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disconcerting, Rikerian assessment of the significance of federalism (Riker
1964
). Reasoning along this path one quickly reduces the relationship between
institutions and economic outcomes to one in which the latter determine the
former, rendering politics irrelevant.
22
This topic challenges this view.
Arguably, the very reason why institutions are contested, in this case, the
reason why political actors engage in conflict about fiscal structures, is that
they have effects on their political and economic environment. In other words,
the motivations and preferences of the actors involved in the process of insti-
tutional choice derive from the expected impact of institutions, that is, from
counterfactual exercises about what the institutional effects will be. Political
contentions over fiscal structures occur because they have distributive implica-
tions that cumulate over time.
These implications may be consistent with previous expectations, in which
case institutions become a mechanism by which a particular dimension of real-
ity becomes self-perpetuating. Alternatively, institutions may work in directions
unexpected and/or unintended by their designers, in which case institutions
become a factor of change. From the fact that the actual effects of any given
institution are consistent with what the designer anticipated it does not follow
logically that that institution has no impact. Symmetrically, from the fact that
a particular institution has unintended effects it does not follow that this insti-
tution is exogenous. It simply means that its designers had the “wrong” expec-
tations about (or could not foresee) its institutional effects. Whether designers
have the right expectations is a different issue from the existence and influence
of the expectations themselves.
On these premises, I argue that the
neo-Rikerian
claim that endogenous
institutions necessarily lack an impact of their own is misleading because it
conflates the methodological difficulties of distinguishing the causal effects of
institutions with an alleged theoretical impossibility for these effects to exist.
It is precisely to avoid this confusion that we need to “sort out institutional
effects from the conditions under which they function” (Przeworski
2004
).
23
With this goal in mind, this topic combines attention to the long-term dynamics
of the relationship between fiscal structures and economic geography with the
identification of the marginal effects of economic geography, mobility, and
representation posited in the argument. This agenda imposes a number of
conditions, both theoretical and empirical. Theoretically, it requires a model
in which the different elements of the argument and their roles in the political
process of adopting different fiscal structures are clearly identified. Critically,
this implies treating fiscal structures and representation as two different and
22
For a related discussion on the institutional determinants of economic developments, see
Acemoglu, Johnson and Robinson (
2002
); and Przeworski (
2004
,
2004b
,
2004c
).
23
As Przeworski himself reminds us (2007a), causality refers to the identification of the mech-
anisms behind the observed impact of a particular factor or institution on the basis of 1)a
theoretical argument and, ideally, 2) a comparison between the observable world and a coun-
terfactual scenario in which all other elements but the factor of interest remain unchanged
(Fearon
1991
).
