Gonzalo Caballero

Comparing theories of institutional change

This article compares a variety of theoretical approaches to conceptualizing institutional change. Our goal is neither to discover the ‘best’ theory, nor to attempt to build a new one. Rather, we wish to compare how the theories we consider agree or differ with respect to the causes, process, and outcomes of institutional change. Some of the theories we discuss emphasize the deliberate creation of institutions through the political process, while others emphasize the spontaneous emergence of institutions through evolutionary processes. Still others combine elements of evolution and design. We differentiate a variety of approaches to conceptualizing the interaction between formal and informal rules. We discuss recent theories based on the ‘Equilibrium View’ of institutions, and theories emphasizing the role of habit, learning, and bounded rationality. We also consider theoretical explanations for institutional inertia and path-dependence.

The Diversity and Rapprochement of Theories of Institutional Change: Original Institutionalism and New Institutional Economics

Abstract Understanding the complexity of institutional change is a necessary step in gaining deeper knowledge of economic performance over time, and it is one of the main challenges in the research agenda of institutionalism. Institutional change can be studied using a variety of theoretical approaches. We study some of the main approaches to institutional change in original economic institutionalism and new institutional economics. First, after comparing the approaches of Émile Durkheim and Thorstein Veblen, we focus on the contributions of the instrumental value theory and other original institutional traditions in the study of institutional change. Second, new institutional economics improved on the weak points of rational choice institutionalism regarding institutional change and incorporated the “institutions-as-rules” approach (Douglass North) and the “institutions-as-equilibria” approach (Avner Greif, Masahiko Aoki). We analyze both approaches to institutional change. Furthermore, we present an updated nonintegral overview of approaches to institutional change, show several interconnections between original and new institutionalisms, and conclude that the dialogue between the different theories of institutional change is relevant and beneficial.

Transaction Cost Politics in the Map of the New Institutionalism

In recent decades, the new institutionalism has strongly emerged in social sciences. Institutions have come back to the main research agenda in economics, politics and sociology. This paper presents and analyzes the program of Transaction Cost Politics within the map of the new institutionalism. Transaction Cost Politics constitutes an extension of the New Institutional Economics towards the analysis of politics, and it points out the relevance of institutions in political markets that are characterized by incomplete political rights, imperfect enforcement of agreements, bounded rationality, imperfect information, subjective mental models on the part of the individuals and high transaction costs. The paper reviews the main contributions of Transaction Cost Politics and we study the relationships of Transaction Cost Politics with Rational-Choice Institutionalism, Constitutional Political Economy and the New Institutional Economics.

Institutional Change, Specific Investments and Photovoltaic Power Plants: The Empirical Effects of the Energy Policy of “Solar Farms” in Spain

The Spanish economy has historically relied heavily on oil as a source of energy, and this has led to a political and economic debate on the Spanish energy model. This is particularly evident in the twenty first century when efforts have been made by Spanish political decision-makers to contain such strong dependence and furthermore try to develop renewable energies in order to have a more diverse, sustainable and cleaner energy model. Therefore, the Spanish government introduced a bonus policy for installation and exploitation of photovoltaic solar energy, which produced a strong sectoral increase and gave rise to a cumulative installed power rating of 4651 MW up to 2014. However, the institutional framework and the incentive policies for the sector were unstable between 2007 and 2014, and led to a substantial change in bonus policies applied by the different governments to the sector. Therefore, while Royal Decree no. 661/2007 established a special scheme that actually managed to increase photovoltaic installations in Spain through a bonus system, later the passing of several decrees and rules led to an institutional change that resulted in a reduction and cancellation of such bonuses and to a downfall of the sector.

Institutional Change in Spain from Francoism to Democracy: The Effects of the Great Recession

Institutional Change in Spain in the second half of the twentieth century has been a story of success. After the Spanish Civil War, a dictatorship was established in the country in 1939 and the political regime implied an institutional design that evolved over time. In 1959 there was an important reform that propelled economic markets and development, and the death of General Franco in 1975 opened up a period of institutional change that conduced to democracy. The new self-enforcing institutional framework that emerged in the political reform of democratization has implied a modern democratic system, the adhesion to the EU and an Europeanization of civil society, a decentralization political process, social and cultural modernization, the making of a Welfare State, and the expansion of the economy. These institutional foundations adequately worked until the Great Recession that has intensely affected the Spanish economy since 2008. The huge economic crisis has implied electoral changes, new social movements, and distrust on political institutions, and understanding these trends is relevant to study how the economic crisis can influence the process of institutional change in Spain. Therefore, this study attempts to provide new and original empirical evidence on the existence of a long-run relationship between economic crisis and political trust in Spain using monthly data. Specifically, the Autoregressive Distributed Lag (ARDL) approach to cointegration is employed to discover such relationship and to quantify the impact of the economic crisis on the Spanish political trust. The empirical findings indicate that the economic crisis has a negative impact on political trust and provide an estimation of this effect.

Institutional Foundations, Committee System and Amateur Legislators in the Governance of the Spanish Congress: An Institutional Comparative Perspective (USA, Argentina, Spain)

Legislative organization matters for policy-making, and institutional rules determine the role of property rights, hierarchies, individual deputies, parliamentary groups, transactions and committees in the industrial organization of Congress. The New Institutional Economics and Transaction Cost Politics have given rise to a relevant research program on legislative organization. This paper analyses the institutional foundations of legislative organization of the Spanish Congress from an institutional and transactional comparative perspective. Electoral rules and Committee systems are institutional determinants of the political property rights of congressmen and the structure of governance of legislative organization. This paper studies the industrial organization of the Spanish Congress, and we compare this case with those of the traditional model of the US Congress and the Argentine Congress. In this respect, new light on the young Spanish Congress is shed.