Role of Institutions in Policy Making

Role of Institutions in Policy MakingINTRODUCTIONThe purpose of this paper is to explore the fictitious character of institutions in influencing insurance insurance polity outcomes. first off part of the paper provides a brief introduction to the study of institutions in political science. This is followed by description of factors influencing policy outcomes. Final part of the paper looks at the limitations of institutions, which pose additional constraints on policy outcomes.INSTITUTIONS IN POLITICAL SCIENCEThe study of institutions is central to the subject matter of political science and, to an even great extent, public administration. According to L sufferdes (1996181), focus upon institutional arrangements for the delivery of public services is broadly speaking held to be defining of the sub-discipline of public administration. March and Olsen (1984) argue that social, political, and economical institutions agnize believe recently become larger, more complex and resou rceful, and therefore more important to collective life. According to them, attention to political institutions has increase in the belles-lettres on legislatures, budgets, public policymaking, local goernment and political elites. According to Scharpf (1989), much of comparative political science research may be characterised as an start out to explain and predict the work of political institutions on the choice of public policy.INFLUENCING POLICY OUTCOMESSETTING NORMS IN DECISION MAKINGMarch and Olsen (1984,1989) see institutions as providing order in political life. Institutions increase capability by reducing comprehensiveness. Institutions express norms of decision-making and behaviour, providing a logic of appropriateness. Rules produce variation and deviation as surface as conformity and standardisation. Institutions generally change in an incremental way through with(predicate) responding to environmental signals.AFFECTING POLICY OUTCOMESInstitutions atomic number 18 very much seen as plant of factors affecting the interactions between policy actors and hence the greater or lesser capacity of policy-making systems to adopt and implement effective responses to policy problems (Scharpf 2000764). According to Gorges (2001), the European Commission and early(a) EC institutions played a significant role in social policy-making. The European Commission sought to increase both its policy domain and its legitimacy, continually insisting that it would not abdicate its power to initiate policy. Although it is actors that are the proximate causes of policy responses, institutional conditions, to the extent that they are able to operate actor choices, are seen as remote causes. Actors are strongly influenced by the institutional rules to which they owe their existence and by institutional and cultural norms that square up the criteria of their mastery or failure (Scharpf 2000). According to Scharpf (2000770), in sociological institutionalism, institu tions are defined very broadly so as to include not only externally imposed and sanctioned rules but also unquestioned routines and standard operating procedures and, more important, socially constructed and culturally taken-for-granted worldviews and shared normative notions of appropriateness. In that view, therefore, institutions entrust define not only what actors can do but also their perceptions and preferencesand thus what they will want to do. Institutions constrain, but do not completely stop, policy choices (Scharpf 1989). certain(a)(prenominal) policy options are unlikely to be chosen under certain institutional conditions. According to Scharpf (1989), policy choices are simultaneously influenced by at least(prenominal) four sets of factors, institutional, situational, preferential and perceptional.Institutional rules will affect policy by restricting options, constituting actor constellations, regulating their modes of interaction and by structuring the incentives of the participating actors (Scharpf 2000). Institutions are lofty substantive prohibitions to policy outcomes. Countries disagree in the range of institutionally allowable policy options and there is an increasing tightness of international legal constraints. For example, the power of governments to determine wages and working time was routinely exercised by most countries but is ruled out in Germany. Moreover, the tight control of capital transfers and the highly discriminatory regulation of credit markets that facilitated the success of macroeconomic full-employment strategies in Sweden until the mid-1980s would now be ruled out by EU directives liberalising capital markets and financial services. The rules of negative integration, in cross European competition law, rich person become a major constraint on all economic policy options that could be construed as inhibiting or distorting free competition in the markets of EU member states. Institutional rules also define the c onstellations of actors that may participate in the adoption and implementation of policy responses and their permissible modes of interaction, which could be classified as mutual adjustment, negotiated agreement, voting, or hierarchical direction. Although most policy choices result from multi-actor interactions, some countries whose political institutions approximate the ideal Westminster model have the option of treating any major policy problem in a single- actor constellation. Here, all relevant policy choices are potentially determined by the preferences and perceptions prevailing in a unified action center. Hierarchical direction becomes an institutionally available mode of interaction, as exemplified in Britain, New Zealand, and possibly France. In rational-choice institutionalism, incentives are defined by reference to the self-interest of the corporate and collective actors involved in the policy process, for example, governments, political parties, central banks, labor u nions, their subunits, or the individuals playing for them. In single-actor systems, the incentives that have the most direct effect on policy choices are constituted by the mechanisms of political accountability. In multi-actor systems, accountability is weakened and policy outcomes are more affected by incentives favoring cooperation or conflict between the veto actors.CRITICAL JUNCTURES AND DEVELOPMENTAL PATHWAYSIkenberry (1994) characterises political development as involving critical junctures and developmental pathways. According to the first principle, different founding moments of institutional formation send countries along broadly different developmental paths. The second principle suggests that institutions continue to adopt in response to changing environmental conditions and ongoing political maneuvering but in ways that are cumber by past trajectories. According to Thelen (1999), where state-builders approach geopolitical competition early, they were forced into gr eater concessions to the financiers, merchants, and administrators who financed and staffed the bureaucracy, resulting in patrimonial systems. Where rulers confronted geopolitical pressures later, they found themselves in a quite different world, where developments in education and finance made these side payments unnecessary, resulting in greater bureaucratic autonomy. Over time, some avenues of policy become increasingly blocked, if not entirely cut off, as decisions at one point in time can restrict future possibilities by sending policy off onto particular tracks (Thelen 1999).DIFFERENT THEORETICAL APPROACHESAlthough it is generally accepted that challenges to which policy actors may have to respond are influenced by the institutional setting, the predominate strands of current institutionalist theorising, rational-choice institutionalism and sociological institutionalism, differ in their conceptualisation of these influences (Scharpf 2000).LIMITATIONSInstitutions have limitati ons which have a significant effect on policy outcomes. These limitations are focus on structures and efficiency, focus on stability, political manipulation and policy networking. focal point ON STRUCTURES AND ECONOMIC EFFICIENCYIt has been argued that compliance with structures and practices much becomes more important than its actual efficacy (Lowndes 1996). According to DiMaggio and Po soundly (1991), it is the demand for similarity of structure and functioning, rather than for increased efficiency, that drives organisational change.According to Thelen (1999), the institutional approach begins with the observation that markets, embedded in political and social institutions, are the creation of governments and politics. The main purpose and effect of institutions are often seen as economising on fraction costs. Lowndes (1996186) describes institutions as efficient organisational frameworks, which arise to solve problems of complex economic exchange. The critics of the new instit utional economics, however, object to the proposal that a universal economic logic determines the choice of institutional systems, regardless of culture and circumstance or power and politics (Lowndes 1996).FOCUS ON STABILITY northeast (1990) stresses stability rather than efficiency as the economic rationale for institutions, arguing that technically inefficient institutions persist because they contribute to stability and harmony in interaction and because they are deeply embedded in culture and tradition. According to historical institutionalism, institutions do more than channel policy and structure political conflict. Thelen (1999) claims that institutions are socially constructed in the sense that they embody shared cultural understandings of the way the world works. This means that even when policy makers set out to redesign institutions, they are constrained in what they can conceive of by these embedded, cultural constraints. For example, the evolution of Japanese security policy shows how collectively held norms define appropriate conduct, shape actor identities, and influence actor interests, and in doing so, inform how political actors define what they want to accomplish (Thelen 1999). Pearson (2000) claims that path dependence can be used to explain the analysis of European party systems, labor incorporation in Latin America, the outcome of state-building processes in Europe, and the comparative development of health care systems.According to Thelen (1999), the problem with this approach is that dominant cultural norms emerge out of concrete political conflicts, in which different groups fight over which norms will prevail. Dominant policy paradigms can and do break of serve at times and organisational fields are often imposed by powerful actors. According to Stinchcombe (1997), it is legitimacy and not automaticity that explains why people follow scripts in the first place. Furthermore, the entrenchments of certain institutional arrangements obs truct an easy reversal of the initial choice (Pearson 2000). The conception of path dependence, in which preceding steps in a particular direction induce upgrade movement in the same direction, is well captured by the idea of increasing returns. In an increasing returns process, the probability of further steps along the same path increases with each move down that path because of the costs associated with exit or change. According to North (1990), institutions induce self-reinforcing processes that make reversals of course increasingly unattractive over time. This, according to Arthur (1994) leads to unpredictability, inflexibility, nonergodicity and potential path inefficiency.POLITICAL MANIPULATIONIn politics, institutional constraints are ubiquitous (Pierson 2000). administration involves struggles over the authority to establish, enforce and change the rules governing social action in a particular territory. According to Gorges (2001), the institutional change could be influe nced by strong and ideal incentives the policy entrepreneurs provide. Furthermore, change is most likely when there is an increase in the effectiveness of individuals seeking change and a decrease in the obstruct power of individuals whose interests are served by the current institutional arrangements. Institutions are not neutral coordinating mechanisms but in fact reflect, and also reproduce and magnify, particular patterns of power distribution in politics (Thelen 1999). Thus, political arrangements and policy feedbacks actively facilitate the organisation and empowerment of certain groups while actively disarticulating and marginalising others. Manipulated by utility-maximising politicians and bureaucrats, institutions quick over time. They come to serve the individual, private interests of officials and any conception of the public interest is lost (Lowndes 1996188). Public officials seek to augment their status and material through increases to budgets under their control, and utility-seeking politicians attempt to maximise votes by promising benefits and service enhancements, which results in waste and over-supply of government goods and services (Niskanen 1973). An alternative to the budget-maximising thesis is provided by bureau-shaping theory which accepts that bureaucrats are self-serving, but denies that they pursue a single course of utility-maximising action (Lowndes 1996). In rational-choice institutionalism, institutional rules are understood as external constraints and incentives structuring the purposeful choices of self-interested rational actors (Scharpf 2000). Thus, when certain actors are in a position to impose rules on others, the employment of power may be self-reinforcing (Pierson 2000). Actors may use political authority to take changes in both formal institutions and various public policies designed to enhance their power. Skocpol (1992) argues that institutional arrangements affect the capabilities of various groups to achieve self-consciousness, organise, and make alliances. For example, the fragmentation of the state, as well as the organisation of party competition along patronage lines, actively mediated against the development of a unified working class that could then spearhead the movement for comprehensive social policies in the United States. Scharpf (2000) does not agree with this notion, arguing that actor preferences have at least two dimensions individual and organisational self-interest on one hand and normative obligations and aspirations on the other.INSTITUTIONS AND THE POLICY NETWORKINGThe policy network approach is concerned with the institutionalisation of relations between governmental and non-governmental actors (Lowndes 1996). The concern is with actual institutional practices rather than with formal organisational arrangements. Jordan (1990) refers to an institution as an extra-constitutional policy-making arrangement between industries and clientelistic groups. Lowndes (1996) po ints to the traditionally fragmented structure of British government and the influential role played by interest groups in policy-making. In such(prenominal) environment, policy is made not by a unified government machine but by an assortment of actors, governmental and nongovernmental, linked together in more or less formal and coherent networks (Lowndes 1996190). Furthermore, institutions are embedded in networks of other institutions, and it is difficult to change one institution in a matrix because of this embeddedness. According to Lowndes (1996), policy networks routinise relationships, promoting continuity and stability. One example is the EU, where the European Commission has often granted access to, and attempted to institutionalise the participation of interest groups as a way of securing legitimacy for its proposals before presenting them to the Council of Ministers (Gorges 2001). The Commission has attempted to sustain and strain the Community political system by provid ing information to the social partners, forcing them to re-evaluate their interests and priorities, and supporting the development of a Community/Union system of interest intermediation by providing a forum for conflict resolution.The capacity for effective policy responses is affected not only by the quantity and quality but also by the diversity of policy-relevant information and analysis provided by an institutionalised information infrastructure (Scharpf 2000). Policy coordination in Austria, for example, was greatly facilitated by the fact that the government, the political parties, and the social partners relied on the analyses provided by a single economic research institute. In Germany, by contrast, unions and employers maintain separate research institutes, the federal government supports altogether six such institutes, the federal labor administration and the Bundesbank maintain large in-house research capacities, the independent Council of Economic Advisors relies on its own research staff, and the big commercial banks have their own macroeconomic research departments.The downside of the monopoly model is the risks of groupthink, or the failure to pay attention to observations, interpretations, and recommendations that do not conform to the dominant worldview (Scharpf 2000). This was arguably the case in Britain in the early 1970s, when policy makers in the treasury continued to rely on the Keynesian recommendations derived from the single macroeconomic simulation model, even when the economy had ceased to respond as predicted (Scharpf 2000).However, when the analyses of institutionalised information monopolists do fit the problem, they will facilitate effective problem solving in single-actor systems and effective coordination in multiactor systems. The pluralistic model, by contrast, will provide protection against the institutionalisation of error.CONCLUSIONThe paper has explored the role of institutions in influencing policy outcomes. Institutio nal conditions, to the extent that they are able to influence actor choices, are seen as remote causes. Institutions influence policy outcomes by setting norms in decision making. Furthermore, institutional rules affect policy by restricting options, constituting actor constellations, regulating their modes of interaction and by structuring the incentives of the participating actors. Although it is generally accepted that challenges to which policy actors may have to respond are influenced by the institutional setting, the dominant strands of current institutionalist theorising, rational-choice institutionalism and sociological institutionalism, differ in their conceptualisation of these influences.Limitations of institutions, such as the focus on structures and economic efficiency, the focus on stability, political manipulation and policy networking, further influence policy outcomes.BIBLIOGRAPHYArthur W.B. (1989). Competing Technologies, Increasing Returns, and lock-in by Historic al Events. Economy Journal, Vol. 99.Ashford, D. E. (1977). Political Science and Policy Studies towards a structural solution. 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