Policy Concepts in 1000 Words: Institutions and New Institutionalism

(podcast download)

The study of public policy would be incomplete without an understanding of policymaking institutions. The study of political science would also be incomplete without turning our understanding of terms such as ‘institutions’ upside down. ‘Institution’ may in the past have referred to organizations such as legislatures, courts and executives. With ‘new institutionalism’, it refers to two factors: regular patterns of behaviour; and the rules, norms, practices and relationships that influence such behaviour.

These rules can be formal, or enshrined in a constitution, legislation or regulations:

• The constitutional nature of political systems – such as confederal or federal; federal or unitary; presidential, parliamentary or semi-presidential; unicameral or bicameral; containing constitutional courts; or holding procedures for regular referendums.
• Their operating procedures – including electoral systems, party systems, rules of government formation and executive–legislative relations, the role of public bureaucracies, and the extent to which group-government relations are ‘institutionalised’ (such as in formal corporatist arrangements).
• Their regulatory frameworks – including the rules governing the operation of economic organizations, interest groups, and public organizations, and the rules governing the provision of public services.

Rules can also be informal, and are described variously as habits, norms, practices or rules that develop without a grand plan. As such, they are often unwritten and difficult to identify or understand by people outside of an organisation.

In practice, we may identify a mix of formality and informality – the combination of written regulations and unwritten understandings of how organisations are expected to operate. This helps explain why political systems often operate rather similarly in practice despite having different constitutional arrangements. For example, the commonly perceived logic or benefit of subsystem/ policy community arrangements helps explain why they are central to most systems.

So far, so good. The problems begin when we try to move from this rather intuitive and broad discussion, to produce concrete studies and detailed approaches. There are three main problems to look out for:

1. We may not know what an institution is. Instead, we often use the ‘I know it when I see it’ approach. For example, the Oxford Handbook of Political Institutions dedicates at least one chapter to: the state, civil society, economic institutions, constitutions, federal and territorial institutions, executives, legislatures, courts, bicameral structures, public bureaucracies, the welfare state, regulations, local government, political parties, electoral systems, direct democracy, international and non-governmental institutions. This is a wide range of activity, brought together largely because definition of institution is vague.

2. We may not agree what new institutionalism is. Instead, Lowndes identifies many variants, including normative, rational choice, historical, empirical, international, sociological, network, constructivist and feminist institutionalism. This suggests that ‘institutionalism’ represents a loose collection of approaches rather than a coherent theory.

3. We may not agree what institutions do. Most discussions tread a fine line between saying that rules influence or determine the behaviour of individuals but there is no common agreement on how to balance the two. It presents us with a classic structure/ agency problem. On the one hand, an institution can be treated effectively as a structure because many rules often endure in the same basic form regardless of the individuals involved. On the other, these rules may only endure because they are passed on, as part of a process of training or socialisation. If so, a rule becomes akin to a language: it only survives if there are enough individuals committed to its survival. It is not inevitable that institutions endure over time, and we may question the extent to which institutions represent shared meanings and practices. Instead, they may be reproduced in different ways by individuals who understand those rules, and act, differently. This makes the identification of institutions very tricky indeed, particularly if rules exist largely in the minds of actors, they are reproduced in implicit or unwritten ways, and implicit rules contradict the rules that are written down.

The first edition of  Understanding Public Policy only outlined four main approaches:

1. Historical. Historical contingency refers to the extent to which events and decisions made in the past contributed to the formation of institutions that influence current practices. Path dependence suggests that when a commitment to an institution has been established and resources devoted to it, it becomes increasingly costly to choose a different path. Therefore, institutions, and the practices they encourage, may remain stable for long periods of time. A ‘critical juncture’ is the point at which certain events and decisions were made which led to the development of an institution. The timing of these decisions is crucial, because it may be the order of events that sets institutional development on a particular path (note the term ‘sensitivity to initial conditions’ which also appears in complexity theory).
2. Rational Choice. One aim of rational choice theory is to establish what proportion of political outcomes one can explain with reference to the choices of individuals pursuing their preferences under particular conditions. Institutions represent those conditions, providing incentives to act or punishments to deter action. Institutions represent sets of rules that influence choices, often producing regular patterns of behaviour. This regularity can be expressed in terms of equilibrium when we identify a stable point at which there is no incentive to divert from these patterns of behaviour.
3. Normative and Sociological. Norms and values within organisations influence behaviour. They matter when members understand and are expected to follow rules. March and Olson describe the ‘rules of appropriateness’ which are ‘transmitted through socialization’ and ‘followed because they are seen as natural, rightful, expected and legitimate’.
4. Constructivist. Institutions represent shared beliefs which give people a common aim and a reason to believe that they have shared interests. In some cases, ideas or beliefs become institutionalized; they are often taken for granted and rarely questioned. In other cases, they are subject to often-radical change, as beliefs are challenged or the understanding of rules change as they are communicated or debated.
5. The second edition now includes feminist institutionalism, which now has its own 500 words post.

One task, with these accounts, is to consider if their insights are complementary or contradictory. They are not mutually exclusive, and ideational accounts may provide important qualifications to the idea that institutions represent relatively-fixed structures. However, note the level of debate on these points, and consider our ability to reconcile these approaches.

Another task is to consider institutions as part of a wider explanation. For example, Social Construction and Policy Design links this discussion to power and agenda setting. Compare with Punctuated Equilibrium Theory, which is one of the few to define institutions primarily as organisations or venues rather than their rules.

See also the more up-to-date:

Policy in 500 Words: Feminist Institutionalism

Policy Concepts in 1000 Words: the Institutional Analysis and Development Framework (IAD) and Governing the Commons