Form over function in finance: international institutional design by bricolage

ABSTRACT

Dominant perspectives in International Relations start from the assumption that the problem-constellation determines international institutional design. Given the difficulty these ends-oriented approaches face when explaining institutional inefficiencies and pathologies, this article develops an alternate perspective based on anthropologist Claude Lévi-Strauss's concept of bricolage. Design by bricolage starts from the premise that actors are means-focused, seeking to recombine and redeploy tools from their existing environment. Designers constantly experiment, adapting institutional elements from cognate fields, with the aim of creating novel institutional arrangements. The outcomes of international cooperation are a function of the design process, more than the initial problem type. To illustrate the usefulness of this perspective, the paper examines the evolution of the International Financial Architecture, with a focus on the evolution of the international securities regime. A design by bricolage perspective is well positioned to make sense of enduring International Relations puzzles such as why second-best solutions often persist yet later succeed, and, importantly, re-opens the conversation on agency in international institutional design that has been downplayed by conventional, structural approaches. The design of international institutional elements is frequently experimental where form trumps function.

KEYWORDS:

• International institutions
• institutional change
• bricolage
• global governance
• global finance
• IOSCO

ACKNOWLEDGMENTS

We thank Lori Crasnic, Henry Farrell, three anonymous reviewers, and participants of the Georgetown University International Theory and Research Seminar.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. For the development of the concept across different academic fields, see Cleaver (2002), Carstensen (2011), Duymedjian and Ruling (2010), Baker and Nelson (2005) and Louridas (1999).

2. Given rational design's focus on the characteristics of the problem type, some may view the approach as structural. But we treat them as agent- oriented given the emphasis on actors using institutions only as a bridge to further their material interests. The institutions do little to change or dictate preferences. Our explanation is echoed by many rational choice scholars who see their work as agency based. For example, Abbott (2008), one of rational design's key proponents, writes that ‘Like all Rational Choice theories, Institutionalism utilizes a form of ‘methodological individualism,’ focusing on the behavior of particular actors or agents’.

3. For related efforts in the domestic arena, see Stark (1996), Campbell (2004) and Carstensen (2011). These contributions, however, work largely under an implicit assumption that designers work in a condition of bounded rationality in which designers work in an ends-oriented process, neglecting the experimental nature of the design by bricolage perspective presented here.

4. While social scientists certainly practice design by bricolage, our success in employing the approach pales in comparison to some of the defining public intellectuals of our time. For example, The New York Times, following the release of the genre-defying The Life of Pablo, proclaimed that Kanye West ‘has perfected the art of aesthetic and intellectual bricolage’(Caramanica, 2016).

5. This does not necessarily mean they will succeed in creating something new.

6. Others like Carstensen (2015) distinguish between ‘limited bricolage’, where designers reinterpret existing institutions to serve novel ends, or ‘expansive bricolage’ that involves grafting institutions that have a different logic of action on to the actor's institutional landscape.

7. For a detailed look at the re-emergence of global finance, see Helleiner (1996) and Abdelal (2007).

8. On why we see intergovernmental versus transgovernmental cooperation from a rational design perspective, see Whytock (2005).

9. The BCBS is flanked by the International Organization for Securities Commissions (IOSCO) and the International Association for Insurance Supervisors (IAIS)

10. Extending the past SEC behavior, this was coupled with the creation of several bilateral Memoranda of Understanding (MoUs) with national securities regulators.

11. IOSCO's Executive Committee sits at the top of the organization. The Technical Committee acts as its right hand man and takes the lead in new standards development.

12. For a review of the politics behind Basel I's creation and its misguided approach to risk management, see Singer (2007).

13. The President's Committee is made up of the head regulators from different national jurisdictions that are ordinary or associate members of IOSCO. The President's Committee must vote to ratify any new set of standards developed and endorsed by the organization.

14. In line with Carstensen (2011), our point is that even ideas can be remodeled and, as such, act as the tools for bricoleurs.

15. For a more detailed look at the G-7's role in economic governance, see Baker (2006).

16. See Reisenbichler (2015) for an analysis of the politics behind the creation of the FSF.

17. Note that the FSF taskforce was primarily composed of central bankers and bureaucrats with substantial expertise and familiarity with the various standards. For a list of members, see FSF (2000, p. 29).

18. For a broader analysis of the IMF's Standards and Codes Initiative, see Mosley (2010).

Additional information

Notes on contributors

Nikhil Kalyanpur

Nikhil Kalyanpur is a PhD student in Government at Georgetown University and a graduate fellow at the Mortara Center for International Studies. He researches the effects of financial and legal globalization on business-government relations. His work has been published in the European Journal of International Relations. For more information, please see www.nkalyanpur.com

Abraham Newman

Abraham L. Newman is an associate professor in the Edmund A. Walsh School of Foreign Service and Government Department at Georgetown University. He is the Director of the Mortara Center for International Studies and senior editor at International Studies Quarterly. His research focuses on the ways in which economic interdependence and globalization has transformed international politics and he is the author of Protectors of Privacy: Regulating Personal Data in the Global Economy (Cornell University Press 2008) and the co-editor of How Revolutionary was the Digital Revolution (Stanford University Press 2006). His work has appeared in a range of journals including Comparative Political Studies, International Organization, Science, and World Politics. For more information see http://explore.georgetown.edu/people/aln24/