James March and Johan P. Olsen, “Institutional perspectives on political institutions”, Governance 9 (1996), pp. 247-264

Summary: Examine some basic assumptions about the nature of political institutions, the ways in which the practices and rules that comprise institutions are established, sustained, and transformed, and the ways in which those practices and rules are converted into political behavior through the mediation of interpretation and capability.
Method: Delineates two conventional stories of democratic politics: (1) politics as arranging exchanges, as a market for trades in which individual and group interests are pursued by rational actors (emphasizes the negotiation of coalitions and ‘voluntary’ exchanges; (2) an institutional approach which is more integrative than (1), emphasizing the creation of identities and institutions as well as their structural effects on political life.
Important Insight: Studies of political institutions should focus on an institutional approach to political life (stressing the endogenous nature and social construction of political institutions, identities, accounts, and capabilities) rather than an exchange-based approach.
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-key point: studies of political institutions should focus on an institutional approach to political life (stressing the endogenous nature and social construction of political institutions, identities, accounts, and capabilities) rather than an exchange-based approach.
– two conventional stories of democratic politics: (1) politics as arranging exchanges, as a market for trades in which individual and group interests are pursued by rational actors (emphasizes the negotiation of coalitions and ‘voluntary’ exchanges; (2) an institutional approach which is more integrative than (1), emphasizing the creation of identities and institutions as well as their structural effects on political life.
-politics as arranging exchanges: politics aggregates individual preferences into collective actions by some procedures of bargaining, negotiation, coalition formation, and exchange (Riker 1962; Coleman 1966; Downs 1967; March 1970; Niskanen 1971). In such a view, individual actors have prior desires (preferences, interests) which they use to determine the attractiveness of expected consequences. Collective action depends on the negotiation of bargains and side-payments among potential trading partners.
-exchange stories of politics and governance have roots in the doctrines of social contract theory which arose in the 17th century. The political community is seen as atomistic. Society is constituted of individuals for the fulfilment of individual ends. Individuals have rights but no obligations or bonds, except those created through consent and contracts based on calculated advantage.
-the ability of any particular actor to realize his or her desires in such a system of exchange depends on what the desires are, what exchangeable resources that actor possesses, and what political rights he or she has. Exchanges may either have pareto-optimal qualities or may have unidirectional benefits, attained through coercion, depending on the perspective.
-politics as creating and sustaining institutions: The exchange vision of human nature as static and universal and unaffected by politics is replaced by a view of the political actor as flexible, varied, malleable, culture-dependent, and socially constructed. Intentional, calculative action is embedded in rules and institutions that are constituted, sustained, and interpreted in a political system.
-The core notion is that life is organized by sets of shared meanings and practices that come to be taken as given for a long time. Political actors act and organize themselves in accordance with rules and practices which are socially constructed, publicly known, anticipated and accepted. Actions of individuals and collectivities occur within these shared meanings and practices, which can be called institutions and identities.
-institutional stories of voluntary exchange stress two themes: (1) political action is driven less by anticipation of its uncertain consequences and preferences for them than by a logic of appropriateness reflected in a structure of rules and conceptions of identities (goes beyond even embedded rationality); (2) political change matches institutions, behaviours, and contexts in ways that take time and have multiple, path-dependent equilibria, thus as being susceptible to timely interventions to affect the meander of history and to deliberate efforts to improve institutional adaptiveness.
-re (1): identities are fulfilled through following appropriate rules, but this does not determine political behaviour precisely. Individuals interpret which identities and rules are relevant in specific situations or spheres of behaviour, and have to deal with conflicting imperatives of appropriateness.
-also, (1) suggests that individuals will, under some circumstances, act not in the name of individual or group interest but in the name of the good of the community.
-re (2): in contrast to  the exchange stories, political institutions do not differ simply b/c of differences in their environments (which require instns to address different sources of inefficiency. Rather, political institutions and identities develop in a world of multiple viable possibilities, and there is no guarantee that they will reflect functional imperatives or demands for change. Moreover, the paths they follow seem determined in part by internal dynamics only loosely connected to changes in their environments, and in the long run changes will not necessarily be consistent with prior intentions.
-in general, neither competitive pressure nor current conditions uniquely determines institutional options or outcomes. Institutional development depends not only on satisfying current environmental and political conditions but also on an institutions origin and history.
-politics is not simply a matter of negotiating coalitions of interests within given constraints of rights, rules, preferences and resources. Politics extends to shaping those constraints, to constructing accounts of politics, history, and self that are not only bases for instrumental action but also central concerns of life.
-identities evolve both exogenously (in response to external forces such as religious movements, conquest, great social and economic transformations, and migration) and endogenously (in a political process that includes conflict, public discourse, civic education and socialization). Politics develops values and identities.
-institutions transform themselves in a struggle to survive. Change may be discontinuous, contested, and problematic, occurring at breaking points in history where considerable resources are mobilized and one definition of appropriateness replaces another. However, change also occurs through mundane processes of interpretation, reasoning, education, imitation, and adaptation.
-surviving institutions seem to stabilize their norms, rules, and meanings so that procedures and forms adopted at birth have surprising durability – but communicable meaning is of course subject to reinterpretation. At the same time, too much stability may serve as a barrier to change (and thus eventual obsolescence).
-such an approach would suggest that research might focus particularly on four grand factors in political development: (1) politics depends on the identities of citizens and communities in the political environment; (2) politics depends on the distribution of political action among citizens, groups, and institutions; (3) politics depends on accounts of political events and responsibility for them, interpretations of political history; (4) politics depends on the ways in which a political system adapts to changing demands and changing environments.