New institutionalism

Of course, studying the mediating role of institutional contexts, in which actors find themselves in, and in which events occur, is nothing new in political science. This perspective has, however, been largely absent from the more pragmatically oriented conflict and natural resource management research. Political science, on the other hand, has its roots in the study of institutions. The focus of the ‘old institutionalism’ was on the so-called state apparatus – its structures in the form of organisations (parliament, government, political parties), departments and flow charts. Formal institutions, such as laws, were of most interest, and research was directed at describing and comparing whole

systems of government. The aim was often normative, to find governing institutions that could structure the behaviour of individuals toward “better ends”. (Peters 005, 6–).

However, this perspective fell out of fashion between 950s and 980s in favour of more individualistic approaches. They emphasise either the socio-psychological characteristics of the individual (behaviouralism), or the rational calculation of maximising one’s personal utility (rational choice) in explaining political behaviour. Both approaches assume individuals act autonomously without being constrained by formal or informal institutions, and their preferences are assumed to be exogenous to the political process.(March & Olsen 989, -8; Peters 005, –.)

New institutionalism can be seen as a counter reaction to these individualistic approaches. Political sciences as well as economics, sociology, organisational studies and planning theory have rediscovered the importance of institutions (March &

Olsen 989; North 990; DiMaggio and Powell 99; Healey 999; Peters 005).

Neoinstitutionalism emphasises the role that structures play in determining individual behaviour as well as in determining the outcome of political processes. Institutions create greater regularity in human behaviour that would otherwise be found, and hence reduce uncertainty. While individuals remain important actors in most of the approaches to new institutionalism, there is a substantially greater leverage, it is argued, to be gained through “understanding the institutional frameworks within which they operate” (Peters 005, 50).However, the structuralism of new institutionalism is soft and more flexible that in the old institutionalism. Although the social and political context is perceived to be structured by institutions, it is not structured in the determinant sense. Actors have a free will and ability to change the institutions around them. Agents have a key role in the creation of the contexts within which their behaviour occurs. It is this complex interplay between agency and structure that interests new institutionalists, especially during periods of change.(Hay 00, , 9, 06.)

Another joint feature of the different trends in new institutionalism is the emphasis on the informal rules as much as on the formal ones (such as laws). Informal norms, conventions and standard ways of operating may reinforce formal rules, or, when in conflict, override them or cause different interpretations of the formal ones. Furthermore, institutions are not understood as ‘things’, as implied by some traditional approaches, but as processes. In the new version institutions are also understood as differentiated in the sense that they do not necessarily fit together to form a whole, or represent functionally desirable solutions. (Lowndes 00, 97–0.)

On the other hand, there are so many different approaches to neoinstitutionalism – or institutionalist ‘turns’ – that one cannot speak of one coherent theory or body of thought (Jessop 00; Peters 005). Various approaches to new institutionalism differ from one another in significant ways. They have developed relatively independently from each other, which is reflected in the infrequency of cross-references in the literature, and the amount of different approaches to new institutional theory. (Hall & Taylor 996, 97.) Peters, for instance, identifies seven distinct variants of the theory (Peters 005).

Because of the wide variety in understanding what institutions are and how and why they

It is important to note, however, as Lowndes (00) does, that despite the lack of attention on institutional theory during 960s and 970s, institutional approaches have continued to serve political science well throughout the years, in particular in constitutional studies and public administration.

33 These are normative institutionalism, rational choice institutionalism, historical institutionalism, empirical institutionalism, sociological institutionalism, network institutionalism, and international institutionalism.

matter, I will present some of the main approaches before defining which will be used in this study. The differences of the approaches, or traditions, relate to three questions in particular (Hall & Taylor 996, 97; Peters 005, 6-8):

(a) How are institutions defined?

(b) What is the relationship between institutions and individual’s behaviour?

(c) What is the origin of institutions and how do they change?

In the following I will apply, with minor modifications, the distinction made by Hall &

Taylor (996) on the three main approaches in new institutionalism to these questions. These approaches are referred to here as normative (sociological) institutionalism, rational choice institutionalism and historical institutionalism.

In normative institutionalism(Peters 005, 5-5), institutions are broadly understood to include anything from routines, procedures, conventions and roles to beliefs, paradigms, norms, and symbolic systems (March & Olsen 989, ). The definition is close to the definition of culture as a whole. ‘Normative’ refers to the central role this version of new institutionalism gives to social norms and values in explaining the behaviour of individuals. Actors are socialized within institutional settings, which define the socially appropriate form of behaviour. Thus it is the logic of appropriateness that explains the impact of institutions on individuals. (Peters 005, –.) We behave the way we do because we have become used to behaving in a particular way in a particular context. It would be difficult and potentially risky to imagine behaving differently. (Roe 99; Hay 00, 05–06.) Hall and Taylor call this perception on the relationship between the individual and the institutions the “cultural approach”. It emphasises the way individuals turn to routines or familiar patterns of behaviour to attain their purposes. It also emphasises that preferences of the individual are not exogenous to the institutional setting, but instead shaped by it in important ways. This approach in political sciences, as described by Peters (005), is close to new institutionalism in sociology, and Hall &

Taylor (996) make in fact no distinction between the two.

Despite the importance of the social environment in defining the appropriate behaviour of the individuals, normative/sociological institutionalists point out that people are not automata responding to socialisation. Individuals must interpret the meaning of their institutional environment and individuals with “multiples I’s” (roles) must choose between “institutional loyalties”.(Peters 005, 6.) The cultural approach to institutions sees individuals as satisfiers (as opposed to maximises) and emphasises

“the degree to which the choice of a course of action depends on the interpretation of a situation rather than on purely instrumental calculation” (Hall & Taylor 996, 99).

From this perspective, institutions provide moral or cognitive templates for interpretation and action. The individual is seen as an entity deeply embedded in a world of institutions, composed of symbols, scripts and routines, which provide the filters for interpretation for both the situation and of oneself. (March & Olsen 989.)

Normative institutionalists consider institutional design difficult and maintain that attempts to do so may not lead to what was meant. (Peters 005, –8.) Organisations identify changing circumstances in their environment and adapt to them through a process of learning. However, instead of intentional design, the process of adaptation has been described by March & Olsen (989) as the ‘garbage can model’. In this model

34 On different ways of defining the different approaches to new institutionalism in political science see also Keman (996) and Peters (005).

organisations⁵ have a repertoire of stock responses available. They will try to use these familiar responses before searching for alternatives that are further away from the core values.

Furthermore, they can also misread signals from the society and react in a dysfunctional manner.(Peters 005, –.) However, since it is the individuals that interpret the norms, the interpretations can vary and institutional change is possible. Leaders of organisations or other “change agents” can consciously affect rules and values (see Halme 997 on such change processes in the Finnish forest industry). Furthermore, as conformity is the process by which institutions affect individuals, individuals or groups can aim to change institutions by choosing to not conform. Also recruiting new individuals to an organisation will bring in new values and provide opportunities for institutional change. The greater the disjuncture between the values and behaviour of an organisation on the one hand, and the values of society on the other, the more likely organisational change will be. (Peters 005, –8.)

Rational choice institutionalism (RCI), in contrast, has a very different approach to why and how institutions affect individuals, and how institutions come about. Rational choice institutionalism, within the field of political science, is close to the way new institutionalism has been understood in economics. Institutions are conceptualised as a collection of rules and incentivesthat provides actors with a greater degree of certainty about the behaviour of others than they would otherwise have. Actors collectively and actively create institutions in order to realise a particular value, typically reducing uncertainty regarding the behaviour of others. Thus, creation of institutions revolves around voluntary agreement by involved actors, and it persists primarily because it provides more benefits to the relevant actors than alternate institutional forms. (Hall &

Taylor 996, 9–96.) As opposed to power struggles or processes of social learning, RCI sees politics as a series of collective choice dilemmas that can be addressed by careful institutional design (Johnson 00; Carlsson & Berkes 005; Ostrom 005).

Defined by Hall & Taylor (996, 99) as the ‘calculus approach’ (as opposed to the cultural approach), RCI concerns itself with the origin of institutions and on the relationship between individuals and institutions, and focuses on the strategic calculation of individuals. Accordingly, individuals seek to maximize personal utility, and in doing so, they behave strategically, i.e. they scope all possible options and choose the one with maximum benefit. The approach also assumes that the calculations of the individual are deeply affected by the individual’s expectations of how others are likely to behave. This is why institutions are a relevant focus of analysis: institutions establish the conditions for bounded rationality and reduce uncertainty over the behaviour of others. Individuals can rationally choose to be to some extent constrained by institutions because their goals may be achieved most efficiently that way. Their goals, in turn, are assumed to be exogenous to the institutional context. (Hall & Taylor 996; Peters 005, –7.)

According to Jessop (00, 5–6) this perception of institutions does not in fact challenge the conventional ontology of neoclassical economics, namely that the central explanatory factor is the individual-level behaviour. He calls such an approach to institutions a superficial ‘thematic turn’, because although it focuses on institutions, RCI denies the ontological importance of institutions, that is, the idea that institutions would condition the economic preferences or identities of individuals.⁶

35 March and Olsen use in their text the term institution instead of organisation. However, since they obviously talk about actors instead of rules that guide them in this part of the text, I have used the word organisation for the sake of clarity.

36 In contrast, as Jessop (00, 8) notes, other forms of institutional economics do adopt the ontological position that economic activities are mediated through institutions that are socially embedded and which socially regulate behaviour.

RCI has dominated much of the institutional analysis in natural resource management (e.g. Bromley 99; Ostrom et al. 99; Ostrom 005; Carlsson & Berkes 005). The research on so-called common-pool resources (CPR), such as fisheries, forests and grazing lands, has focused on designing institutions for co-management that would avoid the

“tragedy of the commons”, where individually rational behaviour of maximising one’s utility results in collectively sub-optimal outcomes through resource depletion.

CPR literature differentiates between institutions at different levels (Ostrom 990).

Constitutional rules specify the terms and conditions for governance. They stipulate who possesses the right to decide concerning the access and utilization of a resource, as well as who is eligible to share the benefits of its use. Collective choice rules regulate how decisions are made, whereas operational rules regulate the daily activities, such as intensity or methods of harvesting timber. The three levels form a hierarchy, with the rules of the higher level deciding on the degrees of freedom for the lower (Kiser & Ostrom 98, 09–0; Carlsson & Berkes 005, 69). These levels have also been referred to in the governance literature as constitutive, directive, and operational governance (Hill & Hupe 00, 8). Carlsson & Berkes (005, 70) have consequently proposed that systems of (co-)management for resource use can be seen as systems of governance.

Despite its prominence in research on the management of the environment and natural resources, this approach has been challenged by a number of scholars working in the developing world in particular. The so-called entitlement scholars have criticised the collective choice scholars for having a simplistic and historically de-contextualized view of institutions. Critics maintain that the approach is based on concepts that are inadequately socially informed and ill-reflect the complexity, diversity and ad hoc nature of institutional formation (Cleaver 00; Johnson 00). Instead, entitlement scholars emphasise the historical struggles that determine resource access and entitlement, and the ways in which informal and formal rules create and reinforce unequal access to commons (Johnson 00, 09). Rather than through intentional design,

“[I]nstitutions are formed through processes of bricolage in which similar arrangements are adapted to multiple purposes, are embedded in networks of social relations, norms and practices and in which maintaining social consensus and solidarity may be equally as important as optimum resource management outcomes” (Cleaver 00, 7).

In this respect, the critics of rational choice institutionalism are closely related to what Hall & Taylor (996, 97–9) call historical institutionalism (HI). They consider historical institutionalism a kind of middle ground because it aims at combining both calculus and cultural approaches to the interaction between institutions and individuals. Historical institutionalism was the first form of new institutionalism in political science. They maintained that the institutional organisation of the polity and economy structured conflicts among rival groups for scarce resources. This privileged some interests while demobilising others. HI proponents were interested in the role of the state as “a complex of institutions capable of structuring the character and outcomes of group conflict” (Hall & Taylor 996, 98), rather than as a neutral broker among competing interests. HI researchers also explored how other social and political institutions, such as those associated with labour and capital, could structure interactions so as to generate distinctive national trajectories. Much of the HI research consists of cross-national comparisons that emphasise the impact of national political institutions structuring relations among legislators, electorate, judiciary, and organised interests. This research had much tangency with the literature on neo-corporatism discussed earlier.

Historical institutionalism defines institutions as “the formal or informal procedures, routines, norms, and conventions embedded in the organisational structure of polity or political economy” (Hall & Taylor 996, 98). In general, HI associates institutions with organisations, where the standardised processes, norms and routines are rooted in (Rantama 00, 5). This perception is close to the definition of institutions in new organisational studies (Hall & Taylor 996, 98; Rantama 00, 7).

Although Hall & Taylor (996) note that all institutional studies have a bearing on power relations, a notable feature of HI is the prominent role in which institutions distribute power unevenly across social groups. As economic historian and Nobel prize winner Douglass North puts it, “Institutions are not always or even usually created to be socially efficient, rather they…are created to serve the interests of those with the bargaining power to create new rules” (996, 0). This view is similar to the one put forward by the entitlement scholars in resource management. They favour a sociological-historical method in which transformations of property rights regimes are explained principally in terms of historical narrative and context, instead of using the deductive model favoured by rational choice proponents.(Cleaver 00; Johnson 00).

In terms of institutional change, HI and entitlement scholars are proponents of path dependency. They reject the traditional idea that the same operative forces will generate the same results everywhere. Instead they favour the view that “the effect of such forces will be mediated by the contextual features of a given situation often inherited from the past”, notably often institutional in nature (Hall & Taylor 996, 9; also Cleaver 00;

Johnson 00). As a consequence, HI scholars have devoted a good deal of attention to explaining how institutions produce such paths. They stress the unintended consequences and inefficiencies generated by the existing institutions. According to HI institutions are often created to solve the problems caused by previous rules (Peters 999, 67–68). Typical also to HI is the perspective of periods of continuity punctuated by ‘critical junctures’, such as military conflict and economic crisis (Hall & Taylor 996, 9). Finally, Hall &

Taylor note that HI rarely insists that institutions are the only causal force in politics.

They typically seek to locate institutions in a causal chain that accommodates the role of other factors, such as socio-economic development and the diffusion of ideas.