ARENA Working Papers
WP 00/2



Organising European Institutions of Governance
A Prelude to an Institutional Account of Political Integration

Johan P. Olsen**
ARENA, University of Oslo

In search of new forms of political unity

For half a century, Europeans have (again) explored the possibility of new forms of political order and unity. This time change has been non-violent and there have been comprehensive and possibly lasting changes in the (West) European institutions of governance. Still, students of European political integration face a partial and emerging polity, with institutions of governance in change and not in a stable equilibrium.

Accounting for the dynamics of political integration requires attention to four questions. First, what is meant by "political integration", how are such processes to be conceptualised and what are good indicators of changing levels and forms of integration? Second, on what basis is the new polity - the European Union, as a political organisation and system of governance - being integrated? Related to this, how much, and what, ties members of the EU together and separates them from non-members? Third, what are the consequences of various levels and forms of integration? What are the most significant effects of changing levels of integration, including implications for the constituent units? Fourth, what are the determinants of political integration and through what processes does change take place? Why are there variations in the levels and forms of integration across institutional spheres and policy sectors? Why are there changes over time? In particular, what is the integrating power of shifting system performance in terms of efficient problem solving and service delivery? What is the integrating power of shared, relatively stable constitutive principles, institutions and procedures of good governance?

This chapter is a prelude to answering such questions. The chapter is a prelude because it primarily catalogues some issues, controversies and research challenges that need clarification before a coherent theoretical approach to (European) political integration can be developed. [1] The chapter feeds on an institutional perspective. Yet, it does not aspire to document the advantages of this perspective. That is, it does not specify concrete implications that are interesting, non-obvious and disconfirmable. Nor does it document the phenomena that can be better understood within an institutional perspective than within competing accounts of political integration.

The chapter starts with the observation that institutional change is a theme attracting attention from both practitioners and researchers. It argues that a European specific agenda should be closely linked to a more general theoretical agenda. Two complications are attended to: the lack of adequate concepts to capture political integration and the limited agreement on the nature of existing European institutional arrangements. In the following focus is on two types of change that are important for the formation of legitimate democratic governance. That is, the processes through which legal institutions are turned into "living" institutions and incentive-based orders are replaced by orders based on authority and informed consent.

Three frames for understanding institutional change are sketched. In contrast to much conventional wisdom, it is argued that an institutional perspective implies a dynamic, not static, view of political life. Major sources of change are inherent in institutional ideals that are strived for but never reached, and in tensions and collisions caused by competing ideals and principles built into single institutions and polities. The chapter ends with a metaphor and some remarks about realistic theoretical ambitions.

The relevance of institutions: Three agendas

Currently, it is commonplace for practitioners to argue that comprehensive institutional reform is indispensable and should be a top priority for the European Union. The practical-political agenda refers to:

- the past: European cooperation has been "deepened" and "widened". Formal institutions, it is claimed, are to a large extent the same. They lag behind due to stagnation of EU reforms.

- the current situation: the need to respond to the recent (perceived) institutional crisis and restore the credibility of the EU institutions, and

- the future: existing institutions are portrayed as hopelessly inadequate in a Union of 25-30 members. Future enlargements of the EU, with new types of applicants and on a scale never experienced before, require prior institutional reform.

There are disagreements concerning the scope of reforms, for instance whether the new intergovernmental conference on institutional reforms should concentrate on the "leftovers" from Amsterdam, i.e. the weighting of votes in the Council, extension of qualified majority voting, and the size and composition of the Commission, or whether "major surgery" is needed. Moreover, there is no unanimity when it comes to the methods for preparing institutional reform, e.g. the use of a small independent committee of experts or intergovernmental diplomacy. There is more agreement that institutional reform requires a long-term process, rather than an ad hoc, short-term intervention. [2]

The European-specific research agenda portrays the EU polity as sui generis. The key question is what competing analytical approaches and interpretations can contribute to a better understanding of the specific EU dynamics and continuities, i.e. institutional formation and change in the particular European socio-economic and historical-cultural context.

The intrinsic importance of the emerging European institutions of governance is a sufficient reason for the attention of researchers. However, there is also a more general theoretical agenda. This agenda goes beyond understanding the ways in which the EU polity is developing. It aspires to give an account of institutional change and reform that captures developments outside the Union and Europe at large. While the EU system of governance has some unique properties, it also shares important features with other complex polities. For instance, the metaphor that the EU system of multi-level governance is like a "marble cake" rather than "layer cake", was used nearly two decades ago to describe inter-governmental relations in the United States (Sharkansky 1981).

The key issue on the general theoretical agenda is how European studies may help us develop more advanced theories of governance, political organisation and institutional change. Taking into account the significance of shifting contexts, are there any general lessons to be learnt about how polities develop, are maintained and change? Are there lessons that require us to revise or replace basic theoretical ideas, concepts, methods, techniques and normative standards?

A basic assumption of the chapter is that a succesful follow-up of the three agendas is more likely if they are considered together. For instance, all three depend on some serious conceptual homework. The task of analysing the dynamics of European integration is complicated by the limitations of available conceptual tools. The claim that "despite the seeming importance of the EC institutional components, with few exceptions institutions have played a scant role theoretically in accounts of European integration" has not become obsolete (Caporaso and Keeler 1995: 49. See, however, Bulmer 1994, Olsen 1996, Armstrong and Bulmer 1998, Jupille and Caporaso 1999, Aspinwall and Schneider 2000, Cowles, Caporaso and Risse 2000). The next section gives an illustration of some elementary conceptual challenges facing students of European institutions of governance and political integration in general.

Political integration as institutionalisation

In order to talk about differences in the level and form of political integration, as well as institutionalisation as an indicator of political integration, we need a metric for political integration and institutionalisation. Only then can we recognise possible enduring changes towards a "higher level of European integration". Only then can we know whether Europe is moving toward an "ever closer union", and whether we are facing "a new stage in the process of European integration".

"Integration" signifies some measure of the density, intensity and character of the relations among the constitutive elements of a system. Integration may refer to causal interdependence among the parts, consistency - the degree of coherence and coordination among the parts, and structural connectedness - a sociometric or network vision of integration (March 1999: 134-5). The three aspects of integration are not necessarily strongly correlated, and here political integration is primarily seen as changes in structural connectedness, i.e. inter-institutional relations.

Falling back on integration as institutionalisation, however, is of limited help, because the concept of "institution" is also contested. Institutionalised government is "conducted in the light of some socially standardised and accepted code" (Finer 1970:12). Still, institution may refer to an abstract regulatory prescription that is supposed to govern a certain sphere of conduct, and it may also refer to specific less than perfect historical attempts to put such abstract ideas into practice (March and Olsen 1989).

We may distinguish among three dimensions of processes of institutionalisation (March and Olsen 1995, Olsen 1997b):

(1) structuration and routinisation - the development of impersonal rules, roles, and repertoires of standard operating procedures, as well as switching rules between pre-structured responses (March and Simon 1958:170). Institutionalisation, then, implies routinising some kinds of change as well as routinising resistance to others.

(2) standardisation, homogenisation and authorisation of codes of meaning, ways of reasoning and accounts (March and Simon 1958:165). Practices and procedures become valued beyond their technical-functional properties (Selznick 1957, Eisenstadt 1964). (3) binding resources to values and worldviews (Stinchcombe 1968:181-2), i.e. staffs, budgets, buildings and equipment, providing a capability to act and to enforce rules in cases of non-compliance. Authority and power are depersonalised (Weber 1978:246).

A perspective on international integration as structural connectedness suggests that a polity has a low level of institutionalisation and integration if the constituent units just observe, inform, and adapt to each other through processes of autonomous adjustment (Lindblom 1965). The level of institutionalisation and integration increases as the constitutive units:

- coordinate their policies in an ad hoc and pragmatic way, based on self-interest or unit-specific norms.

- remove internal barriers to interaction and exchange, and develop common rules and standards, rights and obligations through inter-unit processes.

- develop distinct supranational institutions of governance and routinised joint decision-making at the system level, allowing various mixes of supranationality, majority voting and veto-power for the basic units.

- develop common administrative and military institutions, with staffs and budgets and therefore capabilities for analysis, planning, decision-making, implementation and enforcement.

- give supranational institutions the right to change their own competence (kompetenz-kompetenz).

- develop a common public space, civic society and institutions able to educate and socialise individuals into informed citizens with a shared political identity and culture.

A caveat is in order. Historically, European political developments have followed complex and varying trajectories (Rokkan 1999). There is no reason to believe that the list implies a perfect unidimensional or cumulative scale of ascending degrees of structural interconnectedness, or an obligatory pattern of integration and institutionalisation. There may be a high level of integration based upon informal codes of conduct, soft law and policy cooperation, without supranational institutions (Wallace 1999:13). In addition, supranational formal-legal institutions are no guarantee for strong integration. For instance, establishing formal institutions for a common European security and defense policy without adequate resources may provide less integration than an informal coordination of national defense capabilities. Ceteris paribus, however, each step of institutionalisation is likely to increase the level of integration. In sum, integrated polities are "organised around well-defined boundaries, common rules and practices, shared causal and normative understandings, and resources adequate for collective action" (March and Olsen 1998: 943-44).

In this perspective, processes of institutionalisation include: (1) Reorganising and rewriting institutional forms, rules, roles and standards. (2) Reinterpreting principles and doctrines, frames of understanding and justification, including who is to be accepted as authoritative interpreters of principles, rules and situations. (3) Reallocating resources and changing principles for allocating resources.

A specific measure of institutionalisation can be related to changes in the use of coercion and material incentives in regulating human behavior. An indicator of institutionalisation, then, will be the use of less coercion or material incentives in order to make people follow formerly-questioned rules and practices. Under some conditions, institutionalisation may also be reflected in decreasing demands for participation, as beliefs in the appropriateness of existing structures and political authority are strengthened.

This leads to a focus on the normative quality of political orders. In particular, attention is called to how formal-legal institutional arrangements may be turned into "living institutions". That is, how organisational "charts" are translated into collective practices based on legitimate authority, defining appropriate behavior and ways of reasoning for specific types of actors in specific types of situations.

From legal to "living" institutions

Analysing the dynamics of European integration is also complicated by the fact that there is limited agreement when it comes to what kind of polity the EU is (Schmitter 1996, Kohler-Koch 1999). The evolving European political order is often portrayed as difficult to analyse and describe. It is also uncertain what kind of political integration is possible and likely in a multi-cultural and pluralistic region organised politically on the basis of nation-states.

The architecture of the European polity, i.e. its basic institutions, their powers and relationships, has been contested since the original EC design and throughout subsequent reforms (Wallace 1996b: 37). The current institutional configuration is complex, ambiguous and changing. It is multi-leveled, multi-structured and multi-centered, characterised by networks across territorial levels of governance, institutions of government, and public-private institutions (Jachtenfuchs and Kohler-Koch 1996, Kohler-Koch and Eising 1999).

According to Jacques Delors, the EU is an "objet politique non-identifi�". The EU has come a long way from a bargained agreement among nation-states, to a quasi-federal polity (Stone Sweet and Sandholtz 1998:1). Still, the EU is not a fully-fledged polity (Joerges 1996: 117, Wallace 1996b:39) nor an integrated political community (Mayntz 1999:8). Rather, it is an "experimental union" (Laffan, O'Donnel and Smith 1999), an "unfinished polity" and a "journey to an unknown destination" (Weiler 1993). The uncertainty of the future is highlighted by the five scenarios in Europe 2010 developed by the Commissions's Forward Studies Unit (Bertrand, Michalski and Pench 1999).

For behavioral students of governance a challenge is that EU institutions are usually discussed in formal-legal terms, i.e. institutional powers formalised in treaties and law. This activates old issues like the relationship between legal and "living" institutions and the political implications of formal institutions and rules.

In the study of political life, legislation -- binding for both rulers and ruled -- for a long time was believed to be the most striking manifestation of political power (Friedrich 1950: 268). In this perspective, government is about "the formation and application of law through public institutions" (Peters 1999: 5). To understand institutions of government, it was necessary to know their history (Finer 1999). For instance, understanding Western legal institutions required tracing their roots and routes back centuries (Berman 1983). Furthermore, a legal description of political life, where political institutions are understood by their legal codes and where changes in formal-legal institutions and laws are supposed to change human behavior, has been seen as "a typically European way of looking at politics" (Easton 1964:154).

The American-led "behavioral revolution" in political science in the 1950s and 1960s rejected this approach to the study of political life as formalistic, legalistic and old fashioned. There was a need to penetrate the formal surface of constitutional charters, formal governmental institutions and laws, and to describe and explain how politics "really worked" (Eulau and March 1969: 15-16, Drewry 1996). A result was increasing cynicism about the explanatory power of law, constitutions and judicial institutions. In a world of Realpolitik, such factors were seen as policy instruments.

Less emphasis was put on law as a distinct method of social control based on the normative quality of rules, principles and processes. The main tendency was to ignore law as a revolutionary cultural force in Europe -- one that could change concepts, identities and collective understandings. An implication was that behavioral students often ignored historical development where an instrumental view of law as externally imposed order and discipline was supplemented with a theory of law as justice. In other words, an interpretation of law as rules with a defensable normative content, defining appropriate behavior and generating pressure for compliance (Berman 1983, Habermas 1996, 1998, Koh 1997).

In contrast, the EU represents a renewed trust in governance by law and the legal integration of polity and society. While the EU uses a variety of policy modes, it is to a large extent a regulatory polity (Majone 1996). Therefore, the European context invites students of integration to reconsider the lessons of the behavioral revolution. What are the relationships between, on the one hand, formal-legal institutions, legal concepts, categories and ways of reasoning, formal decisions, and legally binding rules, and, on the other hand, "living institutions", rule-implementation, actual political conduct and outcomes? For instance, is it possible to build "a genuine European political and administrative culture" (Sant�r) by rewriting treaties and formal institutional designs? [3] What actually happens after the great (formal) bargains are made and the treaties are written (Moravcsik 1998)?

A key figure in the behavioral revolution maintains that "most of the basic problems of a country cannot be solved by constitutional design". The significance of constitutions and institutions -- if it really matters whether they are well or badly designed -- depends on whether the underlying social and economic conditions are favorable, unfavorable or mixed (Dahl 1998: 127-8, 139). Some lawyers have also reduced their expectations as to the effectiveness of legislation (Joerges 1996: 123). Yet, both lawyers and political scientists want to "analyse the Community constitutional order with particular regard to its living political matrix" (Weiler 1999: 15, also Armstrong and Shaw 1998, Slaughter, Stone Sweet and Weiler 1998, Craig and de B�rca 1999).

Weber observed that every system tries to establish and cultivate belief in its legitimacy. Some are more successful than others, and Weber defined the constitution of an organisation as "the empirically existing probability, varying in extent, kind and conditions, that rules ... will be acceded to" (Weber 1978: 50). Both legal and other rules present more or less precise binding behavioral claims on more or less specified groups of actors in more or less specified situations.

Rules vary in terms of clarity, pertinence, stringency, adaptability, coherence and consistency (Koh 1997, Z�rn and Joerges 1999). Furthermore, actors -- individuals (Tyler 1990) as well as states (Koh 1997, Checkel 1999b) -- sometimes comply with rules and at other times disobey rules. Under some conditions formal-legal institutions have binding authority so that formal and "living" institutions coincide. Under different conditions the gap between formal-legal arrangements and practices is huge. Actors show great caution in exercising their authority, powers and rights, or they lack the capacity for doing so. There is no straight line from structure to outcome (Caporaso and Keeler 1995: 47), and institutional continuity and policy change go together well (Eising and Kohler-Koch 1999, Sverdrup 1999). Sometimes rules lose their binding authority. They are ignored, contested, changed or replaced. Sometimes legal rules become a "mask" hiding the political effects of legal integration and a "shield" insulating legal rules from political influence (Burley and Mattli 1993).

A staggering feature of the EU has been the rather high level of compliance with rules and the development of legitimacy via judicial processes and legal integration. Therefore, a challenge for students of political integration is to provide a better understanding of the legitimacy and authority of European rules, including the change mechanisms between types of rules and motivations for following them. Which factors affect the probability of acting in accordance with rules of appropriate behavior? How can we understand variations in compliance across rules, actors and situations? There is no reason to expect simple answers. Rather, a variety of reasons for following and breaking rules can be observed.

Turning incentives into authority

An institutional perspective, as defined here, assumes that rule-following is a more fundamental logic of action than action based on the continuous calculation of expected utility (March and Olsen 1989,1995). Still, it is necessary to differentiate between reasons for rule-following. Rules may be obeyed out of habit and "traditional unreflective reverence for pre-existing authority" (Finer 1970: 104). Compliance may be governed by rational calculation of the expected utility of alternative behaviors. Rules may also be followed due to an identity-derived internalised feeling of a moral obligation to do so, e.g. a law-abiding mentality. Or, compliance may be based on interaction and argumentation. That is, rules are followed because of the causal and normative reasons given for the rules and the processes and institutions by which rules are formed and enforced.

Most of the time, the legitimacy of political institutions are understood in functional-instrumental terms (Finer 1970: 19, Stinchcombe 1997). Institutions are purposeful, organised arrangements. Structures and procedures are supposed to promote specific tasks, purposes and goals. Legitimacy and support are based on technical performance, i.e. efficiency in problem solving, service delivery and the capacity to achieve desired social purposes. Another possibility, however, is to see the legitimacy of a polity as depending on the degree to which structures, procedures and rules conform with societal beliefs about legitimate institutions (Meyer and Rowan 1977, Scott and Meyer 1994).

Competing conceptions of political institutions are closely linked to different conceptions of the major institutional impacts (March and Olsen 1998, Peters 1999). When institutions are interpreted in functional-instrumental terms, emphasis is usually on policy impacts. Political behavior is seen as interest-driven and calculative and as externally governed by material incentives and coercion. A supplement is to argue that political institutions constitute, authorise and publicly legitimise actors who are supposed to be pursuing collective goals within a system of rules and due process (Jepperson and Meyer 1991: 206). Institutions, then, are seen as having the potential to form and transform actors, their mentality and identity and change logics of actions, e.g. from expected utility calculation to identity based rule-oriented behavior.

As a consequence, self-control is added to, or replaces, external controls. Compliance is based on the consent of actors who have internalised the belief that they have a normative obligation to accept certain institutions and policies under certain conditions (Weber 1978, Elias 1982, 1988, March and Olsen 1989, 1995, Habermas 1996,1998). Institutional rules are followed because they are accepted as normatively right and not because of a hope to realise pre-determined ends by doing so (Habermas 1996: 153). Change and continuity are justified by appeals to the moral purpose and inherent value of alternative institutional arrangements and organising principles, rather than their immediate consequences and functional efficiency (Reus-Smit 1997:583). In this perspective, political and economic obligations of EU membership are (eventually) fulfilled because they are seen as reasonable and just.

The latter conception is reflected in an important development in European political history; the gradual subjection of human conduct to due process and the rule of law. Students of international politics, however, have emphasised the difficulty of getting beyond "anarchy" and cooperation based on calculated alliances and power balances in international relations. While some also see the transformation to legitimacy and authority as "the essence of governance" in the international context (Ruggie 1998), the pursuit of justice and virtue is generally not seen as possible in the state's external relations (Curtin 1997).

This view is also common in the European context, i.e. the EU as a "benign technocracy". Then, legitimacy and further integration depend on functional performance, comparative problem solving effectiveness and the ability to satisfy relevant policy interests (Wallace 1996b:44). For instance, Scharpf claims that students of European integration have become more aware of some "lasting limitations" of European political integration. The legitimacy of the EU in the foreseable future will depend on its problem solving-capabilities and its institutional safeguards against the abuse of European power. There is no pre-existing sense of collective identity, and a shared identity is not to be expected, given the lack of a European-wide discourse and an institutional infrastructure that could assure the political accountability of office holders to a European constituence. Adding new member states from Central and Eastern Europe will increase heterogeneity and make the development of a common identity even more unlikely (Scharpf 1999a: 4, 187-8).

Others see European political and legal institutions as having a larger potential for transforming mentalities, identities and logics of action. They argue that processes of opinion and will formation, through a communicative logic of argumentation and justification, to some degree can cultivate citizens' character and identities and build solidarity beyond the level of the nation-state (Habermas 1996: 506, also, Habermas 1998, Eriksen 1999, Checkel 1999a, Risse 2000). Furthermore, in its self-presentation the EU adheres to several fundamental principles of governance common to the member states and independent of the single policy issue at hand. As formulated in the Treaties, the European Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law. A charter of fundamental rights and freedoms is supposed to be worked out and decisions are to be taken as openly as possible and as closely as possible to the citizens. The Union shall also deepen the solidarity of its peoples, while respecting their history, culture and traditions.

A challenge, then, is to specify the degree to which, and the conditions under which, the main foundation of a polity's legitimacy represents superior functional performance and continuous utility-calculation. Likewise, what is the significance of historically-developed and fairly stable internalised codes of appropriate behavior and principles for living together politically? For instance, to what degree does the effectiveness and legitimacy of legal integration depend on an historic, underlying political culture in Western Europe? When and how is the legitimacy-basis of a system of governance transformed from functional performance to internalised codes of appropriateness, or vice versa? What is the explanatory power of discourses and arguments? That is, to what degree, and under what conditions, does legitimacy depend on the defensible normative content of the Leitid�en, principles and forms presented in debates over what kind of European order is desirable?

The long-term interaction between legitimacy based on performance and on normative principles and institutional forms is not well understood (March and Olsen 1998). There is no reason to believe that the two are completely independent or perfectly correlated. However, one hypothesis is that if polities are unable to influence citizens' identity and mentality and base their legitimacy on continuous performance, they tend to be unstable. If everyone takes an external calculative approach, so that legitimacy is solely based on performance, rewards and punishments, change is driven by shifting distributions of incentives and coercion, and institutions will not last (Weber 1978, Habermas 1996).

In comparison, in polities where legitimacy is based on shared political identities, collective understandings and emotions, change is likely to be slow and a result of step-wise reinterpretations or major external shocks. One type of cultural shock is when a polity with a law-abiding culture is extended to countries and groups without a similar respect for law and due process. Possibly, the argument is relevant for some candidates of EU membership. Yet, the effect may be modified because these new members may emphasise a different legitimacy basis, e.g. becoming a part of a modern and democratic Europe. If, however, participation in discourses over the aims and justifications of European institutions and policies is important for awarding the system legitimacy, a possible development is towards an increasing legitimacy gap between those taking part in discourses and interactions and the bystanders. The bystanders are impacted, but because they are not taking part in argumentation over the future of Europe, they are less prone to give legitimacy to the new polity.

An institutional perspective assumes that institutional change will depend on both the level of integration and the basis on which a polity is integrated (Brunsson and Olsen 1998, Olsen 1998). Other frames for understanding institutional dynamics, in contrast, tend to see institutions as primarily an epiphenomenon, reflecting competitive environments or the will and power of identifiable actors.

Frames for understanding institutional dynamics

The history of the EU is consistent with the view that all political arrangments are contingent and malleable, yet not necessarily in a voluntaristic way (March and Olsen 1989, 1995). EU developments reflect a history of founding acts and deliberate institution-building as well as informal and gradual institutional evolution. It is a history where desired policy outcomes and prefered institutional development have not necessarily coincided. It is also a history of different dynamics in different policy areas (Wallace 1996b: 38-39).

Here, I distinguish between three frames for understanding the determinants of institutional change and the processes through which change takes place: (1) environmental accounts highlighting competitive selection, (2) strategic agency accounts featuring human will, calculations and power, and (3) institutional accounts privileging the significance of institutional structures and histories (March and Olsen 1989,1995,1998, Olsen 1992).

Environmental accounts start with society and portray institutional change as reflecting shifts in the political institutions' functional or normative environments. Each institutional form has its comparative advantage, in terms of functional performance or how well it "matches" normative environments. In cases where processes of diffusion and rational adaptation do not secure good "matches", a process of competitive selection governs which institutional forms evolve, flourish, decay or disappear. Both structures and policies are largely determined by environmental forces. Therefore, tinkering with institutional arrangements will have little independent impact as long as the underlying environmental forces remain constant (Dye 1975:20-21).

This view is dominant when European developments are seen as reflecting the imperatives of international competition, technological and economic globalisation and mass migration. It is supported by market metaphors emphasising competitive selection in an increasingly interdependent world. [4] Economic and social integration, in the meaning of causal interdependence among parts, dictate political integration, in the meaning of structural connectedness and institution building.

One complication is that it is notoriously difficult to specify an optimal political-democratic space (Dahl and Tufte 1973). Another complication is that environmental accounts seldom specify exactly which changes in institutional forms shifting task environments require and through what mechanisms environmental pressure brings about change (Oliver 1991). For instance, does global competition dictate the size of the European polity? Is territorial enlargement a functional necessity and, if so, which countries have to be included? Do global functional imperatives dictate what Europeans are going to have in common? A single market? Common currency? A defense and security policy? A common defense capability? An integrated public sphere and civic society? A shared language? A collective identity? If a widening and deepening of European cooperation is a functional requirement, through which processes will this happen?

The same questions challenge accounts that assume a necessary adaptation to a normative environment of universally legitimate principles and forms. Here, one task is to explain why some principles and forms in a culture attract attention and get support, while others are ignored or turned down (Risse-Kappen 1994: 187). For instance, how can we better understand the changing mobilising power in Europe when it comes to concepts like the market, democracy, welfare state, human rights, civil society, federal state, governance by experts, etc.? Another task is to specify what each principle, or specific combinations, requires in terms of institutional design.

Strategic agency accounts understand institutional change in rational-instrumental terms, as reflecting the will, calculations and power of an identifiable group of actors. Institutional design and choice are solutions to perceived problems (March and Olsen 1983, Olsen 1997a). This view is shared by intergovernmental interpretations of European institutional developments as the outcome of bargaining between the major member states (Moravcsik 1998), as well as accounts emphasising supranational or transnational actors (Sandholtz and Stone Sweet 1998). Different scholars favour different collective actors, yet, the main focus is on human intention and power.

This is an account that entails two assumptions: On the one hand, that institutional form is a significant determinant of performance, and second, that human choices are important determinants of institutional forms. The former represents a view of institutions as part of modern technology, as illustrated by mechanical methaphors of institutions as "instruments", "tools", "apparatus", and pieces of "machinery" of democratic governance (Olsen 1988: 2). The latter conception is supported by a democratic emphasis on having a "hypothetical attitude" toward existing institutions, so that citizens can choose the institutions under which they want to live together (Habermas 1996: 468). In this view, democratic politics is an important source for changing long-lasting political relations (Shapiro and Hardin 1996:5-6).

For rational-instrumental accounts it is puzzling that reformers are not more efficient in establishing stable institutional arrangements. Institutional reforms do not seem to reduce the demand for future reforms, rather the opposite appears to be the case (Brunsson and Olsen 1993). Deliberate reform assumes motivation, understanding and social control, prerequisites often missing (among other places) in the context of comprehensive European reforms. In the EU it is often difficult to attribute institutional developments to specific actors. Multiple and conflicting goals are pursued. There is no shared vision of a future Europe and how the EU should be governed, i.e. the "nature and ultimate goals of the integration process" (Majone 1998). There is no shared understanding of institutional requirements and possibilities, and no single central reorganisation authority. A task within this perspective is to specify what actors are trying to make comprehensive reforms, under what conditions they are able to achieve planned organisational change, and under what conditions institutional reforms are producing expected and desired substantive results.

Institutional accounts do not deny that changing environments and reform strategies can be significant for understanding institutional dynamics. Rather, the argument is that processes of competitive selection and rational design are less than perfect, and that change cannot be understood on the basis of knowledge about environments and actors alone. Concepts like "historical inefficiency" and "path dependency" suggest that institutional change is not always fast and frictionless. The match between environments, reforms and institutional structure and performance is not automatic, continuous, and precise. An institutional account portrays institutions as having lives and deaths of their own, sometimes enduring in the face of apparent inconsistencies with their environments, sometimes collapsing without obvious external cause. Change processes depend to a large extent upon the internal constitutive characteristics of existing institutions. Institutions authorise and enable, as well as constrain, change. Therefore, there is a need for understanding how institutions may transform, modify, redirect and integrate, and not only aggregate, the demands, interests, and powers of societal actors and forces (March and Olsen 1984, 1989, 1995). [5]

A common criticism of institutional accounts, however, is that they highlight continuity and have little to say about change. To avoid this criticism, institutionalists have to explain "dramatic and unexpected" changes (Keohane and Hoffmann 1990:277), including why major reform agreements sometimes are reached quickly and often to the surprise of even those involved. A recent example is the redefinition of the EU from a "civilian polity" to placing security and defence high on the common agenda and appointing Javier Solana as Mr. CFSP.

More generally, institutionalists have to explain how internal constitutive characteristics of existing institutional arrangements (i.e. what integrates a polity) affect the change-continuity mix and the form change takes. Institutionalists have to explain why institutions under some conditions adapt smoothly. There is an incremental modification of internal structures as well as environments (Nystrom and Starbuck 1981), as institutions codify their changing experience, wisdom and morality. Yet, under other conditions institutions are rigid in spite of changing environments and deliberate reform attempts. Institutions outlive their functional efficiency as well as their normative support. They are outdated, promote superstition and allow exploitation. Then, change may take the form of great leaps, rather than small steps. For instance, as crises have accumulated, there have been critical junctures and exceptional moments in state-building and nation-building processes in Europe (Rokkan 1970,1999).

The EU, with its multiple overlapping centres for policy-making, provides a site for studying institutional impacts on institutional change. Developments in the EU system of governance have taken place within a strong nation state-based order, and not in an institutional vacuum. From an institutional perspective properties of this order -- characteristics of the basic units as well as their relations -- are assumed to have an impact on institutional dynamics. Such properties are expected to have consequences for both europeanisation processes, i.e. the development of new institutions at the European level, and for how the basic units adapt to europeanisation, i.e. variations in patterns of change across nation-states and across institutions within the same polity. An institutional perspective also suggests that the relative explanatory power of domestic and European institutions will change with changing levels and forms of European integration and institutionalisation.

Therefore, the EU polity is also well suited for studying key issues in political integration: For instance what are the relations between changes in, on the one hand, the level and form of polity integration and, on the other hand, changes in the component units of the system? Do changes in the number and types of institutional bonds among the component units of a polity depend on how the component units are constituted and how they "match" each other? What impact do variations in the levels and forms of integration at the polity level have on the component units? Do polities based on different institutional principles make different requirements on their constitutive units (Brunsson and Olsen 1998, Olsen 1998)? Do different types of international orders strengthen or weaken different types of states (Ikenberry 1998:163, Schmidt 1999)?

The research task includes exploring the impact of varying levels and forms of state-building and nation-building, producing states with variable internal cohesion, legitimacy and resources (Rokkan 1999). Given variations in state institutions, traditions and bonds of mutual loyalty and obligations, we should expect different attitudes towards the level and forms of European integration. Moreover, we should expect different patterns of institutional adaptation and not quick and strong convergence in institutional forms. Finally, since the level and form of institutionalisation vary across policy sectors, we would expect institutional dynamics -- the key actors involved, the patterns of change, and the explanatory power of institutional factors -- to vary across policy areas. For instance, patterns of integration can be expected to be different in policy areas like security and defense than in market-building processes. In the latter, supranational institutions have over time won a key role which they are not likely to achieve in the forseable future in, for instance, CFSP. Better specified expectations, however, will depend on detailed knowledge about institutional variations across sectors.

As a further response to the charge that institutional approaches have little to say about change, the next section focuses in more detail on some internal sources of dynamics, often ignored by static conceptions of institutions: The dynamics caused by the fact that institutional orders are never perfectly integrated.

The dynamics of imperfectly integrated political orders

A major historic development in Europe is the emergence of differentiated and partly autonomous institutional spheres with distinct logics of action, meanings and resources. Each sphere legitimises different participants, issues, and ways of making, implementing and justifying decisions. Weber observed that institutional orders are never perfectly integrated and that modernisation inevitably produces imbalances, tensions and collisions between institutional spheres (Gerth and Mills 1970: 328-57, Weber 1978, also, Orren and Skowronek 1994, 1996). An implication is that, in a multi-level, multi-structure and multi-centre polity with partly autonomous sub-systems, a key to understanding institutional dynamics may be to study how institutions relate, balance, collide and penetrate each other. If integration, seen as coherence among the parts, is never perfect, striving for coordination also becomes a potential source of institutional change, at least in political cultures favoring consistency and order.

The French institutionalist Georges Renard observed that institutions are built around foundational principles and organising ideas that provide "themes of development" (Broderick 1970:xxiii). Institutions strive to achieve ideals without ever being able to reach them, i.e. there is a potential for change because there are always discrepancies between ideal abstract regulatory prescriptions and actual implementation. In addition, the potential increases because single institutions, as well as institutional orders, are less than perfectly integrated. Institutions have built-in competing and conflicting organising principles, imperfections and conflicts (Broderick 1970).

All this suggests a dynamic, not a static, concept of institutions. In general, it is difficult to keep institutions constant by deliberately reproducing and sustaining patterns of appropriate behavior. There are continuous interpretations and reinterpretations of what the rules of appropriate behavior are, how concrete situations are to be understood, and how to map rules onto individual cases. Change may follow as rules are differently understood and as resources are reallocated so that actors become able to follow rules differently. Here attention is focused on processes of reinterpretation.

Under some conditions, change results from "a reality test" and a process of rational learning. For instance, Europeans may learn about international interdependencies and the loss of national "fate control". If so, they may avoid wishful thinking and concentrate on alternatives effective under current international interdependencies. Improved knowledge may also make them reconsider the balance between, and justification of, the maximisation of market competition and other social and political goals. Furthermore, actors may adapt collective aspiration levels, internalise dependencies and the interest of other member states. As consequence, they may -- in the very long run -- develop a European "we-feeling" (Scharpf 1999b: 283-6). In brief, according to Scharpf, Europeans may come together to cope with common practical problems, in search for common gains. Yet, the process may foster a sense of community.

This view is consistent with the idea that identity formation has a strong cognitive component (March and Simon 1958). But learning processes are not necesssarily rational and interpretations of history are seldom inherent in the events themselves. Interpretations and their effects are influenced by institutional contexts (March and Olsen 1995:44).

Most of the time, learning in densely institutionalised contexts produce step-wise reinterpretations. Still, in polities encompassing a large r�pertoire of institutional forms, forms are typically attended to sequentially or separately, rather than simultaneously and in a coordinated way (Cyert and March 1963). Shifting attention among forms, or a focus on their relations, may therefore also trigger major change. In polities where legitimacy is largely based on habit and unreflected tradition, processes of reflection and consciousness-raising can also produce sudden, dramatic and unexpected change.

In the EU, generalised institutional forms shared by member states compete with each other and with national-particularistic forms of governance and organisation (Andersen 1999). Which of several legitimate forms are appealed to and evoked has significant implications. For instance, an emphasis on the freedoms derived from the market-building project, compared to a focus on "a shared commitment to freedom based on human rights, democratic institutions and the rule of law" (Presidency Conclusion 1999), legitimises and activates different participants and arguments, problems and solutions, and institutional forms. Therefore, they "bias" decision-making processes differently.

The dynamics of change will also depend on how proposals are framed, typically an institution-dependent process. For instance, a suggested transition of the EU to a democratically-constituted federal state, where German federalism "might not be the worst model" (Habermas 1998: 161), can be discussed in terms of the system's problem-solving capability (Scharpf 1999a,b). It can also be discussed in a powercontext; the future of the realm of the political and majority institutions, and the power implications of winning popular elections in democratic societies (Rokkan 1966). Furthermore, the proposal can be discussed in terms of the development of democratic beliefs and practices, public deliberation and decision making based on the best argument (Habermas 1986,1998). While all are legitimate standards of assessment, they typically suggest different institutional designs.

Change and stability are linked to definitions of the self and the situation (March and Olsen 1998: 959), and Union enlargement has been related to a normative, and not only functional, definition of the EU. By formulating its policy toward the Central and Eastern European candidate countries, the EU has developed the constitutive normative principles of the European political order. By defining the fundamental norms and operational criteria of eligibility for membership or eligibility for assistance programmes, the EU has discovered or defined important aspects of its self-image and collective identity. Likewise, EU policy-makers have developed a specific role, identity and rules of appropriate behavior for the EU towards the CEECs. Examples are the notion of an EU responsibility for the integration of the CEECs, the attempts to delegitimise (or limit) narrowly self-interested behavior towards the CEECs, and the duty to accommodate the interests of the CEECs in EU policy (Sedelmeier 1998,1999, Schimmelfennig 1999). [6]

A step-by-step commitment to enlargement as a moral obligation has taken place -- in spite of vigorous opposition and hard bargaining over the distribution of costs, yet with no thorough debate about the EU interests involved or detailed cost-benefit analysis (Schimmelfennig 1999, Sedelmeier 1999). EU policy-makers have been afraid that current institutions will not be elastic enough for a major enlargement, but they have not developed shared expectations about the institutional requirements of enlargement. It has been argued that the EU will work better with a small number of willing and similar members (Wallace 1996b: 65). On the other hand, enlargement to 12 members set in motion processes that strengthened Community institutions (Keohane and Hoffmann 1990: 277).

The lesson of history is also uncertain because several of the new candidates are different from the former ones, for instance in terms of inadequate institutional capabilities of action, including a capacity for deliberate institutional reform (Nakrosis 1999). One possibility is that the EU, facing candidate states without or with weak democratic state traditions, will be more able to demand institutional reforms than it has been able to do so far in relation to current member states.

Most of the time, institutional actors take each other into account. They routinely observe formal or tacit boundaries of their legitimacy and an established institutional balance. What happens, then, when the ideals and the rival conceptions of political order embedded in different institutional spheres come into conflict with one another (Broderick 1970: xv-xvi)? Such institutional collisions may, for instance, take place when institutional striving leads to "overstreching" one ideal and imposing principles and codes outside their traditional legitimate sphere of activity.

The European context provides a laboratory for studies of institutional collisions. This is so because the EU represents a new type of combinations of institutions with no dominant center of authority and power (Jachtenfuchs and Kohler-Koch 1996, Wallace 1996a,b, Sand 1998: 285). Therefore, imbalances, collisions and dynamics are likely. First, they are likely because of the lack of agreement on the fundamental normative principles and ends according to which the European polity is to be integrated and governed. Secondly, they are likely due to the lack of a clear and stable allocation of powers between levels of governance and institutions (Curtin 1997, Kirchhof 1999, Weiler 1999). For instance, the European Union is a polity where functional performance depends heavily on national agencies, budgets and staffs (Wallace 1999). Tensions between levels of governance, as well as between territorial integration and functional integration that do not overlap with territorial boundaries, are also built into the major European institutions. The EU provides a meeting-place for actors with different institutional affiliations interacting within a variety of institutional contexts, emphasising territorial and functional concerns differently (Egeberg 1999).

Is the Westphalia system of spatial organisation then seriously challenged by European functional organisation? The dilemma is well known in organisational research. As each part of an organisation adapts to its specific task environment, there is an increasing demand for coordination across functional sectors. At the same time, functional differentiation and integration, makes such coordination difficult (Brunsson and Olsen 1998). Functional specialisation and differentiation and institutional "fusion" between levels of governance make coordination difficult at both the European and the domestic level (Rometsch and Wessel 1996). So far, however, there is no agreement that EU functional networks have produced territorial disintegration, making the nation-state less unitary, weakening the power of majority-based institutions as well as coordinating agencies (Knodt 1998, Lange 1998).

Institutional collisions, including the relations between legal and "living" institution, can be better understood through studies of how institutions, after they are formally and legally established, learn their place in an institutional order. For example, the European Court of Auditors, as a new institution, had to "chart the difficult waters of interinstitutional relations" (Laffan 1999: 255). Defining its tasks, methods and organisational forms, was an important part of the learning process. It had to establish its credentials, discover opportunity structures, define ground rules for interactions with other key institutions, and establish trust and appropriate relations. Search and learning processes took place in a changing normative and cognitive climate, with increasing concern for financial management and fraud, and changing formal institutional responsibilities, legal status and resources. Learning its place, finally, meant coping with the dependence on the resources of National Audit Offices and the need to develop cooperation and partnership with domestic institutions jealous of their independence (Laffan 1999: 256-8, 265).

The likelihood and consequences of institutional collisions depend on properties of the polity. In tightly integrated polities, characterised by high causal interdependence, coordination and consistency among the parts and structural connectedness, collisions may not be very likely. However, if an external shock causes collisions, change in one part of the system produces fast and precise changes in other parts. In loosely integrated polities, with modest causal interdependence, separation of tasks, powers and responsibilities, and with slack resources buffering the various parts (Cyert and March 1963), consequences tend to be local, with system impacts more modest and less precise. [7]

The Treaty of Rome and San Pietro in Vatican

Historically, Europe has been a key site of innovation when it comes to forms of governance and political organisation (Finer 1999: 14). Now, the region is again experiencing a period of political experimentation, innovation and transformation. Building European institutions of governance may be compared to building San Pietro in Vatican - Saint Peter's Basilica. Some trace its history nearly two thousand years back, and even the current (new) Basilica took generations to build. There have been many builders, popes and architects, as well as artists and workers. Plans have been made, modified and rejected. There have been conflicts over designs and over the use of resources. There have been shifting economic and political conditions and changing cultural norms, including religious beliefs and fashions of architecture. Such factors have affected both the motivation and ability to develop the Basilica. Yet, as parts have been added, modified and even demolished, the project has had dynamics of its own, constraining both the physical development, the use of, and meaning of, the Basilica.

I ask for mercy from those who know the history in detail. The point of using the mehaphor is simply to suggest that the processes underlying European integration are not well understood. Furthermore, it may simply not be possible to develop a single, coherent theory of a complex historical phenomenon like the European Union. As has often been the case historically (Rokkan 1999), change in the European political order seems to be an artifact of a complex ecology of processes and trajectories, rather than the result of a single dominant process. Again, it may be concluded that "the historical processes by which international political orders develop are complex enough to make any simple theory of them unsatisfactory" (March and Olsen 1998: 968).

Still, the evolving European polity provides great empirical opportunities for those interested in political development. Studies of the EU may help us understand political integration and disintegration as universal phenomena unfolding somewhat differently in different territorial, historical-cultural and socio-economic contexts.

Studies of a polity with some special features, like the EU, may improve our ability to differentiate between forms of political organisation and their key dimensions and characteristics. They may also make it easier to compare political and governmental structures. In addition, such studies may shed light on the consequences of institutional form. That is, whether, under what conditions, how and through what mechanisms institutional form matters. For instance, when and how do institutions fashion agency, so that constitutive institutional principles and identities make actors follow a rule-driven logic of appropriateness? When and how do institutions have an impact upon policies, performance, power-relations, and the democratic quality of governance?

Inquiries of the co-evolving processes of institution formation and adaptation at the European and the domestic level may also improve our understanding of institutional continuity and change. They may help us understand shifts between periods of radical change and stability and, thus, the shifting basis for periodisation of political development. They may also shed light on variations in developmental trajectories. Under what conditions do institutions (and actors) gain and lose legitimacy and support, or see their legitimacy-basis change? Under what conditions are existing institutions overwhelmed by environmental forces, for example shifting social and economic interdependencies? Under what conditions are different types of actors able to deliberately form and reform institutions and achieve desired and intended results? And the key issue of an institutional approach: Under what conditions do institutions, and different levels and forms of political unity, modify the change potential of environmental forces and reform strategies?

This chapter is a prelude to answering such questions. Exploiting the research potentials of the changing European polity may contribute to more interesting theories of governance, political organisation and institutional change. In turn, such theories may give a better understanding of the significance of Europe as a specific context for political integration and disintegration.


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*. To appear in Helen Wallace (ed.): Whose Europe? Interlocking Dimensions of Integration, London: Macmillan (forthcoming)

**. ARENA, University of Oslo
Phone: 47 22857678
Fax: 47 22857832

[1].Earlier versions of this chapter were presented at the Workshop on Research Directions in relation to Governance and Citizenship in a Changing Europe, European Commission, DG Research, Brussels September 8-9 1999 and the ARENA Annual Conference in Oslo November 17 1999. I want to thank the participants and in particular Svein S. Andersen, Morten Egeberg, Beate Kohler-Koch, Ulrich Sedelmeier and Helen Wallace, for constructive questions and suggestions. Thanks also to Peggy Br�nn, Jeffrey Checkel, B. Guy Peters and Ulf I. Sverdrup and to James G. March, with whom I have worked on theories of formal organizations and political institutions for more than 30 years.

[2]. For an overview of this debate, see Bulletin Quotidien Europe. Also, Dehaene, von Weizs�cker and Simon, 1999. The Commission's Reform Strategy Program, "embarking on a process of fundamental reform" will be published in February 2000 ( IP/99/769|0|RAPID&lg=EN).

[3]. Jacques Sant�r 1999-03-03 ( gettxt=gt&doc=IP/99/143|0|RAPID&lg=en).

[4]. Ruggie claims, with a reference to Etzioni (1966), that "the boldest variant of functionalism actually posits the existence of evolutionary trends: that in reacting and adapting to its environment, humanity will build for itself ever-higher forms of socio-political organization, from tribes to baronies, from national states to global authorities" (Ruggie 1998: 46).

[5]. In attempts to typologise institutional approaches, this interpretation is often placed together with "the new institutionalism" in organizational sociology. Such typologies overlook that the two takes opposite views when it comes to the importance of internal factors. The latter argues that: "Most of the institutional change now occuring in any given polity can be predicted more readily from knowledge of the wider world environment than from an understanding of internal structure" (Jepperson and Meyer 1991: 226). This approach, emphasising the spread of a general world culture, is closer to Weberian ideas of a general rationalization and "disenchantment of the world" (Gerth and Mills 1970: 41).

[6]. Thanks to Ulrich Sedelmeier and Helen Wallace for helping me formulate this point.

[7]. Thelen suggests that collisions are likely to be most consequential when they interfere with the reproduction mechanisms of institutions (Thelen 1999: 400).

[Date of publication in the ARENA Working Paper series: 15.01.2000]