Institutional Change in Advanced Democracies

by

Bernhard Ebbinghaus

• LAST REVIEWED: 28 September 2016
• LAST MODIFIED: 28 September 2016
• DOI: 10.1093/obo/9780199756223-0113

Introduction

Since the late 1980s, an institutionalist turn in political, economic, and other social sciences has led to renewed interest in questions of enduring institutions and their rather conditional change. Globalization and secular socioeconomic changes in modern economies have pushed advanced democracies, developed welfare states, and postindustrial economies to adapt. However, seminal comparative analyses have shown that institutional diversity remains salient, related to longstanding political traditions, welfare state regimes, or “varieties of capitalism.” How can one explain such institutional persistence? Path dependency, the sunken investment in past decisions and its increasing returns, is seen as explanations of institutional lock-in. More generally, that “history matters” has become a common theme of new institutionalism thinking in institutional economics, organizational sociology, and historical institutionalism. Institutions are seen as the “rules of the game,” norms taken for granted, or cultural scripts that remain durable. Yet multiple examples of change are also found, not so much via “big bang” reforms but often through long-term stepwise transformations. The theoretical agenda and empirical focus subsequently shifted in a second wave to institutional change instead of durability. How does institutional change occur? The processes and mechanisms leading to the evolution of institutions have been explored in recent years, mirroring the recognition of rather gradual but ongoing changes in advanced democracies and their political economies. The global diffusion of democratic aspirations and market principles has been the real-world context in which to reconsider the impact of institutional change from a variety of disciplinary and theoretical perspectives.

General Overviews

Advances in institutional thinking have been scattered across different disciplines and specialist fields. Therefore, state-of-the-art reviews have played an important role in taking stock of past achievements and shaping the common understanding of the main currents (for an overview see Peters 2012). Hall and Taylor 1996 distinguishes at least three branches of “new institutionalism”: sociological, rational choice, and historical. Sociological institutionalism is grounded in culture-oriented organizational theory that focuses on the taken-for-granted nature of institutions, while rational choice institutionalism seeks to explain institutions as rational conventions that limit transaction costs. While these two theoretical paradigms, culture versus calculus, are analytically at odds, as Immergut 1998 argues, the third variant, historical institutionalism, has a more eclectic research agenda, as outlined in Thelen 1999. It investigates how and why “history matters,” partly borrowing insights from the two other paradigms. Theoretical approaches to institutional change have been closely connected to “path dependency,” but this concept comes in two variants, as delineated in Ebbinghaus 2005: more deterministic theorems borrowed from economists that seek to explain institutional lock-in, and more open conceptions stressing sequential change and how past decisions narrow but do not completely determine later choices. Thelen 1999 and Mahoney and Thelen 2010 discuss more recent advances in theories of institutional change that have also revisited the impact of power relations and actors important in the “old institutionalism” (see for an intellectual history Stinchcombe 1997). Furthermore, Dobbin, et al. 2007 examines the mechanisms causing the diffusion of ideas.

• Dobbin, Frank, Beth Simmons, and Geoffrey Garrett. “The Global Diffusion of Public Policies: Social Construction, Coercion, Competition, or Learning?” Annual Review of Sociology 33 (2007): 449–472.

  DOI: 10.1146/annurev.soc.33.090106.142507

  A review of social science literature on policy diffusion across countries, including constructivist, power-oriented, competition, and learning theory, distinguishing different causal mechanisms at work.

• Ebbinghaus, Bernhard. Can Path Dependence Explain Institutional Change? Two Approaches Applied to Welfare State Reform. MPIfG Discussion Paper 05/02. Cologne: Max Planck Institute for the Study of Societies, 2005.

  Contrasts deterministic lock-in and open sequential concepts of path dependence and discusses whether and how mechanisms of stability can also explain change, using welfare state examples.

• Hall, Peter A., and Rosemary C. R. Taylor. “Political Science and the Three New Institutionalisms.” Political Studies 44 (1996): 936–957.

  DOI: 10.1111/j.1467-9248.1996.tb00343.x

  Distinguishes and compares three “new” institutionalist approaches in reaction to the behavioral paradigm: historical, rational choice, and sociological.

• Immergut, Ellen M. “The Theoretical Core of the New Institutionalism.” Politics and Society 26.1 (1998): 5–34.

  DOI: 10.1177/0032329298026001002

  Ellen Immergut sees common goals for all three institutionalisms but also the need for historical institutionalism to better position itself between calculus and cultural approaches.

• Mahoney, James, and Kathleen Thelen. “A Theory of Gradual Institutional Change.” In Explaining Institutional Change: Ambiguity, Agency, and Power. Edited by James Mahoney and Kathleen Thelen, 1–37. Cambridge, UK: Cambridge University Press, 2010.

  Mahoney and Thelen advocate a power-distributional view, overcoming the focus on exogenous abrupt change and highlighting different modes of endogenous gradual change.

• Peters, B. Guy. Institutional Theory in Political Science: The New Institutionalism. 3d ed. New York: Continuum, 2012.

  This text book introduces into different varieties of the “new” institutionalism, including approaches beyond political science.

• Stinchcombe, Arthur L. “On the Virtues of the Old Institutionalism.” Annual Review of Sociology 23 (1997): 1–18.

  DOI: 10.1146/annurev.soc.23.1.1

  Revisiting the history of institutional thought, Arthur Stinchcombe shows how old institutionalism took account of how “staff” in organizations were crucial in financing, governing, training, and motivating institutional actions and discusses the different sources of legitimacy.

• Thelen, Kathleen. “Historical Institutionalism in Comparative Politics.” Annual Review of Political Science 2 (1999): 369–404.

  DOI: 10.1146/annurev.polisci.2.1.369

  An overview of historical institutionalists’ focus on how institutions emerge and evolve, distinguishing it from “rational choice” institutionalism, which focuses on coordination mechanisms that lead to an equilibrium.