Institutions

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Institutions
Presentation 6 Environment and Sustainable
Development course UNU-MERIT PhD programme

• René Kemp

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• Institutionalism represents a distinctive
  approach to the study of social, economic and
  political phenomena yet it is is often easier to
  gain agreement about what it is not than about
  what it is (DiMaggio and Powell)
• For institutionalists, key to understanding the
  processes of growth and change are the
  institutions of the economy as well as individual
  preferences (Parto)

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• Institutions as rule of the game (formal and
  informal)
• Institutions structure interrelations they
  enable individuals to understand what other
  individuals are doing, what they are likely to
  do, and what may and may not be done
• What is not an institution?

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What is not an institution

• A price for a tomato is not an institution but
  prizes are a widely held view or value is an
  institution, individual values are not
• Institutions are at once persistent, resistant to
  change but capable of changing in evolutionary
  time, and transmitted through various means to
  consecutive generations thus providing a certain
  degree of continuity, stability, predictability,
  and security (Parto)
• An institutional perspective sees the world as
  institutionalised with institutions acting as
  mechanisms for change, linking causes and effects

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In economics we have

• New institutional economics (North, Williamson)
• Old institutional economics (Veblen, Neale,
  Scott, Hodgson)

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In new institutional analysis

• Transactions are the unit of analysis
• It extends neoclassical theory by accounting for
  a few institutional factors
• Rejection of socialization theory
• It is mostly concerned with external constraints
  to action, not with internal ones (value,
  purpose, orientation)

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In old institutionalism

• Institutions are acting at the substance rather
  than merely the boundaries of social life
  (Hodgson, 1988)

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• The old institutionalists are generally commended
  for drawing attention to the complex and
  instituted nature of change of the economy but
  criticized for vagueness on how best to
  incorporate complexity in the economic analysis
• New institutionalists may be praised for bringing
  institutions into economic analysis but
  criticized for remaining largely within the
  limited bounds of the neoclassical conceptual
  framework

Parto (2005)
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3 pillars of Scott

• Regulative rule-setting, monitoring, enforcement
• Normative values, beliefs
• Cultural-cognitive conceptions, understanding

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(No Transcript)
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Institutions in the Dutch waste subsystem
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Actor-centered institutionalism

• The integration of rational choice (action
  theoretic) and institutionalist / structuralist
  paradigm
• A framework that conceptualizes policy processes
  driven by the interaction of individual and
  corporate actors endowed with certain
  capabilities and specific cognitive and normative
  orientations, within a given institutional
  setting and within a given external situation
  (Scharpf)

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• In game-theoretic terms, institutions not only
  constrain feasible strategies, but they also
  constitute the important players of the game and
  shape their perceptions and valuations of
  outcomes in the payoff matrix (Scharpf)
• An institutional framework, provides a halfway
  position between a theoretical system that, like
  neoclassical economics, substitutes universal and
  standardized assumptions for empirical
  information on the one hand and purely
  descriptive studies of individual cases on the
  other (Scharpf)
• It helps to go beyond functionalist explanations

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Actor-rule system dynamics
Source Burns and Flam (1987)
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Reflexive strategies injecting feedback in
actor-rule system dynamics
Source Voss and Kemp (2005) based on Burns and
Flam (1987)
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Three interrelated analytical distinctions
Geels (2004)
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Questions

• What is the usefulness of an institutional
  perspective?
• Do you always need it when do you need it?