“Collective Action, meet Political Settlements”

How to characterize context, the foundational platforms on which development proceeds? Two important new books highlight progress in answering this key question.  The  concepts of collective action and political settlements  are core to both books, and turn out to be deeply intertwined – indeed each is the missing puzzle piece that completes the other.

This post focuses principally on one of the two books, William Ferguson’s The Political Economy of Collective Action, Inequality and Development, published in 2020 by Stanford University Press. The second book, Political Settlements and Development: Theory, Evidence, Implications will be published by Oxford University Press later in 2021.  It is the capstone volume of the decade-long DfiD-funded and University of Manchester-based Effective States and Inclusive Development (ESID) research program; Tim Kelsall is the 2021 book’s lead author. [Previews of the book’s core analytical contributions are available in two working papers produced by Kelsall and two of the book’s co-authors  – one on the theory with Matthias vom Hau, the other  on the empirical methodology, with Nicolai Schulz. The other co-authors of the book are myself, Bill Ferguson and Sam Hickey.]

Bill and I reconnected in 2015, 26 years after our paths briefly crossed at Williams College’s Department of Economics. We discovered that we had been exploring similar intellectual terrain, though from radically different perspectives: Bill as a scholar and teaching professor at Grinnell College; me as a practitioner and researcher at the World Bank. Bill’s  focus has been on how  the lens of collective action can be used  to explore a very wide range of  economic, political and social challenges. His work turned out to fill a vexing gap in the ESID program

Bill’s book is an encyclopedic synthesis of cutting edge literature at the intersection of development economics, new institutional economics and political science. It is a synthesis which transcends the synthesis genre.  It is systematic, careful in its definitions, rigorously argued. It connects the dots in a way which gives new life to the field of economic development. (Don’t just take it from me; Kaushik Basu, Dani Rodrik and other scholars have given the book glowing recommendations.)    

In a 2013 book,  Collective Action and Exchange: a Game-Theoretic Approach to Contemporary Political Economy, Bill made the case for  the far-reaching relevance of a collective action lens for the study of political economy. Here in five propositions (each supplemented by quotes from his new book) is the essence:

First, collective action problems (CAPs) are ubiquitous:

“Economic and political development requires resolution of underlying CAPs. CAPs arise whenever individuals pursuing their own interests, generate undesirable outcomes for one or more groups. Relevant groups include nations, cities, communities, tribes, clubs, companies, nonprofit and religious organizations, colleagues and friends. Examples include: addressing climate change at international, national, and local levels; reducing international conflict; deciding who makes the coffee at work or who washes the dishes at home;  reducing crime, pollution and traffic jams; providing basic public services such as potable water, roads, parks, disease control, R&D, and adequate education and health care; resolving disputes; and achieving political reform”. (p.17)

Development, and social thriving more broadly, thus depends (including in high-income countries such as the United States…..) on a society’s ability to address CAPs, on its capacity to co-operate.

Second, resolving CAPs is challenging. There are 1st order and 2nd order challenges:

“1st order CAPs involve multiple manifestations of free riding and social conflict. Resolving them involves forging implicit or explicit arrangements – among parties whose interests usually differ – for distributing the associated costs and benefits….. Effective agreements require credibility, and perceived inequities within agreements often foster conflict….. 2nd order CAPs involving arranging the coordination and enforcement that renders agreements possible….. The anticipation of problematic co-ordination or enforcement often undermines the will to negotiate or even consider any resolution.” (pp. 17-18)

Third, resolution of CAPs lies in the domain of institutions, which Ferguson (2020) defines expansively as:

“…a combination of mutually understood and self-enforcing beliefs, decision rules, conventions, social norms and/or formal rules that jointly specify or prescribe behavioral regularities….Institutions are ‘technologies’ that signal social co-ordination and prescriptions for managing conflict; they allow society and individuals to pursue long-term goals – even in the face of changing circumstances”. (p 22)

Fourth, ‘institutional systems’ can be stable for long periods of time;

“Institutional systems are relatively stable configurations of formal institutions, informal institutions and organizations that generate social regularities…..These deeply embedded mechanisms interact with distributions of power….  Shared cognitive and behavioral patterns reproduce and persist via correlated patterns of thought and activity….. These dense interactions generate a punctuated equilibrium dynamic….” (pp. 28; 35)

Fifth change in institutional systems takes the form of punctuated equilibrium

“The social choreography [which sustains institutional systems]  may adapt slowly or not at all to changing conditions….Dramatic change requires co-ordinated and often near simultaneous re-evaluative learning and reconfiguration of practices across large groups…. Yet, once change gathers momentum, once it crosses a critical-mass threshold, shifts can facilitate dramatic change”. (pp. 28; 35-36)

In our 2015 meeting, Bill described his plans for a new book which aimed to explore systematically how  differences in context shaped both which CAPs were addressed, and how they were addressed. The typological thinking he envisaged was squarely in my wheelhouse. I had been wrestling for decades,  as both researcher and practitioner at the World Bank, with the challenge of distinguishing among different contexts  – and had recently synthesized what I had learned in  my 2014 book, Working with the Grain. After completing that book,  I continued working on a variety of applications and extensions of the approach with the ESID research program, a team which shared a commitment to trying to make progress at the interface of theory and practice, adding value to each.  Bill’s work was an opportunity to bring an additional scholarly perspective to the  ESID effort; I was happy to encourage  the ESID team to work with him.

Intensive interaction among the ESID research team had revealed that our shared enthusiasm for a ‘political settlements’ perspective translated into neither a shared, precise definition of such settlements nor a shared, consistent typology. I increasingly had come to realize that, anchored as it was in the discourses of governance and new institutional economics (a reflection of both my intellectual roots and the realities of the World Bank), the approach I laid out in Working with the Grain  underplayed the role of power.

After a few years of collective angst within the ESID team,   Tim Kelsall, together with Matthias vom Hau, made a key step towards resolving this troubling ambiguity. As detailed in their working paper, they  proposed a new definition of a political settlement (PS) as:

an ongoing agreement (or acquiescence) among a society’s most powerful groups over a set of political and economic institutions expected to generate for them a minimally acceptable level of benefits, and which thereby ends or prevents generalized civil war and/or political and economic disorder”.

Accompanying this definition was a careful effort to distinguish among three aspects of power: the power of an elite leadership bloc in relation to opponents and other influential actors; the power of leaders in relation to followers; and the extent of incorporation of non-elites. These careful distinctions among different aspects of power provided the basis for a modified typology, although some ambiguities remained as to how institutions were incorporated.

Bringing together Bill’s CAP-focused approach and the ESID PS discourse turned out to add substantial value to each. For Bill, it created the opportunity to graft onto his work a typology which had gone through multiple  iterations, both conceptual and applied. For the ESID team, engagement with Bill offered a way of bring an extra conceptual dimension to PS work. Here is how Ferguson (2020) summarizes the CAP-PS synthesis:  

“Political settlements are the foundations of social order….. The basic configuration of a PS, reflecting the distribution of power and the composition of included and excluded groups, fundamentally shapes, circumscribes, and conditions  the creation, reform, maintenance, and demise of political and economic institutions…  The two-dimensional, four quadrant PS typology points to critical, quadrant-specific tensions and sets of CAPs that condition, complicate and impede political and economic development” (assembled from pp. 37, 168, 235; 238).

To some, the above might seem abstract, only of academic interest. My experience as a development practitioner leads me to the opposite conclusion. Development practice has long been bedeviled by a pre-occupation with normative ‘best practice’ prescriptions. While the limits of ‘best practice’ approaches are now widely recognized, as the saying goes ‘you can’t beat something with nothing’.  As I suggested in Working with the Grain, to juxtapose ‘best practice’ against an argument that  “….every country is unique and that there is little to be learned in one setting that can be helpful in another is a prescription for despair. The challenge is to find an orienting framework that is capable of filling the gap between hubris one the one hand and despair disguised as humility on the other.” (p.8) 

Making this shift has been no easy task. The journey (about which I offer a personal account in this post) has been long and circuitous;  many practitioners resist typological thinking.  It is thus crucial that the proposed successor be intellectually robust. This, in my view, has been decisively addressed by Ferguson (2020) and Kelsall et. al. (2021).

Kelsall et. al. and Ferguson  build on the CAP-PS marriage, but in very different ways.  Kelsall et. al.  use the platform as the basis for elaborating and applying an empirical methodology to benchmark, track and contrast political settlements in 42 countries – and to  test econometrically the causal impact of  political settlements on development performance. (Click here for Schulz and Kelsall’s preview.)  Ferguson uses theory to explore in-depth  the relevance of a CAP-PS approach for a variety of fundamental development topics, including:

  • why development is ‘unbalanced’, and generates a variety of spatial, sectoral and distribution inequalities;
  • the sources of power, how unequal distributions of power emerge, and how they shape the creation, evolution and demise of economic and political institutions;
  • the role of ideas, with particular emphasis on how ‘mental models’ influence political interactions and the evolution of institutions;
  • how interactions between power, ideas and political settlements can lead to significant, but not insurmountable, constraints on development
  • how, in settings seemingly locked-into a low-level political economy equilibrium, policy innovations might nonetheless help loosen binding constraints to development; and
  • the variety of ways in which business-state relations can support development across different contexts, via different combinations of rules and deals.

Ferguson (2020)  can be a hard slog: concepts and connections cascade one after the other, relentlessly. But I found that a sustained investment of time and intellectual energy more than repaid the effort. My research and writing moves back-and-forth between laying out  over-arching conceptual frameworks, and drilling into the details of specific development problems. This hopefully has some advantages. But its weakness can be a certain amount of hand-waving, of not being clear enough about the connections between different levels of analysis. Ferguson (2020) provides solid ground: carefully constructed connections across the different parts, carefully anchored in cutting edge literature. I expect that, for years to come, his book will have a prominent place on my bookshelf, both as guide and as a source of inspiration.

2 responses

  1. Pingback: Governance and development – new progress in the search for middle ground « WORKING WITH THE GRAIN: Integrating governance and growth

  2. Pingback: Characterizing context – how power and institutions interact « WORKING WITH THE GRAIN: Integrating governance and growth

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