This section involves a more detailed discussion of the issues relating to new institutional theory that were introduced in the previous section. In addition to giving a more detailed account of the “collective action” and “social practice” models, it also considers historical and constructivist accounts. These latter two approaches have led to a new emphasis on the role of ideas in institutional analysis, which have in turn led to a new conception of institutions that accords a more prominent role to agency in the operation of institutions and thus facilitating institutional interactions.
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2.1 The three original new institutionalisms
Hall and Taylor have identified three distinct approaches to new institutionalism. These are referred to as rational choice, sociological and historical institutionalism (Hall and Taylor 1996). Rational choice institutionalism corresponds to the “collective action” approach introduced by Young. This body of theory is based on the assumption that actors make decisions based on fixed rational preferences of self-interest, and therefore act in a strategic and calculated manner in order to maximise the attainment of these preferences. It is a deductive and systematic analytical approach that draws from literature on game theory and economics (Hall and Taylor 1996). In the rational choice approach “institutions are simply equilibrium ways of doing things” (Shepsle 2006:18). Institutions emerge from a need to reduce uncertainties that derive from multiple and conflicting preferences. Thus institutions have come to be seen as originating and persisting through a need to overcome “collective action dilemmas”, where groups of actors pursue common preferences in order to collaborate towards mutual advantage (Shepsle 2006: 19). Institutions are conceptualised as incentive structures which are voluntarily entered into by actors and promote complementary behaviour. Such behaviour constrains actors from attempting to maximise their individual preferences in a way that would lead to collective sub-optimal outcomes (Schmidt 2008). A commonly cited example of such a situation is the “tragedy of the commons” where, in the absence of constraining institutions, actors are incentivised to “free ride” on common resources, leading to resource depletion, ultimately to the detriment of all interests concerned (Hardin 1982, Hall and Taylor 1996)
Sociological or normative institutionalism, which corresponds to the “social action” approach outlined by Young, is similar to the rational choice model in terms of its emphasis on institutional equilibrium (Hay 2006). However the two contrast sharply in their assumptions about the motivation of actor behaviour. In the sociological model, actor behaviour is seen to be a reflection of “the logic of appropriate action”, which relates to shared culture, values and perceptions of legitimacy (March and Olson 1989, 2006). In this approach, according to Hall and Taylor, “institutions do not simply affect the strategic calculations of individuals, as rational choice institutionalists would contend, but also their most basic preferences and very identity” (Hall and Taylor 1996: 15). The importance of institutions according to this conception derives from their ability to achieve social legitimacy. In practice this may lead to institutional arrangements that are inefficient and dysfunctional, and fail in terms of achieving instrumental and material goals, but still persist because they succeed in achieving wider cultural value. Instrumental and material rationality is not entirely dismissed, but is
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rather relegated to the category of social construction within wider systems of belief (March and Olson 1989, Powell and DiMaggio 1991, Hall and Taylor 1996).
Historical institutionalism is a third approach that is not referred to in the institutional interplay literature. This is a more diffuse body of work that has cross overs with the two other forms of new institutionalism. Indeed Hall and Taylor characterise historical institutionalism as an amalgam of “calculus” and “cultural” in the decision making process of actors (Hall and Taylor 1996), though others have contended that it has a more distinct ontological basis (Thelen and Steinmo 1992). It focuses on the role that long-term historical continuities have played in constraining policy innovation and creating path dependencies within particular polities or political economies. According to historical institutionalism these path dependencies can be seen as ways in which polities achieve a state of “stable equilibrium” (Hall and Taylor 1996). The theoretical work of Pierson, which takes a combined historical and rational choice approach, explains how institutions become path dependent though a process of “increasing returns” involving “self-reinforcing positive feedback”. This means that the benefits of continuing on a particular path increase over time while the costs of alternatives grow correspondingly greater (Pierson 2000). Associated with this process, historical institutionalism is also concerned with power asymmetries, where path dependent institutions function to maintain the interests of a dominant group or coalition, while at the same time demobilising and marginalising other conflicting interests (Hall and Taylor 1996, Thelen 1999). Hay observes that a crucial problem with each of these theoretical approaches is their focus on equilibrium, where institutions are considered as stable self-reinforcing structures that are resistant to change. This necessarily creates difficulties in trying to explain the dynamics of how institutions change. In addition, their structural and deterministic emphasis gives little room for the role of individual actors in the processes that lead to institutional change (Hay 2006, Schmidt 2008). This is particularly the case with rational choice and sociological institutionalism, which are based on well- defined ontological assumptions on behaviour that are fixed on the basis of the logics of “calculus” and “appropriateness”, and do little to explain how these logics are capable of altering (Hay 2006, Campbell 2004). This deterministic view means that it is difficult to account for endogenous change from within institutions, including the role of agency in effecting such change. As a result, many explanations of change from within earlier new institutionalist literature have tended to be put in terms of exogenous influences (Schmidt 2008).
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2.2 Historical institutionalism, institutional change and the turn to ideas
Of the three new institutionalisms, historical institutionalism has paid the greatest attention to institutional change. Initial theoretical approaches sought to explain change in terms such as “critical junctures” (Collier and Collier 1991) or “punctuated equilibriums” (Baumgartner and Jones 1993), resulting from exogenous shocks to a political system. These lead to periods of institutional crisis, which in turn initiate a process of realignment to a new equilibrium state. Hall expands on these ideas, likening them to Kuhn’s work on paradigm shifts. He uses the term “third order change” to describe rapid changes from one institutional state to another, as opposed to 1st and 2nd order change that only modify policies and programmes within the confines of the existing paradigm (Hall 1993).
These explanations do little to explain endogenous change or the role of agency in effecting endogenous change. Given that much of the earlier theoretical work associated with historical institutionalism derives from rational choice and sociological approaches, by association much of this work is coloured by the same static conceptions (Hay 2006). However the eclecticism of historical institutionalism and its relative independence from more narrowly defined ontological foundations means that it has also been able to adopt alternative theoretical concepts more easily. As a result it has become the main conduit for introducing a new strand of theory into institutional analysis that emphasises the role of ideas in initiating and driving endogenous institutional change (Hay 2006, Hall and Taylor 1996).
Ideas in this sense are construed as being the foundations of institutions and are often deeply embedded in institutional structures. But at the same time Hay conceives of ideas, rather than being fixed, as open to being “contested, challenged and replaced” and thus can provide a means of explaining how institutions change (Hay 2006: 58). Within the historical institutionalist tradition, Hall’s concept of third order paradigm shifts represents one of the first attempts to bring ideas to the centre of new institutional analysis. He illustrates the value of this concept through the example of the way neoliberal ideas were introduced into British politics at a crisis point in the 1970s and 1980s, which led to a fundamental shift in political institutions in Britain during the Thatcher era (Hall 1993). Following this, Thelen takes the role of ideas within a historical perspective further by attempting to endogenise them into the dynamics of historical continuity. She emphasises that even during periods of institutional stability, far from being a state of equilibrium, the processes of institutional reproduction are just as dynamic as periods of change. She highlights the role that ideas play in reproducing continuity against a background of ever changing events, observing also that
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“institutions rest on a set of ideational and material foundations, that if shaken open up possibilities for change” (Thelen 1999). Further to this, Streek and Thelen have sought to show how some ideas “drift” away from original dominant policy programmes while others are “layered” on to it in order to explain more incremental change within path dependent institutional structures (Streek and Thelen 2005).
In spite of these modifications, historical institutionalism has remained open to continued criticisms that it biases institutional stability over institutional change, and as a consequence that the dynamic aspects of institutions continue to be underemphasised (Lieberman 2002, Peters et al 2005, Schmidt 2008). Peters et al observe that historical institutionalism and its concentration on path dependency “mask[s] the dissensus that may exist beneath the surface of a program, organisation or field, and thus produce some neglect of the forces of change”. In response they call for the inclusion of a “dynamic conception of agency” to be brought into institutional analysis (Peters et al 2005: 1277). This has led to some working within the historical institutionalist tradition to develop approaches that move agency as well as ideas closer to the centre of their analysis.
Lieberman provides one example of a more actor centred approach that remains within a historical institutionalist tradition. In a study on the history of the civil rights movement in America, he observes the importance of agency in mediating between the constraints of institutional legacies and ideological change. He argues that political systems are less “political orders” and more a combination of “multiple orders” of institutions and their associated ideas. In such complex arrangements, tensions between different institutions generate “friction”, which at opportune moments allow for new ideas to become the catalyst for institutional change. Agency enters where, as a result of institutional friction and the introduction of new ideas, “institutions create strategic opportunities for purposive political actors to further their interests and shape political opportunities for the mobilization of social interests” (Lieberman 2002: 709).
Campbell provides another perspective on the role of agency within a historical institutionalist framework. He does this by introducing the concept of “policy entrepreneurs” into institutional analysis. This concept is used to explain the way some policy actors assume a leadership role and mobilise ideas and material resources in order to drive institutional change, while at the same time being constrained by their historical institutional context. He builds on Streek and Thelen’s concept of “layering” with the terms “bricolage” and “translation” to describe the ways that policy entrepreneurs use and recombine different aspects of existing institutions in order to achieve evolutionary change through institutional configuration. These evolutionary changes can have a
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cumulative effect that can lead to more radical shifts in line with the critical juncture or paradigm shift conceptions of earlier historical institutional theory (Campbell 2004).
2.3 A fourth new institutionalism?
While historical institutionalism has made considerable progress in amending earlier static and deterministic conceptions of institutionalism, some critics question the appropriateness of emphasising historical legacies in an increasingly chaotic and uncertain world (Schmidt 2011). This has led to a movement in institutional analysis that seeks not only to include agency and ideas in approaches that continue emphasise institutional equilibrium, but to give them primacy in an approach that views institutions as dynamic constructs. The turn to ideas has led some authors to posit the emergence of a fourth new institutionalism. This has been variously described as “ideational institutionalism” (Hay 2001) “constructivist institutionalism” (Hay 2006) or “discursive institutionalism” (Schmidt 2008). The principle purpose of these approaches is to explain institutional dynamics through the impact of new ideas and the facilitating role of agency (Hay 2006, Schmidt 2011).
The underlying premise of this approach is that actors, while still to a certain extent constrained by their institutional context, are also able to act independently of this context and thus initiate institutional change (Schmidt 2008). The motivations of actors in this sense are not considered as a given, but are based on ideational constructions that are complex, contingent and subject to change. According to Hay, these motivations are based on “perceptions of context which are at best incomplete”, where actors are constantly engaged in a process of sense making and balancing competing institutional influences. As a consequence, these perceptions can only at best be interpretations of their institutional context, rather than deriving from a direct connection to this context as other models of new institutionalism would hold. In these circumstances, ideas act as “cognitive filters” through which actors make sense of their institutional context (Hay 2006: 63-65). Thus, given that a constructivist approach opens up space for actors to interpret their context through ideas, it also opens space for actors to use new ideas to reinterpret this context as well. Consequently, Schmidt conceives of institutional context as the setting within which ideas realise their meaning, but also that new ideas are at the root of the way that sentient agents potentially become drivers of institutional change (Schmidt 2011).
Hay traces the origin of this approach to the work of Blyth on the developmental trajectories of capitalism in Sweden and the USA (Hay 2006: 67). Blyth counters the ideas of rational choice institutionalism, arguing that actor’s “interests” are not based on fixed rational preference, but on
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mutable socially constructed perceptions of self-interest that are “rendered actionable” through ideas. Thus in periods of political crisis these ideas can become blurred, subject to contestation, and can be reconfigured in such a way that that actor’s perceptions of self-interest are re-orientated (Blyth 2002).
Hay and Rosamond follow a similar approach to the constructed nature of interests in assessing the impact of globalisation on nation states in Europe. They distance the debate on globalisation away from it being a primarily a matter of economic and material considerations. Rather globalisation is seen in terms of “the effects of globalization itself, the effects of having internalized popular constructions of globalization and, indeed, the strategic and disingenuous appeal to globalization as a convenient justification for unpalatable reforms” (Hay and Rosamond 2002: 150). Globalisation is thus seen as a set of ideas that are reconstructed in different ways from nation to nation depending on more local contextual factors. Moreover these ideas can be used strategically by national actors towards specifically national ends in different ways according to these different national contexts (Hay and Rosamond 2002).
Schmidt expands on the way that ideas operate in an institutional context and their role in the dynamics of institutional continuity and change. On one level, she conceives of ideas as the philosophical foundations of institutions that establish their coherence and continuity, and therefore form the basis of the way they are reproduced over time. But on another level they underpin policy programmes and initiatives through which agents initiate institutional change. These policy or programmatic ideas can take a cognitive form, which establish “what is and what to do”, and thus shape the way that actors perceived instrumental policy problems and the action to be taken in response. But they can also take a normative form, which establish “what ought to be done”, which can lead to changes in the perceptions of legitimacy on which institutions are based (Schmidt 2008: 306, 2011). However Schmidt observes that ideas are not enough in themselves to explain institutional dynamics. She argues that an ideational approach alone cannot explain “the process by which ideas go from thought to word to deed” and by “whom, how, where, and why” (Schmidt 2008: 309). She therefore highlights the way that discourse between different actors is used to transmit ideas and thus how actors seek to influence and persuade others of the validity of these ideas. She states that “discourse serves not just to express one set of actors’ strategic goals or normative values, but also to persuade others of the necessity and/or appropriateness of a given course of action” (Schmidt 2008: 312).
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Schmidt conceives of a variety of ways in which agency can transmit ideas through the medium of discourse. Actors can play the role of policy entrepreneurs, who are able to mobilise ideas to exercise power, set policy agendas and build policy coalitions. This is particularly the case where the policy entrepreneur occupies a powerful position within the existing institutional system (Kingdon 1984, Schmidt 2011, Beland 2009). Discourse can be seen operating in different directions. The mobilisation of ideas in initiating change need not come only from the top-down through the action of political leaders or policy makers, but can also come from the bottom-up through social movements, the media or interest groups. Furthermore, these two way processes can take place in both national and international contexts (Schmidt 2011, Beland 2009). Schmidt also conceives of discourse as taking coordinative or communicative forms. Coordinative discourse refers to the way that policy is initiated by political elites. In this form, discourse takes place within “epistemic communities” using expert language in order to facilitate bargaining and political agreement. In its communicative form, discourse takes place between policy makers and the wider public, and is generally presented in non-expert language with the aim of legitimating particular initiatives or programmes in the public sphere. These two forms are often, though not always, connected, with either communicative legitimation discourses following coordinative policy formulation, or communicative bottom-up political pressure leading to a coordinative reaction from policy makers. (Schmidt 2011).
2.4 Criticisms of constructivist and discursive institutionalism
While these constructivist or discursive approaches to institutional analysis provide a valuable contribution to understanding the role of agency in driving institutional change, they are not without their shortcomings or critics. These have emerged because, by reemphasising agency, ideas and discourse in response to older static conception, they risk underemphasising other aspects of institutions and actor behaviour (Bell 2011). Consequently, Campbell highlights the danger that constructivist approaches may lead to an opposite extreme where institutions are reduced to “interpretive frameworks” where actors are considered free to reconstruct institutions at will. This leads to the potential problem that the constraining role of institutions, the very reason why new institutionalism was proposed in the first place, will become underemphasised (Campbell 2004). A first problem that constructivist approaches face is how to incorporate material influences. This is particularly the case in institutions that govern natural resources, where the environmental characteristics and condition of a given resource impact on the form of the institutions that emerge to govern them. This is also a feature in terms of the material resources controlled by different
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actors operating within a given institutional context. Hay observes in the case of Blyth’s approach to the social construction of interests, that the promotion of ideas to solve institutional crisis depends on the influence of actors with significant material resources. Given this observation, Hay states that “the role of ideas in determining outcomes would seem to have become significantly attenuated”. He therefore questions whether in such circumstances a materialist explanation of institutional change would suffice (Hay 2006: 70). Schmidt concedes this limitation, observing that “agents’ ideas,