The Four Faces of Institutionalism: Public Policy and a Pluralistic Perspective

SIMON REICH* Contending conceptions of the new institutionalism claim to offer approaches that can develop generalizable social scientific theories of behavior. This article challenges that proposition, arguing that contingencies exist in which specific forms of institutionalism are best suited to addressing particular types of questions. Viewed through the prism of public policy, it develops the argument that policy dictates politics. It suggests that four variants of institutionalism (historical, new economic, normative, and billiard ball) are each systematically most appropriate to examine the issues in the policy domains of redistribution, regulation, modernization, and liberalization, respectively. New institutionalism has become a catchphrase concerning an approach to the study of social science. Yet the term conceals a number of distinct approaches that compete with one another as explanations of political behavior. Some proponents of variants of institutionalism assert that they are trying to develop general theories of behavior. Some of the contributors to this issue of the journal represent efforts drawn from these different traditions. In this article I offer a contrasting perspective, one embedded in the notion that theories of institutions have identifiable and delineated contours that make them most appropriate for explanations of specific kinds of problems. This argument is based more on intuition than on science. It is one that is explored neither as exhaustively nor as deliberately as I would like, but that reflects my current state of thinking. It is presented in the form of a think piece which I believe is suitable for a forum of the type offered by a special edition symposium. I propose that there are four forms of new institutionalism. Each has specific features that suggest they are systematically best suited to the study of particular forms of public policy by virtue of the distinct character of politics in that domain. Reorienting and extending the seminal work of Theodore J. Lowi, I outline a resulting contingent argument challenging the claim that any one form of institutionalism is most suited to developing a general theory. Rather, each policy domain has a particular set of characteristics that capture a particular dimension of politics, and no one

*Graduate School of Public and International Affairs and Department of Political Science, University of Pittsburgh Governance: An International Journal of Policy and Administration, Vol. 13, No. 4, October 2000 (pp. 501522). 2000 Blackwell Publishers, 350 Main St., Malden MA 02148, USA, and 108 Cowley Road, Oxford, OX4 1JF, UK. ISSN 0952-1895

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variant of new institutionalism provides a general theory that can subsume the other approaches and thus capture all such characteristics.1 So, I suggest, the way forward is to recognize that particular forms of institutional analysis are best suited to the study of particular policy domains. The next stage is to wrestle with the intricacies of how and why they are best suited, and in which ways they can be improved. The purpose of this paper is twofold. First, to try and describe the alternative conceptions of institutionalism; second, to identify the broad linkages between four prominent domains of public policy and these formulations; specifically, to identify how and in which ways each domain is best suited to an alternative form of institutional analysis. I offer nothing conclusive, preferring at this stage simply to try and provide a basis for further dialogue between adherents of these different approaches.
THE ARGUMENT

In this article I offer a central argument: Consistent with the spirit of Theodore Lowis seminal World Politics article of 1964, I contend that the character of a policy arena or domain is most influential in determining the most appropriate form of institutional analysis (Lowi 1964; see esp. pp. 688689). Lowi identified three policy domainsdistributive, redistributive, and regulatory (then later added a fourth domain of constitutive policy (Lowi 1971)). His analysis specified that the characteristics of particular policy domains tend to dictate the most appropriate institutional form, by virtue of the contours of politics in each. As Lowi states,
Areas of policy or government activity constitute real arenas of power. Each arena tends to develop its own characteristic political structure, political process, elites and group relations (original italics) (1971, 689690).

I expand upon Lowis argument in two ways. First, reflecting my grounding in the study of globalization, I reorient and expand his three original categories of public policy (distributive, regulatory, and redistributive) in favor of reconstituting and delineating four policy domains (redistribution, regulation, democratization/modernization, and liberalization, whose characteristics are discussed in more detail below). I attempt to outline the respective central analytical problems and institutional actors in each area. I do so in the belief that these four policy domains constitute the most important ones in a world where national borders are not of less importance but of increasingly uneven importance. Second, I expand the theoretical scope of the argument to suggest that a different form of institutionalism is most compatible, in analytic terms, with each respective policy arena or domain. My claims thus emphasize the contingent nature of relations according to what I argue are these four

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major policy domains that may link, yet simultaneously delineate, hitherto seemingly irreconcilable perspectives on new institutionalism. Thus, I delineate four major approaches to the study of institutions. I identify these as historical institutionalism, new economic institutionalism, institutions as cognitive frameworks, and institutions as actors. In the realm of political science, these are largely treated as alternative perspectives (or explanations) that are largely unreconciled in their formulations. I accept the claim that each of these four alternative formulations of institutions can indeed potentially be applied to explain behavior in any policy domainto issues concerning redistribution, democratization, liberalization, or regulation. I respond, however, by suggesting that each is best suited to analysis in one particular policy domain. Key to this assertion is the nature of politics in each approach, the underlying assumptions of the form of institutionalism itself, and the definition, purpose, and nature of institutions. For example, are institutions defined as actors, in power relational terms, as values, or by their interest structures? Is the form of institutionalism predicated on positive-sum solutions or negative-sum assumptions, or is it agnostic on this point? In practice, I suggest that historical institutionalism, for example, is consistent with the nature of the debates within the redistributive policy domain given the substance of politics over the division of scarce resources. Regulation, in contrast, is carried on between and among actors seeking to gain greater efficiency (or arbitrate differences across systems to avoid friction) through cooperation. It often deals with market failure or collective action problems. The search for solutions to common problems that cannot be resolved unilaterally leads to the adoption of new structures that reflect the assumptions of the new economic institutionalism. The third policy domain, namely, modernization, focuses heavily on debates regarding democratization, and is value-laden and cognitive in tone. In that dimension, at least, it approximates Peter Katzensteins definition of institutions as a normative context that constitutes actors and provides a set of norms in which the reputation of the actors acquire meaning and value (Katzenstein 1997, 1213). Finally, liberalization as a policy domain consistently employs the notion of institutions primarily as actors. Here institutions are characterized as having greater agencyas international financial organizations, for example, that demand states reform their policies, as transnational corporations that negotiate incentives, or even as markets that punish what they adjudge as malfeasance in government policy. In sum, policy creates politics, discriminating in favor of a particular form of institutional analysis. I seek to begin a discussion of the efficacy of this claim.

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INSTITUTIONALISM: FOUR VARIANTS

Guy Peters points to the evolving character of institutionalism. He states that the old institutionalism was descriptive, while new institutionalism is
characterized by an explicit concern with theory development. . . . [It] seeks to explain [institutions] as a dependent variable and, more importantly, to explain other phenomena with institutions as the independent variables shaping policy and administrative behavior. . . . Further, contemporary institutional analysis looks at actual behavior rather than only at the formal, structural aspects of institutions (1996, 206).

Peters acknowledges that the new institutionalism itself is fragmented into many contending forms. Here I offer four characterizations of contemporary institutionalism. Historical Institutionalism In d e s cribin g t hose working in the trad it io n o f h ist o r ical institutionalism, Guy Peters states that this approach emphasizes
the role of institutional choices made early in the development of policy areas, or even of political systems. The argument is that these initial choices (structural as well as normative) will have a pervasive effect on subsequent policy choices . . . have an enduring impact. . . . [T]he state is not discussed as a single entity but rather as an aggregation of organizations and institutions, each with its own interests (1996, 210).

Elsewhere, Bert Rockman has called this the historical-comparative approach (Rockman 1994, 146), noting that
the historical approach seeks . . . to intertwine the play of societal forces with institutional structures and processes. . . . From the perspective of neo-institutionalists fishing in the historical stream, however, the searching for precise and decomposable causal structures is likely to be regarded as a misplaced effort (1994, 147148).

Institutions in this form of analysis determine the identity and number of the legitimate actors, the ordering of action, the information that actors will have about each others intentions, and, cumulatively, a relevant agendawhat Theda Skocpol labeled a Tocquevillian approach. Here organizational configurations, along with overall patterns of activity, affect political culture, encourage some kind of group formation and collective political actions (but not others), and make possible the raising of certain political issues (but not others) (1985, 21).2 Skocpol concludes that, from this perspective,
the investigator looks more macroscopically at the ways in which the structures and activities of states unintentionally influence the formation of groups and the political capacities, ideas, and demands of various sectors of society (1985, 21).

Peter Hall and Rosemary Taylor state that historical institutionalists see the institutional organization of the polity or political economy as the principal factor structuring collective behavior and generating distinctive

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outcomes (Hall and Taylor 1996, 937). But, as Rockman points out, the relationship of institutions to outcomes in this mode of analysis is probabilistic. He states that institutional arrangements make opportunities more or less available and increase or decrease the risk of acting (1994, 149). Hall and Taylor suggest that institutions, in this context, are defined as
the formal or informal procedures, routines, norms and conventions embedded in the organizational structure of the polity or the political economy. They can range from the rules of a constitutional order or the standard operating procedures of a bureaucracy to the conventions governing trade union behavior or bank-firm relations (1996, 938).

Although Sven Steinmo, Kathleen Thelen, and Frank Longstreths notable edited volume illustrates that the historical institutionalist approach can be and is applied across a variety of policy areas (Steinmo, Thelen and Longstreth 1992), this approach is perhaps most often and effectively used in the domain of redistributive policy, notably concerning welfarism. Hall and Taylor, for example, note:
From group theory, historical institutionalists accepted the contention that conflict among rival groups for scarce resources lies at the heart of politics but they sought better explanations for the distinctiveness of national political outcomes and for the inequalities that mark these outcomes. . . . Rather than emphasize the degree to which an outcome makes everyone better off, they tend to stress how some groups lose while others win (1996, 941).

Historical institutionalism thus emphasizes the zero-sum politics of redistribution.3 Who gets what is about how a given amount of resources are redistributed, not about how a pie is enlarged. New Economic Institutionalism Emerging predominantly out of new institutional economics, and initially applied in political science to the study of American politics, this variant of institutionalism posits that actors are driven by rational cost/benefit assumptions.4 Focusing largely on property rights, rent-seeking, and the transaction costs of making deals, the primary intent of this approach is to solve individual collective action problems through the use of various bargaining games or strategies (Hall and Taylor 1996, 943). It is therefore micro in approach, working from the level of the individual actor upward. In describing such an approach, Bo Rothstein notes:
Preferences can only be held by individuals and that they are exogenous to institutions. The actors come to the institutionalized game with a fixed set of preferences which, moreover, they are able to rank among actors, but the institutions as such do not influence preferences. As utility maximizers, actors rank their preferences and engage in a strategic logic of exchange with other agents within the constraints set by prevailing institutional rules. If the institutions change, actors usually change their strategy, but not their preferences. This is a logic of exchange approach, the calculative nature of action being universal as the agents preferences are always to maximize expected individual utility. The

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problem is how to design institutions so that an effective aggregation of individuals preferences to collective data can be made (1996, 147).

Institutions are therefore purposive, designed to solve particular types of problems. Deborah Avant suggests that organizations are rational responses to collective dilemmas [which] are instances where individually rational decisions lead to collectively irrational outcomes. For a variety of reasons . . . neither markets nor perfect democracy . . . [is] efficient for providing some goods (1994, 67). This leads to an agency problem because the agent of central authority gains autonomy exacerbated by informational asymmetry in agenda setting or in capabilities. The result may be unstable or manipulable organizational choices. Avant, however, concludes: Members of the organization acquire expectations, based on previous experience, about how political actors will behave. These expectations affect the way members of the organization will interpret new actions (1994, 9). Institutions, if designed correctly, therefore add predictability and provide information for their memberships. Organizational membership is a product of voluntary agreement, providing otherwise unattainable benefits. The risk of free riding remains (cf. Olson 1982), generatingaccording to Hall and Taylorthe focus among theories of new economic institutionalism on the institutional mechanisms whereby principals can monitor and enforce compliance on their agents (1996, 943). Hall and Taylor echo Avants point on this kind of approach: Typically, what prevents the actors from taking a collectively superior course of action is the absence of institutional arrangements that would guarantee complementary behavior by others (1996, 945). Institutions structure strategic interaction by affecting the range and sequence of alternatives on the choice-agenda or by providing information and enforcement mechanisms that reduce uncertainty about the corresponding behavior of others and allow gains from exchange, thereby leading actors towards particular calculations and potentially better social outcomes (1996, 945). Essentially, institutions, if correctly structured, successfully avoid suboptimal outcomes that otherwise lead to Tragedy of the Commons or prisoners dilemma situations. Bert Rockman notes that to the extent . . . (1) they shape the incentives for individual behavior; (2) these incentives have collective consequences; and (3) the institutions structure conflicts (or collaborations) of interest and, thus, define the terms under which bargaining takes place (1994, 151). Rockman says that institutions play such an important role in achieving cooperative behavior (in reference to the work of Kenneth Shepsle) because
[i]nstitutionalized practices make it much more difficult for deals to get unstuck by providing an enforcement mechanism. These practices are rational in that they respond to the cooperation problems induced by the structure and organization of authority (1994, 151152).

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The approach, working from the micro level upward, thus contrasts with the historical institutionalist approach. First applied in U.S. congressional studies, such an approach has been extended, notably in the application of such principles to supranational bodies such as the European Union (see Tsebelis 1994; 2000). Whether engaged in multilateral or bilateral negotiations, states pool sovereignty in order to achieve important benefits, such as regulatory goals that they cannot generate unilaterally in a process of hard interstate bargaining (Martin 1992; Oye 1993; Axelrod 1997).5 Elinor Ostrom addresses the problem of resistance to regulatory limitations and what it implies for Tragedy of the Commons situations by suggesting that it is the structure of the institution that plays the decisive role in changing individuals views of their self-interest, independent of the existence of property rights (Ostrom 1990). As Rothstein summarizes the situation, transparent decisionmaking encourages actors to conform to social norms as they redefine their self-interest so that it accords with the collective interest in not draining the common resource. The discursive and public character of the institution launders the individuals preferences (1996, 149). Regulatory goals, in the context of appropriately defined institutions, can therefore be achieved in order to overcome suboptimal outcomes where the product is something that works to the detriment of all. Markets may fail to achieve a common good; regulatory rules may assist in repairing such institutional defects. Cognitive Conceptions of Institutions Arising out of the work of sociologists, a third way of viewing institutions is from the perspective of institutions as normative contexts themselves.6 Hall and Taylor note that from the end of the 1970s, some sociologists rejected the distinction between means-end rationality and culture. They argued that
many of the institutional forms and procedures used by modern organizations were not adopted simply because they were the most efficient for the tasks at hand, in line with some transcendent rationality. Instead . . . many of these forms and procedures should be seen as culturally-specific practices, akin to the myths and ceremonies devised by many societies and assimilated into organizations, not necessarily to enhance their formal means-ends efficiency, but as a result of the kind of processes associated with the transmission of cultural practices more generally. Thus, they argued, even the most seemingly bureaucratic of practices have to be explained in cultural terms (1996, 947).

As Walter W. Powell suggests, Even the most efficiently-minded organizations rely on socially constructed beliefs such as more is better (1991, 187). Among the forerunners of the adaptation of this variant of institutional analysis to political science was the work of James March and Johan Olsen. They emphasize the significance of political structure, defining it as

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a collection of institutions, rules of behavior, norms roles, physical arrangements, buildings, and archives that are relatively invariant in the face of turnover of individuals and relatively resilient to the idiosyncratic preferences and expectations of individuals. . . . Theories of political structure assume action is the fulfillment of duties and obligations. . . . [W]e assume that political actors consult personal preferences and subjective expectations, then select actions that are as consistent as possible with those preferences and expectations. . . . That political actors associate certain actions with certain situations by rules of appropriateness. What is appropriate for a particular person in a particular situation is defined by the political and social system and transmitted through socialization.7

Symbols become important here not . . . as devices of the powerful for confusing the weak, but more in the sense of symbols as devices of interpretative order (March and Olsen 1984, 741). In describing the concept of normative order, March and Olsen note that action is often based more on discovering the normatively appropriate behavior than on calculating the return expected from alternative choices. As a result, political behavior, like other behavior, can be described in terms of duties, obligations, roles, and rules. . . . A broader theoretical examination of normative order would consider the relations among norms, the significance of ambiguity and inconsistency in norms, and the time path of the transformation of normative structures (1984, 744). Likewise, symbolic orderthe role of symbols, myths, and rituals in ordering and transforming political lifeis central to developing this notion of institutionalism (1984, 744). Building on this sociological work, Peter Katzenstein suggests that, in essence, institutions are more abstract in character in the sense that they are inherently cognitive. As Katzenstein develops the idea,
Bargaining theory typically overlooks a central aspect of all bargainingthe framework or context in which a particular issue should be seen. A richer conception thus emphasizes not only how institutions facilitate bargains among political actors. It also investigates how institutions affect the context of bargaining, primarily through the effects they have on the identity of the political actors who make political choices (1997, 14).

Ronald Jepperson offers an even more comprehensive view of institutions when he suggests that
[i]nstitutions are those social patterns that, when chronically reproduced, owe their survival to relatively self-activating social processes. Their persistence is not dependent, notably, upon recurrent collective mobilization, mobilization repetitively reengineered and reactivated in order to secure the reproduction of a pattern. That is, institutions are not reproduced by action. . . . Rather, routine reproductive procedures support and sustain the pattern, furthering its reproduction (1991, 145).

To Jepperson, this is not the same thing as institutionalization, which denotes the ongoing or social reproduction of such patterns. Democracy, for example, can be a norm but is not necessarily institutionalized unless its formal aspects are reproduced through elections (1991, 145). Indeed, institutions are frameworks of programs or rules establishing identities

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and activity scripts for such identities (1991, 146). They are socially constructed, routine-reproduced (ceteris paribus), program or rule systems (1991, 149). Rothstein contends that political institutions in a narrower sense can be defined as formal arrangements for aggregating individuals and regulating their behavior through the use of explicit rules and decision processes enforced by an actor or set of actors formally recognized as possessing such power. Obviously, culture, norms, and so on are neither explicit nor formalized (1996, 145). Thus institutions provide a logic of appropriateness, informing the relevant actors about what they ought to prefer in the specific situation. In this approach
[i]nstitutions not only determine actors preferences but also to some extent create them. Institutions create or socially construct the actors identities, belongings, definitions of reality and shared meanings. In a given institutional setting, the agent usually does not calculate what action would enhance his or her utility the most. Instead, by reference to the institutional setting, she asks Who am I? . . . and what is the most appropriate action for such an individual in this situation . . . [thus] action is not universal but rather situational, as the individuals preferences vary in different institutional settings (Rothstein 1996, 147148).

Hall and Taylor concur, suggesting that many sociological institutionalists put a new emphasis on what I might think of as the cognitive (1996, 948). This form of institutionalism addresses matters of the relative degree and type of institutional homogeneity or heterogeneity, and central questions about how values and practices get diffused (Hall and Taylor 1996, 947). In the aftermath of the Cold War, much of this work has stressed the process of expanding and incorporating political and economic norms consistent with a neoliberal agenda, specifically Lockean variants of liberalism and capitalism.8 Institutions as Actors Finally, I briefly return to an earlier (albeit postwar) conception of institutionsas actors themselves. Theda Skocpol labeled this a Weberian-Hintzean approach in which states are composed of organizationally coherent collectivities of state officials, especially collectivities of career officials relatively insulated from ties to currently dominant socioeconomic interests (1985, 9). States may be relatively autonomous actors, depending on contingent factors including foreign and domestic challenges and the resources they can utilize.9 Furthermore, such actions, which are often the product of crisis, are carried out by elites. Such an approach has been applied to both authoritarian regimes and their advanced industrial counterparts. States are capable of formulating holistic and long-term strategies transcending partial, short-sighted demands from [for example] profit-seeking capitalists or narrowly

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self-interested social groups (Skocpol 1985, 14). Though often misguided, state action can be coherent and appropriate as
autonomous state actions will regularly take forms that attempt to reinforce the authority, political longevity, and social control of the state organizations whose incumbents generated the relevant policies or policy ideas. . . . Whether rational policies result may depend on how rational is defined and might even be largely accidental. The point is that policies different from those demanded by state action will be produced (Skocpol 1985, 15).

As March and Olsen summarize it,

The argument that institutions can be treated as political actors is a claim of institutional coherence and autonomy. The claim of coherence is necessary in order to treat institutions as decision-makers. From such a point of view, the issue is whether we wish to picture the state (or some other political institution) as making choices on the basis of some collective interest or intention (e.g., preferences, goals, purposes), alternatives, and expectations. . . . The pragmatic answer appears to be that the coherence of institutions varies but is sometimes substantial enough to justify viewing a collectivity as acting coherently (1984, 739).

Stephen D. Krasner suggests that even the American state, noted for its weak, fragmented structure, has autonomous elements (Krasner 1978). On a personal note, it might be suggested that those scholars who suggest that the American state is pluralist, weak, and fragmented have never been exposed (unlike foreigners) to the arbitrary power of the Immigration and Naturalization Service (INS)or perhaps, as citizens, never been audited by the Internal Revenue Service (IRS) for that matter! In both instances those under scrutiny soon discover they have few rights and little recourse. No bill of rights exists, for example, for those (potential) immigrants being reviewed by the INS. Yet such claims about states as institutions (with their own relative autonomy) immeasurably benefit from comparative analysis across countries. There, a rich literature forms the basis for a comparative institutional assessment about both state autonomy and state capacity that dates back at least to the popularity of literature in the early to mid-1980s, as described extensively by Skocpol in Bringing the State Back In. Though hardly a proponent of the Weberian view that organizations cohere, Walter Powell reminds us that our analysis should not be confined to the study of states when it comes to institutional analysis. Many other kinds of institutions have similar propertieswhether defined as hierarchical and collectivist or not. Market-driven actors, for example, may also have organizational characteristics comparable to states. Institutional heterogeneity should not be assumed but should be studied (Powell 1991, 183). Institutions, regardless of whether they are public or private actors, international or domestic, may reflect similar propensities toward efficiency or appropriateness of form, isomorphism or sustained heterogeneity, autonomy or subject to being insinuated, independent capability or dependent. Political science has been relatively slow to grasp this notion. The state as actor paradigm may be among the oldest in the discipline,

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but Realism (for example) treats such actors as relatively homogeneous in character, distinguished by their degree of power oraccording to domestic structure variantsby their resources relative to society. Although increasingly popular in the literature of international political economy (IPE), the relationship between the state and private actors remains largely underdeveloped. Whether liberals or Marxists, both groups of scholars in IPE tend to focus on the issues of privatization of assets and liberalization of markets, fostered by capital mobility, as determinants of state behavior. It is private actors (corporations) and international institutions that are here given a coherence of policy and collectivist character formerly reserved (under the assumptions of Realism) for the unitary state.10
POLICY DOMAINS AND INSTITUTIONALISM IN THE CONTEXT OF GLOBALIZATION

Earlier I suggested that the nature of policy corresponds to an appropriate type of institutionalism; each policy domain having characteristics that discriminate in favor of the use of a specific type of institutionalism. I have now identified four typeshistorical, new economic, cognitive, and state-as-actor. These are linked to the four major domains of policy in an increasingly porous national system marked by a greater propensity toward globalization. I now identify these domains of policy, describing their characteristic features, and begin a discussion concerning how they systematically link to different forms of institutionalism. Redistribution The end of embedded liberalism results in a new set of winners and losers. While economic pressures may build, political will and policy competence offer the opportunity for meaningful levels of policy autonomy over redistributive issues. The agency of actors, albeit path-dependent, is important in bringing about change. The replacement of the Keynesian welfare state with a neoliberal counterpart is not the same thing as the end of the state itself but rather of a particular form of state. The state no longer fulfills the Keynesian function of defending domestic welfare from exogenous pressures. Rather, it is a transmission belt in which neoliberal policy passes from the global to the national policy domain (Cox 1992, 2643; Gill 1993), leading the state to be primarily a receptor rather than an author or an encoder of modern capitalism (Panitch 1992). As such, the neoliberal state is an instrument of globalization. But many convergence theorists who stress the terminal nature of the state ignore the weakness of this approach as an analytical instrument.11 It assumes that the institutions and values of governance are being assimilatedlargely toward an Anglo-American model of John Lockes

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politics and Adam Smiths economics. Furthermore, states still largely determine the issue of who gets what within national borders through the instruments of tax and social welfare policies. Of the four policy domains outlined, redistribution thus remains the most insulated from external forces of globalization despite the states changing character. Globalization certainly influences the distribution of resources, but this issue is strongly mediated by states. In that sense, redistributive policy is heavily conditioned by domestic factors and thus the legacy of historic and political constraints. Such constraints mitigate against the concept of the end of history endemic in much of the work of proponents of the radical effects of globalization. Although, for example, we are often told that the total amount of resources that states have to allocate to social welfare has dwindled, this is not necessarily supported empirically. While the Clinton administration, for example, shifted the focus of decisionmaking in its federalist system from the national to subnational authorities, total welfare expenditures remained intact for the first half of the 1990s according to Paul Petersen.12 I thus contend that historical institutionalism seems best suited out of the four institutionalisms for its explanatory power in the context of redistributive policies. Historical patterns of development are very influential in the broad determination of who gets what, limiting the propensities for change in an environment where the state looms so importantly in the context of primarily domestic considerations. Domestic interests therefore compete within an environment where external factors may condition the size of the pie, but not how it gets dividedthe latter being strictly a zero-sum game. Illustrations of this point are provided by a series of recent ethnic conflicts, stretching from Chiapas in Mexico across the Balkans and into Rwanda. A consistent theme of such disputes is the historic basis of the idea of one side being maltreated and seeking the redistribution of resources through the instrument of war. I argue that these conflicts are not fueled by nationalism but by the idea that some historic wrong should be addressed by the seizure of land. The Serbs genocidal efforts perhaps provide the best example in their quest to conquer first Bosnia and then Kosovo. These actions were motivated largely by an attempt to redress what they felt was an effective policy of misallocation in the original division of Yugoslavia. As a largely rural population, the Serbs felt that too much had been distributed to an urban population where they were underrepresented. Such a justification for war was thus part of a historical cycle in the region.13 These wars represented the ultimate version of zero-sum contests. Regulation Regulation remains a central policy domain in the context of globalization despite the purported retreat of the state. Huge increases in trade,

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foreign direct investment (FDI), and financial flows have exposed and magnified the differences between national economies. Efforts to arbitrate differences across systems or to achieve convergence, however, have largely shifted the regulatory focus from the national to the supranational level of intergovernmental organizations (IGOs). Regional organizations, in particular, have become more important and have proliferated because they provide shared rules of behavior and reflect the fact that the largest percentage growth has primarily been in intraregional trade and FDI. The world is thus not so much globalizing as it is regionalizing, both in terms of IGOs and economic flows. The same proposition about regulations growth in importance applies as much to security as to economics. Migration, drugs, and proliferation (nuclear or chemical) represent new regulatory challenges that no state, however powerful, can singularly redressrequiring collaborative efforts between states, whether organized on a bilateral, regional, or multilateral basis. They provide situations where concerns about sovereignty clash with those regarding the need to address potentially overwhelming policy concerns. In the areas of both economic and security policy, authority over regulatory policy has shifted from the national to the supranational level. Whether through bilateral organizations, regional organizationssuch as Asia Pacific Economic Cooperation (APEC), the European Union (EU), or North American Free Trade Agreement (NAFTA)or multilateral onessuch as the World Trade Organization (WTO)states have become increasingly involved as participants in negotiation and bargaining. Interstate bargaining, I contend, therefore creates a new dynamic as states often have the capacity to veto each others ability to address common problems such as those outlined above. In that context, a central proposition of proponents of regulatory policy is that the purpose of an economy and polity remains highly contested, even as liberal democratic and capitalist values apparently spread in influence. Rather than abandoning economic processes to the vagaries of markets, regulation reemphasizes the role of the state in stressing rules of conduct as a means to avoid conflict and to arbitrate fissures in contrasting forms of capitalism. It signals a shift away from antagonism and toward cooperation, with states generally using organizations (even bilateral agreements) as a cipher for their own policy goals (Keohane 1984, 12). Regulation therefore reasserts the importance of intergovernmental negotiation in the functioning of markets across boundaries. This is achieved through institutional competition (mutual recognition), harmonization (in the sense of imposing standards), or managed tradeall three processes reflecting the fact that differences are negotiated and considered legitimate by the signatories to an agreement (Kahler 1996, esp. p. 300). The development of multilateralism, regionalism, or bilateralism implies some usurpation of unilateral state authority in recognizing that states must bargainoften with other states. While economic sovereignty

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may have eroded, states continue to negotiate and arbitrate the international rules of economic conduct and thus define the parameters of interaction. Negotiation here therefore represents a way of maneuvering separate forms of capitalism through the maze of global integration, preserving differences while compromising with the global economyif not an act of resistance to globalization (Johnson 1991). In this context, new economic institutionalism offers an analytic approach that attempts to achieve cooperative solutions that are otherwise unattainable. States concede a degree of sovereignty for strategic purposes to realize specific policy goals. They may thus concede intangible (and admittedly, possibly tangible) resources for tangible rewards. Ironically, while weaker actors may be disadvantaged by having fewer resources, the need for compromise may well push stronger actors to make side payments or generous compromises to achieve their desired goals. Mexican negotiations with the United States over drug policy exemplifies the dynamics of such a situation and the insight that new institutionalism provides. Public discourse in Mexico focuses heavily on the rhetoric of sovereignty and autonomy. This concern was magnified after the revelation concerning the Casablanca Affair, in which it was discovered that American governmental officials conducted an illicit drug sting within Mexico in 1998 without the knowledge of Mexican governmental officials, designed to root out official corruption. Yet a subsequent round of negotiations in 1999 between American and Mexican officials over drug policy did not reflect the potential strains that such an incident could have caused. Instead, the focus was clearly on the issue of policy coordination and the side payments that the Mexican government could obtain in exchange for their cooperation. Here, new institutionalism seems best suited to explaining the dynamics of state policy.15 Modernization and Democracy Work in this realm, at its core, focuses on the hegemony of American valueseither implicitly or explicitly, repackaging many of the notions articulated in the modernization literature.16 It restates an expectation of convergence, via the process of the institutional assimilation of liberal democratic and capitalist values. In the modernization literature, failure to converge toward liberal democracy as a normative prescription risks a moral failure. As David Apter comments, in describing the theme of the Politics of Modernization, analysis begins with moral content . . . political life . . . can only be understood in moral terms. Thus beyond science lies moral intuition [and] the overriding purpose of this book is to bring together some general methods and their moral implications, the eventual objective being the formation of representative government (a concept of freedom and choice defined as morality) which Apter equates with liberal democracy (Apter 1965, xiiixiv, 3, 1012, 450458 passim).

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The common core between this and contemporary work on globalization is the assertion of a positive relationship between democracy and development as domestic political institutions in different countries increasingly assimilate, in tandem, the values of liberalism and free market capitalism professed by the earlier modernization theories. Globalization theory is replete with the same teleological sentiments found in much of the earlier modernization literature. Francis Fukuyamas arguments about the triumph of liberalism echo Daniel Bells arguments of nearly four decades earlier that modernity in America signaled the end of ideology (Bell 1960; Fukujama 1992). Here nongovernmental organizations (NGOs) play a pivotal role as purveyors of international liberal democratic norms. Although independent of American government tutelage, they often articulate comparable values despite their occasional tendency pointedly to accuse the United States of human rights abuses. These NGOs, in tandem with international organizations and (alternatively muted or trumpeted) American governmental pressure, encourage the assimilation of both norms and institutional structures of transparent, accountable, and stable liberal democratic polities. In terms of the application of institutionalist approaches, cognitive conceptions of institutions appear particularly appropriate for application to the issue of democratization. For that issue is intrinsically linked to the spread and convergence of specific norms rather than interests. Indeed, from some perspectives, the grafting of such norms onto existing societies, remaking them in form and structure, is a project designed to minimize the influences of (if not defy) history. As Fukuyama suggests, the process of democratization signals the end of history. The purpose is to embed norms in institutions, reflective of the notion of a living and breathing constitution. The outcome of successful democratization is, optimally, positive-sum. An illustration of such norm-based behavior is evident in the reformist impulses that have taken hold in Mexico since the infamous stolen election of the 1980s in which the Partido Revolucionario Institucional (PRI) was accused of rigging the results to retain presidential power. External actors, governmental and nongovernmental alike, have played an increasingly important role in reforms both within the political parties and across the electoral system more generally. These effects have largely been the products of the activities of nongovernmental actors with little leverage rather than international financial institutions (IFIs), international organizations (IOs), or governmental actors with either incentives or sanctions to offer.17 It may be premature to anticipate the effects of these reforms without sufficient hindsight regarding the 2000 presidential election. But preliminary indications suggest that the effect has changed the nature of the electoral process in Mexico, with primaries now contested rather than candidates appointed, and the ultimate loss of presidential power by the PRI.

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Liberalization The substantive elements of this policy domain involve the liberalization and deregulation of markets, privatization of assets, dismantling of state functions (particularly welfare ones), diffusion of technology, cross-national distribution of manufacturing production, foreign direct investment, and the integration of capital markets. In its narrowest formulation, the term refers to a worldwide spread of sales, production facilities, and manufacturing processes, all of which reconstitute the international division of labor. Its most extreme theoretical perspective posits the view that we are witnessing a decisive shift away from industrial capitalism to a postindustrial conception of economic relations. The economic phenomena identified earlier are important not just because they represent a unique cluster of activity but because they represent a new form of activity, depicting a striking revolution among techno-industrial elites that ultimately renders the globe a single market.18 This is a comprehensive and complex vision of globally integrated production, of specialized but interdependent labor markets, rapid privatization of state assets, and the inextricable linkage of technology across conventional national borders. It therefore reconceptualizes not only the importance of traditional factor endowmentsland, labor, and capitalin the context of new knowledge-based industries, but also a variety of social and economic relations. It is labeled the new economy.19 Normatively and prescriptively, proponents of this perspective take an optimistic view. The expansion of international economic activity relative to state-based activity offers the prospect for efficiency gains through specialization. Arguing that a rising tide lifts all ships, the proponents discount negative redistributive consequences. Using a utilitarian calculus, they assert that costs to displaced individuals are offset by overall welfare gains. Markets are the central authoritative mechanisms, with corporations developing strategies designed to transcend borders and institutionalize themselves locally, thus enhancing their flexibility and establishing geographically dispersed networks. At its worst, though, this thesis can descend into a crude technological determinism. Critics castigate the assertion of inevitability that lies behind the transference of authority to private nonstate actors and the market mechanism. It should be recognized that states have been significant contributors through their own regulatory reforms which some now fear have led to a growing ungovernability of global financial markets. Yet a paradox exists at the heart of this approach. For while it decries the significance of states as actors, proclaiming the renewed import of the market as an authoritative mechanism in the allocation of resources, it attaches increasing importance to the role of both international financial institutions and corporations (generally multinational or transnational) as institutional actors. In that sense, it sustains a form of institutionalism

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despite the apparent shift in authority from states to markets. For it is the substitution of who the dominant actors are, rather than their characteristics, that shifts. Proponents of globalization (descriptively and normatively) talk of states in retreat as if they are living, coherent, organic beings. They certainly talk of corporations as organic and often as coherent hierarchies (like states). The autonomy these nonstate actors enjoy is from states. A relational transfer of authority is thus seemingly under way. Such characterizations are most evident in the case of IFIs such as the International Monetary Fund (IMF). Policymakers, the press, and scholars commonly depict the IMF as coherent and autonomous. Furthermore, they attribute to it both the motive and the capacity to implement policy notably in the context of economic crises when the pressures of market demands, the desires of state actors, and the limitations of time should most heavily challenge such assumptions. Under globalization, states may well be in retreat but it is the institutions as actors approach that endures, whether analyzing public or private sector actors, and seems suited to the role in the context of liberalization. This point is amply illustrated by the negotiations surrounding the Asian economic crisis. In each episode, negotiations took place between IMF officials and a small elite of government officials regarded as relatively autonomous, coherent, and effectively able to implement policy by their IFI counterparts. Just as the state was in retreat in each country, under pressure from both domestic and external forces, it was treated as an actor in an institutional sense by the very organization thatcritics claimwas seeking to undermine its authority.20
CONCLUSION

Policy makes politics was the adage prescribed by Theodore Lowi in his article over three decades ago. I might amend his formulation to suggest that politics makes analysis in application to the study of new institutionalism. Rather than invoke the claim that any one position can generate a general theory of politics, I contend that each of the four variants of institutionalism provides keen insights into a particular slice of politics. It is no peculiarity that proponents of historical institutionalism tend to study redistributive issues. Theda Skocpol provides insights that are, perhaps, best suited to that realm. Likewise, while Terry Moe may believe that the new institutionalist approach may be extended as effectively to the study of pork barrel as to regulation, in an increasingly porous economy (and polity) that may not be the case. Regulation is increasingly becoming negotiated between states and not within them, with different (and perhaps more effective) veto players and a growing number of commons problems. The four different policy areas I have outlined become increasingly more subject to global forces as they move, respectively, from

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redistribution to regulation, democratization, and liberalization. The effect of such a transition is to introduce different actors with contrasting capacities, changing the nature and dynamics of politics. This, I suggest, influences the dynamics of politicsand the explanatory power of each approach to new institutionalism. In this article I fully concede that I have only just begun to scratch the surface of an argument that needs both theoretical embroidery and empirical substantiation. It is a first step, provocative in intent and heuristic in design. But perhaps, as an attempt to bridge different approaches rather than subsuming one within another, it may have served a useful purpose. Acknowledgments I am grateful to Barry Ames, Peter Katzenstein, Mark Peterson, and Bert Rockman for comments. Notes
1. 2. 3. For a general discussion of the nature and purpose of general and contingent theories see, e.g., George and Smoke, 1974. Skocpol employs such an approach in her Protecting Soldiers and Mothers (1992). As Peters points out, fine illustrative works reflecting this approach are to be found in Douglas Ashfords various analyses of British and French welfare systems. See Ashford and Kelley 1986; Ashford 1988. For a comparable example drawn from the US see Weir, Orloff and Skocpol 1988. The list of notable works is long for both the new institutional economics and its application to political science. Among economists, the works of Oliver Williamson and Douglass North are some of the most influential. See Williamsons Markets and Hierarchies (1975) and The Economic Institutions of Capitalism (1985). See also North, Institutions, Institutional Change, and Economic Performance (1990). Terry Moes work is among the most notable using this approach in American politics (for good examples see Moe 1984; 1987; 1990). For a discussion of presidents as institutional actors see Moe 1993, esp. p. 338. For an extensive discussion of this point, see Moravcsik 1998. See, e.g., Meyer and Rowan 1997; Meyer and Scott 1983; see also DiMaggio and Powell 1991. For an application of this kind of an approach see Finnemore 1996. March and Olsen 1984, 741. For another example of important formative work on this subject, see Simon 1982. For a discussion of this point, see Higgott and Reich 1998. For an example of such an approach, see Nordlinger 1981. This includes a rich literature. But the assumptions of the unitary state under Realism are succinctly described by Graham T. Allison in The Essence of Decision: Explaining the Cuban Missile Crisis (1971). For example, Susan Strange (1970) was justly critical of the determinist nature of much economistic analysis. In subsequent work, she forgot her own admonition of twenty-six years earlier. As she then said, markets win, governments lose (see Strange 1996, 5). On the United States, see Petersen 1995.

4.

5. 6. 7. 8. 9. 10. 11.

12.

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13. 14.

15. 16. 17. 18.

19. 20.

For a discussion of the causes of the destruction of the former Yugoslavia, see Silber and Little 1995. Alternatively, regionalism may be considered as complementary to the spread of globalization, a stepping stone in the process of enlargement (Lawrence 1996, esp. p. 20). The Organization for Economic Cooperation and Development (OECD) contends that regionalism and globalization are mutually reinforcing phenomenona (OECD 1995, 14). For a discussion of this issue, see Ruiz-Cabaas 1998 and Chabat 1999. For a discussion, see Richard Higgott, 1986. For a discussion of this point, see Dresser 1996; Fox and Hernandez 1997; and Millett 1994. Carnoy, Castells and Cohen (1993, 45) use the term in a generic sense to refer to investment, production, management, markets, labor, information, and technology now organized across national borders. See also Castells 1991. For a full discussion of the term, see Herzenberg, Alic and Wial 1998. See also Drucker 1986, and 1997; Krugman 1997; Stiroh 1999; Weber 1997. For just one example of such an analysis, see Neiss 1998.

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