Down the Wrong Path : Path Dependence , Increasing Returns , and Historical

Does the concept of path dependence provide a plausible theoretical framework for historical institutionalism? Practitioners of historical institutionalism have recently sought to formalize path dependence, because otherwise ‘path dependence’ would merely signify or advance the unsurprising claim that history matters. Formalization links production of an institutional path through a critical juncture with contingent outcomes to the self-reproduction of that path through increasing returns. However this formalization logically conflicts with the causal logics historical institutionalists advance. Path dependence operates at a system level, while historical institutionalism operates at a unit level. Casting path dependence in less formal terms as an approach vitiates the utility of path dependence by housing incommensurable mechanisms under one conceptual roof. It would be better to shift attention back to actual mechanisms for both change and stasis. Down the Wrong Path – p. 1 Down the Wrong Path: Path Dependence, Increasing Returns, and Historical Institutionalism Introduction Two interesting issues intersect at the heart of current comparative historical and institutional analysis. While everyone agrees that history matters, no one agrees how history matters. Similarly, while everyone agrees that institutions matter and sometimes exhibit puzzling inefficiencies, no one agrees quite how institutions matter or why those inefficiencies persist. One currently popular effort to sort out these issues is an effort to formalize “path dependence” (PD hereafter) arguments to explain the self-reinforcing persistence of institutional structures. Three related features of what I will call the Formal PD argument account for its popularity. First, a formal and precise definition for PD prevents loosely defined PD from collapsing into unsystematic arguments that the past affects the future (Mahoney 2000, 507508, 510; 2001a, 4 and fn. 2). PD’s second attraction flows precisely from this apparent regularization and grounding of the processes to which historical institutionalism attends. Formal PD appears to provide one master concept for the behaviors and outcomes historical institutionalists study (Hall 2003, xx). Because historical institutionalism studies mid-range phenomena, it is theoretically eclectic, as a decade of assessments of the approach have noted (Steinmo, Thelen and Longstreth, 1992; Hall and Taylor 1996; Pierson and Skocpol 2000). Formal PD appears to let historical institutionalists generate a range of propositions about institutional (in)stability, and, equally important, to unify otherwise disparate causal mechanisms under one theoretical construct. Formal PD identifies a specific sequence of events in which the mechanisms that produce a given set of institutions are replaced by different mechanisms that reproduce those institutions. Historical institutionalists find this argument congenial because formal PD asserts that institutional reproduction is a function of the ways that those successor institutional mechanisms shape actors’ interests. Institutions are thus logically prior to individual actors. Without master concepts like this, historical institutionalism would otherwise largely be an empirical intellectual enterprise. It would thus remain vulnerable to criticism from rational choice theorists, who have constructed a substantial set of theoretical claims based on the proposition that individuals and their interests are logically prior to institutions. Third, formalized PD is attractive because it permits a retrospective assimilation of what proponents of formal PD see as early – and often unselfconscious – efforts at PD analyses. Formal PD thus allows current historical institutionalist accounts to find in those older literatures mechanisms that are similar to the ones on which historical institutionalism focuses. This lends credibility both to the idea of a formal PD and to historical institutionalism. Moreover, despite the usual academic hedging, formalizers are wont to make expansive claims that PD is a pervasive phenomenon. Thus, Pierson (2000a, 251, and 2000b, 73) argues that “path dependence arguments are.appropriate in substantial areas of political life,” and are “extremely widespread,” while Mahoney (2001b, 111) notes that “recent methodological writings.have emphasized the importance of path dependence for political and social analysis,” citing himself (2000), Pierson (2000a), and Thelen (1999). However, formalized PD does not provide a stable base for historical institutionalism. Formalizing PD creates two problems. First, formal PD must select causal mechanisms that are inconsistent with historical institutionalism. Formalizing PD emphasizes mechanisms that make institutions dependent variables, rather than causally prior independent variables. Second, those mechanisms are heterogeneous: increasing returns, decreasing returns and constant returns mechanisms can all generate PD’s characteristic sequence of events, namely a critical juncture followed by a period of stasis. This is because PD’s signature event sequence – outcomes produced by one causal mechanism yet sustained by another – is logically distinct from the mechanisms themselves. But a simple sequence of events is not a mechanism per se. Blurring the difference between events and mechanisms vitiates the conceptual utility of PD. Perhaps there is an ideal stopping point on the road from PD as a synonym for ‘history matters’ to a fully formal PD? Lately, both Thelen and Pierson seem to suggest this strategy. Thelen (2003, 209, 212-213) argues for relaxing formal PD’s analytic emphasis on different mechanisms for institutional generation and reproduction, and for reducing its assertions of contingency during institutional generation and determinacy during reproduction. Instead she emphasizes a search for specific mechanisms. At two public fora in 2003, Pierson (2003b) similarly argued that PD is an ‘approach’ and not a theory. While this move leaves institutions prior to actors, it still has negative consequences. First, if PD ever any analytic utility – and even I believe that it does – blurring the distinction between path production and path reproduction eliminates that utility. Blurring this distinction simply highlights the degree to which PD is a re -labeling of the older, 1 However Mahoney also sometimes says that PD is relatively rare (2000, 508), as do a number of other, less frequently cited authors, like Goldstone (1998) and Aminzade (1992). This inconsistency is precisely the problem with PD as an ‘approach. ’ Down the Wrong Path – p. 2 diverse mechanisms for social and political change that Thelen re-emphasizes. Why not simply go straight to the extant mechanisms themselves and just dump PD? Second, Thelen’s move risks blurring the distinction between institutions and organizations, because while organizations can be converted to new uses, institutions per se cannot. Third, what distinguishes an approach from a theory (Ostrom 1991, 243) is that approaches specify general mechanisms, while theories elucidate specific mechanisms. Thus she notes that a rational choice approach encompasses work based on methodological individualism, individual level comparisons of relative cost, and strategic action. These mechanisms are mutually consistent. In contrast, while PD as an approach could in principle point to a whole collection of self-reinforcing mechanisms, many of these mechanisms are incommensurable. The current move to formalize PD is thus problematic. It contains a large antinomy: either it must incoherently house incommensurable mechanisms under one theoretical roof, or, by trying to present a logically coherent set of mechanisms, it must select mechanisms that are internally inconsistent with historical institutionalism. This article thus has four sections. The first section shows why the effort to formalize PD is a good, if flawed effort, and why we should care about the flaws in this effort. The second section lays out a fully formal version of PD, based on contingent institutional origins, increasing returns, and punctuated equilibrium. The third section discusses the problems with each of these features, showing that formal PD groups incommensurable mechanisms together. The conclusion discusses the implications of this dismissal of formal PD. It emphasizes that the purpose of this article is not to argue that all work that has retrospectively or self-consciously been labeled “path dependent” is wrong, that there are no real world instances of path dependence, or that in no instances are institutions causally prior. Rather, I argue that collecting these disparate studies and mechanisms under a common label obscures the actual causal mechanisms present in each study. Path dependence in its current usage thus obscures more than it reveals. Formalization and the difference between events and mechanisms Normal science proceeds in part by aggregating what were thought to be disparate phenomena and causal mechanisms under one master mechanism. If an informal version of PD were able to aggregate a set of compatible causal mechanisms under one conceptual label, this would be a positive step. It would remove any need to move to the more formal version of PD presented later in this paper. An informal version of PD might focus on the specific sequence of events that Arthur Stinchcombe (1968) first elaborated: a historical cause that creates a process (or path) whose self-replication has a different underlying cause. The utility of both loose and formal PD is precisely this differentiation between mechanisms of production and mechanisms of reproduction. But without specific mechanisms, this distinction only identifies a sequence of events. Turning this description into a causal argument requires specific mechanisms. Stinchcombe (1968, 9-10), echoing Max Weber, provided one such mechanism in his original argument, noting tha