicts related to the emotional sphere.
This concept implies that, for instance, the choice between different consumption alternatives, and between consumption and saving is not only a “matter of tastes” but in many cases implies the choice between different values and reflects different ways of dealing with emotions and conflicts.
As already seen, such factors heavily influence the decision-making process and, we can assume, the greater the effects of emotions on the individual’s decision-making process the greater the tendency for psychological conflicts to arise.
The emotional sphere is partly unconscious and may be affected by neurotic conflicts.
The most obvious way this could happen is when the individual is overwhelmed by feelings of anxiety, anger, sorrow and so on. Supposing that such a situation is not due to severe external shocks, the decision-making process can be affected, though not because such emotions are “excessive”, but rather because the conflicts related to them are difficult to manage.
Neurotic conflicts can affect the “rationality” of the individual’s decision-making process in two interrelated ways:

i) By conditioning the priority the individual gives to the range of available choices.

ii) By affecting the internal coherence of a sub-set of decisions deriving from a previous choice; there is thus a conflict between two contrasting emotions both belonging to the emotional sphere.

In these cases, the choices made by a person may cause him or her feelings of stress, guilt, dissatisfaction and so on.
Such feelings arise because some aspects of the individual are contrary to the choices made. The stress caused by these conflicts may result in a largely unconscious behaviour tending to reverse the initial choice. In such a situation, the correct choice of means could also be affected and thus, an incorrect choice of means might depend (at least in part) on the underlying conflicts of the individual.

The Contributions of Amitai Etzioni’s Moral Dimension

In accordance with our interdisciplinary approach, we will consider some insights offered by one of Etzioni's works (1988), which analyzes the complexity of factors entering the individual’s decision-making process. In fact, although Etzioni’s work appears in a number of aspects different from the main concepts of institutional economics and psychoanalysis, we believe that this contribution could be useful for analyzing several issues related to individual-society dynamics.
He stresses the importance of normative commitments and affective involvements, referred to as N/A factors, expressed by the author in the following passage:

”The central thesis advanced here is: (1) the majority of choices people make, including economic ones, are completely or largely based on normative-affective considerations, not merely with regard to selection of goals, but also of means; and (2) the limited zones in which other, logical-empirical considerations are paramount, are themselves defined by N/A factors that legitimate and otherwise motivate such decision-making.”, (Etzioni 1988, 93).

This passage stresses that N/A factors may heavily influence the individual’s behaviour. In this sense, even the choices of maximizing profit or efficiency are values and may be affected by emotions and conflicts.
Once one recognizes the importance of N/A factors in the individual’s decision-making process, what can be said about their role in the logical empirical (L/E) factors which, according to conventional wisdom, should characterize decision-making process?
To quote Etzioni again,

“Implicit in the argument that L/E considerations are rational, at the core of the neoclassical paradigm, is the prescription that they are the correct ones to make. Indeed, it is widely acknowledged that neoclassical decision-making theories are much more prescriptive than descriptive. The role of affect, to the extent that is not simply ignored, is depicted as negative, a factor that “twists” or “distorts” thinking.”, (Etzioni 1988, 103).

The implicit idea underlying these opinions is that N/A factors are in opposition to rationality.
Of course, N/A and L/E factors are quite different factors and involve different mental processes, but to consider them actually in opposition is tantamount to assuming a structural dissociation of mental processes.
In fact, according to this hypothesis, L/E factors can work only when N/A factors have been repressed and, in turn, N/A factors can work only beyond rational considerations.
The results reported in Etzioni’s work show that in many cases affective factors represent a positive element in rational decision-making.

To quote another passage,

”The main view followed here is that raw emotions often do curb reason, and that the socialization of emotions may never be complete. At the same time it is recognized that socialized emotions often, though  not always, play significant positive roles, including enhancing decision-making. That is, whether affect is constructive or disruptive depends on the specific circumstances and the role it plays.” (Etzioni, 1988, 104).

In order to overcome the problems of neoclassical construction and to take into account the role of N/A factors, the author introduces the concept of “multiple self”.
The two dimensions of the self are assumed to be pleasure and moral evaluation. Individuals seek to accommodate these conflicting elements, and this process can cause feelings of ambivalence, guilt and stress, which, in turn, can affect the actor’s ability to make sound choices (for example, by leading him or her to inaction). Such conflicts precede, accompany and follow individual choices. To quote another passage,
“The concept of a single over-arching utility disregards a major human attribute observable in the behavior under study: people do not seek to maximize their pleasure, but to balance the service of two major purposes — to advance their well-being and to act morally....rationality enters when we come to the choice of means. The position advanced here is that normative-affective factors shape to a significant extent the information that is gathered, the ways it is processed, the inferences that are drawn, the options that are being considered, and the options that are finally chosen. That is, to a significant extent, cognition, inference, and judgement — hence, decision-making — are not logical empirical endeavours but are governed by normative-affective (non-cognitive) factors, reflecting individual, psycho-dynamic and, we shall see, collective processes.”, (Etzioni, 1988: 83, 94).

An important implication of this analysis is that, due to the internal dialectics between these forces, the set of individual values and preferences are not stable but change over time according to the evolution of individual personality and external context.
The concept of multiple self, though representing a substantial step toward a better understanding of the characteristics of human behaviour, can be further developed.
In fact, the principle of multiple self does not consider sufficiently the effects of the unitary character of mind on “each self”.
In particular, the individual’s purposes of enhancing his or her well-being and acting morally are not necessarily at odds. In fact, enhancing personal well-being can well constitute a moral obligation for the concerned individual because he or she is, like everyone else, a human being; and, on the other side, acting morally can be a source of pleasure.
We suppose, according to the major psychological and psychoanalytic theories, that the mind acts unitarily and, therefore, each choice expresses (partly at a symbolic and unconscious level) the entire structure of the individual’s values, emotions, interests and conflicts.
The individual’s decision-making process may be conditioned not only by emotional factors but also by the characteristics of cognitive factors.
Many studies have shown how such factors may influence the individual’s decision-making process.
One important element is people’s limited ability to acquire and process information in a complex world. In order to make decisions, people employ many heuristic means which allow them to simplify the world they have to face.
Now, we will provide an example which, employing the concepts developed here and in the previous chapters, illustrates how complex the individual’s decision-making process can be.

Work and Leisure

In contemporary society, one of the most difficult dilemmas of human life is the following: what is the best division of time between work, and social and family life (referred to here as “leisure”)?
As shown by psychoanalytic studies, the decision-making process involved in these issues central to human life can be easily driven, to varying degrees, by neurotic conflicts.
In fact, on one hand, the choice of overworking may be stimulated by greed as well as by a related and more or less unconscious feeling of guilt; on the other hand, the same could apply to the choice of not working. In this case, greed can be expressed by the wish to live on the income of others and the related feeling of guilt by the avoidance of the prospective advantages attainable through work. 
However, also a “normal” allocation of time between work and leisure may be, to varying degrees, neurotic-driven. In short, any decision regarding this issue might express the individual’s neurotic conflicts.
However, if neurotic conflicts can be expressed in any potential choice, what does determine the choice really made by the person?
One element is  a combination of the characteristics and intensity of the individual’s neurotic conflicts.
However, as already observed, individuals affected by neurotic conflicts can make different or even opposing choices between work and leisure. Apart from cases of evident psychological disturbances, it is not easy to associate a given choice to the type and severity of neurosis, also because the individual’s decision-making process is partly influenced by the ISEF. A given ISEF influences the decision-making process in many relevant ways, as it represents a significant set of values and norms for the individual; in this sense, the ISEF constitutes what “society” is thought to require from the individual in order that he or she comply with these values and norms.
These remarks lead us to stress the importance for the individual of the symbolic and unconscious meaning of choices made.
Thus, little can be said about the reasons for a choice between work and leisure without knowing the meanings that society attaches to work, on one hand, and social and familiar activities, on the other.
Indeed, for an individual the choice of how much to work can have different meanings, depending on what work “represents” for his or her groups and society.
We can illustrate these points through the following example. Let us suppose that a person, you or me, have to decide how to spend time next afternoon. In this case, there is first the major choice between work and leisure and then a second choice about how to effect the first choice, that is, how to work or how to use leisure.
Supposing that we choose not to work, we need to make a choice among the available alternatives. At this stage, both emotional and intellectual factors are likely to be very important, since a decision-making process that concerns, for instance, theatre, reading, movie, or other social and family activities is influenced by a wide variety of factors including intellectual and emotional elements, values, personal situation and so on. In this case it is very difficult to assess the reasons underlying choices without a fairly detailed picture of all the factors influencing the individual concerned. For example, if we choose to read a difficult book, this choice does not necessarily reflect a genuine interest but could also be due to a hidden feeling of guilt about being away from work—because we can consider reading more similar to work.
Once one of the available alternatives has been chosen, there arises the problem of choosing the most appropriate means to reach it.
Let us assume we choose to visit a particular place, the problem now is to select the shortest way to go there. If, however, we choose a longer way, this does not necessarily imply that we have not made a sound choice. There could be three main hypotheses:

1) We have not chosen the shortest way because of lack of information, myopia and so on.
2) We have not chosen the shortest way because we feel guilty (more or less unconsciously) about not being at work, and so want to punish ourselves by delaying the visit.
3) We have not chosen the shortest way because, although aware of all the available alternatives, we prefer the longer way (may be because it is more panoramic).

However, even if we choose the shortest way, this would not be sufficient to warrant the “optimality” of our choice, for instance because we could have made that choice only out of conformism even though, actually, we would prefer the longer way.
What we would like to stress by this example is the great difficulty in assessing the true reasons for individual choices without carrying out a careful analysis of all the psychological, social and economic factors which may impinge on the individual’s decision-making process. In this regard, as observed before, institutional economics and psychoanalysis may contribute to cast more light on the complexity and multifariousness of these phenomena.   

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