Institutional Theory: A Primer Llewelyn Hughes, Crawford School of Public Policy, ANU

What are “Institutions”? Institutions as “humanly devised constraints that structure political, economic and social interactions” Institutions can be formal, such as constitutions, laws Institutions can be informal, such as customs, codes-of-conduct Institutions “evolve incrementally, connecting the past with the present and the future” Douglass North, “Institutions” JEP (1991) Institutions as “formal or informal procedures, routines, norms and conventions embedded in the organizational structure of the polity or political economy” Hall and Taylor (1996)

Institutionalism to Behavioralism to Institutionalism Early Institutionalism Talcott Parsons (1902-1979, Harvard Prof.) & structural functionalism Macro-focus Institutions (both formal and informal) in societies are inter-connected, and have distinct functions, leading to a social equilibrium. Individual preferences are shaped by the institutions they inhabit Change is incrementalist

Institutionalism to Behavioralism to Institutionalism Behavioralist Revolution Criticized structural functionalism (S.F.) on methodological and theoretical grounds S.F. is overly descriptive/qualitative/non-scientific S.F. has a status-quo bias, and ignores the role of agency Preferences are exogenous to institutional structures e.g. Anthony Downs, An Economic Theory of Democracy (1957) Formal model of democratic theory

Institutionalism to Behavioralism to Institutionalism New Institutionalism Movement across political science, economics, sociology, beginning in 1980s. Accepts scientific approach to the study of politics, but generally engages in hypothesis testing, sometimes using qualitative methods. Emphasizes role of institutions in shaping political outcomes Institutions determine who has power, and when they can exercise it Individual and organizational preferences can be endogenous to institutional arrangements Three main schools: rational choice institutionalism, historical institutionalism, sociological institutionalism Recently interested in how to explain institutional change

Rational Choice Institutionalism: Applications US Politics Riker, William, “Implications from the Disequilibrium of Majority Rule for the Study of Institutions,” APSR 74, No. 2 (June 1980), pp. 432-446 International Institutions Barbara Koremenos, Charles Lipson, and Duncan Snidal, “The Rational Design of International Institutions,” International Organization 55, 4 (2001). B. Peter Rosendorff and Helen Milner, “The Optimum Design of International Trade Institutions,” International Organization 55: 4 (2001). European Politics etc. Also see George Tsebelis, Veto Players

Historical Institutionalism: Applications Paul Pierson, ‘Increasing Returns, Path Dependence, and the Study of Politics’, The American Political Science Review, 94:2 (2000)

Institutionalism: Explaining Change G Capoccia, RD Kelemen. 2007. “The Study of Critical Junctures: Theory, Narrative, and Counterfactuals in Historical Institutionalism.” World Politics 59: 341-69. Pierson: Junctions are critical because they place institutional arrangements on paths or trajectories that are then difficult to alter. Path dependence is driven, on the other hand, by increasing returns, lock-in, & sequencing. CJ Defintion: “a situation in which the structural (that is, economic, cultural, ideological, organizational) influences on political action are significantly relaxed for a relatively short period.” (343) This leads to two consequences: “range of plausible choices open to powerful political actors expands substantially a the consequences of their decisions for the outcome of interest are potentially much more momentous.” (343)

Institutionalism: Explaining Change Mahoney & Thelen. 2010. Explaining Institutional Change. CUP. Exogenous shock model needs “fundamental rethinking”. Path dependence is rare. Given this, we need a power-distributional approach to institutions. (Power as a driver of change is common across both RI and HI.) Thesis: Institutional change occurs when rule interpretation and enforcement weaken, leaving space for change. Compliance is a variable Causes of Change: Shifts in the balance of power through: shifts in environmental conditions; changes in other institutions in which the actor is embedded

Institutionalism: Explaining Change Thelen & Streeck. Beyond Continuity. CUP. Five Types of Gradual Transformative Change: Displacement: new models emerge that call into question existing forms and practices. Layering: Introducing new, competing systems alongside existing ones. Differential growth ensures former wins out. Conversion: Existing institutions directed to new goals and functions. Achieved through changes in power relations, exogenous change etc. Exhaustion: = Institutional breakdown.