What Are Institutions, and Why Are Ours Crumbling?

Norms, Systems, and Breakdowns

If you’ve been paying attention over the past four years, especially to a popular strain of centrist and center-left political analysis, you’ve probably run across a lament or two over the pitiable state of our “institutions.” Maybe the concern du jour is instead the breakdown of our “norms.” In this strain of often-breathless discourse, “institutions” and “norms” serve as shorthand for the guardrails and guideposts that shape the behavior of actors within the peculiar American political system. These commentators are essentially saying that bad actors are breaking the rules, Rubicons are being crossed, and things are going to hell in a handbasket. Our precious system is falling apart.

This line of reasoning has real merit. Lines are being crossed. Norms are being violated. Institutions are crumbling. Things are falling apart. That was the case even before the pandemic and a wave of pent-up anger over our blatant racial inequities placed a crushing series of weights on every layer of American governance, from the presidency down to county public health offices. There’s genuine value in grasping precisely what’s breaking, where, how badly, and why.

To be clear, I’m as guilty of this as anybody else; in fact, I’ve spent more than my fair share of time over the past four years bewailing ongoing breakdowns and trying to understand their implications. I still don’t think it’s understood enough just how messed up various essential aspects of the American political system have become, though the pandemic is doing a good job of driving that point home.

Instead of doing more lamenting, as good as it might feel, I want to take a step back to define some terms and break down the system itself. What do we even mean when we say “political system”? What, exactly, is an institution? And why does any of this matter in the grand scheme of things?

Let’s focus on institutions, because they’re the bedrock - the constituent pieces - of the system as a whole. The term has a slightly different meaning when we’re applying it analytically than it does in common parlance; the popular definition of “institution” has a formal ring to it, but that’s not the case in political science, economics, or sociology, the disciplines that make the greatest use of institutions as a tool for understanding the world. Institutions can be formal - the Postal Service or the Department of Defense, for example - but they don’t have to be; on the informal side, institutions encompass all aspects of our world.

There are a few different ways of defining institutions, some of them extremely technical, but the specifics aren’t all that important to us. The one I like the most, with a couple of caveats, is this, from the economic historian Avner Greif: An institution is a system of rules, beliefs, norms, and organizations that together generate a regularity of behavior. Basically, institutions structure our behavior. They set the rules by which we play the various games that make up our lives and shape the way we act in all sorts of different situations.

I really like institutions. I like them enough that I just finished writing a book about economic institutions, specifically those that shaped attitudes toward credit and investment, in the early modern world. The reason I like institutions is because they’re a powerful and flexible tool for explaining three things: the granular details of everyday interactions on an individual level; the broader picture of why people act the way they do in groups; and finally, the big-picture implications of that behavior over historical time.

Institutions are everywhere, all around us. Let’s say you walk into a grocery store. The employees likely belong to a union, which sets collectively bargained rules regarding their relationship with their employer. That’s one institution. Apples, oranges, lettuce, and potatoes end up in the produce section because of the network of distributors and middlemen who connect the producers to the store’s (or chain’s) buyers. That’s another institution, albeit a less formal one, that sets agreed-upon standards of behavior and fair dealing between the parties. When you go to the checkout counter to pay for your purchases, you and the store are working through a whole series of institutions, from the Treasury and the banking system all the way on down to the individual consumer: You’re all agreeing to operate on the basis of a whole bunch of different rules and norms of behavior, starting from the basic assumption that the money (cash, check, credit card, EBT) you’re paying has actual value as a medium of exchange.

There are written laws and formal organizations involved in your trip to the grocery store, of course, but there are also unwritten and informal ones: The more amorphous concept of “grocery store as institution,” with its specific manifestations in that particular place and time, shapes how you interact with the employees and your fellow shoppers, whether you expect the grocery-bagger to help carry your purchases to your car, and so on.

Our trip to the grocery store therefore involves a whole series of social and economic institutions. A political system is no different; it’s nothing more than an agglomeration of different institutions, all of them setting formal and informal rules, shaping individual and group behavior, working together, and sometimes grinding up against one another.

Some of those institutions are formal, like Congress, the Supreme Court, the DNC and RNC, and think tanks. Others are informal: donor networks, the process for appointing and approving federal judges, political campaigning, the whole industry of lobbying. Any individual actor within our political system, from the lowliest voter up to the president, can belong to and be shaped by numerous institutions at once. Nor do political institutions exist in isolation from social and economic institutions; that newly appointed federal appellate judge is still a member of the country club, still a Redskins fan, and still trusts his credit card to do its thing when he swipes it at an overpriced steakhouse. Institutions of various types overlap, reinforce, and clash in myriad ways.

Institutions are a wonderful analytical tool for helping us understand the forces shaping behavior, but there’s a slight fly in the ointment here: If the whole point of institutions is that they’re supposed to generate a regularity of behavior, then how can they change?

We know institutions change over time. It’s obvious. Mitch McConnell’s Senate isn’t Lyndon Johnson’s, much less John C. Calhoun’s. The idea of a 60-vote supermajority threshold for any meaningful legislation to pass the upper house isn’t an age-old tradition, to name just one example of how things are different now. Joe Biden’s Democratic Party in 2020 isn’t that of, well, Joe Biden in the 1970s. Labor unions aren’t anywhere near as important now and affluent professionals are much more so, which affects the means of organization, fundraising, and priorities, among many other things. 1970s Biden’s Democratic Party wasn’t that of FDR or James Buchanan, either, for that matter.

This is a bit of a conundrum for scholars of institutions, and explaining the causal mechanisms for institutional change while still retaining their regular-behavior-producing effects is a serious challenge. Institutions aren’t frozen in time even if we’re analyzing them at a particular moment, so if we want to explain their development over time, we’d better have some ideas handy; otherwise, they’re not an especially useful analytical tool.

One of the more common ways around this issue is the idea of a critical juncture. At particular points of massive upheaval, institutions can shift a great deal in a short period of time. The various strains of change at this critical juncture create a new equilibrium, new sets of norms and rules and structures that produce a new regularity of behavior. Slower, less perceptible institutional change is harder to model or predict, but it certainly exists as well.

Running through much, though not all, of the scholarship on institutions is the idea that if they exist and endure for years, decades, or even centuries, then they must be a net positive. They must be efficient and good at what they do. Otherwise, the reasoning goes, they’d simply fall apart, disappearing into the mists of time, to be replaced by better institutions. There are some fairly obvious flaws with this approach, though, which recent work on institutions has done a good job of addressing.

The upshot of that recent work is this: Institutions can stick around for all sorts of reasons. Sometimes, they are in fact efficient. A wide swathe of people find them useful, and so they wind themselves deeply into the fabric of various systems. But other institutions endure because they serve the needs and wants of powerful groups and classes, to the detriment of society as a whole.

Take craft guilds as an example, which lasted from at least the 12th century well into the 19th throughout Europe. Rather than serving as proto-labor unions that ensured fair returns for workers or organizations that allowed for the dissemination of craft-specific knowledge, or which guaranteed the quality of the goods they produced for consumers, they were in fact cartels of owners. Craft guilds allowed these cartels to set artificially high prices for consumers and manipulate wages for their employees. They endured for centuries not because of their efficiency but because they could pool their resources and influence to buy monopolies and other craft-specific privileges from the political authorities. A nice cash gift or the promise of help with tax collection in return for the sole right to trade in wool and regulate their industry, for example, was an exchange the king was happy to make. Once entrenched, craft guilds stuck around for a long, long time.

Economic historians have made similar arguments about the institution of racialized chattel slavery in the United States; it endured not because it was economically efficient when compared to the productivity of free labor, but because it created and supported a powerful and wealthy aristocratic elite who dominated the politics and society of their home regions. Great planters and smaller slaveholders wanted to maintain and expand slavery because it benefited them, not the economy more broadly. The brutal immiseration of millions and an impossibly bloody civil war, from their perspective, was a small price to pay for their social and economic status and gain.

So let’s bring this back around to the present.

It’s obvious that the last four years, and perhaps longer, represent a critical juncture. An array of forces are placing the institutions which together make up the American political system under sustained stress, and they’re changing in response to that pressure. Some are indeed, as the lamentations go, crumbling; the Council of Economic Advisors has exactly one member at present, the definition of a failing formal institution. The departments formally charged with oversight are in a pitiable condition. More broadly, there’s been serious decay throughout the administrative state. The pathetic federal response to the pandemic is clear evidence of the failure of formal organizations at every level of governance. Informal institutional norms around self-dealing, corruption, and the politicization of government agencies have been thrown to the four winds. We could go on and on, but there are simply too many examples to list.

When a talking head on TV bemoans the state of our institutions, this is generally what they’re referring to. But this kind of analytical lamentation misses one key point: When norms break down and institutions don’t do their jobs, the game is already up. These are eulogies for a state of affairs that’s already past. There’s no putting Humpty-Dumpty back together again.

Moreover, there’s no sense of the bigger picture, of the years and decades prior that have led to this state of affairs. It’s not like Donald Trump and his associates just showed up one day and took a sledgehammer to a well-oiled administrative machine and an ironclad set of institutions that generated reliable regularities of political behavior. Institutions aren’t static even when everything is running smoothly, which it’s hard to argue that they were beforehand. Iraq War, War on Terror, 9/11, Bush v. Gore: all of these things were inflection points, critical junctures in their own right. We can find more of them in the 90s (impeachment), 80s (Iran-Contra), and before. The world is constantly in motion.

Believe it or not, there’s a bright side here. This might be a particularly damaging moment, but it’s also a great time to cast a critical eye on all of our institutions.

Instead of throwing more money at police budgets, we can ask what the baseline purpose of policing is supposed to be, what the institutional culture and norms of behavior within police departments really are, and whether those best serve the public interest. What should a Department of Homeland Security, and more specifically the Border Patrol and ICE, really be doing with their enormous budgets and manpower? Federal and state unemployment insurance systems are creaking under the weight of the pandemic, but rather than doubling down on this particular institutional arrangement we might ask if there isn’t a better way. Is the revolving door between government and lobbying - the very definition of an informal institution - really something we want to preserve intact? What level of influence-peddling, self-enrichment, and outright corruption, all of them governed by institutional norms, should we really accept for current and former politicians? The Federal Reserve has handled the financial side of the pandemic economic crisis pretty dang well, so how might we streamline its operations and learn lessons from its effectiveness?

Critical junctures are times of upheaval and change, but that change doesn’t have to be for the worse.

Critical junctures give rise to a wealth of possibilities, none of which are set in stone. Some of them can and will be worse. Some bedrock institutions and norms will undoubtedly fall to pieces or disappear entirely. But this is also the time to build new things and redefine the old for the coming age, to embrace the possibilities for improvement that upheaval creates.

When we step back and ask hard questions about institutional design, about the arrangements and norms that have flourished in the nooks and crannies of our political system, we have the chance to improve them. Things that have endured aren’t necessarily good just because they benefit people who have the power to keep them intact or extend their influence. Institutions stick around for all sorts of reasons, and we don’t have to accept that they must remain static and eternal. We can tear them down, alter them intentionally, turn informal guidelines into formal rules backed by the power of law, and all sorts of other things. Our political system is indeed in trouble; its constituent institutions are under all sorts of pressure; but this doesn’t have to be the end.

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