Discuss the promises and pitfalls of the use of principal-agent theories in international relations.
PA is dominant approach to the study of delegation. Draws from rational choice theories, arguing that instrumentally rational actors (voters, legislators, states) delegate power to executive and judicial agents systematically in order to lower transaction costs of policymaking and in doing so, they tailor the discretion of their agents, systematically, as a function of several factors including the demand for credible commitments, demand for policy relevant information, and the expected gap between the preferences of the principals and agents.
Promises
- following initial act of delegation, PA accounts go on to make predictions about the autonomy and influence of executive and judicial agents, which are typically theorized to vary as a function of the administrative and oversight mechanisms available to the principals.
- It is a limited but fruitful midrange theory allowing us to problematize and generate multiple testable hypotheses about delegation and agency in a wide array of empirical contexts.
- PA theory acknowledges that agents are not “mere agents” of their political principals, but rather possess independent preferences and can influence political outcomes in their own right
o Int’l organizations like the EC or the ECJ possess independent preferences and can influence political outcomes in their own right
o PA analysis gives us a theoretical language for problematizing and generating testable hypotheses about the sources and extents of agents’ autonomy and influence
- completely prior to and outside of any scholar’s particular biases about supranational institutions like the ECJ. These biases (neorealist) are extrinsic to PA analysis, which allows us to problematize rather than prejudge the autonomy and influence of international agents
- PA models, as rationalist theories, are compatible with a wide range of other rationalist mid level theories and can thus easily serve as one of several building blocks of a more ambitious theory of monetary policy, judicial politics, or whatever.
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Pitfalls
- there is an assumption that agents will only act to the point that they will not incur sanctioning, overturning, renegotiation with their Principal
o insofar as PA analysts make the implicit assumption that agents seek to avoid sanctioning by their principals at all costs, they may be mistaken and the judicial realm in particular (getting overruled) is replete with examples of judges interpreting law in accordance with their legal beliefs and inviting legislature to overturn their decision through new legislation if they disagree
o this causes some states to not seek partnership with the government in the first place, because they don’t want any interference and expectation regarding provisions (this is religious nonprofits, pro life groups, etc.)
- PA ignores third parties because of its exclusive focus on the dyadic relationship between a principal and its agents
- Black boxes the internal workings of both state principals and IO agents (bureaucracies and courts), adopting simplifying assumptions about both actors in order to model the relationship between them
- Thus, because of the black boxing and the inattention to third parties, PA models cannot (and do not) claim to offer a complete theory of judicial or monetary politics.
o To its defense, PA analysis can account for the possibility that agents such as courts and central banks have lots of discretion from their principles and thus the primary influences on those agents may come from third party actors like markets, lower courts or individual litigants.
- a major critique is that PA approaches model the dyadic relationship incorrectly
o Majone claims that there are in fact two distinct logics in delegation in EU
o One logic is informed by the demand for policy relevant expertise, in which Principals delegate executive functions with constraining mechanisms
o Second logic is guided by the logic of credible commitments, in which Principals deliberately give agents lots of discretion to implement policies to which the Principals cannot commit (UN and abortion?)
o In the case of the EU, Majone argues, member state principals have delegated powers in EU treaties primarily to ensure credible commitments, and in these areas the EU organizations such as the EC and the ECJ have a lot of discretion
o Alternatively, member states delegate primarily technical and information functions in EU and design traditional, PA oversight mechanisms to limit discretion
o Thus, this account distinguishes two rationales for delegation (one informational and one based on credible commitment) but in doing so it dichotomizes the two logics of delegation, creating two entirely separate categories of PA relationships and hypothesizing entirely distinct motives for each case
§ Author says that unless there is a 100 percent transfer of sovereignty, it is not necessary to separate, so we can ignore this.
- Methodological, empirical difficulty
o It is hard to measure abstract variables like “inherent uncertainty,” demand for credible commitments, or the preferences of principals and agents
- PA cannot account for the fact that political principals both domestically and internationally may delegate powers for reasons other than to reduce transaction costs of cooperation and policymaking
o Sociological institutionalists have argued that powers are delegated to political agents not to reduce transaction costs for Ps but rather because such delegation is widely accepted as legitimate or appropriate by the Ps or their constituents
§ In an article on central bank independence, Kathleen McNamara 2002 questions the transaction cost justification for delegating extensive power to independent central banks, arguing that the econ lit is inconclusive about the benefits of such delegation. Rather, she suggests that the spread of independent central banks as an organizational for is an example of a normative or mimetic “institutional isomorphism” in which particular institutions are adopted and spread not because of their functional benefits but because such institutions come to be seen as legitimate or appropriate in public discourse
§ Finnemore 1993 offers a similar explanation for the widespread adoption of science bureaucracies, prompted by new norms arising from UNESCO in the post war era, suggesting that functional logics don’t explain the timing or the universality of the highly specialized organizational form.
o response: First, one can imagine political principals engaging in purely symbolic acts of delegation—delegation decoupled from any actual transaction cost benefits—where the stakes and the costs of such delegation are low, as in the case of science bureaucracies or when there is radical uncertainty. But such delegation is less likely in cases such as central banks where the stakes of delegation are high and the costs and benefits are more clearly understood
o additionally, while such sociological institutionalist claims about delegation as normative institutional isomorphisms is a plausible prima facie explanation of particular acts of delegation, they are difficult to distinguish from PA counterparts, since a high degree of normative legitimacy for an institution may simply reflect an accurate assessment by the public of its functionality and thus rationality. You would have to prove that a given institutions’ predicted functional benefits are absent in specific empirical cases, so that only normative or mimetic isomorphism would be left as a convincing explanation
o sociological institutionalist accounts deserve consideration but there are theoretical reasons for expecting that purely symbolic delegation will decline as the stakes of delegation increase, and there are methodological obstacles to testing such claims that are at least as great as the methodological challenges of testing PA accounts
- misspecification of principals’ influence
o PA assumes that Ps rely on their influence over agents to get what they want
§ Karen Alter notes that most PA analysis (wrongly) predicts that courts will receive substantial discretion from their political principals and that political principals will retain some tools of control over courts and judges, including most notably the possibility of reappointment and the prospects of overturning and recontracting.
§ By contrast, Alter argues that while states do indeed have means of influencing or defying international courts, these means do not generally arise from the nature of the contract between the principals and agents, nor do they rely on the threat of recontracting.
§ Instead, other modes of state influence, including the use of rhetorical and legitimacy politics as well as legal avenues such as refusing to consent to jurisdiction and settling out of court are available to states and are more widely used than traditional control mechanisms.
o While these arguments are not per se inconsistent with PA theory, they suggest that PA theory itself will not be very useful in studying the dynamics of variation in international judicial decisionmaking across cases or across international courts.
- Misspecification of agent’s autonomy
o agents have both idiosyncratic preferences and multiple sources of influence authority that are not captured by PA analysis
o more radical departures from PA models are made by constructivist scholars such as Barnett and Finnemore 2004 and Ian Johnstone 2003 who offer very different views about the nature of the relationship between IOs and the states that create them.
§ First, IOs are bureaucracies which shapes their behavior in systematic ways that cannot be accounted for by a simple set of assumptions about agent preferences
· IOs as bureaucracies order the world and deal with problems in predictable and sometimes dysfunctional ways and any attempt to understand the behavior and the pathologies of any IO must model not only the PA relationship but also the bureaucratic culture that helps to shape IO preferences and behavior
§ second, IOs enjoy four distinct power resources: sources of authority:
· delegated authority, which arises from explicit mandate from the member states and is conditional on satisfactory performance on IOs delegated tasts
· expert authority, which arise from IOs control of specialized policy relevant information
· rational legal authority, which arises from the nature of IOs as bureaucracies and rests on their ability to present themselves as neutral and objective, based on impersonal rules
· moral authority, which comes from IOs claim to represent the values and interests of the community rather than the partial, self seeking interests of individual states.
· these four sources of authority place IOs both “in authority” by virtue of the offices they hold and make them “an authority” by virtue of specific characteristics (expertise, objectivity and neutrality) and the authority thus conferred give IOs both autonomy and the potential to influence other actors.
- IO power is regulative and constitutive, which PA theory cannot account for
o The claim that IOs regulate state behavior through the adoption of informal rules is a central claim of PA models, but Barnett and finnemore go further suggesting that IOs can also constitute the world as they define new categories of problems to be governed and create new norms, interest, actors, and shared social tasks
o This CONSTITUTIVE role of IOs may be the most profound and important, but also is one to which rational theories have devoted no attention
§ Similarly, Ian Johnstone 2003 has argued that the primary influence of the UN Secretary General arises not from his delegated powers which are meager but from his priviledged position as a member of international interpretive community and from his ability to persuade others of the correctness of his position through a process of ongoing legal discourse.
o however, as Barnett and Finnemore concede, constitutive claims do not lend themselves readily to falsification, and the best empirical work in this tradition offers essentially plausible narratives in which moral authority and persuasion play a role at the margin in providing some leverage to IOs that otherwise enjoy relatively little formal powers
o still, studies like Johnstone’s and Barnett and Finnemore’s do suggest that IO autonomy and influence may—at least in the margins—rest on sources of authority and on causal and constitutive processes to which rationalist accounts are indeed ontologically blind
- If we look at Barnett and Finnemore’s four sources of authority, one could argue that rationalist PA analysis can model the first two sources (delegated authority and expert authority) effectively, and indeed with greater precision than Barnett and Finnemore do, but the last two sources (legal-rational and moral authority) lie outside the PA analysis and are difficult to reconcile with its core assumptions as is the prospect of a constitutive role for IOs
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