Institutional Change and Globalization

John L. Campbell

• Editorial: Princeton University Press
• Año: 2020
• ISBN:
  9780691216348
• Categoría: Economics
• Categoría: Economic Theory

This book is about institutional change, how to recognize it, when it occurs, and the mechanisms that cause it to happen. It is the first book to identify problems with the "new institutional analysis, " which has emerged as one of the dominant approaches to the study of organizations, economic and political sociology, comparative political economy, politics, and international relations.
The book confronts several important problems in institutional analysis, and offers conceptual, methodological, and theoretical tools for resolving them. It argues that the paradigms of institutional analysis--rational choice, organizational, and historical institutionalism--share a set of common analytic problems. Chief among them: failure to define clearly what institutional change is; failure to specify the mechanisms responsible for institutional change; and failure to explain adequately how "ideas" other than self-interests affect institutional change.
To demonstrate the utility of his tools for resolving the problems of institutional analysis, Campbell applies them to the phenomenon of globalization. In doing so, he not only corrects serious misunderstandings about globalization, but also develops a new theory of institutional change. This book advances the new institutional analysis by showing how the different paradigms can benefit from constructive dialogue and cross-fertilization.

Chapter 1

PROBLEMS OF INSTITUTIONAL ANALYSIS

INSTITUTIONS ARE the foundation of social life. They consist of formal and informal rules, monitoring and enforcement mechanisms, and systems of meaning that define the context within which individuals, corporations, labor unions, nation-states, and other organizations operate and interact with each other. Institutions are settlements born from struggle and bargaining. They reflect the resources and power of those who made them and, in turn, affect the distribution of resources and power in society. Once created, institutions are powerful external forces that help determine how people make sense of their world and act in it. They channel and regulate conflict and thus ensure stability in society.

Without stable institutions, life becomes chaotic and arduous, as people learned, for example, following the demise of the communist regimes in Eastern Europe after 1989. The sudden weakening of old political constitutions, property rights, law enforcement, and other institutions generated tremendous confusion as these countries began to move toward capitalism and democracy. National politics were inundated suddenly with dozens of political parties and interest groups vying for power in unstable coalitions. Economies were besieged with all sorts of mafia, scam artists, and other shady characters that made commerce unpredictable and sometimes dangerous. Even a simple thing like taking a train from one city to another was suddenly fraught with possible attacks by bandits and uncertainty about schedules. As a result, building new political and economic institutions was one of the most urgent tasks for the postcommunist countries (Elster et al. 1998). This should not be surprising. After all, Max Weber, Karl Marx, Emile Durkheim, Karl Polanyi, and many other scholars have shown that capitalism itself is impossible without a solid institutional base.¹ This is one reason why institutional analysis has become such an important perspective in the social sciences in North America and Europe.

As this example suggests, institutions change. Sometimes they change radically. Sometimes they evolve more incrementally. Sometimes they are quite stable. This book is about institutional change, how to recognize different types of institutional change when we see them, and how better to understand some of the forces that make institutional change happen or not. As we shall see, scholars from various intellectual and social science backgrounds share common conceptual, theoretical, and methodological problems when it comes to these issues. Indeed, institutional analysis has been criticized repeatedly for having an inadequate understanding of institutional change (e.g., Lieberman 2002; Scott 2001, 181; Thelen and Steinmo 1992, 15). Among other things, we sometimes have trouble recognizing institutional change for what it is, mistaking evolutionary developments for more revolutionary shifts and failing to appreciate fully how much continuity there often is during episodes of institutional change, even across big events like those that occurred in postcommunist Europe after 1989. As such, this book is intended to confront and help rectify some of the most important analytic problems facing institutional analysis today. In doing so, it also offers a new theory of institutional change that combines insights from several versions of institutional analysis.

This book also confronts, however, a more concrete problem: the phenomenon of globalization. Much has been written about globalization and much of this writing suggests that the forces of globalization have triggered what amounts to a revolutionary change in national political and economic institutions.² Some scholars intimate that this threatens the utility of institutional analysis for understanding today’s world. I disagree. Much of this literature has overestimated the extent of institutional change associated with globalization. Why? Because much of it either has failed to take institutional analysis into account, or has failed to elaborate institutional analysis along the lines suggested in this book.

Broadly speaking, then, this book does two things. First, it identifies serious problems that are central to institutional analysis and offers some conceptual, methodological, and theoretical tools for solving them—tools that help improve the analytic power of institutional analysis, especially for understanding change. Second, to demonstrate the utility of these tools, it applies them to the phenomenon of globalization to show how they can help us improve our understanding—and reduce our misunderstanding—of how phenomena like this produce institutional change, or not, in the world around us.

But what do I mean by institutional analysis? Today there are three major versions of institutional analysis: rational choice, organizational, and historical institutionalism.³ To be precise, these are often referred to as new forms of institutional analysis, or neoinstitutionalism, because each one descends from an old version of institutional analysis. Each one also cuts across sociology, political science, and economics. Their utility is evident from the extraordinarily wide range of things that they have been used to explain: the development of art museums and other cultural organizations, the rise of modern corporations, the organization of labor unions, the adoption of affirmative action policies, the diffusion of business management models, the progression of forms of corporate governance, the rise of health care systems, the creation of markets, the transformation of property rights, the growth of economies and nation-states, the making of economic, fiscal, social, technology, and other public policies, the growth of social movements, the ability of groups to preserve natural resources, the variation that occurs in national economic performance and national responses to economic crisis, the operation of national and international security regimes, the diffusion of citizenship rights, the dissemination of world culture, the effects of globalization, and much more.⁴

Despite the important insights of the three new institutionalist paradigms, there has been much bickering among their supporters as to which is the best approach and what each one’s strengths and weaknesses are (e.g., DiMaggio and Powell 1991; Kiser and Hechter 1991; Thelen and Steinmo 1992). Indeed, some of us even disagree about what institutions are in the first place. For instance, some rational choice institutionalists define institutions as a strategic equilibrium. By strategic equilibrium they mean a situation where no persons would unilaterally choose to alter their current behavior given the available alternatives and given their expectations about how others might respond if they began to behave differently (Bates et al. 1998, 8–10; Calvert 1998, 57–60). Other rational choice institutionalists view institutions as sets of formal and informal rules and the monitoring and sanctioning mechanisms that cause actors to comply with these rules (North 1990, 3). Similarly, historical institutionalists take institutions to be the formal and informal rules and procedures that structure conduct (Thelen and Steinmo 1992, 2). Finally, although organizational institutionalists recognize that institutions include formal rules, many of them see institutions as informal, common, and taken-for-granted cultural frameworks, scripts, and cognitive schema (Jepperson 1991).⁵

Regardless of these and other disagreements, beginning in the late 1990s scholars began calling for a second movement in institutional analysis, that is, a more constructive dialogue that explores the ways in which these paradigms might complement and connect to each other (e.g., Campbell and Pedersen 2001b; Hall and Taylor 1996; Immergut 1998; Peters 1999, 149–51; Suchman 1997; Thelen 1999). The hope was that such a conversation might lead to a reconciliation and perhaps a new and more unified approach for studying institutions.

The premise of this book is that an important part of a second movement in institutional analysis involves recognizing that these three paradigms share a common set of problems that need to be resolved. By recognizing these problems, institutionalists should see that they have much more in common and at stake together than they thought previously. Moreover, for reasons discussed later, unless these problems are resolved, institutional analysis is not likely to advance much beyond its current stage of development. At least three important analytic problems require attention: the problems of change, mechanisms, and ideas. Globalization constitutes a fourth problem, but of a much different order.⁶ This book examines each one of these problems and suggests how we might begin to rectify them. To my knowledge, although many scholars have compared the strengths and weaknesses of one institutionalist paradigm to another, virtually no one has examined in detail the common problems that all three paradigms share. Nor have they tried to offer solutions for them. Let me elaborate briefly on each of these problems and how the book is organized around them.

First, institutionalists debate about the best way to describe institutional change. For instance, some of us argue that it tends to follow an evolutionary pattern characterized by the gradual accumulation of small, incremental changes over long periods of time. Others say that it conforms more to patterns of either punctuated equilibrium or punctuated evolution. These patterns are more revolutionary than evolutionary in the sense that they are characterized initially by prolonged periods of either equilibrium and stability or evolution that are interrupted suddenly by a crisis that throws things into turmoil until a radically new set of institutional arrangements is established, which then remain in equilibrium or evolve slowly for another long period of time (Blyth 2002, chap. 1; Hay 2001; Krasner 1984). No matter what our position is on the issue, we often fail to explain adequately how to distinguish among these and other patterns of change. That is, we fail to specify one of the most important dependent variables with which institutionalists are concerned. As a result, it becomes difficult to establish the degree to which a given episode of change is actually evolutionary, revolutionary, or something else. This has been true even with respect to some of the most important institutional changes in the twentieth century. For instance, there has been much debate about the degree to which institutional change in postcommunist Eastern Europe during the 1990s constituted a sharp, revolutionary break with the communist era, or something more evolutionary that still bore a strong resemblance to past institutions (e.g., Campbell and Pedersen 1996; Crawford and Lijphart 1995; Hanley et al. 2002; Stark 1996). Chapter 2 explores what institutionalists mean by institutional change and how we might better recognize different patterns of change when they occur. Resolution of this problem is critical if we want to adjudicate among competing claims about the nature of institutional change in specific empirical cases, including globalization, and, in turn, if we want to test theories that seek to account for different patterns of change.

Second, institutionalists rely on causal concepts but often without clearly specifying the underlying mechanisms or processes by which change occurs. As a result, these concepts resemble mysterious black boxes whose contents need to be unpacked and examined. Unless we do this, vague concepts end up carrying much of the argument when, in fact, mechanisms should be doing the work. This is an important problem in the social sciences in general (Hedström and Swedberg 1998a; McCloskey 1985) and especially for institutionalists insofar as critics charge that the neglect of mechanisms undermines the empirical and theoretical credibility of institutionalists’ arguments (Hirsch and Lounsbury 1997; Hirsch 1997; Knight 2001). It also undermines the credibility of arguments about globalization. Chapter 3 discusses how we might think more clearly about the mechanisms underlying some of the most important causal concepts that institutionalists use. In particular, it focuses on the concepts of path dependence and diffusion. It also addresses, albeit in less detail, other concepts, such as how institutions enable, empower, constitute, and constrain action. Resolution of this problem is critical if we want to develop tighter and more convincing causal arguments about institutional change.

Third, many institutionalists have taken a cultural turn recognizing recently that ideas, broadly construed, as well as self-interests drive change (Campbell 2002). Whether norms, intellectual paradigms, policy frames, world views, and other types of ideas affect institutional change are issues that have spawned new research agendas and much debate among institutionalists working in comparative politics, international relations, political economy, and political, economic, and organizational sociology.⁷ Many of us, however, have been hobbled in these efforts because our work on ideas suffers from conceptual and methodological problems (Blyth 1997; Finnemore 1996; Yee 1996). Notably, what we mean by ideas and what the mechanisms are by which ideas affect behavior are often confusing. And it is not always clear in the first place what the difference is between ideas and interests. Chapter 4 clarifies how we might better think about all this, particularly how we might better study the effects that ideas have on political, economic, organizational, and other types of behavior. Insofar as this chapter discusses the ideational mechanisms associated with institutional change, it also addresses some of the issues raised in chapter 3. Resolution of this problem is critical if we want to determine how ideas—such as norms, paradigms, and frames—as well as self-interests affect institutional change, and the degree to which they do this.

By grappling with the problems of change, mechanisms, and ideas, this volume offers conceptual, theoretical, and methodological insights that can help institutionalists better understand important social phenomena in the world around us. To demonstrate this, I apply these insights in chapter 5 to an analysis of globalization. Why pick globalization rather than some other empirical phenomenon? Many institutionalists have argued that differences in national institutions are an important cause of variation across countries in political and economic performance. Globalization is a fourth problem for institutional analysis insofar as some people now claim that the forces of globalization, notably increased international capital mobility and trade, are leveling these institutional differences across countries. As a result, they intimate that much institutional analysis is becoming irrelevant for understanding societies during the late twentieth and early twenty-first centuries (e.g., Giddens 2000; Guéhenno 1995).⁸ If we accept this argument, then our desire to improve institutional analysis will likely diminish and scholars will turn to alternative analytic approaches. Utilizing the lessons from chapters 2, 3, and 4, chapter 5 shows that claims about the leveling effects of globalization are mistaken and that institutional analysis can help us understand why this is so. Resolution of this problem through the application of the analytic tools developed earlier in the book is critical if we want to demonstrate that institutional analysis is still relevant for understanding how societies are changing during the globalization era.

Two clarifications are necessary about the problem of globalization. First, this problem is of a fundamentally different order than the other three. The problems of change, mechanisms, and ideas are internal to the logic, conceptual apparatus, and causal arguments of institutional analysis. The problem of globalization is external to these arguments in the sense that a change in the empirical reality of the world, that is, increased capital mobility and trade, appears to some observers to pose a threat to the relevance of institutional analysis per se for understanding societies nowadays. Second, although the analysis of globalization in chapter 5 develops insights and arguments specific to the debates about globalization, its primary purpose is to illustrate how the concepts, methods, and arguments of previous chapters can be used fruitfully in doing empirical research on important real-world problems. It is not intended to be a full-blown or exhaustive critique of the globalization thesis.

While chapter 5 demonstrates the utility of my arguments for empirical research, chapter 6 weaves them together into a theory of institutional change that integrates insights from all three institutionalist paradigms thereby advancing the second movement—that advocating a sustained three-way dialogue—in institutional analysis. In brief, this theory suggests how institutional change is a process of constrained innovation. By this I mean, on the one hand, that institutions tend to constrain the range of options from which actors are likely to choose as they engage in institutional innovation. But, on the other hand, institutions also provide principles, practices, and opportunities that actors use creatively as they innovate within these constraints. I present this theory as a series of analytic propositions about the antecedents that initially trigger episodes of institutional change and the complex processes by which it unfolds. This is a deliberate attempt to advance the second movement in institutional analysis. Based on these propositions, I also offer some suggestions about ho...