By D. A. Parker

Introduction
Does institutional variety matter in the contemporary global political economy (GPE)? This paper explores the Neo-institutionalists claim that they do by starting with an explanation of what institutions are and how they are formed, then leading onto a summary of what function neo- institutionalists think institutions perform.
Why are there so many institutions, discussed under this heading, shows that varieties of institutions in the GPE are an inevitable consequence of the heterogeneous nature of the societies in the world; and for this reason we get variety? This concept is further discussed under the heading of, “why varieties matter: the responsibility of the state as an institution” is used as point of reference to study the neo-institutionalists claim in which the role and responsibly of the state as representatives of society in the global market is explored.
In conclusion the claims of the neo-intuitionalists that variety matters is verified as the positive and correct assumption, however, the roles and ever increasing responsibility of new institutions is discussed and highlighted.
What are institutions?
Institutions can start in the family home; they begin with simple rules that over a life time build in to the more complex structure of the family’s life. The institutional rules of the family, however uniquely apparent to the individual family, are nether the less, products of the social norms that are presented by the historical placement of the family in that time. These rules are then taken back out of the home and into the work place, and into deeper society by and adding to or taking from the cultural norms of the time.
We live in a hierarchical world, that is being constantly recreated through human action; institutions cannot be separated from this. Human action creates institutions; concomitantly, institutions also governs action and  form naturally in all societies primitive or otherwise.

The more complex a society the more complex are the institutions needed to govern and operate the society. Thus the actions of the individual are held to account only through the power of institutions, this can work for or against an individual depended on which side of the institution (law) he finds himself. In the same way this can be reversed and institutions can find that it (the institution) is being held to account for its actions against or for a particular grievance towards an individual or a group of individuals. This conception is carried forward on national and international level through society, governments and other state institutions, and more recently through transnational corporations. Human Rights, law, order, contract, ownership, private, commercial and mercantile laws are maintained and upheld through the power invested in institutions, this being one of the basic principle of conception for neo-institutionalism. Institutions become facilitators serving the needs of society through group actions and decisions that lead to regulation.
There are three main varieties of neo-institutionalism that came out of the 1960s and 1970s in response to the Behavioural models that were on offer at the time, they are; historical institutionalists who tend to conceptualise the relationships between institutions and individual behaviour, they also emphasize asymmetric power relations within the operation and development of institutions (Hall and Thelen, 2009b). Rational choice institutionalism that assumes all actors to be rational utility maximises therefore they will make the most economically rational choice thus translating to predictable patterns of behavior that institutions can capture and plan for; and finally the sociological institutionalists who argue that institutions should be seen as ‘culturally-specific practices’ (Hall and Taylor, 1996: p 16) that are created out of cultural necessity.
Why so many institutions?
Institutions are created from habits and rules, through leadership, from the family and in society or from the state, they are differentiated through traditions and cultures working habits as well as other forms, on global scale by interrelations of businesses and consumers and states, by actions of actors in the GPE. Douglas North (1999) argues that the importance of domestic political institutions as determinants of economic growth. For North, institutions comprise both sets of formal rules, like constitutions, and informal norms of behaviour. For Michael Aglietta it is the process of mediation that is important. Doulas North also argues that in an increasingly specialised world with compartmentalized production and increasing divisions of labour, institutions are necessary to mediate the complex relationships involved in this process and to ‘reduce uncertainties’ (North, 1999: p 49) in the market.
The model of individual behaviour espoused by neo-liberals is too narrow according to Chang. The neo-liberal model assumes a sort of selfish utility maximization whilst he argues that other motivations drive individuals within institutions and thus shape the way institutions affect socio-economic structures. ‘Contrary to the neo-liberal assumption, self-seeking is not the only human motivation even in the ‘private’ domain of the market, and that people do not operate with the same degree of selfishness in the public domain as in the private domain’ (Chang, 2002: p 549).
The neo-liberal approach could be viewed as the opposition to institutionalism with its emphasis on the individual. However even in neo-liberalism institutions still matter in political economy but there affects are seen as negative because the neo-liberals focus on state institutions distorting the free market. Chang challenges neo-liberalism on the grounds that individuals have many differing motives and that the attack on institutions of state is misplaced, ‘Once this assumption of pure self-seeking is dropped, the anti-statist conclusions of neo-liberalism need to be seriously modified’ (Chang, 2002: p 549). An example of this would be the state regulating pharmaceuticals they don’t do it for profit they do it for the public good, if they were to deregulate and let inferior products onto the market thus gaining more revenue from Tax rather than setting medical safety standards, would be of interest to the state budget yet a contradiction of the states responsibility.
Moreover even the free market is the interaction of many institutions: organisations of many individuals in areas of economic production which is where Chang criticizes neo-liberalism. The neo-liberal myth of individuals in a barter style economy thus they fail to identify productive organisations as institutions; ‘In this world, even the firm exists only as a production function and not as an “institution of production” ’ (Chang, 2002: p 545).
The idea of an unregulated laisez-fare free market is a myth. The market after all is a conceptualisation of the state and thus cannot be separated from the state. The responsibility of the state is to regulate the chaos that a free market creates and to create parsimony. It is necessary to co-ordinate the free market in order to do this, it is the ‘liberalization’ process that is undermining the ‘coordinated market” (Hall, et al, 2009b: p 15).
The study of institutionalism suggests, all the socio-economic structures are examples of institutions, even the “free market” itself, is an institution in a series of complex interactions with other institutions, state and non-state actors. ‘The capitalist system is made up of a range of institutions, including the markets as institutions of exchange, the firms as institutions of production, and the state as the creator and regulator of the institutions governing their relationships… as well other informal institutions such as social convention’ (Chang , 2002: p 546). This does not mean that free markets are totally downgraded in institutionalism; free markets are intermediate institutions of exchange and communication.
The varieties-of-capitalism approach distinguishes between two main modes of organization. One; ‘firm’s co-ordinate with other actors primarily through competitive markets, characterized by arms-length relations and formal contracting’ (Hall and Gingerich, 2009a: p 452). And In addition to this institutionalists that use rational choice modeling, as neo-liberals often do, combined with the coercive ability and the power of the institutions, for better or worse, forms the environment in which economic transactions takes place. ‘Firms co-ordinate with other actors through processes of strategic interaction of the kind typically modeled by game theory here, equilibrium outcomes depend on the institutional support available for the formation of credible commitments’(Hall, et al, 2009a: p 452), they do this in attempt to more effectively share information, monitor and sanction, actors actions and, to support more effective deliberations.
Apart from state institutions in neo-liberalism, all institutions are seen as negative in other streams of thought such as postmodernism. Crane & Amawi in describing Foucault’s work stress the need of individuals and smaller groupings of individuals to counter institutions, ‘the cultivation and enhancement of localized resistance to the institutions, techniques, and discourses of organization’ (Crane and Amawi 1997: p 303).
In this way there is a dialectical exchange between the institution as the family and the greater societal and cultural institutions like state institutions, companies, unions etc that make up the rules or norms of everyday life and necessary social functions. Therefore, there is no way to avoid the affects of institutions, but, are they good or bad for us or are they just a pest that can’t be effectively exterminated as neo liberal and many postmodernist would wish, however, their emphasis on the individual is unrealistic.
Varieties matter:

The responsibility of the state as an institution
What is important to understand is that you can’t create or make institutions; organisations, corporations, rules regulations and generally the way of doing things become institutionalized over time. Consequently different societies have different ways of solving problems and hence different intuitive institutional behavior.
Because of the heterogeneous nature of societies it becomes impossible to model accurately this is the failing of rational institutionalism as it relies on game theoretical theory and on the ‘Nash equilibrium’(Hall, et al, 1996: p 940) as it fundamental interpretive tool for understanding and interpreting institutional behavior, which is too rigid a system for accurate analysis. This also highlights the reason why different institutions are needed, because of the heterogeneous nature of the GPE. Furthermore, as Polanyi (1994, Cited; Hodgson, 1996: p 403)‘would argue all markets are themselves socially and culturally embedded’.
Because of the uniqueness of each nations or societies requirements and because of the competitive necessity that is inherent in all forms of capitalism ‘Nation-states are required to redefine which social rights are truly fundamental and to strengthen the collective bases of their competitiveness’ (Aglietta 1998: p 64) in the GPE. It is the duty of the state to represent the best interests of the nation in the global market. When discussing capitalism we must refer to varieties of economic systems; what’s more economic systems are in themselves a ‘trans-historical concept’ (Hodgson, 1996: p 40) thus are institutionalized rational that influence behaviour.
The job of institutions is to regulate and mediate between actors in the local, national and GPE however, ‘analysis of any given system cannot and should not be based on universal concepts alone’ (Hodgson, 1996: p 4120). Institutions are incentive systems that encourage honesty and punish cheating. In this way they can have influence on the outcome of policy and enforce behaviour patterns. There exists a hierarchy between powerful and less powerful institutions that is reflected in the interests and behavior of the state as a set of institutions. ‘Structures and superstructures from an ‘historic bloc’, that is to say the complex contradictory and discordant ensemble of the superstructures is the reflection of the ensemble of the social relations of production (Gramsci, 1971: p 336, cited, Cox and Sinclair 1996: chp 2, p 56).
The more powerful the state institutions, the greater the coercive power that the particular state has over institutions in the global political economy. The relative power of individual states is mirrored in their hierarchical position and influence within the global institutions of political economy like the United Nations and the World Trade Organisation. Thus more powerful states can then influence the behavior and the benefits received by less powerful states. Thus the dialectical relationship between the institutions and the state create a synergy within society.
The behavior of more powerful states like the US and global institutions effectively determines and controls the well-being of less powerful states by determining their access technology and trade thus dictating socio-economic growth and social change, especially as these powerful states and institutions work within and impose neo-liberalism as a hegemony to which less powerful states have to adhere to or lose benefits or incur penalties.
Some authors see that even individuals attempting to change global political economy have their attempts ameliorated by the socially formative powers of global institutions maintaining the global status quo and only extracting marginal benefits to dis-empowered or peripheral nations. ‘Individuals from peripheral countries, though they may come to international institutions with the idea of working from within to change the system, are condemned to work within the structures of passive revolution. At best they will help transfer elements of “modernisation” to the peripheries but only as these are consistent with the interests of established local powers’ (Robert Cox, 1996: p 63).
Why neo-intuitionalists say variety matters:
Institutions  essentially help form the beliefs and behavior of individuals,not just as limiters of innate individual nature, ‘Seeing institutions not simply as constraints on the behaviors of the pre-formed and unchanging individuals … but also as shaping individuals themselves’ (Chang 2002: pp 551-552).
As well as shaping the individuals within them, institutions then subsequently shape the nature of politics, its actions, limits and culture are thus crucial to political economy. ‘Politics is an institutionally structured process, not only because institutions shape people’s political action… [and],because they influence people’s perceptions of their own interests, of the legitimate boundary of politics, and of the appropriate standards of behavior in politics’ (Chang, 2002: p 556).
Society is thus the outcome of the nexus of interacting institutions. The more heterogeneous the range of institutions in the global political economy the more heterogeneous the societies, or to contrast this with the more homogenous the institutions in the global political economy the more homogeneous the global political economy is, which is exactly happened with the ascendance of neo-liberalism; which attempts to enforce uniformity in global polices and politics, however, it hasn’t fully succeeded.
The neo-institutionalists claim that institutions matter is correct. The relationship between institutional behaviour in the global political economy can dictate the societal mobility of less developed nations, is a case in point. By changing institutional behavior from the imposition of capitalist free market ideals to a behaviour that engendered more equitable outcomes, fairness and encouraged the dissemination of technologies, a greater degree of social advancement would occur.
Whether institutions form the power structure of GPE is debated amongst many authors but to Marxists like Gramsci they do. ‘Do international relations precede or follow (logically) fundamental social relations? There can be no doubt that they follow. Any organic innovation in the social structure, through its technical military expressions, modifies organically absolute and relative relations in the international field too’ (Gramsci, 1971: p 176, cited, Cox and Sinclair 1996: chp 2, p 58), however this does not mean that they are homogenous in their outlook. In a sense the heterogeneous nature of institutions, characterises and is reflected in, the global political economy; despite the apparent dominance of neo-liberalism. It is for this reason that institutions have ever increasingly important role to play in the mediation of the globalisation process that is currently accelerating at a rapid rate.
In the contemporary climate institutions can be used for good or for ill. Many thinkers in political economy like Michael Hardt (2005) for example, call for more institutions and increased institutional powers in the global political economy. Institutions are good for wielding both soft and hard power although soft power remains the best option he claims. Without institutions the world would certainly be in a lot more chaos than it is currently, there is a call for more institutions on climate change, greater regulation for banking institutions and for health, poverty; the list goes on. Perhaps with all these institutions there should be better representation for the weaker players in the market, however, in the real world thus far this has not really happened yet.
The good that some institutions do is mostly watered down by the damage that the bad ones create. The United States is a case in point, with its democratisation policy and hegemonic behaviour concomitant with its coercive behaviour enforced through institutions is threatening the global power balance. Meanwhile China and India are waiting in wings to claim the prise of global leader for themselves. However, whatever becomes of the future GPE one thing is assured and that is, for good or bad new institutions will be born.

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