Path dependency in policymaking: a double-edged sword
On why past constraints in policymaking aren’t necessarily good or bad
In a previous article, I explored the concept of path dependency and how it arises in policymaking. Policies often reinforce themselves over time; policymakers lack the incentive to change existing policies. Such inertia increases the difficulty of gaining the necessary support for policy change and reform. I turn to consider whether path dependency is beneficial or detrimental to effective policymaking.
Path dependency: a blessing or a curse?
Whether path dependency safeguards or sets back good policy remains an open question. The general argument against path dependence is that it may lock policymakers into choosing sub-optimal policies. These policies result in ‘bad equilibria’: a policy continue out of necessity or habit even though better alternatives exist. The persistence of policy compels policymakers to make optimal choices in the present that are suboptimal had policymakers previously adopted another policy or pathway.
A negative term associated with path dependency is the colloquial phrase ‘managed decline’, which emerges from the pessimistic sense that institutional or policy change is not possible due to the constraints of decisions of decades past. Under managed decline, policymakers turn to ensure that existing policies do not collapse to the belabouring forces of depreciation, bureaucracy, and decay – a path-dependent trap. Of course, proponents of path dependency may reject the existence of ‘managed decline’. Just as organisations take time to grow and pivot, policies take time to adjust and flourish: there are always potential tweaks and improvements to be made.
Preventing policy lock-in due to past choices is difficult and often requires significant government resources to overcome. To counteract policy lock-in, ex-Civil Servant Joe Hill proposes an approach called ‘venture statecraft’, in which policymakers focus on replacing institutions – by ‘investing in new institutions’ and ‘empowering people at the edge(s)’ of government to build these new institutions – rather than attempting to reform them. According to Hill, introducing innovative institutions and fresh talent helps prevent governmental stagnation. Unlike traditional methods of policy changes, which are often marginal tweaks to existing structures, venture statecraft reimagines governance. Introducing new approaches, represented by fresh faces, can more easily eliminate the constraints of antiquated policies.
While path dependency may sub-optimally dominate certain aspects of governance, its existence alone does not justify the breaking down of old institutions. Hill’s argument about the value of building new institutions seems to apply more to governmental initiatives at the ‘frontier’ of innovation, where risk should be encouraged, including science funding through DARPA (U.S.) or ARIA (U.K.) or artificial intelligence governance through AI Safety Institute (U.K.).
But for more traditional, long-standing policies – e.g. immigration policy or defence policy – there may well be good reasons that a particular governmental department should remain complacent with path dependency, even if we would set up the institution differently if we had the opportunity to start again. Consider Chesterton’s fence, a principle which cautions against dismantling institutions without fully understanding their purposes. Governments are not startups or VC firms; institutions should ensure that checks for balancing between excessive path-dependency and not destroying the systems that should remain existent.
In contrast, some political scientists view path dependencies more favourably, arguing that path dependency encourages policymakers to build on the past. Paul Pierson, Professor of Political Science, argues that path dependency is desirable because of increasing returns: doing something in the past induces positive virtuous cycles for political outcomes, or ‘the relative benefits of the current activity compared with other possible options increase over time’. Let me elicit this crucial concept of 'increasing returns' further. Imagine a farmer planting a familiar crop. Over time, they refine their techniques, learn to maximise yield and develop better farming tools, reaping increasing returns.
In policymaking, organisations gain know-how and develop implementation capacity. Past investments begin to pay off exponentially in the future. Exit costs to switch to other policy options rise relative to the existing policy path. Using this framing of ‘increasing returns’, we can see why natural path dependence is not something to fear. Policies that have been tried and tested are likely more robust to sudden shocks. Policymakers and bureaucrats learn how to implement policies – for instance, consider the long lists of immigration rules that countries have set up to manage immigration – and individuals acquire knowledge in reacting to them – how to succeed within the 'rules of the game'.
Critical junctures in shaping policy
Whatever one’s attitude towards path dependence is, the concept of path dependency emphasises the appreciation of institutional history in attempting to explain the constraints, incentives, and options faced by each institution and policymaker. Under this framework of historical institutionalism, there are moments in which the past becomes less relevant and constraining to policymaking. Experts call these moments critical junctures.
Critical junctures, as defined by political scientists David and Ruth Berins Collier, are a period of significant change, which typically occurs in distinct ways in different countries… and which is hypothesised to produce distinct legacies'. During critical junctures, the costs of maintaining existing policy fall drastically. Demands for change swell. As unique opportunities to rewrite the ‘rules of the game’, focusing on reforming policy during critical junctures may lead to effective policy reform.
One does not have to look far to see that critical junctures exist throughout history. Ideological changes create openings for critical junctures. For instance, the evolution of feminism in the 1960s and 1970s was a critical juncture for the landmark decision of Roe v. Wade (1973), which legalised abortion. Major political and economic shocks have also catalysed significant changes in policy, such as the end of World War II sparking a critical juncture for the progression of the U.S. Civil Rights Movement or how Deng Xiaoping coming to power in 1978 gave him the space to set the Chinese economic miracle in motion through Reform and Opening Up.
As we navigate the post-COVID-19 landscape and face rapid technological change, many aspects of policymaking may be reaching a critical juncture. Separating between negative and positive persistence of policy requires quality research about our institutions. Most importantly, it involves understanding the complex role of path dependency in policymaking, which can benefit the public good or impede optimal policy development. In the future, we must utilise critical junctures to proactively contribute towards improving existing policies to reap the increasing returns from time and history or crafting new policies that are sensitive to historical and institutional contexts.
