Structure, Agency and Credible Commitment: Polarization in Comparative Perspective (UNDER REVIEW)

Michael Touchton, Boise State University

Abstract

Recent evidence indicates a strong connection between a credible commitment to the rule of law and economic development. Securing property rights and enforcing contracts promotes investment and growth (Barro and Gordon 1983, North and Weingast 1989, Mauro 1995, Stasavage 2002, Frye 2004). Credible commitment to the rule of law generates stable expectations, lasting agreements and a foundation for economic expansion. However, generating such credibility is difficult. The important and elusive nature of credibility raises a critical question: What factors promote credible commitment to the rule of law?

Previous scholarship in political science and economics focuses on the ways in which formal rules and structural features of the state generate credibility among a target audience (Persson and Tabellini, 2003, North and Weingast, 1989, Stasavage, 2002). These institutional arguments dominate the literature on credible commitment, yet they neglect an important element of politics: the actual flesh and blood of elected officials. Institutional explanations only describe one part of the story surrounding credibility; understanding the role of politicians within the institutions is crucial to understanding credible commitment. For example, politicians harboring distinct ideologies may constitute an effective constraint on authority whereas institutions alone may not suffice (Tsebelis, 1995). The concept of ideological polarization captures the relative difference in policy preferences among elected agents and assists in modeling their behavior in a given structural context. I expect ideological pluralism to generate credible commitment to policy outcomes because deviations from previous policy equilibria will be difficult to achieve. Furthermore, politicians are more likely to respect the rule of law when confronted with challengers who are unlikely to collude. I expect ideologically distant politicians to expose one another’s malfeasance since future alliances with the opposition would be unlikely.

I test my argument against available data in a cross-national, aggregate context to generate a baseline model. I then supplement statistical analysis with natural experiments in Argentina, Brazil and Mexico to identify causal mechanisms driving relationships in the data. The degree of ideological diversity within each government was different when I began this investigation and changed as a result of elections in 2006 and 2007. Institutions, economics and other potential-determinants of commitment to the rule of law did not change measurably over this timeframe. I was therefore able to test whether changes in polarization generate changes in perceptions of the rule of law while naturally controlling for other factors.

I gathered survey data from several hundred domestic investors in Argentina, Brazil and Mexico before and after their recent national elections. These subjects responded to a battery of questions regarding the credibility of property rights, contract enforcement and adjudication of disputes. They also provided data detailing the importance of political agents relative to institutional structures in assessing the credibility of policy commitments. This research design allows me to attribute any post-electoral changes in survey responses to the influence of the elections and the new government they generated. Analysis of the field data presents an argument requiring further exploration: stable institutions require credible agents to enforce rules and regulations whereas decisive executive action is preferable when institutions are weak. I re-evaluate this argument using aggregate data and find ideological polarization coupled with stable polities is a strong, consistent determinant of the rule of law. Polarization is indeed important for the rule of law, but those working with aggregate indicators must be mindful of the context in which polarization and the rule of law operate.

The remainder of the paper proceeds as follows: First, I develop a theoretical argument for polarization’s role in generating credible policy commitments. Then I present a preliminary, aggregate model of the rule of law. I use data from Argentina, Brazil and Mexico to explore the causal mechanisms behind statistical relationships and revise my model to reflect insights from fieldwork. Finally, I conclude with a discussion of the results and their implications.