INSTITUTIONAL DESIGN, SOCIAL NORMS, AND THE FEASIBILITY ISSUE

Abstract:

The “new institutionalist revolution” in social sciences has led to a repositioning of social norms to the forefront of the pre-analytic vision in institutional theory and to the consolidation of the contextual analysis approach. That has significant epistemological, methodological, and political philosophy implications. This essay follows the logic of these developments showing: (a) why they inherently lead to the feasibility problem, the key of applied theory, toward which both contemporary philosophy and institutional analysis converge from different venues; (b) how feasibility is a nexus of empirical, counterfactual, normative, and contextual elements, that is, something more complex than a mere matching between empirical reality and institutional design; (c) what are the governance implications of all of the above, with an emphasis on an alternative approach (distinctive enough to circumvent both the conservative averseness to intervene and progressive drastic interventionism) and in which the public choice process is seen mainly as endogenized, socialized, and institutionalized, as opposed to formalized, intellectualized, and externalized.

I. Introduction

This essay takes as a starting point the problem of social norms and social change—more specifically, deliberated, public policy designed and implemented change: When putting together a policy intervention or institutional change plan, what should one know about social norms and their policy relevance and implications? What is the current knowledge created in social sciences in this respect and what aspects of that knowledge are relevant for applied thinking, assuming that such thinking takes place with a certain degree of self-awareness and generality? Out of the vast literature relevant for these questions, the essay will use as a vehicle and reference point the contribution made by the family of research programs broadly belonging to the “new institutionalist turn” or “revolution” that has reshaped the social sciences landscape during the last four decades or so. There are three major reasons for this choice. First is the massive impact of this approach on contemporary social scientific thinking. Arguably “the institutionalist revolution” was the defining mark of recent social sciences, and it was responsible for some of the most relevant social scientific developments for our subject. Second is its explicit stance as an applied-level scholarly enterprise. In this respect, it is, by its very nature, the preeminent domain of institutional design and feasibility research. Finally is its mode of analysis that places collective action (the phenomenon and its theorizing) at the center of its investigations. As collective action is also the foundational framework in policy analysis and applied-level approaches, a coherent, conceptually integrated approach is thus possible.

More precisely, this essay focuses on a very important but overlooked set of philosophical and governance theory implications of the insights coming out of the institutionalist family of research programs. As such, the essay should be seen as an attempt to draw attention, coming from an empirical and applied perspective, to an area in which the applied and empirical approaches overlap with and transmute into themes and puzzles of a philosophical nature. Seen from a social/political philosophy angle, this type of perspective could be associated with the increasingly influential debate and literature on “nonideal theory.” It is a “messy area” in which philosophical and theoretical matters overlap and combine with empirical, normative, and operational aspects, intertwining in complex ways, on multiple dimensions.¹ Yet, it is a crucial area to be charted and explored, because it is the vey area where the practical relevance of our philosophical and scientific endeavors is decided. The ultimate goal of this essay is to invite a philosophically-minded audience to take a closer look, elaborate, and bolster these significant interdisciplinary developments, using the specific tools and approaches of philosophical investigation.

One of the most remarkable aspects of the institutionalist research is the fact that, without intention or plan, it has amply illuminated the surprisingly pivotal position social norms have in both institutional order and in institutional change via institutional design and public policy. The essay follows the logic of these developments to their implications in three stages: the first stage and objective is to show that far from being just one of the typical cases of normal science in which growth of knowledge occurs by variable addition, the reorientation of focus on social norms signals a larger and profound shift of methodological, theoretical, and epistemological perspectives. Such a shift has the potential to alter the ways we understand structure, change, prediction and control in social settings. All that inherently leads to the feasibility problem, that is, the key problem of applied theory and philosophy, and the underlying theme defining the institutional theory and design domain that this essay aims to explore and build upon.

The second objective is to show that the feasibility issue—as emerging in the light of the converging developments in both institutional analysis and social/political philosophy—is a far more complex matter than is implied by the rough intuition of feasibility as a mere match between empirical reality and policy design. In fact, evaluating feasibility entails an engagement that must always go beyond the standard empirical analysis. Facts and values are not the sole sources of political disagreement hampering political designs. At the intersection between the two, the assessment of the feasibility of different designs and policies is sufficient to generate substantial disagreements, even if the actors may agree on facts and on values. How could one deal with such disagreements of direct practical relevance? The feasibility problem is a nexus of heuristic, empirical, counterfactual, operational, philosophical, normative, and contextual elements in which local and tacit knowledge, preferences, and circumstances are crucial. The solutions must first recognize these multiple facets of feasibility and only then can work with or around the facets’ implications for public policy, institutional design, and governance practices.

Third, the essay looks precisely at the implications of all of the above for governance. Once the real dimensions of the impact of social norms on feasibility and policy design is recognized, the contours of an alternative to the standard governance typologies and ideologies start to become clearer. Circumventing the ideal types of both unimaginative conservativism and progressive hyper-activism, it is an approach to governance in which the public choice process is seen mainly as endogenized, socialized, and institutionalized, as opposed to formalized, intellectualized, and externalized. It is a case for institutional diversity at multiple levels, for polycentric systems of overlapping and competing jurisdictions, of ongoing experimentation tinkering, probing, and adjusting of the justice and feasibility frontiers and niches. The institutionalism program’s findings and insights may thus be read as a direct contribution to this alternative tradition, distinctive enough from both the conservative averseness to intervene and the progressive drastic interventionism that currently polarize the ideological spectrum. The message of institutionalism, grounded in a sharper understanding of the relation between social change, social norms, and policy design, is thus more coherent and far-reaching in its foundational-philosophical and applied directions, than both its supporters and critics have been prepared to admit.

II. Social Norms in the Light of the Institutionalist Revolution

Revisiting the relevant literatures on the social, political, and economic analysis of institutions offers a fascinating view of how the problem of social norms has come to occupy a pivotal place in the larger picture of institutional order and change emerging during the last decades. Institutions, broadly defined as “rules of the game” or “constraints” or “constitutive parameters” of individual and collective action, were always recognized as key instrumental or target policy variables. The last decades, however, under the impact of what was called the “Institutionalist Revolution” in social sciences, have brought a more nuanced understanding of the phenomena of institutions and of the processes at work. The first step was the de-homogenization and firmer conceptualization of the large class of phenomena and variables identified under the label of “institutions.” One of the outcomes of that move was a gradual but decisive shift of emphasis. The more the empirical and applied-level literature has advanced along these lines, the more the problem of the distinction between “formal” and “informal” institutions has become salient. The interplay between formal institutions (economic, political, legal) and the realm of the informal (social norms, tacit, implicit, non-legally binding, customary practices, and so on) has slowly taken center stage.²

For our purposes it is important to note that the relatively heterogeneous class of the “informal” contains at its core the notion and the phenomena of interest to our discussion: social norms. Indeed, when it comes to the “informal,” irrespective of what conceptualization is used and what focus and angle the analysis takes, sooner or later, for policy purposes, social norms are inescapably the element around which the analysis must pivot.³

Awareness of the role of the “informal” dimension of social order has always existed but the detailed studies of a variety of policy related issues such as policy implementation, transition economics, developing societies, shadow economies, corruption, Asian business systems, informal markets in the Soviet system, and so forth, have put in a new light the key role of social norms and of unwritten rules.⁴ Increasingly, the prevalent policy theory assumption that when it comes to policy interventions, incentives and expectations are shaped mainly by formal rules and institutions, has been deemed naïve. And thus the literature has entered with increased focus and precision into the deep area of fuzzy contours but strong policy weight, where we locate our subject: social norms. And this is exactly the domain that has been pushed to the forefront by the institutionalist turn in social sciences, sometimes as an unintended consequence of it: a Copernican “Revolution” within the “Institutionalist Revolution”—the insight that social norms have such a position in the architecture of social order that concentrating on them gives a privileged vantage point in institutional analysis, institutional design, and public policy.

Henceforth, the following two sets of observations, puzzling, counterintuitive, and controversial as some of them may seem to us prima facie, far from being a mere exercise in speculative social philosophy, are strongly based on the main insights of the literature, well-grounded in multiple research agendas and the corroboration of their findings.

(1) From background conditions to foreground. Without intending it, and even without fully acknowledging it, the institutionalist program has created an inescapable shift of emphasis, when it comes to causal weight and relevance, towards the informal sector. It has established that social norms and the domain of attitudes, values, beliefs, and practices surrounding them, have a larger causal weight than previous scholarship was prepared to consider.

Despite the understated tone in which this finding is usually expressed, its radical corollary is unmistakable: the downgrading of the preeminent causal and functional role of formal institutions, as assumed or as presented in most textbooks and primers of economic and political analysis. Informal norms shape the performance of formal institutions in so many ways, and the very compliance with formal rules may depend in such a large measure on them, that it makes sense to reconsider some of our most cherished notions about the nature and efficacy of the formal realm. The very constraining and coordinating capacity attributed to formal institutions may in fact have its source, its driving force, outside the formal realm. The entire apparatus of formal institutions operates using social capital, the energy or the fuel generated in a different dimension of the social system and processes. Formal institutions remain essential, but to understand them and the sources of their efficacy, one needs to look beyond them.

A shift of causal weight between variables is not the only thing at stake. An entire change of fundamental perspective is entailed. As such, that change is an issue whose significance touches the foundational, philosophical domain. It is a case of what Schumpeter called “preanalytical vision,” the fact that "in order to be able to posit to ourselves any problems at all, we should first have to visualize a distinct set of coherent phenomena as a worthwhile object of our analytic effort.”⁵ Each analytic effort, argues Schumpeter, “is of necessity preceded by a preanalytic cognitive act that supplies the raw material for the analytic effort.” Schumpeter shows that in all social scientific theorizing and modeling there is such an element, a “preanalytic cognitive act” which he calls a “vision.” A vision of this kind, he explained, not only must precede the emergence of analytic effort, but also may operate each time somebody teaches us to see things in a certain theoretical light. This is exactly where the gradual accumulation of factual observations regarding social norms and the informal has led. The first objective of this essay is to draw attention to and articulate this not yet fully acknowledged reality.

Indeed, once the role of social norms in social systems is reframed, a new view opens up: the entire architecture of formal institutions that otherwise are center stage in our analysis, recedes to the background. The logic of R. Wagner’s discussion about background and foreground in equilibrium and disequilibrium analysis applies in this case perfectly. Wagner draws attention to two types of theorizing in economics: (i) theorizing in which equilibrium is in the foreground, while the disequilibrium condition of the system is in the background; and (ii) theorizing in which the dynamics of disequilibrium are in the foreground, while equilibrium is a background framework that plays a supporting role to disequilibrium analysis. He shows that although the theoretical apparatus of equilibrium and disequilibrium remains unchanged in all cases, there are major differences of approach and insight once one places processes of development or emergence in the analytical foreground, and puts equilibrium states or conditions in the background (and the other way round).⁶

The institutionalist research seems to lead, mutatis mutandis, to an approach in which the informal, the domain of norms and primary rules (and the basic social coordination of informal mechanisms) takes the foreground, while the formal institutional arrangements—traditionally salient in the spotlight—take more of a background position. Two entangled realms of institutional processes emerge, each with different but intertwined dynamics. One of them seems in a sense more basic: a network of social norms and their associated processes, bolstering (or undermining) the formal domain at specific critical points. The shift of focus doesn’t mean the neglect of the formal domain. It means that the very way one conceptualizes the entire institutional system has to be reconstructed. Hence, this shift means reconceptualizing an entire social ontology. The pre-analytical vision and metamodel of institutional reality gets reformed. The ways we conceptualize causal structures and functional relationships changes, and with that, our understanding of what is possible, that is, feasible, within such systems has to adjust as well. With that we have reached the second observation.

(2) Combinatorics and Contextual Analysis. This shift in social ontology comes in turn with noteworthy methodological and analytical strings attached. The reassessment of causal vectors and functional structures has to be seen as part of the complex, contextual combinations of “formal” and “informal,” first order and second order variables. The full combinatorial and stochastic dimensions entailed become clearer as soon as we look at collective action, not just as a game theoretical matter, but as a large-numbers phenomenon. Indeed, social norms are the quintessence of this type of phenomenon.⁷ It is not only that as a rule such collective phenomena involve a large number of agents, with interacting social actors making interdependent decisions. It is also a matter of a large number of variables defining various facets of the actors, their decision arenas, and their environment, all bringing into the picture vast combinatorial possibilities.⁸ If one introduces also the permutation aspects, in which the order of variables, interactions, and factors matters (as in the policy sequencing problem, see the “democratization first” versus “marketization first” debate),⁹ the space of possible configuration of variables becomes a large numbers, complex dynamic situation.

The main point is that once institutional structure and performance are understood as a combinatorial causal configuration in which the heterogeneous and elusive “informal” has at minimum an equal status with the formal, the pressure to reconsider the epistemological and methodological apparatus involved reaches a threshold. Such pressure results not only from the increase in the number of variables but also from the way they are weighted in various combinations generated by large numbers, repeated interactions, and multiple nested levels. Methods, approaches, and techniques aiming to capture these nested, collective phenomena have come to the fore.

In brief, a focus on social norms and the processes associated with their emergence and persistence leads to a specific understanding of causal configurations that, in turn, entails a methodological and epistemological shift to what the recent literature has labeled “contextual analysis.”¹⁰ One may find this at work throughout multiple fields. Analytical contextualization is invariably associated with a focus on social norms. When we have one, the other is not far behind. A focus on social norms seems to lead to rethinking and reframing the approach and methodology, and the other way round. In fact, it looks like the two reinforce and illuminate each other. Progress in refining our understanding of one side leads to better understanding and refining of the other. A finer tuned analytical apparatus leads to a better understanding of social norms and their functions and functioning. A more nuanced grasp of the nature and function of social norms leads to a finer tuned analytical apparatus. And that, obviously, has important ramifications for debates regarding the scope and limits of our capabilities for institutional change, that is, for the feasibility of our design plans. All things considered, both the foreground-background switch and the contextual and combinatorial analytical perspective that emerge distinctly from the institutionalist program, are much more consequential than we are left to believe by the low key, restrained ways they are presented by scholars in the field.

III. Feasibility, Indexing, and Possibilism: The Convergence Domain

The repositioning of social norms and informal institutions to the forefront of the pre-analytic vision in institutional theory, and the consolidation of the contextual analysis approach in which social norms have a pivotal role as variables of stability and change, have related but distinctive implications. These implications include those of an epistemological-methodological nature and those of a social-political philosophy nature. The logic of what started in the territory of social science and policy analysis has ended in much more complex territory, a nexus of normative, conjectural, counterfactual, epistemic, and heuristic elements. Confronted with the intellectual reality of this domain, we are left with a challenge: How should one conceptualize and deal with it? This section will show how the notion of feasibility emerges as the natural convergence point for organizing and conceptualizing the domain of problems, and what further implications result from that emergence.

Let us start again in institutionalist territory and its empirical-applied agenda. Reviewing developments in collective action theory and institutionalism research, and looking back at her own work, Elinor Ostrom concludes that the collective action situations we usually associate with the emergence and functioning of institutional arrangements, social norms, and social capital are, in most cases, domains in which “it is not possible to relate all structural variables in one large causal model, given the number of important variables.”¹¹ Ostrom and colleagues note that “an immense number of contextual variables” have been identified by empirical research as “conducive or detrimental to endogenous collective action.”¹² She lists some of these variables, and the catalogue is daunting: from the size of the group involved and the type of production and allocation functions, to the heterogeneity of the group, and the relative scarcity of the good; from the common understanding of the group, the size of the total collective benefit and the marginal contribution by one person, to the presence of leadership, past experience, and level of social capital and the autonomy to make binding rules, all these and others—in endless combinations and permutations—could make a difference. She also notes the disagreements over the impact of contextual variables. For instance, “the size of a group and internal heterogeneity are frequently considered important contextual variables, but the direction of their impact and how they operate is strongly contested.”¹³

Marwell and Oliver, working along similar lines, remarked that “today scholars have concluded that there are many different issues and many different kinds of collective action and that one can shade into the other depending upon the structural characteristics of the situation.”¹⁴ Hence, a rather radical conclusion: there is no Theory of Collective Action because, there is no single Problem of Collective Action and consequently there is no single, universal Solution to the Problem of Collective Action. That is not only a matter of configurational heterogeneity but also a matter of dynamics. As Ostrom put it, “changes in one structural variable can lead to a cascade of changes in the others.” A small change “may suffice to reverse the predicted outcome.” Context matters enormously and causal weight is thus relative. Social and institutional arrangements are “complexly organized” and “we will rarely be able to state that one variable is always positively or negatively related to a dependent variable.”¹⁵ Therefore, it should be no surprise that “the kind of theory that emerges from such an enterprise does not lead to the global bivariate (or even multivariate) predictions that have been the ideal to which many scholars have aspired.”¹⁶ The initial search for the Theory of Collective Action seems now, in retrospect, to be naïve. The theoretical and methodological apparatus and the epistemological assumptions stimulating that initial search starting in the 1960s seem obsolete as well.

Irrespective of the epistemological or methodological presuppositions one may maintain, it is obvious that the evolution of this vast, systematic, robust, and well-funded family of research programs—broadly labeled as “new institutionalist”—has led to a point that necessitates a departure from the familiar, well-traveled path of the methods-and-approaches textbooks. Trying to respond to this challenge, Oliver and Marwell advance the notion of “response surface” as a tool aimed at helping us to think “about the complexities involved in collective action.” A response surface is “a k-dimensional graph of an outcome variable as predicted by k - 1 independent variables”.¹⁷ In a similar vein, Ostrom introduces the notion of “theoretical scenarios.” A possible solution, she suggested, may be to build scenarios of how “exogenous variables combine to affect endogenous structural variables.” That may make it possible to “produce coherent, cumulative, theoretical scenarios that start with relatively simple baseline models. One can then begin the systematic exploration of what happens as one variable is changed.”¹⁸ Again, one could see how the logic of combinations and permutations becomes the background of the analytical exercise. The analytical path of “formal institutions-social norms-collective action” is permeated by it.

Indeed, if one revisits the new wave of social science of the last decades, an important part of it—probably the most important—has been the institutional theory fueled by (evolutionary) game theory, decision theory, and the statistical analysis of complexity and emergence. At the core of it is the analysis of how macro-level, formal institutional arrangements come into being and endure through the micro-dynamics of social mechanisms and processes, emerging out of individual norms and interactions, in different environments. One witnesses the growth of an apparatus aiming to capture the combinatorics and the behind-the-scenes interplay of individuals and collectives, rule-guided and strategic behavior, of rationality and irrationality that fuels and shapes the otherwise more salient institutional architecture. This trend is indicated by an entire series of statistical mechanics instruments from the natural sciences that have been increasingly introduced in the social sciences, as well as the conceptual tool-kit related to them: critical mass, thresholds, phase transition, equilibrium, critical points, bifurcations, flows, diffusion cycles, contingency, and so on. These are all the result of recognizing the fact that most of the variables related to institutional arrangements need to be analyzed in many cases as combinatorial, large-number, dynamic processes.

These challenges are further amplified if we put at the center of interventionist social norms— the quintessence of collective action—large-numbers processes, with their elusive properties and lack of secondary-level support structure that might otherwise provide some degree of control. To make things even more unsettling, one may expect abrupt changes in collective dynamics introduced by structural and scale factors, even without changes in individuals’ intentions or motivations. It is difficult to think in terms of covering laws and to make predictions leading to control based on them, when context and circumstances matter, and when change takes place sometimes as a result of endogenous processes having to do with scale and critical mass. In short, the institutionalist revolution has indeed inspired a new, updated avatar of older concerns regarding blind spots and naiveties about prediction and control in the social system, and has spurred a search for methods and approaches to deal with this challenge.

Ostrom, has recognized the crux of it all. There is no getting back to the comfort of the epistemology and methodology of the era of the positivist mindset. But that does not mean that we should capitulate to the forces of large numbers or to environmental-contextual determinism. In fact, there seems to be only one way moving forward: to recognize that this condition leads us toward thinking in terms of “a world of possibility rather than of necessity.” That is to say, “we are neither trapped in inexorable tragedies nor free of moral responsibility for creating and sustaining incentives that facilitate our own achievement of mutually productive outcomes.”¹⁹

One of the major merits of Ostrom’s take is that among new institutionalist scholars, she was the one clearly identifying and articulating the philosophical and normative ramifications of this aspect of the research on institutional change and institutional design. Whether we like it or not, she noted, we are inescapably operating deep within the territory of “possibilism”—not just a matter of a combinatorial theory of multiple variables and the mechanics of social and environmental forces, but also a matter of human deliberation, decision, and responsibility. When it comes to social structures and institutions, and we recognize that they are largely based in collective and evolutionary-contextual behavior, we even more sharply understand that not all things are possible. Yet some are. And to determine what is possible and what is not, what is desirable and what is feasible, requires an intellectual and normative engagement that goes way beyond what empirical analysis could provide. This engagement implies a perspective on social order, social change, and social causality as well as an interpretation of the function of human deliberation and choice—social reflexivity. There is no method or algorithm, no operations research, no systems thinking or expert system that would save us from the troubles of judgment, analysis, and responsibility.

Following the logic of the institutionalist research to its applied conclusions, one enters thus a “messy area” in which philosophical and theoretical matters overlap and combine with empirical and operational aspects, intertwining in complex ways on multiple dimensions. It is the familiar philosophical territory associated with the increasingly prominent debates on “nonideal theory.”²⁰ And at the center of this multifaceted and complex domain, the feasibility issue emerges as a natural salient point and organizing principle, irrespective of the angle of approach (social scientific or philosophical).

The institutionalist research program thus goes straight to the core of this pivotal problem. On the one hand, it brings to the table a wealth of case studies and empirical insights. It includes a reminder that one needs to be more cautious and methodical in framing what is deemed desirable, using the filter of what is possible. On the other hand, it comes with a warning on misplaced expectations regarding the redeeming power of empirical research when it comes to the feasibility issue. In this respect, the conclusions of the institutionalist program are unequivocal. The empirical element, the appeal to realism, and the feasible is important, is necessary, but it is not sufficient. Important contextual elements, with intrinsic normative and epistemic particularities, must always be included in the picture. In this respect, it strongly reinforces a line of argument already advanced from a philosophical angle. The problems revealed by the contextual aspect of policy intervention and social norms are nothing else than the social scientific facet of a problem identified and articulated from a social/political philosophy perspective: the indexing problem of feasibility conditions.

Gaus, while arguing for a nuanced understanding of the dichotomy between ideal and nonideal theory, has introduced a set of caveats regarding the feasibility-centered approach and, in the process, he has given a concise outline of the problem. Building on the conceptual analysis of Gilabert and Lawford-Smith,²¹ Gaus doesn’t deny that “in many respects and contexts,” feasibility is “critical” and “undeniable.”²² Yet he remarks that it cannot do the entire work that many seem to expect it to do. He shows for instance that “feasibility is indexed to agents, time spans and contexts.” An outcome may be feasible for one agent at time t1 in circumstances c1 but not at time t2 and it may again be feasible at t3, though in the meanwhile circumstances have changed. At t2 the outcome may have been feasible for another agent, however. That’s not very encouraging for a general theory of feasibility with applied ambitions. Gaus is skeptical about the possibility of creating a consolidated indicator of feasibility out of “different layers of feasibility, differing according to time spans and contexts.” Capturing the perspectives of social agents as they enter the feasibility calculus, is a challenge in itself. Even more, it is not just a matter of aggregation of different dimensions of feasibility, but it is also a matter of dynamics. Circumstances and perspectives change, and with these changes, the entire notion of what is feasible and not is subject to shift.

To sum up: the feasibility issue emerges in the light of recent developments in both institutional analysis and political philosophy as a salient point of convergence. Yet, there is in the notion of feasibility, beyond its apparently firm surface, something more complex and slippery. One has to be cautious about its promise to offer a firm empirical anchoring to the speculative temptations of normative and ideal theorizing. Indexing is the social-political philosophy counterpart of the contextual analysis point made by institutionalism. Independently, and coming from two different angles, philosophy and social science lead to similar conclusions regarding the puzzlingly volatile and hard to pinpoint parameters of feasibility. This convergence and the complementarity of theoretical-empirical and philosophical-formal analysis are remarkable, and this essay has made one of its objectives to show it. The avenues opened by it represent one of the most promising current evolutions at the interface between political/social philosophy and the social sciences. Their applied relevance is hard to overstate, and a closer look at some outstanding applied-level implications will illustrated this point.

IV. Applied-Level Implications: Policy Theory and Governance Doctrines

At the core of the Public Policy approach is the problem of social intervention, of action based on public and private deliberation and choice, aiming to change or preserve a social-institutional state of things. Let us start with the standard approach to public policy and use it as a vehicle to identify what the institutionalist and social philosophy insights on feasibility bring to the table. In this manner we’ll move the discussion to the next stage, from the more general discussion of the previous sections, closer to the applied level.

The public policy literature describes the parameters of the policy intervention task via the notion of “policy theory.” Any intervention, policy, or institutional design operates under what the literature calls “policy or program theory” —assumptions about “the change process actuated by the program and the improved conditions that are expected to result.”²³ Policy theory is ultimately a feasibility analysis and guidance framework and a concrete link to the applied level. Inherent in that is an idea of an operating causal structure, a presumed cause and effect sequence, and a series of key variables that are deemed to be crucial in that respect (including in most cases some normative assumptions and standards). For the purposes of our discussion, the main issue is that any policy theory needs to deal satisfactorily with three problems: (i) the causal weight of a variable in a configuration of factors determining a policy problem; (ii) the malleability of that variable; and (iii) the external validity of the designs and principles involving the variable in the case. In brief: causality, malleability, and validity. The point is this: moving social norms at the forefront requires a reassessment on all three dimensions of what that movement entails for policy theory. Let us see more precisely how that unfolds.

The most striking problem posed by social norms is in terms of malleability. Malleability is the crucial issue in policy design, which is basically an attempt to orient courses of action, and to change structures and processes. A variable that has strong causal impact in a policy configuration may nonetheless have a very limited malleability. For policy purposes, malleability is what truly counts. Hence a search for those aspects of the social reality that are open to influence and intervention, that is, are malleable, is in turn crucial. And that is precisely the problem with social norms in the policy design equation. Social norms are not very elastic, malleable variables. The institutionalist research has provided considerable empirical evidence supporting that: “At a practical level, whether informal institutions are considered to be constraints or parts of a society’s opportunity set is probably less important than the recognition that informal institutions fundamentally influence human behavior while not being directly amenable to policy.”²⁴

There are multiple reasons why norms are not readily malleable. We have limited knowledge about the changes in informal norms and even less control over the process that is a matter of collective behavior. One needs to get enough people in a group to accept, recognize, and enforce a norm. It is a critical mass phenomenon. Once a social norm is established in a place, once the critical mass is reached, then a series of factors set in, systematically diminishing its malleability. There are perceptible costs of coordination and cooperation to change and replace a social norm. The problem is not just the costs directly related to the particular norm in question, but the cascading costs related to all other behaviors and institutions organized around or linked to that social norm. A certain locked-in and path-dependent situation arises, reinforced by transition costs. Brennan and colleagues expound several other reasons: interest mobilization, loss aversion, self-fulfilling expectations, and sunk holes (absorbing Markov chains). For the purposes of our discussion, all represent an extension and elaboration of the basic transition costs, lock-in point.²⁵ The bottom line is evident: social norms make for an excellent casual explanation, but they are a very tricky policy variable.²⁶ Moving them to the foreground gives from the very beginning a more realistic and sobering sense of the challenges confronting institutional design and public policy interventions.

The conjunction of the malleability problem with the causality problem sets the stage for the circularity problem. To produce a policy change when a change in a social norm is deemed to be instrumental in the change equation, one needs to use the system of formal institutions. But in many cases the very formal institutional arrangement is not functional as an instrument, precisely because of informal institutions and social norms. Even more precisely, the social norm in point may have a key role in a causal chain, undermining the effectiveness of the formal institutional arrangements to be used in the case in point. The result is a “catch 22” situation and the applied literature abounds with examples: again and again legislative and administrative measures aimed at cutting red tape are ineffective because social norms undermine the very process of implementing those measures. A vicious circle is created. Layers of administrative measures and legislation are added to break the cycle. But the inflation of the formal institutions domain and its ineffectiveness undermine the very credibility of that approach. Social norms, the “informal,” get reinforced each time, having their resilience and effectiveness demonstrated, again and again, after each such new wave of “reforms.” Irrespective of the specific form and shape taken in a particular context, the underlying logic is the same: the effectiveness of a policy intervention is trapped and undermined by the circularity of the “formal institutions- social norms-formal institutions” pattern. We see now how the circularity problem reinforces an agnostic stance on intervention. At the same time, it entails the next problem on the list: the validity problem.

Establishing a policy theory to be used as a guide for intervention, raises issues of its applicability. How could one be sure of the soundness of the causal conjecture? How valid could it be given the circumstances? There are in fact two aspects of the validity problem. First is internal validity: establishing ex-post that in case A, a causality structure (the one assumed by the policy theory ex ante the intervention) was in truth operating and producing the targeted consequences. As we have seen, given the combinatorial and stochastic nature of the phenomena in point, internal validity is not easy to establish even with the most advanced methods and tools. But even establishing that policy P worked in case A does not lead automatically to the conclusion that the same policy (with its causal process outlined in the policy theory) will work in other cases. That is the external validity problem. The field of public policy and institutional design is filled with case studies of failed attempts at institutional implants. They all illustrate how formal institutions and their design fail when clashing with the local social norms and arrangements. Irrespective of how solid the empirical evidence is establishing the efficacy of P in case A, that evidence is only of limited value in extending it to case B and other cases. Cartwright and Hardie²⁷ have amply proved this point using the “hard evidence” of Random Control Trials (RCT), considered today the “gold standard” of evidence-based policy.²⁸ All of the above places us at the core of the feasibility issue: malleability, circularity and validity, predefine the feasibility space of any institutional design.

To sum up, moving social norms to the foreground in a standard policy theory framework offers a much more nuanced and sobering view on the task of institutional design and policy intervention. Context matters, and the range of ways in which the relevant variables may combine is so vast (with their different causality impact and malleability coefficients, and out of which social norms, with their low malleability and high causality coefficients are so salient) that it precludes any analytical or normative fixed formula of feasibility. Not only is the standard logic of policy intervention challenged in its feasibility assumptions but also the very notion of feasibility gains additional and complex facets, emerging to salience in a new light. The standard “policy theory” needs to be amended. An additional dimension is called for to capture precisely the combination of empirical, counterfactual, contextual, normative, and philosophical elements involved in the variety of facets of feasibility. An entire range of feasibility criteria emerges. Disentangling these criteria contextually seems to be essential. Different dimensions of feasibility, with features of philosophical, applied-level, and social science approaches intertwine with local and tacit knowledge. In brief, when it comes to feasibility of interventions, one must think beyond deceptive epistemic certainties, not take the notion for granted, avoid assuming it is reducibile to a formula or model, and refrain from considering it to be just a matter of a simple, technical, practical task. It is naïve to think that big data, better methods or technologies, or hypothetical agreements on values under the pressure of “reality,” will solve the foundational feasibility problems identified in the analysis and discussions quoted above.²⁹ It is evident that the standard policy theory approach—with its localized social intervention assumptions—is not sufficient. A different approach and a different framework are needed.

The question is: What kind of framework? It seems natural that this framework will combine philosophical and social scientific elements. The philosophy is messy, as is the social scientific approach, both for good reason: the domain combining so many dimensions that blend into each other is messy.³⁰ Facts, data, and generalizations are necessary but, in the end, feasibility may mean many things. The very effort of pinpointing what feasibility necessitates in specific circumstances entails an engagement that involves substantial heuristic, philosophical, and normative elements. Confronted with these challenges, the easiest and most tempting reaction seems to be to retreat to a more guarded, conservative position. A certain skepticism toward social engineering obviously underlies the institutionalist program. It is not hard to note that when public policy and institutional design are seen in important ways as matters of context and circumstances, a certain skepticism toward the potentialities of social engineering is not far away. When the informal, the role of the social norms in complex combinatorial systems is seen as pivotal for policy, a rather agnostic, skeptical demeanor seems hard to avoid. From there, the traditional conservative stance seems the natural rallying point. Indeed, whether one likes the language of context, limits, and unintended consequences in complex path dependent systems or not, the caution against hubris and centralized control is a conservative language.

Hence the question: Do these insights truly support a conservative stance in public policy? We are now confronting what seems to be one of most intriguing aspects of the intellectual developments discussed in this essay. A case could obviously be made for a conservative reading. Yet, at the same time, a substantially different reading could be advanced. Let us take them one by one.

The emerging position sounds somewhat familiar because it resonates as a micro-level version of the already familiar macro-sociological theme of (neo-)conservative tones, articulated, among others, by authors such as Robert Nisbet or F. Fukuyama. The gist is that the institutions of modernity (capitalism and democracy), need in order to function, the existence of functional pre-modern institutions and social norms that generate a certain social environment, a certain set of social relations and attitudes. There is a social and cultural dimension that makes the more preeminent and visible capitalist and democratic arrangements work tolerably well. Modern economic and governance performance depend on that underlying and neglected social dimension that acts as a necessary condition of their functioning. Hence there is a concern for having this constitutive resource undermined, shattered, or consumed without replacement by the formal, main institutions, in their operations and expansion.

Turning back to the institutionalist program, in a sense, it is all ironic. It looks like an entire research cycle started decades ago in search of a grand theory of collective action and institutional design, with a view to create a scientific basis for designing social change schemes, apparently has come to speak of conservative themes and in something that resembles a conservative idiom. The institutional theorists avoid scrupulously the ideological or public philosophy tangent, but then all that is left to debate is a matter of semantics: How should one label this renewed understanding of the limits of policy interventions and centralized social control? What is the best way to characterize its insights on social continuity and change? It is intriguing and significant that looking at major figures of the neo-institutionalism movement, such as D. C. North and Elinor Ostrom, one could hardly find any enthusiasm for this or that policy blueprint (or the very idea of such blueprints), but finds instead abundant caveats regarding the dangers of hubris, or the limits of prediction and control when confronted with the complexity, variety, and multiple dimensions of institutional order.

Again, social norms and the way they are treated as a policy intervention variable, are the best indicator. Probably the best examples of an activist optimist interventionist ethos is currently fueled by Behavioral Economics, through its influence in Law and Economics. It is very intriguing that in many cases, when it comes to social norms and their policy intervention implications, this literature simply glosses over the difficulties and problems identified by the institutionalist research. Cass Sunstein and Richard Thaler are the leading example in this respect, the authors most responsible for creating a consistent doctrine of intervention at the interface between law and behavioral economics: the “Nudge” approach.³¹ One could look long for an equivalent of a similar stance in the institutionalist literature. How one may label those stances is in the end secondary. The point is the stark differences.

In brief, it is easy to see how the feasibility complications revealed by the collective action, critical mass, social-norms centered, institutional analysis of causality, malleability, and validity in policy designs may lend support to a “conservatism” interpretation. It is tempting to see in those results a more technical up-to-date version of what Albert Hirschman dubbed the “rhetoric of reaction”—that is, better empirically grounded versions of the perversity thesis, the futility thesis and the jeopardy thesis.³²

Yet, at a closer look at the institutionalist results and their implications, an equally plausible and tempting interpretation renders itself to our attention. It is actually a case not for conservatism but for a certain form of institutionalized dynamism. In this view, policy problems are seen as part of a larger, complex, and evolving system. It is a case for institutional diversity, for polycentric systems of overlapping and competing jurisdictions, of pluralist ongoing experimentation and tinkering, probing, and adjusting the justice and feasibility frontiers. This has indeed to be a case not for conservatism but for dynamism. At its core first, is the idea of a meta-level institutional framework of “the rules of the game” constituting social arenas through systems of overarching rules. Second, is the notion that social actors interact via voluntary exchanges and voluntary associations within those general rules, generate the trends in institutional and social change (including change of social norms, as well as of the meta-level constitutive rules) in accordance with the dynamics of the aggregation of individual preferences and the collective action parameters in place. A large space is created for such bottom-up solutions, while the space of top-down targeted interventions becomes more circumscribed. The desirable and feasible are constantly defined, redefined, calibrated, probed, and experimented, as part of this multifaceted evolutionary process.

In this alternative view, public policy is seen less as a targeted intervention using instrumental variables to change dependent malleable variables and more as an indirect approach. The policy (both in diagnosis and solutions) is projected as part of a broader process taking place in an evolutionary system of nested institutional arrangements and decision arenas. We are getting now probably closer to Hayek’s position that he described using the metaphor of “gardening.” The activities “in which we are guided by a knowledge merely of the principle of the thing,” he suggested “should perhaps better be described by the term ‘cultivation’ than by the familiar term ‘control’—cultivation in the sense in which the farmer or gardener cultivates his plants, where he knows and can control only some of the determining circumstances, and in which the wise legislature or statesman will probably attempt to cultivate rather than control the forces of the social process.”³³ If that is the case, the feasibility of various interventions must look differently in gardening mode in contrast to an engineering mode. The distinctiveness of the gardening approach is the combination of an “organically” evolving process and a process in which reflection, choice, and design may nonetheless play a certain a role.

And, thus, issues of collective action, critical mass, circularity, contextual validity, and so on, as brought to the fore by modern institutional analysis, with its theoretical and empirical revelations regarding social norms and social change, could offer support to a governance approach in which the public choice process is mainly defined as endogenized, socialized, and institutionalized, as opposed to formalized, intellectualized, and externalized. In this respect, the status of the feasibility issue is not much different from the status of the desirable “ideals of justice,” as addressed in discussions in social philosophy about the tension between ideal and nonideal theory. In fact it is even more evident in the case of “ideals of justice” that the matter cannot be dealt with without bringing into the picture the more complex social-epistemological processes and the institutional arrangements that frame them. In the absence of clear-cut epistemic criteria and scientific formulas, a context-based iterative procedure of trial and error is deemed to be second best. As already mentioned, it is a case for institutional diversity, for polycentric systems of overlapping and competing jurisdictions, of ongoing experimentation, tinkering, probing, and adjusting the justice and feasibility frontiers. All the inhibiting challenges of complexity, malleability, validity, contextualism, and indeterminacy revealed by the institutionalist analysis of social norms and social change are acknowledged. Yet, it circumvents the tempting case for conservatism and instead puts forward a case for dynamism and polycentric social experimentation.

At a close look, we recognize that this is a process perspective that shifts the focus from an ideal, a final state or goal, to the decentralized activity and the interaction between social actors.³⁴ The objective of governance is not so much to achieve a predetermined configuration or a particular state. Instead, the focus shifts to the rules and the general principles that those rules reflect and the process they shape. That doesn’t mean a lack of concern with the end-results. It means that when evaluating, a situation or a system, for policy and design purposes, the various states emerging are always judged in parallel with the rules and procedures generating them. Instead of being absorbed with a particular, fixed configuration of arrangements and outcomes—an end state—the change process and its parameters become preeminent. The ultimate governance ideal is making the system flexible and adaptable, resonating closely with the changes of the environment and responding to the dynamics of the preferences of social actors on the ground. The materialization of such a governance objective must necessarily take the form of a polycentric system of institutional diversity and experimentation. The conceptual framework used to generate “policy theory” for such an objective has to go beyond a mere model of localized intervention. Thinking about institutional change, institutional design and feasibility requires conceptualizing these multiple-level, multiple-speed and multiple-intensity, nested processes. The distinguishing feature of this type of framework is the multiple-level approach.

At a closer look, this is in fact the essence of what James Buchanan and his collaborators called the “constitutional political economy” approach.³⁵ Constitutional political economy sets a metalevel pre-analytical vision that “looks at market and state as different kinds of social arenas in which people may realize mutual gains from voluntary exchange and cooperation.” The nature of those arenas and their functioning are shaped by “the rules of the game that define the constraints under which individuals are allowed, in either arena, to pursue their interests.” In this respect, a policy to “improve” markets means mainly “to adopt and to maintain an economic constitution that enhances consumer sovereignty.” Similarly a policy to “improve” the political arena “means to adopt and to maintain constitutional rules that enhance citizen sovereignty.”³⁶ This also reflects Richard Wagner’s theory of “entangled political economy”³⁷ or Easterly’s stance on the “bottom up view of institutions,” a view that is “more open to the possibility that societies evolve different institutions even in the long run” and that considers the top-down approach to be responsible more often than not for development policy fiascoes.³⁸ This, as already noted, is getting probably closer to Hayek’s own position that he described using the metaphor of “gardening.”³⁹ This is also the Ostroms’ polycentric, democratic public administration idea that must be analyzed as an interplay of three institutional levels (constitutional, public choice, and operational) and that has been extensively investigated both theoretically and empirically by them and their associates. And this is also convergent with the efforts to revamp and rearticulate the Popperian notion of Open Society, “a framework in which different perspectives can search, share, debate, and dismiss each other’s insights, while engaging in cooperative social relationships.”⁴⁰

In brief, the institutionalist approach to feasibility suggests a social-epistemic approach combining incentives and knowledge elicitation and mobilization, in which the ideal and the feasible are constantly explored and tested, via a diversity of collective and interactive arrangements and processes. The frontier of ideals of justice or of the practically implementable are continuously probed, configured, and reconfigured while tinkering “in the neighborhood.” It is a remarkable convergence of views, social scientific and philosophical. In what measure we are justified to consider it an intellectual tradition, from Hayek and Buchanan to Ostrom and beyond, is a separate discussion. By all accounts, it looks like it offers not only a nuanced understanding of institutional design but also an alternative to the standard public philosophy and ideology taxonomy: it is distinctive enough from both the conservative reluctance to intervene and the progressive interventionism that currently define the ideological spectrum, and it is backed up by an impressive theoretical and empirical literature.

Seen in this light, the program of institutionalism (and the developments fueled by its insights) may be considered as a direct contribution to this alternative tradition. If that is the case, we are confronted perhaps with the most important and intriguing contribution of the “Institutional Revolution.” Unfortunately, it is also its less discussed, noted, and used aspect. And yet, if one goes beyond the agnostic, cautious lessons of the institutional analysis literature outlined in this essay, one could discover the elements of a fresh view of governance, a distinct analytical and theoretical universe, irreducible to the currently dominant political doctrines or social scientific orthodoxies. In the end, the message of institutionalism seems to be more coherent and far-reaching in its foundational-philosophical and applied directions, than both its supporters and critics have been prepared to admit.

And thus a discussion of social norms from an applied perspective that uses as a vehicle the results of the institutionalist research program, has conducted us consistently, via multiple pathways, to an engagement with the complex domain where a meta-theoretical, philosophical apparatus meets policy theory and the social science dimensions. Illuminating the nature and complex dynamics of social norms, as well as their function in the institutional architecture, has put us in the position to isolate and focus on the key problem of feasibility, the ultimate source of relevance for all methodological, theoretical and empirical research endeavors. In this respect, the conclusions of the institutionalist research program lead to a more realistic and nuanced understanding of the feasibility issue, with all its applied, normative and philosophical dimensions. That, in turn, invites a thorough rethinking of the ways one understands the governance practices and the governance doctrines that support in the public arena those practices. In all this, the empirical element, the appeal to realism and practicality, is important, is necessary, but it is not sufficient. In the end, the logic of the “institutionalist revolution” in social sciences, starting in deep empirical analysis territory and implying the reassessment of the “informal” domain of social norms in the casual scheme of social analysis, inescapably leads to a renewed engagement with multiple challenges that cannot be dealt with by the empirical social science apparatus alone. It is both an invitation and a challenge to philosophers to engage and advance to a new level the range of insights, concepts and conjectures resulting from this fascinating chain of intellectual developments.