In the past two decades, scholars in sociology, economics and political science have simultaneously rediscovered the importance of institutions as guides and constraints on human behaviour. But under what conditions do institutional reforms produce unintended policy consequences? Compiled for Comparative Political Studies, this paper uses two empirical case studies to demonstrate that it is the broader institutional context in which the institution is embedded that influences the likelihood and effect of unintended outcomes.
Unintended consequences are those procedural or policy consequences that diverge from the intentions of reformers. The conditions that make it more or less likely that institutional reform will achieve its intended procedural and policy goals remain unexplored. Unintended consequences may be unavoidable, given the frequent turnover and diverse preferences among the agents involved. It may however be possible to identify conditions that may limit these unintentional consequences.
Two case studies demonstrate how the broader environment can affect reformers abilities to achieve their objectives when modifying an institution: the institutional changes enacted by the US Congress in relation to foreign policy in Nicaragua and Prime Minister Margaret Thatcher’s industrial policy reforms. In both cases the broader institutional context conditioned the achievement of the intended objectives:
- The broader context in which congress operated both hindered and empowered them.
- Ronald Regan was able to ignore congressional reform for several years because of decentralised decision-making and norms privileging secrecy and executive dominance.
- Congress achieved their objectives because the broader institutional structure gave them the instruments for monitoring and enforcing compliance.
- Thatcher controlled the consequences of changes to industrial policy institutions because of the centralised state and the prime ministers position within it.
- Reformers in both countries found budgetary powers a significant method of controlling their institutional reforms.
- Fewer unintended consequences emerged in the centralised than in the decentralised political system.
Three aspects of the environment in which institutional changes are embedded are particularly important:
- A reformers access to policy instruments to monitor and sanction compliance with reforms. For example, the reformers position in decision making, ability to appropriate funds, appoint new office holders and create new institutions.
- Normative understandings which can reinforce or work against specific institutional reforms. Institutional change is more likely to endure when it reinforces and is reinforced by broader normative understandings.
- The organisation of decision-making authority within the state determines the ability of the state and societal actors to derail institutional change and its intended consequences. In particular, the degree of centralisation of decision-making.
