Institutional Diversity and Political Economy This page intentionally left blank Institutional Diversity and Political Economy The Ostroms and Beyond z PAUL DRAGOS ALIGICA 1 1 Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offi ces in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trademark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016 © Oxford University Press 2014 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-in-Publication Data Aligica, Paul Dragos Institutional diversity and political economy : the Ostroms and beyond / Paul Dragos Aligica. pages cm Includes bibliographical references and index. ISBN 978–0–19–984390–9 (alk. paper) 1. Institutional economics. 2. Social institutions. 3. Public institutions. 4. Ostrom, Elinor. I. Title. HB99.5.A47 2013 306.3—dc23 2013011721 1 3 5 7 9 8 6 4 2 Printed in the United States of America on acid-free paper Contents Acknowledgments vii Introduction ix 1. Institutional Diversity, Heterogeneity, and Institutional Theory 1 2. Institutionalism and Polycentricity 30 3. Institutional Mapping and the Institutional Analysis and Development Framework 71 4. Institutional Resilience and Institutional Theory 101 5. Institutional Design, Ideas, and Predictability 134 6. Institutionalism and Pragmatism 166 Conclusion 200 References 205 Index 227 This page intentionally left blank Acknowledgments this project owes immensely to the advice and encouragement I have received over the years from my professors at Indiana University Bloomington and from my colleagues at George Mason University. Needless to say, Vincent and Elinor Ostrom top this list. I am deeply indebted to Brian Hooks, Claire Morgan, Pete Boettke, and Tyler Cowen and their eff orts in creating a hospita- ble and productive setting at the Mercatus Center at George Mason University for an entire research program, to which this book is just a small contribution. Pete Boettke, the Director of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at the Mercatus Center, has inspired and incessantly fuels this research program with new ideas. I acknowledge with gratitude his multifaceted infl uence. Special thanks to Claire Morgan for her belief in this project, which in fact started as a result of a conversation with her. The book project had the privilege of being the benefi ciary of a book manuscript review conference in August 2012, at George Mason University, organized and sponsored by the Mercatus Center. I am profoundly grateful to the participants: Jack Goldstone, Barbara Allen, William Blomquist, Peter Boettke, Roberta Herzberg, Marco Janssen, James Johnson, Jack Knight, Mike McGinnis, Margaret Polski, Hilton Root, Filippo Sabetti, Amy Stabler, and Richard Wagner. My gratitude also goes to Claire Morgan and Erica Christensen for coordination and organizing the event. Individual chapters of the book or ideas and arguments expressed in sections and fragments of various chap- ters were read and most helpfully commented on by Nicholas Rescher, Xavier Basurto, Bill Blomquist, Peter DeLeon, Mike McGinnis, Ron Oakerson, Roger B. Parks, Edella Schlager, Karol Soltan, Bruno Grancelli, Janos Matyas Kovacs, Eileen Norcross, Christopher Weible, and Bruno Dallago. Their feedback and help is gratefully acknowledged. An initial version of chapter 1 was discussed at the 2011 American Political Science Association Annual Meeting, Seattle, and at the 2011 Southern Economic Association Annual Meeting, Washington, DC. The comments viii Acknowledgments received on these occasions from Jessica Green, David Victor, Liliana Andonova, Robert Keohane, Emily Chamlee-Whright, Jayme Lemke, Peter Calcagno, and Virgil Storr are hereby acknowledged with gratitude. Chapter 2 includes material published in “Polycentricity: From Polanyi to Ostrom and Beyond,” coauthored with Vlad Tarko for Governance: An International Journal of Policy, Administration, and Institutions , vol. 25, March 2012. I thank John Wiley & Sons for permission to reprint this material. Two sections of chapter 3 were part of “Institutional and Stakeholder Mapping: Frameworks for Policy Analysis and Institutional Change,” P ublic Organization Review , vol. 6, June 2006. I thank Springer for permission to reprint this material. The help of my research assistants, Vlad Tarko (assisting the work in chapter  4) and Sathya Mathavan (editing the bibliography) is gratefully acknowledged. A diff erent sort of debt is owed to Terry Vaughn, Cathryn Vaulman and Bharathy Surya Prakash. They supported the project with pro- fessionalism, easing the progress of the book from submission to the fi nal stage. I remain responsible for any errors or omissions. Last but not least, I would like to express my deepest gratitude to Lin Ostrom. In the diffi cult month of May 2012, she found the resources to read the manuscript with astonishing care, off ering invaluable feedback with a level of attention and intensity that reached the point of fi xing minor typos. As an alumnus and affi liate of the Ostroms’ Workshop in Political Theory and Policy Analysis at Indiana University in Bloomington, I was familiar with the amazing dedica- tion Lin and Vincent always had for their students and collaborators. Yet I was totally unprepared for this last gift, received in such tragic moments. I dedicate this book to the memory of Elinor and Vincent Ostrom. Introduction one of the most profound but not always fully understood challenges to modern political economy and institutional theory is the diversity of institu- tional forms that give substance and structure to political and economic life. Diversity shouldn’t be a surprise. Institutional arrangements are intricate clus- ters of rules and human interactions, shaped in large measure by the variety of situations of social life. The mere diversity of situations is enough to create a wide variety of possible arrangements. If we add to all that the variety of indi- viduals’ possible preferences, beliefs, interpretations, and strategies, all lead- ing to possible new rules and situations, we start to grasp the huge range of potential combinations in their evolving dynamism. All of the above suggest the measure in which institutional diversity is indeed messy and complex. It doesn’t lend itself easily to analysis. When it comes to institutions, “carving nature at its joints” and arranging it in classes is not a simple and straightfor- ward process. And yet, more often than not, in our institutional theories and in our designs we tend to brush off this profound challenge. More often than not, homogeneity is assumed or expected, while heterogeneity is considered as marginal, unessential, of limited relevance. The limits of this strategy may not be so obvious as long as one is operating mainly as a social scientist, fol- lowing the notion that social scientists produce generalizations and test them, while the burden of applying the insights thus gained to practical problems and social dilemmas is the business of “practitioners.” But what happens if, instead of the typical approach, which gives a position of preeminence to theoretical generalizations and considers the applied level an extension of peripheral interest, we start by focusing on tangible, applied problems and puzzles, and we consider institutional theory in the light of its instrumental value to contextualized analysis and institutional design? Elinor and Vincent Ostrom’s lifework is a case study giving many clues and some possible answers to this question. Their approach is well known for aiming not for grand generalizations but for understanding the nature and