I’ve spent some time recently considering how institutions adapt, particularly the punctuated equilibrium theory and how it relates to path dependence. Punctuated equilibrium (as I understand it from Krasner’s 1984 work “Approaches to the State”) essentially says that institutions continue with the status quo until there is a crisis, and then either adapt to the crisis or die. The longer an institution has persisted, according to path dependence, the more difficult it will be to adapt. This seemingly simple proposal has been slightly modified by scholars over the years (for example, Greif and Laitin’s 2004 “A Theory of Endogenous Institutional Change”), but in general it seems to be the predominant theory on institutional adaptation. Nevertheless, in my mind, some deep questions persist.
First, it is puzzling to me as to why international relations holds the adaptation powers of younger institutions in higher regards to older institutions. The argument is that older institutions are more set in their ways, according to path dependence. But, it seems to me, that once set, all institutions are difficult to change. For example, I am not sure that changing the permanent five members of the United Nations Security Council would have been easier two years after the establishment of the United Nations than it is today.
Second, according to punctuated equilibrium, in order to adapt an institution, there must be some foresight as to what specifics steps should be taken for appropriate adaptation. In practice, this foresight seems unreasonable and impractical, especially if the institution has been maintaining status quo for several years and then suddenly experiences a crisis. This, in itself, seems like an odd assumption – international environments tend to be gradual changes, not in step functions.
Third, and this point echoes several previous critiques of punctuated equilibrium, is to what extent can an institution actually adapt while remaining the same institution. More specifically, assuming that an institution was initially created to lock in the normative environment of the time, but a crisis changes the normative environment and the institution must adapt to in order to survive, can it still be considered the same institution since the previous norms are no longer part of the institution? It would seem to me that it would be fundamentally changed from this perspective, but again this would suggest that institutions were fundamentally un-adaptable, which does not seem an accurate portrayal of reality either.
Fourth, which is related to the third point, if an institution’s adaptation inevitably leaves old norms behind, couldn’t this negatively affect the commitments made before the institution’s adaptation? If the new norms consider the terms of the previous commitments violations of the rules of the game, then would suggest an end to the commitment. If there is a definite end to the commitment at the time that a commitment is made, then, as game theory would suggest, the commitment would unravel. Without the facilitation of cooperation, and the locking in of norms, why invest in institutions?
We know, from common observation, that none of the outcomes predicted by my critiques happen in practice. So, what could be a more accurate portrayal of institutions and adaptation?
Here is my proposal. What if institutions were constantly undergoing a crisis – addressing a crisis at their formation, but continuing to address crises of varying degrees after they are established. These crises could be nested and overlapping, and it is not necessarily knowable how the most immediate crisis is related to upcoming crises. Furthermore, part of the “rules of the game,” the norms and environment built into and locked in to an institution, is crisis management. This would avoid the double standard of young and old institutions – institutional learning might be able to inform how institutions respond to crises, giving older institution an advantage over younger institutions, but it could also hinder creative solutions. Therefore, depending on one’s interests and intentions, there could be an incentive to either continue investing in existing institutions, or to start new ones. It also would not require the assumed foresight from punctuated equilibrium. Because crisis management would remain a significant constant for institutions, institutions would be allowed to adapt to a changing environment without necessarily compromising its locked in norms, which, in turn would minimize the unraveling cooperation effects.
More thought and empirical analysis is necessary to further develop my proposal, but here is my initial theory.