* Institutions matter: The central tenet is that institutions—formal rules (laws, constitutions, contracts) and informal norms (customs, traditions, codes of conduct)—significantly structure individual behavior and societal outcomes. These institutions are not simply neutral frameworks but actively shape incentives, constraints, and opportunities.
* Path dependence: Institutional structures are often path-dependent, meaning that past choices and historical events constrain future possibilities. Once an institution is established, it can be difficult to change, even if it's no longer efficient or beneficial.
* Evolutionary processes: Institutions are not static; they evolve over time through a process of adaptation, negotiation, and conflict. This evolution is often gradual and incremental rather than revolutionary.
* Power dynamics: Institutional arrangements reflect and reinforce existing power relationships. Institutions can be used to maintain inequality or to promote social justice, depending on who controls them and how they are designed.
* Rejection of methodological individualism: Unlike neoclassical economics, institutionalism doesn't reduce social phenomena solely to the actions of individual rational actors. It recognizes the importance of collective action, social norms, and shared understandings.
Different strands of institutionalism exist, each with its nuances:
* Old Institutionalism: Focused on the descriptive analysis of institutions and their historical development.
* New Institutionalism: Emerged as a reaction to the limitations of old institutionalism, employing more rigorous methods and theoretical frameworks, often drawing on game theory and rational choice theory. Several sub-types exist within new institutionalism, such as rational choice institutionalism, historical institutionalism, and sociological institutionalism.
In summary, Institutionalism highlights the crucial role of institutions – both formal and informal – in shaping economic and political behavior and outcomes. It emphasizes their enduring influence, their evolutionary character, and their embeddedness in power structures. This makes it a powerful lens for understanding social and political phenomena beyond simple market explanations.