Institutionalism 3620-I-SP-OG

There are two sides to institutions. There are regulatory bodies, such as governmental and international organizations. And there are the values that underpin all social interactions. The major institutions in our lives are covered by family, government, the military, school, and business. The underlying values of each of these is different. Families in the Western world have love as the symbolic medium of exchange, although loyalty, pride, status, and
other values also play a part. Religion values the sacred. The military honors strength, valor, and loyalty. Politics values power. Government values honesty and ethical working.
Education values knowledge. The healthcare system values health. The symbolic medium of exchange in business is money. The interplay of these different institutions and their values
impinge on all daily activities.
Organizations are how we coordinate the activities of individuals for collective goals.
Rhetoric or language is how the goals are transmitted to the individuals by the collective and by the leaders. Language, of course, is what the legal system uses to codify the rules by
which we live. Science uses language too, but scientific theories of how the world works are tested through experiments, and mathematics is the language used to measure truth in
science.
The traditional Institutionalism in the social sciences is exemplified by Philip Selznick’s study of The Tennessee Valley Authority in 1948. This view of institutions harks back to Max
Weber and looks forward to Talcott Parsons. It looks at power between individuals and organizations as central to activity.

Traditional institutionalism has been displaced in academia by the New Institutionalists, who look between the cracks. It looks at activity as symbolic and legitimacy as a means of
coalescing support. New Institutionalism has three academic offshoots. Each one has a slightly different take on institutions and organizations.
Sociology and New Institutionalism
The sociology of New Institutionalism is a response to the rational choice model. Ever since
Frederick Taylor, management theory has focused on finding the optimum rational solution.

New institutionalism says that some solutions that are not optimal and not rational are chosen anyway, because they solve social or political needs. Meyer and Rowan’s seminal 1977 article identifies that rationality is a myth that justifies behavior (J. W. Meyer, and Brian Rowan, 1977) .
The myth of the rational propels management theory. Management by objectives. Strategic
planning models. Acquisition screening models. Clinical pathways. QALY – quality of life year. The value of life quantified. Computerization and the ability to measure many things,
as well as the value of science and measurement, has led to the quantification of many decisions that are not objective. This sociology branch of new institutionalism has found a
home in accounting research, where accounting and budgeting decisions are seen as social and political. See (Brignall & Modell, 2000) and (M. A. Covaleski, and Mark W Dirsmith,
1986) . The contribution of New Institutionalism-Sociology to this topic is that organizations have processes and procedures that are rational but not in the ways explicitly described by
the actors.

Economics and the New Institutionalism of Modern Monetary Theory Classic economic theory is purely rational. Within boundaries it is good at explaining supply and demand. It justifies financial market models that put the shareholders’ interests above all others. In practice it has turned out to be a political theory, because it supports those with capital over other interests in society. In fact, it is not even a good theory for how
people make economic decisions. New behavioral theories of economics are turning capitalism on its head. (Beinhocker, 2014) .

One offshoot of the new institutionalism in economics is Modern Monetary Theory. It builds on work from John Maynard Keynes. It rejects the classical monetarism of theorists like
Milton Friedman. The work of Frederick Hayak, a European who was reacting to the forces that led to WWI, are also important to the Chicago school that MMT rejects.

Experimental Psychology and Institutionalism
Experimental psychology supports the new institutional logic that people don’t make rational decisions but that rationality is used to justify their opinions about moral and ethical beliefs. Jonathan Haidt, experimental psychologist from U Penn, has shown that people do not start with rational arguments. They start with culturally determined beliefs
and then justify them with reason. (Haidt, 2013) .

Historical Institutionalism
Historical Institutionalism is built on Path Dependency. It states that the path that the political system has taken, the frameworks built into its decision making, determine the paths that future changes can make.

International Organizations and Institutionalism
Institutionalism looks at international relations and international organizations through the lenses of new institutionalism and historical institutionalism. This course will cover both.

Rhetorical Institutionalism
Language is the medium through which leaders mould their concepts of how the organization should change. As expressed in the quotes below, Green & Li describes how
institutional entrepreneurs use rhetoric (language) to mold culture to their vision.

“Fields are best conceptualized as strategic and political arenas where actors as institutional entrepreneurs pursue differing interests as they pit one logic against another to achieve
dominance.” (Green Jr & Li, 2011) p1669
“Institutional entrepreneurs bring about endogenous institutional change by using rhetoric to create an incongruous perspective: the dismantling of old identifications and the
construction of new identifications.” (ibid. p 1678)
These are the strands that will make up the majority of this new course. There will be energy spent to help the students use institutionalism to view Poland and Central and Eastern Europe in these times of change.