“Institutions Matter?”

“Institutions Matter?” By Adam Przeworski (2004) pgs 527-540

A summary in quotes

-          Link to the article http://as.nyu.edu/docs/IO/2800/go_2004.pdf

“THE THEORY OF ‘NEW INSTUTIONALISM’ CONSISTS OF TWO propositions: 1) ‘Institutions matter’: they influence norms, beliefs, and actions; therefore they shape outcomes; 2) ‘Institutions are endogenous’: their form and their functioning depend on the conditions under which they emerge and endure” (Przeworski, 2004, pg 527)

“if endogeneity is strong, then institutions cannot have a causal efficacy of their own.  Imagine that only those institutions that generate some specific  outcomes, say those that perpetuate the power of the otherwise powerful, are viable under the given conditions.  Then institutions have no autonomous role to play” (Przeworski, 2004, pg 527) * My note, this statement is damning for much of the ‘Enduring Authoritarianism’ literature coming out of Middle East Comparative Politics. 

“the crux of the difficulty: if different institutions are possible only under different conditions, how can we tell whether what matters are institutions of the conditions?” (Przeworski, 2004, pg 530)

“consider the possibility that democracies are vulnerable to economic crisis, while dictatorships survive them…we will have observed this difference only because democracies died when they encountered bad economic conditions and became dictatorships capable of surviving under these conditions” (Przeworski, 2004, pg 534)

“The fundamental difficulty is that we observe each country during each year having only one of the two possible institutions, while our questions calls for having observed both.  Hence, to determine the effect of institutions, we need to generate counterfactual observations” (Przeworski, 2004, pg 535)

“Hence, the task of comparative politics is heroic.  To evaluate the impact of institutions we somehow must use the observed world to make inferences about a hypothetical one.  Yet such inferences are subject to several biases:

“1) Baseline difference.  The units observed as democracies may have had different performance as dictatorships or vice versa. 

“2) Effect of the treatment on the treated. The units observed as dictatorships may have performed differently under democracy to those that were actually observed as democracies or vice versa…

“3) Post-treatment effect…The problem here is that changing just the regime and nothing else that affects the rate of growth may be impossible

“4) Distance effect… the distance between the conditions under which the actual cases were observed and their closest observed matches under alternative institutions (‘treatments’) is also a source of bias…

“5) Aggregate effect…observations are independent, which implies that realizations of counterfactuals do not alter the values actually observed” (Przeworski, 2004, pgs 537-39)

“What, then, can we do in the presence of endogeneity?  All we can do in my view is to try different assumptions and hope that the results do not differ.  If they do not, we know that the conclusions are at least robust with regard to different assumptions about the sources of bias.  If they do differ, all we can do is throw our hands up in the air” (Przeworski, 2004, pg   540)

“We need to be skeptical about our belief in the power of institutions and we need to be prudent in our actions” (Przeworski, 2004, pg 540)