Way the Concept of Institutions Is Used - Term Paper Example

Comparative Political Economy Q #2 Discuss the similarities and differences in the way the concept of s is used in historical alism, regulation theory and economic sociology. Introduction While majority of political scientists and political sociologists would today refer to themselves as institutionalists, there are still evident differences among these three institutionalism schools in how they define the concept of institutions. Some basic similarities still exist among claims in the institutional theories, for example, in their enhanced appreciation for explaining institutions on the basis of firm micro-foundations (Thelen, 370, 1999), using this to explain outcomes and processes at a lower analytical level. Institutionalists in the three schools avoid same level analysis and individual level analysis, which may leave them open to criticism of being structurally biased. They focus on varying higher order determinants while also differing in their causal importance. Different scholars have taken diverse positions within the varieties of institutionalism in emphasizing how differently institutions work. Economic sociology is more focused on ideational and cultural causes of institutions, which are posited to influence states and their policy at supra-state or supra-societal level. It is the study of the cause and effect of a variety of economic phenomena within the society (Schneiberg, 2007). Historical institutionalists, on the other hand, usually, focus on macro-level and macro-political determinants of institutions (Crouch, 2005). However, rather than rely on specific institutional theory, they expect causation to involve path-dependence and time-order, as well as to be con-junctural and multiple. It is a political research approach that concentrates on highlighting institutional importance and rejecting functionalist reasons for the emergence of institutions. It relies heavily on case studies in studying all aspects of human organizations. Regulation theory, just like economic, sociological institutionalism, forms a school of theory but with a much weaker self-identity. It addresses the similarities and differences of both informal and formal cultural institutions (Peck and Theodore, 2007). Historical institutionalism and economic sociology also have a similarity in the way that they embrace institutions more expansively, rather than simply within their strategic context (Thelen, 371, 1999). Similarities and differences in the way the concept of institutions is used in the three approaches The three approaches have conceptualized institutions in different ways. Historical institutionalism (HI) examines the different historical development of formal institutions over time. It utilizes institutions in finding consequences of economic, political, social behaviour and change across time (Crouch, 2005). Historical institutionalism is a comparative approach that relies heavily on case studies in studying all aspects of human organizations. It mainly examines regulative (formal) institutions such as business systems, law, education system and marriage just to name a few (Streek, 2003). Historical institutionalism, on its part, is a response to rational behaviourism and choice theory found in political science. It holds that institutions are not normally formed due to functional reasons, instead tending towards tracing the processes underlying the creation of policies and institutions and their persistence. In this case, the institution is implicated in the theory’s explanations and what is being explained about the institution. Historical institutionalists view institutions as a product of political and historical struggles. Historical institutionalists mainly examined formal institutions because before they arrived, institutions were just treated a formal rules of behaviour (Thelen, 1999). Institutional analysis can be divided into relational choice institutionalism, sociological institutionalism and historical institutionalism. All these schools view institution as laws or rule that structure behaviour. However, they differ in the way they understand the nature of beings whose behaviours or actions are being structured. Relational choice proposes that human beings rational in their daily actions or decisions. Institutions are, therefore, crucial because they help in framing the strategic behaviour of individuals (Höpner, 2005). According to relational choice institutionalists, people abide by the set rules because they are strategic actors who would wish to maximize their individual gains. Individuals, therefore, maximise their gains when they both cooperate and follow rules. Sociological institutionalists view human beings as basically social beings who are neither rational nor self-interested. It is the institutions and not only rules that frame their perception of the world. Sociological institutionalists maintain that people should do what is appropriate. For sociological institutionalists, rules are social norms that control social interactions and everyday life (Thelen, 1999). Economic sociology (ES) was developed in part as a response to organizational views like world systems theory, state interactions, and resource dependence models that do not consider process and structures of culture in their explanations of institutions. Economic sociology is focused on legitimizing political institutions, tending to concentrate on policy diffusions and imitation processes, particularly on convergences in types of policy and institutions (Schneiberg, 2007). Economic sociology (ES) refers to the study of the causes and effects of a diversity of economic phenomena within the society. It examines cultural institutions, logics, informal and the economic embeddedness within the society (Polanyi, 1957). Economic sociologists argue that people tend to be economically rational because they are determined by the institutions. For instance, after the 2oth century, people tended to migrate in line with economic demands of the labour market. Immigrants ebbed and flowed to those areas with food, security, and adequate career opportunities. However, they work towards over socialized because their rationality is firmly fixed on their social networks (Krippner, 2001). According to this approach, institutions are mainly social hence no difference should exist between social and economic institutions. Being influenced by economics, economic sociologists have incorporated social relations into economy. Institutions, therefore, play a vital role in individual’s behaviour. Polanyi (1957) clearly states that society cannot be assumed when one is discussing markets or economics because they are interdependent. Finally, regulation theory (RT) that was developed by French Marxist economists in the 1970’s in response to economic instability refers to the regulation of capitalism. It addresses the informal and formal cultural institutions in relation to their similarities and differences (Peck and Theodore, 2007). This theory was developed at the time when economic instability and stagflation were very rampant in the French economy. Regulation theorists attempted to put forth the emergence of new economic and social forms with regards to tensions within the existing arrangements. Their main interest was how to stabilize or regularize historically particular systems of capital accumulation. They aimed at understanding the economic and extra-economic mechanisms that might stabilize capitalistic societies (Peck, 2007). According to Vidal (Forthcoming), the theory outlines conceptual and methodological tools that aid in developing historical growth models that stabilizes capitalist political economies. Vidal maintains that micro-economic growth regimes, based in production models and embedded or rooted in the institutional regulation models, exists which are similar to the historical institutionalism in this regards because accumulation regimes are predominantly formal institutions. Regulation theory mainly assumes that institutions and economies resolve a crisis (Boyer, 1988). Similarities The three approaches exhibit some comprehensible similarities in the way they conceptualise institutions. Both economic sociology and historical institutionalism use embeddedness. Historical institutionalists use embeddedness because they clearly indicate different organizations of societies in the social institutions (Crouch, 2005). They both reflect on the history and the society as a whole. Because historical institutionalists propose that institutions arise from political and historical struggles, it is right to conclude that the two approaches are similar. Regulation theory, on the other hand, possesses an approach that is similar to historical institutionalism, although it came before the latter, thus makes up the main theoretical thread within historical institutionalism. It was created in response to pluralist politics that gave 1-dimensional views of institutions and states. Regulation theory mainly assumes that institutions and economies resolve a crisis, a view that is shared by economic sociologists. Economic sociologists argue that the market cannot operate in isolation from the society because they are the regulators. The crisis is, therefore, prevented by regulation. Further, regulation theorists and economic sociologists maintain that the market is crucial in creating an embedded international economy. Both approaches assert that a politically selected institution is capable of playing leading role for change Vidal (Forthcoming). The three approaches are, therefore, similar in the way they conceptualize institutions. Historical institutionalism and regulatory theory have also developed their definitions of the institutions along different tracks of theory than economic sociology, partially due to the former two tending to address different empirical grounds about institutions in case selection and subject study. Historical institutionalism and regulatory theory address institutions in terms of policies and political developments, especially with their ability to stabilize growth and promote it (Boyer, 85, 1988). This, inevitably, draws to the attention the state’s most powerful structures of decision-making and its political actors with the most influence. Historical institutionalism and regulation theory tend to be similar because they both indicate that individual behaviours are determined by rules and their actions. All the three approaches share the concept of embeddedness; however, it is mostly used by the economic sociologists. It is also evident that economic sociologists tend to dwell more on conventional economics on how they use institutions in their arguments. Differences As seen above, the three approaches also exhibit comprehensible differences in the way they have used the concept of institutions. In addition, they have put forth different definitions to the concept. The three institutionalism do not deal with individual action and its aggregations but, rather, with factors of a higher order that portend influence on political institution outcomes and produce stasis or regular patterns. In economic sociology, institutional roles complement each other (Schneiberg, 2007), and it is basically a cultural theory and a species of organizational theory. It treats the state and other institutions like organizations, offering wide-ranging cultural, theoretical views on organizations and, therefore, institutions and politics. Economic sociology is mainly concentrated with the search for legitimacy by organizations through the diffusion of cultural norms and ideas. Through this, economic sociology attempts to explain the existing similarities between policies and types of institutions, usually referring to public policy development as a diffusion of policies and forms through the catalytic influence international institutions. Historical institutionalism, on the other hand, involves the engagement of social sciences independent of theoretical projects. Rather, it concentrates on portending macro-political empiricism, while also deploying historical and comparative analytical research strategies in addressing these empirical questions. According to (Höpner, 343, 2005), institutions are historically lost properties, meaning that mixing their functions up in social reproduction would be akin to subjectifying the social structures. However, the primary difference between the approaches come in the way they view institutions, for instance, historical institutionalism focus on formal institutions, economic sociology focuses on informal institutions and regulation theory deals on both informal and formal institutions. Historical institutionalism and regulatory theory address institutions in terms of policies and political developments while economic sociology predominantly addresses institutions in terms of policies that are of less game-changing consequence, in which delegating policy to globally linked civil society results in minimal state resource reallocation (Crouch, 2005). Unlike economic sociology, historical institutionalism focuses on institutional differences across states and institutions because of increased competition with convergence on similar institutional configurations (Deeg & Jackson, 153, 2007). Historical institutionalism’s nature of institutional causation, however, possesses meta-theoretical strictures. Although mainly situated in political science, historical institutionalism, compared to economic sociology, is composed less self-conscious scholarly groupings. Crouch et al. (p. 368, 2005) contends that historical institutionalists recognize that the fit among institutions is transitory and partial, which may explain the lack of self-consciousness. This is because historical institutionalists tend to agree more about methodology and approach than theoretical stance. While it does not give any preference to particular institutional theories, it views institutions as more influential and distinctive, as well as more concerned with power issues, than economic sociology does. Despite the two schools of institutional theory being reliant on political, institutional theorizing, historical institutionalism is reliant on social or economic institutions in its theoretical discourse. Regulation theory gained prominence as a state-centred theory and explicitly addressed power, emphasizing on the causal role of institutions on the processes and outcomes of politics. While initially relying on state actors and structures, focus turned to structural and systemic aspects of political institutions with Crouch et al. (p. 368, 2005) noting that the fit between institutions was far from perfect. Historical institutionalists propose that humans abide by the norms and laws. In addition, their actions are rational even though they are mostly self-centred. The individuals behaviour is determined by the rules, the general situation around them as well as their own self. When considering about institutions, historical institutionalists consider the bigger picture (individual, rules and context) (Deeg & Jackson, 2007) while regulation theorists believe that individuals are simply strategic actors interested in maximizing their gains and rule abiders. While regulatory theory and historical institutionalism scholarship offers more knowledge to that already in existence, concerning the political institutions outcomes and processes occurring in past places and times, it is a body of in-depth and disparate case studies and providing explanations, although rarely offering theory beyond the considered institutional cases. According to regulation theory, individual preferences are exogenous. People tend to make choices that benefit them all. This approach eliminates conflict of interest as people need to cooperate to achieve more. Institutions tend to exist for just efficiency purposes. Historical institutionalists, however, indicates that individual preferences are endogenic. Individuals are self-interested rational actors who only make choices that benefit them at the expense of others. In contrast, economic sociology theorizing proceeds more boldly with encompassing explanations and overarching proposals but rarely going into in-depth historiographic institutional case studies. It also allows institutionalists to use an array of illustrative policy like environmental treaties and educational studies, while only utilizing cases as interchangeable testing grounds for particular proposals or as examples, instead of addressing many factors that counter or mediate processes. Economic sociology is slight in historiographic terms, enabling only some degree of interdisciplinary dialogue (Peck & Theodore, 750, 2005). Economic sociologists research into institutions that use primary paths and alternative systems for institutional study (Scheinberg, 75, 2007), shoring up claims that would only have only convinced partially if the institutions had been researched using secondary data analyses. Regulatory theorists and historical institutionalists that use increasingly rigorous statistical tests in making explanatory claims about institutions that are more precisely formulated would also support explanations that have been consigned to frequently marginal status by their particularistic scope in regulatory and economic sociological research and theorizing. In addition, economic sociology emphasizes on normative and cognitive cultural explanations of institutions, which are not entirely incompatible with regulatory theory and historical institutionalism’s work, while this does not require a theoretical apparatus that is paradigmatically unique. Regulatory theory and historical institutionalism scholars who are interested in assessing and exploring institutional conceptualizations post-Marxism could borrow from economic sociology. For example, they emphasize allied concepts and complementarity of path dependency, increasing institutional lock-in and returns (Vidal, 76, 2014). Conclusion From the above discussion, it is in order to conclude that the concept of institution is used differently within the three approaches. Economic sociology focuses on legitimizing political institutions by trying to concentrate on policy diffusions and imitation processes. Historical institutionalism holds that formal institutions are not only formed due to functional reasons but also to trace the processes underlying the creation of policies and institutions and their persistence. Regulation theory focuses on institutional differences across states and institutions because of increased competition with convergence on similar institutional configurations. Although all the three approaches share the concept of embeddedness, it is right though to conclude that differences are more that the similarities. Refereces Boyer, Robert. "Technical change and the theory of régulation." In Giovanni Dosi, Christopher Freeman, Richard Nelson, Gerald Silverberg and Luc L. Soete (Eds). Technical change and economic theory. London: Pinter Publishers, 1988. 67-­94. Print. Crouch, Colin. Streeck, Wolfgang. Boyer, Robert. Amable, Bruno. Hall, Peter. & Jackson, Gregory. "Dialogue on institutional Complementarity and Political Economy." Socio-economic Review. 3.2 (2005): 359-382. Print. Deeg, Richard. & Jackson, Gregory. "Towards a More Dynamic Theory of Capitalist Variety." Socio-economic Review. 5.1 (2007): 149-179. Print. Höpner, Martin. "What Connects Industrial Relations and Corporate Governance? Explaining Institutional Complementarity." Socio-economic Review. 3.2 (2005): 331-358. Print. Krippner, Greta. "The elusive market: Embeddedness and the paradigm of economic sociology." Theory and Society 30.6 (2001): 775-810. Print. Peck, Jamie. & Theodore, Nik. "Variegated Capitalism." Progress in Human Geography. 31.6 (2007): 731-772. Print. Schneiberg, Marc. "Whats on the Path? Path Dependence, Organizational Diversity and the Problem of Institutional Change in the Us Economy, 1900-1950." Socio-economic Review. 5.1 (2007): 47-80. Print. Thelen, Kathleen. "Historical Institutionalism in Comparative Politics." Annual Review of Political Science. 2.1 (1999): 369-404. Print. Vidal, Matt. “Incoherence and dysfunctionality in the institutional regulation of capitalism,” in Marco Hauptmeier and Matt Vidal (Eds.) Comparative Political Economy of Work, Palgrave Macmillan. Print. Vidal, Matt and Jamie Peck. 2012. "Sociological Institutionalism and the Socially Constructed Economy." Ch. 38 in The Wiley-Blackwell Companion to Economic Geography, edited by T. Barnes, J. Peck, and E. Sheppard. Oxford: Wiley-Blackwell. Vidal, Matt. Forthcoming. “Incoherence and Dysfunctionality in the Institutional Regulation of Capitalism” Ch. 4 in Marco Hauptmeier and Matt Vidal (Eds.) Comparative Political Economy of Work (Palgrave). Read More