Institutions Shape Outcomes Beyond Their Rules

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Institutions are defined as the rules of the game, delineating fair play and objectives within specific frameworks, such as sports or marriage. While the rules themselves may be consistent across different cultures, the outcomes can vary significantly when applied in diverse contexts. This discrepancy is illustrated by how Latin American countries adopted elements of the American Constitution, despite the original American governance framework experiencing difficulties. Hence, institutions cannot be purely understood through their written rules, as cultural and contextual factors heavily influence their effectiveness and results.

One common feature of complex systems is sensitive dependence on initial conditions: a small change in how systems begin evolving can lead to large differences in their later behavior. In the social sphere, this is a way of saying that history matters. But it can be hard to quantify how much certain specific historical events have affected contemporary conditions, because the number of variables is so large and their impacts are so interdependent. Political economist Jean-Paul Faguet and collaborators have examined one case where we can closely measure the impact today of events from centuries ago: how Colombian communities are still affected by 16th-century encomienda, a colonial forced-labor institution. We talk about this and other examples of the legacy of history.

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Blog post with transcript: https://www.preposterousuniverse.com/podcast/2024/08/26/287-jean-paul-faguet-on-institutions-and-the-legacy-of-history/

Jean-Paul Faguet received a Ph.D. in Political Economy and an M.Sc. in Economics from the London School of Economics, and an Master of Public Policy from the Kennedy School of Government at Harvard. He is currently Professor of the Political Economy of Development at LSE. He serves as the Chair of the Decentralization Task Force for the Initiative for Policy Dialogue. Among his awards are the W.J.M. Mackenzie Prize for best political science book.