Hitotsubashi University School of International and Public Policy Global Governance Theory Pietro Tornese PA12G002 January 15,

, 2013

Path dependance in institutional theory

Recent research in political science and sociology applied the concept of path dependence to political institutions, emphasizing lock-in and increasing returns (Pierson, 2000) and self-reinforcing sequences (Mahoney, 2000). These works sought to generalize arguments about historical causation, therefore moving the discussion of institutional development as in terms of continuity or change over time - beyond the mere, unsurprising notion that "history matters" (Boas, 2007). Their formalization correlates the following of an institutionl path to a critical juncture with contingent outcomes of the self-reproduction of that path through increasing returns. Pierson, in one of the most important contributions to recent institutionalist debates (Deeg, 2001) argues that increasing returns - and continuity - occur in politics as much as they do in the economy; that therefore institutions, too, experience the positive feedback mechanisms , or the characteristics causing increasing returns (fixed costs, learning effects, network effects and adaptive expectations). He notes a connection between increasing returns and institutional persistence, arguing that an increasing return process "may lead to a single equilibrium" which "will in turn be resistant to change" (Pierson, 2000, p. 263). Mahoney, too, maintains that the positive feedback mechanisms sustaining a selfreinforcing sequence often lead to institutional persistence. But his discussion goes beyond the characteristics - borrowed by Pierson from economic theory of increasing returns. In contrast to Pierson, in fact, he adds other mechanisms of institutional reproduction that do not only focus on the utilitarian calculation of self-interest 1 which have little relevance for institutions rather than private organizations. (Mahoney, 2000, pp. 516-518). He argues that an institution might be reproduced because of its function for an overall system, or because it is considerally morally appropriate, or because it enpowers and is protected by an elite group in a view that Pierson also cites as a possibility. This additional
1 Economic characteristics of increasing returns, in fact, are based on the assumption that actors choose particular institutions and choose to reproduce them as long as they find it in their interest, based on a cost-benefit analysis of alternative choices. In this sense both Mahoney and Pierson are consistent with rational choice theory, although none of them explicitly claims a rational choice perspective.

mechanisms share the fact that they "may be so causally efficacious that they "lock-in" a given institutional pattern, making it extremely difficult to abolish". The contingent nature of initial events - referred to as the critical juncture - is another common element of Pierson and Mahoney's definition of path dependancy. According to Pierson, a path-dependent historical or temporal process is one characterized by a selfreinforcing sequence of events, with a distinctive characteristic: when in the sequence a particular event takes place is fundamental, as even small events happened early on might have large effects on later events. In a critical juncture, events trigger a move towards one of the alternative paths. During the early stages of the sequence, things are rather open or permissive; once moving down the path they get more restrictive, that is the period in which positive feedback mechanisms reinforce the movement along that path. The path then comes to an end when new events dislodge the long-lasting equilibrium. For Pierson, every path begins and ends with a critical juncture, signed by specific triggering events. Mahoney takes this point a step further in argueuing that "path dependance characterizes specifically those historical sequences in which contingent events set into motion institutional patterns or event chains that have deterministic properties (Mahoney 2000, pp. 507-508). Mahoney then specifies more clearly than Pierson the properties of the early events in a historical sequence: they must be contingent - they cannot be explained by prior events, or they could not be at the beginning of the path - not necessarily random or without antecedent causes, but either too specific to be explained by theories (ex. the assassination of a leader) or large and random (such as natural disasters). Drawing from a more recent scholarship 2 (Schwartz, 2001), I suggest that the concept of the critical juncture might be too restrictive theoretically and empirically difficult to sustain. Change, represented by the end of a path and the transition to the other can also be initiated by endogenous developments from the old path, not necessarily by an exogenous force that disturbs the equilibrium of the old path. I might make the example of certain policy reforms such as the last labour reform in Italy which are often incremental, not disruptive, because they come out of number of negotiations from opposed parliamentary groups, each of which has a different view on the issue.

Another recent contribution to the debate (Banchoff, 2005) critics the approach on path dependance developed by Pierson and Mahoney for having been mainly centered around interest-driven issues. Banchoff argues that path dependance analysis does not comprehensively frame what he calls value-driven issues - such as policies on stem cell research - since it does not take into consideration the role that institutions play in framing the terms legislative debate by ruling in and out certain policy alternatives and generating rhetorical resources for defenders of incremental, as opposed to far-reaching, policy change (Banchoff, 2005, p. 202).

References Alexander, G. (2001). Institutions, Path Dependence, and democratic Consolidation. Journal of Theoretical Politics, 13(3), 249-270. Banchoff, T. (2005). Path Dependence and Value-Driven Issues: The Comparative Politics of Stem Cell Research. World Politics 57(2), 200-230. Boas, T. C. (2007). Conceptualizing Continuity and Change: The Composite-Standard Model of Path Dependence. Journal of Theoretical Politics, 19(1), 33-54. Deeg, R. (2001). Institutional Change and the Uses and Limits of Path Dependency: The Case of German Finance, MPIfG Discussion Paper 01/6. Mahoney, J. (2000). Path dependence in historical sociology. Theory & Society, 29(4), 507. Pierson, P. (2000). Increasing Returns, Path Dependance, and the Study of Politics. American Political Science Review, 94(2), 251. Schwartz, H. (2001). Down the Wrong Path: Path Dependence, Increasing Returns, and Historical Institutionalism. Unpublished manuscript. Charlottesville: University of Virginia.