How ideas and institutions mutually affect each other

Abstract

This chapter introduces the leading theme of the book: the emergence, discovery, and rediscovery of political and economic ideas are the necessary conditions for significant institutional change (vs. incremental change). It briefly maps out the changing understanding and appreciation of the role of ideas in institutional reforms and proceeds to ask three important questions in this domain: 1. What is the relationship between institutional emergence, change, and ideas vis a vis interests? 2. What role is played by ideas in the area of institutional stability, the success and failure of institutions? 3. Why do some ideas rather than others gain prominence in particular historical circumstances, and where do they come from? The authors argue that ideas are very useful, but still underappreciated tools of improving the “fit” of our explanations of the success and failure of institutional change. The concept of “socio-economic imaginary” is introduced as a synonym for the set of ideas characteristic for particular socio-economic time-space. These determine the possibilities for institutional change. Only their evolution can open possibilities for more radical institutional reform. However, this evolution seems to be more rapid at times, which creates windows of opportunity for institutional entrepreneurs to introduce institutional changes.