Historical Institutionalism and the Theory of Goal Oriented

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Historical Institutionalism and the Theory of Goal. Oriented Action: Towards a Behavioural Foundation for

Historical Institutionalism and the Theory of Goal. Oriented Action: Towards a Behavioural Foundation for Institutionalism Gerhard Schnyder, King’s College London gerhard. schnyder@kcl. ac. uk Julien Etienne, London School of Economics 4 th Constructed Complexities Workshop, Barnett Hill, Guilford, 26 -27 November 2014

Hall & Taylor 1996/1997: ‘Three New Institutionalisms’ (in political science) Sociological-, Rational Choice-, Historical

Hall & Taylor 1996/1997: ‘Three New Institutionalisms’ (in political science) Sociological-, Rational Choice-, Historical Institutionalism Move away from more structuralist, deterministic brands of institutionalism Multiple claims of “actor-centeredness” in HI (e. g. Scharpf 1997, Jackson 2010: Actor-centred institutionalism) Reflexivity: Institutional change as bottom up process caused by changes in actors’ behaviour E. g. Streeck and Thelen (2005: 18) “fundamental change (…) ensues when a multitude of actors switch from one logic of action to another” Liberalisation as shift towards more opportunism, crowding out of normative behaviour (Streeck 2009) *Historical institutionalism and agency

 Yet little progress in terms of a theory of agency - Höpner (2007:

Yet little progress in terms of a theory of agency - Höpner (2007: 9): HI scholars either tend to SI or to RCI; no ‘institutional theory of its own’ - Combination of (incompatible) theories Steinmo and Thelen (1992: 9) stressed that: “[H]istorical institutionalists would not have trouble with the rational choice idea that political actors are acting strategically to achieve their ends. But clearly it is not very useful simply to leave it at that. We need a historically based analysis to tell us what they are trying to maximize and why they emphasize certain goals over others. ” (emphasis added) *Historical institutionalism and agency

Goal framing theory (GFT) (Sigwart Lindenberg) A theory of goal-oriented action Anticipating actors Limited

Goal framing theory (GFT) (Sigwart Lindenberg) A theory of goal-oriented action Anticipating actors Limited capacities Limited, selective attention: cannot be attentive to all options or to all aspects of options, nor achieve a sophisticated aggregation ≠ Peter Hall (2005: 134): Actors aggregate “the net costs and benefits of the multiple effects of the action (…) and (…) the interests potentially affected by the action” Multiple goals, multiple logics of action Gain goal / logic of consequences Normative goal / logic of appropriateness Hedonic goal / emotions Actors privilege certain goals over others depending on context: dominant goal is the “frame” Goals are strengthened/weakened through ‘signalling’ e. g. Wall Street Game vs. Community Game experiment *GFT as a foundation for agency in HI

 • - - • Three capitalist varieties (Höpner 2007): liberal (relatively unembedded) coordinated

• - - • Three capitalist varieties (Höpner 2007): liberal (relatively unembedded) coordinated (Williamsonian institutions – bottom up, voluntaristic, long-term self-interest) organized (Durkheimian institutions – top-down, collectively enforced, beyond self-interest) Three corresponding logics of action: – – – • opportunism / no solidarity (Streeck 2009) enlightened self-interest / weak solidarity norm orientation / strong solidarity Each defined as a different « mix» of gain- and normative goals The link with varieties of capitalism

 • institution against their immediate and long-term material interests Literature suggests this is

• institution against their immediate and long-term material interests Literature suggests this is unlikely: – – Institutions of organisation are either the product of power relations/ labour power resources (e. g. Korpi 1982); or of a strong state (e. g. Streeck & Yamamura 2001) external constraint Shift of logic of action from ‘normative behaviour’ to ‘opportunism’ acknowledge as source of liberalisation …but ‘non-liberalisation’ as a shift from opportunism to normative self-restraint…not conceivable in HI A puzzle: bottom-up non-liberal change

Vinkulierung – bound shares: Can only be transferred with company’s consent; foreigners generally excluded;

Vinkulierung – bound shares: Can only be transferred with company’s consent; foreigners generally excluded; yet, banks help foreigners getting around the limitations Tensions between industrial companies and banks Gentlemen Agreement of 1961 by Swiss Bankers Association: Banks: - Refrain from selling stocks to unwanted shareholders - Check that buyer fulfills company’s criteria Companies: - Keep banks informed about restriction criteria Arrangement of self-restraint: Swiss banks ‘do the right thing’ not what is in their immediate material interest Strong solidarity / norm orientation ‘institution of organisation’ (goal outside of profit function) The Case: Selling Swiss Shares to Foreign Investors 8

Material interests v. moral “For obvious reasons, the banks are in the first place

Material interests v. moral “For obvious reasons, the banks are in the first place interested in the free circulation of securities. […] The banks hope that the industrial companies will henceforth abstain from limiting the transferability of obligation registered shares. ” “Our Board of Directors […] considers that it is – despite the above [reservations] – the Swiss banks’ duty to support the industry in its efforts when it is in the superior national interest” (GA 1961; our translation) 9

1. ‘Shadow of hierarchy’ argument Private actors want to avoid state intervention at any

1. ‘Shadow of hierarchy’ argument Private actors want to avoid state intervention at any price Yet: - Industrial companies too have an interest in avoiding state intervention - State intervention not a ‘serious threat’ for business in CH - Why would GA persist despite legal reform? 2. ‘Long-term self-interest’ Banks see long-term risk with foreign ownership (Interhandel case) Yet: - Banks do not use Vinkulierung before 1970 s - Why would banks’ perceived self-interest change before and after 1961? (selling stock to foreigners before 1961, renouncing to do so afterwards) Explaining strong solidarity 1 10

3. Collective shift in logic of action from opportunism to norm orientation: - Argumentation

3. Collective shift in logic of action from opportunism to norm orientation: - Argumentation in GA and debates around it: ‘bank’s duty’ ‘superior national interest’ normative argumentation - Why would bankers care about ‘norms’ (more than about immediate material gain)? GOAL SIGNALLING Dormant normative dispositions among Swiss business elite: - Economic nationalism & political neutrality - Ideology of vulnerability (small states in world markets; Katzenstein 1985) - Contextual: Cold war, immigration (CH’s first anti immigration party formed in 1961) - NB: Bankers are officers in militia army ‘Activated’ through normative signalling by certain actors (some with material interests in mind Geigy AG). Explaining strong solidarity 2 11

Conclusion HI increasingly ‘actor-centred’, but a proper theory of action is lacking Fundamental institutional

Conclusion HI increasingly ‘actor-centred’, but a proper theory of action is lacking Fundamental institutional change as collective shift in ‘logics of action’ Elements of GFT and goal signalling to understand logics of action and shifts therein Swiss example: puzzling case of spontaneous emergence of ‘institution of organisation’ (Parsonsian institution – voluntaristic) Our framework allows us to make sense of it: - Liberalisation : = crowding out of norms (Streeck 2009) - ‘Embedding’ : = activation of normative dispositions 12

http: //onlinelibrary. wiley. com/doi/10. 1111/spsr. 12082/abstract Related paper published in Swiss Political Science Review

http: //onlinelibrary. wiley. com/doi/10. 1111/spsr. 12082/abstract Related paper published in Swiss Political Science Review