Institutional survival and return: examples from the new pension orthodoxy
In the struggle of historical institutionalism to explain the origin and change of institutions, the state-of-the-art is currently represented by Streeck and Thelen’s (2005) study Beyond continuity. The book departs from the previous, bifurcated literature, which divides institutional evolution into long periods of stasis, characterised by incremental change and short, sudden bursts of institutional innovation. The authors, in fact, focus on change as a combination of process and result. In particular, they show how a rigid dichotomy between typically path dependent incremental adaptation (or simply continuity) and radical transformation does not capture important transformative processes common to advanced political economies. Most innovatively, their contribution focuses on examples of radical but at the same time gradual transformation.
In this essay, Streeck and Thelen’s argument is integrated by investigating what the two authors call ‘survival and return’ types of institutional change. The paper first defines the concept and subsequently individuates two phenomena falling under this category. (i) Survival through replication, where the institutions that are the object of reform survive despite a structural overhaul.
The breakdown of the old institution does not happen, because the new arrangements perform identical functions, as before, thereby failing to generate a concomitant shift in the logic of action. (ii) Return by reaction, where those institutions that undergo restructuring return despite structural reforms. In this case, the old logic of action returns as a consequence of rule-takers’ demands
for its reintroduction.
The study individuates in the agenda-setter’s strategic behaviour the key explicans for the two phenomena. Under particular political-institutional conditions – that is, the operation of an unconstrained executive – unilateral or divisive policy-making that unevenly allocates gains and losses becomes more likely. The neglect of the distributive dimension of problem-solving implies
that either the reformed institutional arrangements are disguised replicas that do not deviate from the old logic of action, if this provides material advantages to the agenda-setter; or they reallocate resources and create a new logic of action, but at the same time trigger the reaction of the reforms’ losers, who demand the reintroduction of the old logic.
In order to substantiate such classification and explication of the two phenomena, the paper analyses the instability of paradigmatic pension reforms enacted in Croatia and Hungary in the late 1990s. Both countries’ policy-makers unilaterally overhauled the respective retirement systems, but the partial, incoherent or fictive institutional replacement steered the new arrangements away from their original designs. The old, inherited and inefficient public pension systems either survived the abrupt process of change for politically instrumental reasons, or they returned as a result of popular dissatisfaction, thereby generating hybrids between old and new logics of action. The tangible possibility that the reaction against the new logic and the replication of the old schemes lead to further hybridisation or marginalisation requires yet another structural overhaul of the freshly implemented multi-pillar systems.
The paper’s argument is structured as follows. The first section presents the evolution of historical institutionalists’ understanding of change – from the early 1980s to Streeck and Thelen’s theoretical framework – and defines their ‘survival and return’ concept. The second section lists the features of the new pension paradigm, compares it to socialist legacies and presents the two case studies. The following part shows how the implementation of pension reforms in Croatia and Hungary underwent the abovementioned processes, thereby leaving the new institutional arrangements in a haphazard state. In the final part, reaction and replication are conceptualised as two analytically distinct instances of ‘survival and return’.