The New Institutionalism
Political Science 317
Spring 2006
Professor Geoffrey Brennan
Professor Michael Munger
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Monday 10:05 am – 12:35 pm Languages
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INTRODUCTION:
This course is a survey of recent developments
in transactions cost and collective action theory, especially as these
techniques have been applied to the study of classic questions in political
science. This is not an economics course, though many of the readings in
the first portion of the course derive from the economics literature.
GRADES: Grades derive from the following...
1. A paper on a topic to be decided in consultation with the instructors. Possibilities include an analysis of the strengths and weaknesses of a body of research, identification of a research program that would advance the state of literature in some area, or a report on some related supplementary reading that goes beyond class materials. The due date for the paper is not later than the end of exams. No incompletes will be awarded, except in documented medical emergencies. A rough draft is due March 21, right after spring break, so you should begin consulting with us soon about topics. Paper: 40% of Grade
2. A final designed to help you prepare for prelims. This will be administered during the exam period for this class, 7-10 pm, Wednesday, May 3. We will pass out a list of ten possible questions right after spring break. The exam will take place in the class room, and you will be asked to write answers in a blue book to the three questions that will be selected randomly. Final: 40% of Grade
3. Participation in class discussions of assigned readings. You are expected to come to class prepared to discuss the readings in depth, and to answer questions posed by the instructors. Participation: 20% of Grade
THEMES:
I.
Institutions as exogenously defined
You may find it useful to think of institutions in the context of what is known
as Plott's fundamental equation:
(Preferences)x (Institutions) = (Outcomes)
In the simplest conception, the causal arrows are going one way, with preferences and institutions both being taken as fixed and exogenous. The “comparative statics” of this approach are then obvious: change preferences, or change institutions, holding the other parameter fixed, and see what happens to outcomes. We will consider at least the possibility of a feedback loop from outcomes to both preferences and institutions, but not that much is known about this phenomenon. As for the nonindependence between the parameters (preferences causing institutions, and institutions forming preferences) we will say more, but frankly it will still seem rather unsatisfactory.
II.
Definitions: Just what are "institutions"?
Douglass North, in his seminal work Institutions, Institutional Change, and
Economic Performance, defined institutions as "the humanly devised
constraints that shape human interaction." We will want to think about
what this leaves out, and what it includes. In particular, North distinguishes
between “institutions” and “organizations.” The latter
he defines as the endogenous, optimizing responses of humans to their
institutional environment.
III.
Institutions as endogenous: What are the goals of institutional choice?
The study of is an invitation to raise questions about the design of
institutions. For example, as The Federalist No. 1 points out, the
American constitution is one of the first systems of government to result from
"reflection and choice" rather than "accident and
force." Normally, the design of institutions is justified in
terms of broad public purposes, such as preserving liberty and avoiding
"the mischiefs of faction." But other purposes may
be disguised by the language of the general welfare. For example,
institutions may be designed to enhance the power of a particular group of
people. In fact, this was the contention of Charles Beard about the
framers, as expressed in his Economic Interpretation of the Constitution of
the United States.
IV.
Paradigms.
The field of institutions is in an unusual period of change and growth, and
heightened consciousness of theory. One set of perspectives is sometimes
called the new institutionalism. To some people, such as Kenneth
Shepsle, this means an effort to apply economic reasoning and rational choice
models to the analysis of institutions. To others, such as James
March, the new institutionalism is a much more diffuse, but also highly
theoretical and abstract subject. Another set of perspectives on institutions
is called American political development. This involves sensitivity
to historical change, and to detailed description. Your instructors
are not agnostic, but an attempt will be made to consider a variety of
alternatives and present them fairly. You are encouraged to raise
fundamental questions.
V.
Expectations about readings for this course.
You are expected to read all of the books and articles listed on
this syllabus, and do it before the class for which they are assigned.
Most of the reading assignments for this course are in books you are expected
to purchase, on reserve, or are available electronically by clicking on the
appropriate part of the syllabus.
TEXTS:
The following books are on sale at the Book Store:
1. Brennan,
Geoffrey, and Loren Lomasky. 1993. Democracy and Decision: The Pure Theory of Electoral Preference.
2. Brennan, Geoffrey, and Philip Pettit. 2004. The
Economy of Esteem
3. Buchanan, James, and Gordon Tullock. 1962. The
Calculus of Consent: Logical Foundations of Constitutional Democracy.
4. Coase,
Ronald H. 1990. The Firm, The Market, and The Law.
5.
6. Knight, Jack.
1992. Institutions and Social Conflict.
7. North, Douglass.
1990. Institutions, Institutional Change, and Economic Performance.
READING SCHEDULE:
Week 1 : Background—The Problem of Models and
“Rationality”
1. A.A. Alchian, “Uncertainty, Evolution, and Economic Theory,” Journal of Political Economy (1950). (Link)
2. A. Denzau and D. North, "Shared Mental Models: Ideologies and Institutions," Kyklos 47(1) (1994), 3-31 (Link)
3. C. Sartorius, “The Relevance of the Group for the Evolution of Social Norms and Values,” Constitutional Political Economy, 13 (2002):149-172. (Link)
4. G. Hodgson, “The Evolution of Institutions: An Agenda for Future Theoretical Research,” Constitutional Political Economy, 13 (2002):111-128 (Link)
Week 2 (January 31) Institutions and
“Predictable Behavior”
Reading:
1. F. Hayek, “The Use of Knowledge in Society,” American Economic Review, 1945. (Link)
2. R. Heiner, “The Origin of Predictable Behavior,” American Economic Review, 1983. (Link)
3. G. Mackie, “Ending Footbinding and Infibulation: A Convention Account, American Sociological Review, December 1996, 61:999-1017) (Link).
4. A. Smith, Adam Smith, Wealth of Nations, Book I, Chapters 1-3, 10; Book III, Chapter 1, Book IV, Chapter 2
5. D. Hume, Of the
Original Contract and Of Passive
Obedience
Week 3 (February 7) Institutions that are not
spontaneous: Constitutions & Rule of Law
Reading:
1.J. Buchanan and G. Tullock, The Calculus of Consent (1962)
2.D.
North and B. Weingast, "Constitutions and Commitment: The Evolution of
Institutions Governing Public Choice in 17th Century
3. J. March and J. Olsen. “The New Institutionalism: Organizational Factors in Political Life.” American Political Science Review (1984). (Link)
4. .B. Weingast, “Political Foundations of Democracy and the Rule of Law.” American Political Science Review. (1997). (Link)
5. M. Olson, “Dictatorship, Democracy, and Development,” American Political Science Review, Vol. 87, No. 3. (Sep., 1993), pp. 567-576. (Link)
6. M. McGuire, M. Olson. “The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force,” Journal of Economic Literature, Vol. 34, No. 1. (Mar., 1996), pp. 72-96. (Link)
Weeks 4 & 5 Institutions and Motivations
1. J. Knight, Institutions and Social Conflict (1992)
2. Hirschman, Albert. 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?" Journal of Economic Literature 20:1463-1484. (Link)
3. G. Brennan and L. Lomasky, Democracy and Decision (1993)
Week 6: Spontaneous Order: The
Emergence of Institutions of Exchange
1. R.H. Coase, “The Nature of the Firm,” Economica (1937). (Link) (Also in The Firm, The Market, and The Law)
2. R.A. Radford, “The Economic Organization of a P.O.W. Camp”, Economica (1945). (Link)
3. A.A. Alchian and H. Demsetz, “Production, Information Costs, and Economic Organization,” American Economic Review (1972). (Link)
4. Demsetz, Harold, "Toward a Theory of Property Rights," American Economic Review, (May 1967) (Link)
5. J. Ensminger, Making a Market: The Institutional Transformation of an African Society.
Weeks 7 & 8 : Transactions Cost Economics
1. R.H. Coase, “The Problem of Social Cost,” Journal of Law and Economics (1960). (In The Firm, The Market, and The Law)
2. O. Williamson, “Transactions Cost Economics: The Governance of Contractual Relations,” Journal of Law and Economics (1979). (e-reserves)
3. O. Williamson, “Credible Commitments,” American Economic Review, 1983. (Link)
4. B. Klein, Crawford and Alchian, “Vertical Integration, Appropriable Rents, and the competitive Contracting Process”, Journal of Law and Economics (1978). (e-reserves)
5. B. Klein K. Leffler, "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, August 1981. (Link)
6. G. Akerlof, “The Market for Lemons: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics (1970). (Link)
Week 9: March 28 Selection
and Institutions
1. Brennan, G. and A. Hamlin (2000) Democratic
Devices and Desires CUP chapters 3,4 and 9 (e-reserves)
2. Brennan, G. “Selection and the Currency
of Reward” in Goodin (1996) The Theory of Institutional Design CUP
(e-reserves)
Week 10: April 4 Esteem
and Institutions
1. Brennan,G. and P.Pettit The Economy of
Esteem (especially section III)
Weeks 11 and 12: Transactions Cost Theory, and Political Organization
1.
J. Aldrich, Why Parties? The Origin and Transformation of Party
Politics in
2.
2.
B. Weingast and
3. J. Jenkins and M. Munger. “Investigating the Incidence of Killer Amendments in Congress.” Journal of Politics. 2003. (Link)
4. D.M. Kreps, “Corporate Culture and Economic Theory,” in Alt and Shepsle (eds) Perspectives on Positive Political Economy (1990). (e-reserves)
5. M. Hinich and M. Munger, Ideology and the Theory of Political Choice (1994), Chapter 4. (e-reserves)
6. McCubbins and Schwartz, “Congressional Oversight Overlooked: Police Patrols vs. Fire Alarms", AJPS (1984) (Link)
7. K. Shepsle and B. Weingast, “Structure-Induced Equilibrium and Legislative Choice,” Public Choice (1981). (e-reserves)
Last class: Catch-up and course wrap-up
Final Exam:
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Wednesday, May 3 |
7:00 PM - 10:00 PM |