What are institutions?
In line with Hodgson’s attempt to promote greater conceptual clarity, I define institutions simply as rules. As a common and often-used term, this word hardly needs further definition or clarification. I will only add that rules can be of different kinds: prescriptive (“one must”), prohibitive (“one is not allowed”), encouraging (“one should”), discouraging (“one had better not”), and enabling (“one is allowed to”), among other. A common element of rules is that they aim to influence, guide or channel people’s behaviour and practices. Rules vary enormously in the number of people who accept them or to whom they apply. Rules can be created by and for an individual, a family or any other group, or they can take the form of a formal law that applies to all citizens of a country.
Contrary to North’s view that organisations should be distinguished from institutions,[3] but in line with Hodgson’s argument,[4] I consider organisations to be particular kinds of institutions. Organisations are bundles of rules created for particular aims or purposes and are commonly constituted to mobilise a group of people for those aims or purposes. They include, among others, constitutive rules that specify the goals, objectives, or functions of the organisation, determine membership, establish formal positions, allocate powers and responsibilities, and prescribe or guide the interactions between members of the organisation as well as with the outside world. However, not all rules are constitutive elements of an organisation. There are rules (formal and informal) that do not lay the foundations of organisations but nonetheless guide or influence human behaviour and practices, such as traffic rules, pollution standards, social etiquette, customs, and dress codes, among many others. They may be policed or enforced not only by organisations but also by social pressure. Hence, all organisations are institutions (rules), but not all institutions (rules) are organisations.
Distinguishing between institutions and actors
Although organisations are often referred to as actors, it is essential to recognise that the decisions and actions of organisations are made by “real people”. Organisations, being bundles of rules, are social constructs, not humans. Strictly speaking, they only exist in the minds of people who treat them as if they are part of physical reality.[5] Organisations may become visible through the paperwork by which they have been created, their logos, the buildings where they are located, and their websites, but none of these act or make decisions. Agency is exercised by individuals or groups of individuals (“real people”), also within organisations. Distinguishing between organisations and agency is not just nitpicking but crucial if we want to explain the decisions and actions of organisations. Treating organisations as (unitary) actors runs the risk of ignoring the important role and influence of individuals and the differences in views, interests, and power between people within an organisation. Thus, while it is probably inevitable, given common parlance, to avoid referring to organisations as actors (for instance, a corporation or a government), we need to be careful not to treat (reify) them as individuals or unitary entities, let alone rational actors. The decisions and actions of organisations are shaped by individuals and groups who can have different and even conflicting values, views, and interests, but who make choices within the framework of the rules of an organisation. Only to the extent that those decisions and actions result from the involvement of more than one individual should we refer to them as collective agency.
What are political institutions?
Logically flowing from this definition of institutions, political institutions are formal and non-formal rules, including organisations, that regulate, guide or channel political behaviour, practices, and processes or, in general terms, politics. Distinguishing political institutions from other institutions requires clarification of what politics is. Again, we are spoilt for choice for definitions of politics in the literature. Lasswell’s definition, in my view, is still a good start: politics involves processes that affect “who gets what, when and how”.[6] It must be emphasised that the “what” in this definition does not refer only to material goods (including income and wealth), but to potentially anything, including rights, authority (legitimate power), opportunities to participate in collective decisions, access to information, the freedom of expression, a fair trial when accused of something, protection against oppression, abuse and torture, education and opportunities for self-development, a safe, clean (unpolluted) and pleasant environment, and freedom from exploitation, poverty, and hunger. The wide-ranging nature of what political institutions can and do allocate indicates their crucial importance to individuals and societies. Political institutions may not be the only determinants of what everybody gets, but they (potentially) create or influence the ways and processes by which many, if not most, allocations are made.
Political institutions also comprise rules (including organisations) that regulate how formal power is allocated and how these institutions can be changed. These can be referred to as constitutive political institutions. They comprise written and unwritten political constitutions, conventions, administrative laws, and jurisprudence. They allocate power and regularise its exercise by attaching it to formal and informal rules, positions and/or organisations (political bodies). They may formally grant power to kings, dictators, governments, parliaments, courts, and any other bodies to play a role in deciding who gets what, when and how. They also encompass rules by which constitutions themselves can be changed.
Who creates political institutions?
Like all institutions, political institutions are socially constructed. Some, like absolute monarchies, were based on divine rights or derived their legitimacy from the fact that they had existed for a long time. But they are always created or amended by people. However, that does not mean, as social contract theory suggests, that they are the product of democratic deliberation between all members of groups or societies. A more plausible explanation for how political institutions have been (and still are) created and changed is that they are shaped by the most powerful individuals within groups or societies. Historically, democracy has been a rare phenomenon, particularly when it comes to making the fundamental rules that affect who gets what, when, and how. In most cases, those who already have (accumulated) a lot of power, especially power of various kinds, also define the political rules.
The crucial importance of institutions
The power attached to institutions makes them crucial for those who want to change human behaviour and practices, for instance, to protect the environment. This applies all the more so to constitutive political institutions, as these assign the power to issue and change rules that are binding on all people of a society (including by legislation). Occupying the seats of institutional power can hold the key to changing constitutive political institutions, thereby reassigning the power associated with these institutions. Not surprisingly, given the crucial importance of political institutions, proposals for constitutive political-institutional change often provoke fierce battles and resistance involving those who stand to gain or lose the most from these changes, making such change (very) difficult.
These observations should clarify the importance of political institutions to all people. They have direct implications for who gets what, when, and how, and thus for the extent to which people can meet their needs and those of their families and live in poverty or relative abundance. They can make the difference between life and death for individuals as well as for large numbers of people. This is most apparent when we look at the role of states, the world’s most important political institutions.
References
[1] Peters, B. Guy (1996), “Political Institutions, Old and New”, in R. E. Goodin and H.-D. Klingemann (eds.), A New Handbook of Political Science. New York: Oxford University Press, 205-220.
[2] Hodgson, Geoffrey M. (2006), “What Are Institutions?”, Journal of Economic Issues, Vol.XL, No.1, 1-25.
[3] North, Douglass C. (1991), “Institutions”, The Journal of Economic Perspectives, Vol . 5, No.1, 97-112.
[4] Hodgson, Geoffrey M. (2006), “What Are Institutions?”.
[5] Harari gives the example of Peugeot to illustrate this point. Harari, Yuval N. (2011, e-book ed.), Sapiens: A Brief History of Humankind. London: Vintage, 31-33.
[6] Lasswell, Harold D. (1936), Politics: Who Gets What, When, How. New York, London: Whittlesey house, McGraw-Hill book company.