Why do malfunctioning institutions persist? A case study of the Kingdom of the Netherlands

Abstract

While all neo-institutional approaches to varying degrees of success aim to explain institutional persistence, none of them offer clear-cut explanations for the persistence of institutions that have become completely undesirable. The present article aims to analyze how such cases of institutional ‘lock-in’ can be explained, and to what extent the theoretical premises of historical and rational choice institutionalism are helpful in this regard. It does so by means of a case study of the Kingdom of the Netherlands, which is a unique, trans-Atlantic institutional structure that was established in 1954, but has since its foundation become increasingly dysfunctional and disliked by all parties involved. The analysis reveals that the survival of the Kingdom can be seen as an instance of extreme path-dependence, but also that rationalist notions of Pareto optimality and veto-players can contribute to explaining the persistence of this institution. Most conspicuously, however, the analysis reveals that the unique political structure of the Kingdom, constituting a hybrid between a federal and a unitary state, has prevented any attempts to reform the institutional structure.