Pierson (2000): Increasing Returns, Path Dependence and the Study of Politics

spatial location of production (physical proximity) argument

"established firms attract suppliers, skilled labor, specialized financial and legal services, and appropriate physical infrastructure"

the central role of collective action

-"influencing government policy almost always has very high jointness of supply" which generate major collective action problems. -"the effectiveness of my action will depend heavily on the actions of others." -"despite massive social, economic and political changes over time, self-reinforcing dynamics associated with collective action processes mean that organizations have a strong tendency to persist once they're institutionalized."

the high density of institutions

-"politics involve struggles over authority to establish, enforce and change the rules of governing social action in a particular territory (i.e. most of politics is based on authority rather than exchange" -"policies are remarkably durable" -"as social actors make commitments based on existing institutions and policies, their cost of exit from established arrangements generally rises dramatically."

possibilities for using political authority to enhance asymmetries of power

-perhaps knowledge -asymmetries of power form from positive feedback

factors of social life prone to increasing return process

-prominence of collective activity in politics -the central role of formal, change resistant institutions -the possibilities for employing political authority to magnify power asymmetries, and the great ambiguity of many political processes and outcomes

technological characteristics of increasing returns

1) large set-up or fixed costs 2) learning effects 3) coordination effects 4)adaptive expectations

key elements of increasing returns

1) pinpoint how costs switching from one alternative to another will, in certain contexts, increase over time 2) draw attention to issues of timing and sequence, distinguishing formative momenta or conjunctures from the periods that reinforce divergent paths -not just what happens but when it happens -economists clarified implications of path dependence and identified many specific aspects of a particular social environment that generate such processes

4 prominent and interconnected aspects of politics that make social life conductive to increasing returns (positive feedback)

1) the central role of collective action 2) the high density of institutions (institutional development) 3)possibilities for using political authority to enhance asymmetries of power (exercise of authority) 4) it's intrinsic complexity and opacity (social interpretation)

characteristics of increasing returns

1) unpredictability 2) inflexibility 3) nonergodicity 4) potential path inefficiency

endogenous growth theory (economic growth)

Romer argues that increasing returns are associated with economic applications of knowledge. -Knowledge is nonrival (unlike labor and capital). -A single gain in knowledge can be applied to many settings and can lead to dramatic improvements to productivity. -economic growth generates positive feedback that defines increasing returns process

nonergodicity

accidental events early in sequence do not cancel out. they cannot be treated (which is to say, ignored) as "noise," because they feed back into our future decisions. small events are remembered

unpredictability

because early events have a large effect and are partially random, many outcomes may be possible. we cannot predict ahead of time which of these possible end-states will be reached. (early on it's not as predictable but later on it is

polya urn process demonstration

emphasizes that earlier events in sequencing matter much more than later ones. if you stick with the sequence, you will eventually reach an equilibrium

potential path inefficiency

in the long run, the outcome that becomes locked in may generate lower pay-offs than a foregone alternative would have

Margaret Levi's definition of path dependence implication

increasing returns process can be described as SELF REINFORCING or positive feedback processes. -this paper employs this particular use of the term

path dependence

no clear definition of the term -(broadly speaking)what happened at an earlier point in time will affect possible outcomes of a sequence of events occurring at a later point in time - Swells: " we cannot understand the significance of a particular social variable without understanding how it got there and the path it took." - Margaret levi: (more narrow) "once a country or region has started down a track, the costs of reversal are very high."

revolutionary cascade

occurs when an individual's participation triggers the participation of others in a chain

repeated play

re-relection: elections are the bedrock of every democratic nation -"unlike economic actors, political actors must anticipate that their political rivals may soon control the reigns of government" -"incentivized to bind themselves in credible commitment to grow economy

Douglas North

says that all the features Arthur argued in "investing increasing returns in technology" could be applied to institutions. -in contexts on social interdependence, new institutions often entail high fixed or start up costs -they involve considerable learning effects, coordination effects, and adaptive expectations -institutions are hard to change; individuals and organizations adapt to existing institutions

path dependence claim #2

sharp contrast to prominent modes of argument and explanation in political science that attribute large outcomes to large causes and emphasize: -the prevalence of unique, predictable political outcomes. -irrelevance of timing and sequence -capacity of rational actors to design and implement optimal solutions (given resources and constraints) to the problems that confront them

increasing returns

some theorist argue this is part of path dependence; some are beginning to argue its causes and consequences

path dependence claim #1

specific patterns of timing and sequence matter -starting from similar conditions, a wide range of social outcomes may be possible -large consequences may result from relatively "small" or contingent events -particular courses if action, once introduced, can be virtually impossible to reverse -consequently, political development is often punctuated by critical moments or junctures that shape the basic contours of social life

cost of exit

switching to some previously plausible alternative rises the potential costs

inflexibility

the farther into the process we are, the harder it becomes to shift from one path to another. in applications to technology, a given subsidy to a particular technique will be more likely to shift the ultimate outcome if it occurs early rather than late. Sufficient movement down a particular path may eventually lock in one solution

necessary and efficient

the presence of A and A alone will lead to B but necessary could have other conditions. -potential path inefficiency is both of these things

potential path inefficiency in necessary and sufficient

you don't necessarily switch paths if the path you pick isn't lucrative. certain payoffs we forgo to maintain payoffs elsewhere.