The rise of populism and the weakening of democracy have captured attention across advanced industrial societies, particularly among liberal elites on the centre left. How could voters elect politicians who undermine the provision of social services, chip away at the rule of law, coopt or constrain the free media, and at times even threaten to bankrupt the state? How could they reward or even tolerate those leaders for engaging in overt acts of corruption while at the same time preventing any plausible alternative or opposition group from holding them to account through free and fair elections? Sure, people may feel they got a bad deal from globalization, and they may resent the pretensions – both cultural and intellectual – of an overly educated, out-of-touch elite. A little outrage and protest seem appropriate to gain attention. But why are they turning against the institutions that were created to serve advanced industrial societies, from the smallest local authority through the welfare state to the rules-based multilateral system?

Such questions matter because those institutions are the bedrock for the security and prosperity of advanced industrial societies. Even people who lost out in relative terms from globalization have still benefited – hugely! – from the growth and peace that liberal democratic institutions have fostered, particularly when compared to the first half of the Twentieth Century. Why throw that all away to follow a leader who only seems interested in his or her own power and money, and who appears all too happy to tear down the whole edifice of liberal democratic government to get what they want? The self-harm involved hardly seems worth the symbolism that voting for such populist and potentially would-be authoritarians represents.

The easy answers to such questions focus on misdirection and confusion. The populists who mobilize discontented voters are nothing if not gifted in delivering a compelling message. Those populists lie, of course, but they are authentic about doing that. They also manage to strengthen their claims by hanging them on a fragment of truth about how the world works and the appearance – whether real or imagined – of hypocrisy among their opponents in the political mainstream. Voters can be excused for not being obsessed with politics and so falling for skilful misinformation, particularly when it goes viral on social media or rebounds in the echo chamber of ideologically oriented podcasts, talk radio, and television. In this easy diagnosis, the challenge for mainstream politicians is to ‘break through’ with a stronger and more compelling message that will bring the voters back to their senses.

The harder answers are that the voters who support the burn-it-all-down populists are being rational in the choices they make. Those voters know the difference between mainstream politicians and the populists who would replace them. They also know that electing those populists will mean for the institutions that shape the market and the state at all levels of government, including the international system. And that is what they want – maybe not burn it all down but at least shift the balance away from rules and toward discretion. Those voters do not trust institutions, and they do not believe in the benefits that the supporters of such institutions claim to bring. Their goal is not so much to overturn elites or liberalism as it is to escape from institutionalism as an ideology or worldview that promises to connect rules, norms, and conventions with a host of advantages for those who live within them. In its place, they want more freedom and fewer constraints, even if at a high cost for society as a whole.

Two Faces of Institutionalism

To understand this rebellion, it is important to distinguish between two different notions of institutionalism – as an approach to understanding how the world works and as an ideological commitment to the value or virtues of those mechanisms. Institutionalism as understanding is popular among academics and policymakers. They know institutions are more than they appear to be on the surface. Rules reflect specific values and so the more rules are made to be consistent with one-another, the more deeply those values become embedded in society. That is what the Hungarian economic anthropologist Karl Polanyi meant when he talked about social embeddedness. Any new rule must be made to work alongside those that already exist in order to function, otherwise the result will be conflict. This explains why you can have a Latin American or African approach to international law, for example. Even supposedly universal principles need to be made to fit with the rules, norms, and conventions that prevail in a given context.

Polanyi made this point about social embeddedness to explain the rise of organized labour at the end of the 19^th Century and the origins of the welfare state in the early 20^th Century. People confronted with new market institutions that did not reflect their underlying social values organized themselves to fight back and establish rules that were more consistent with what they had in the past. Economist and political scientist Herbert Simon gave the argument a slightly different spin to focus on how people think rather than why they react. Simon explained that people perceive things differently depending upon the institutional context because they naturally prefer those things that are consistent with what they experience. Their rationality is ‘bounded’ by the rules and institutions that shape their environment to reflect the values those institutions carry within them. You are where you sit, in that sense.

That notion of context is politically important insofar as it creates the possibility to pitch different sets of institutions against one another both by imbuing them with different values and creating rules about how they interact. This is the essential premise behind the notion of institutional ‘checks and balances’. For one part of government to check another, the different institutions need to have different interests. But they also need to share an interest in preserving the rules that create the delicate balance between them. Writing in the Federalist Papers, James Madison argued that this was the only way to ensure that one set of actors shaped by one set of institutions did not come to dominate over all the rest. The result might make for slower decision making and at times awkward conflicts, but those inconveniences insured that a greater number of values remained represented in the wider constitutional arrangement.

The fact that the whole system of checks and balances exists in the form of rules and institutions also offers the added advantage of being transparent to anyone who knows how to read and interpret the rules. In turn, this transparency creates both greater predictability in terms of knowing how the rules would apply even in situations that are largely unprecedented, and greater accountability because it should be possible to establish when the rules have been broken and what kind of redress can be offered to those who are badly affected as a consequence. The system of checks and balances depends upon the rule of law, and the rule of law depends on checks and balance.

Political scientist Theodore Lowi argued that this combination of predictability and accountability were essential to the success of liberalism in ensuring prosperity and peace. Here we are not just talking about government. Business tends to flourish when entrepreneurs can more easily predict what business model will turn a profit and when investors can find a resolution to any conflict. And what applies to business can also apply to states interacting with one-another in the international system. States find the mix of predictability and accountability a better foundation upon which to create an international division of labour while at the same time promoting the non-violent resolution of conflict. That is how we move from the rule of law in the domestic context to a rules-based international system, even when there is no strong international enforcement mechanism.

Indeed, any alternative arrangement that did not rely on transparency, predictability, and accountability would be significantly less efficient – which means states and markets that relied on these attributes would have a significant advantage over those that did not. This is the point the Nobel prize winning economic historian Douglass North made. When institutions provide transparency, predictability, and accountability, that lowers transaction costs and so – everything else being equal – makes economic activity that takes place within a coherent institutional context more competitive vis-à-vis those that do not. As a result, institutions tend to spread from one place to the next. They also tend to adapt in ways that are path dependent and so show important consistencies with the path. Nobel prize winning political scientist Elinor Ostrom referred to this process as the origins of institutional diversity.

These different ways of interpreting things are important for academics because they tell us how different parts of society or societies are connected; they give us a sense of why those connections might fail and why they might last; and they explain why even the powerful forces of globalization cannot do away with national distinctiveness. This was the kind of argument Nobel prize winning economist Gunnar Myrdal made when analysing American society, the international economy, or the dynamic growth of countries in Asia. Myrdal’s conclusions were not always popular. Some attracted little or no attention; others attracted controversy. That is how specific arguments work. But institutionalism is less an argument than a method for academics. Despite the controversy Myrdal’s work created, his general way of seeing the world was less controversial and more easily accepted.

The ideology of institutionalism is harder to embrace without controversy. That ideology assumes that the characteristics academics and policymakers see as important in institutions do more than just describe how institutions function; they also tell us how we should use those characteristics of institutions as part of a political programme to transform society. Policymakers should write rules to promote and enforce specific values. They should be careful to embed those values across a wide array of institutions, to make sure they are not too easily ignored or rejected. They should multiply veto players to ensure adequate representation in the face of any concentration of countervailing power. They should enhance transparency to redistribute risk and strengthen accountability. And they should work to ensure that this activity is consistent across all levels of government to minimize the potential for contradiction or conflict between one level to the next. Achieving all this will not be easy, but this kind of comprehensive institutional social engineering is the key to national competitiveness. It is also essential to the promotion of an integrated and harmonious world economy. That framing is important. The goal of ideological institutionalism is to make the world a better place. Who wouldn’t want that?

Minority Report

The answer depends a lot on the values policymakers choose to embed in institutions. It also depends on how efforts to embed one set of values create tension or conflict with other values that already exist. Madison, writing in the Federalist Papers, was acutely aware of this tension. Madison also believed in the institution of slavery as well as the promotion of individual freedom. Even the most brilliant minds embarking on the most ambitious political projects are prone to contradiction and hence also to writing those contradictions into institutional arrangements. This is what makes institutionalism so controversial as an ideology. That institutions transmit values across generations is not debated. What values institutions should transmit across generations is.

This distinction shows up most clearly for groups that were not present or represented when the institutions were created. In the United States, those groups included women, slaves, and native Americans, among other collective identities. These groups are ‘minorities’ not in the sense that they constitute less than half of the population, but in the sense that any values or interests they hold that are inconsistent with those represented or promoted in the institution-building process are more likely to be ignored or sacrificed. This tendency is what it means to talk about ‘institutionalized discrimination’. The longer any given group is excluded and the more institutions – rules, norms, conventions – are created and shaped to fit together consistently in the meantime, the deeper this institutionalized discrimination will reach into the society in which it is embedded. The ‘founding fathers’ may declare an intent to protect minority rights, and they may even create rules to carve out specific exceptions, but the logic of institutionalism is too pervasive for them to erase the impact of context. Even the framing ‘founding fathers’ is problematic, whether or not it is historically accurate.

This point about minorities is important because it explains why certain parts of any society are less committed to the smooth functioning of state institutions. Those groups believe that the system is ‘rigged’ against them, and with good reason. If the shops close early, childcare is expensive, the tax code creates incentives joint filing, and firms are not required to allow for parental leave, that may promote one set of values related to the structure of the nuclear family, but it will also discriminate against anyone who values alternative arrangements. The examples of institutionalized racism are if anything more subtle and more pervasive. Even the content of high school history books can be shaped in ways that celebrate the story of America but discriminate against those who lived very different narratives. And that is before we talk about how the values carried within institutions shape the perceptions of those groups who are discriminated against and hence also the norms and conventions with which they are treated. Small wonder, therefore, that these ‘minority’ groups embrace a political agenda to reform institutions around a new, more inclusive set of values.

What is true within societies is also true between them. Where Western elites extol the virtues of the rules-based multilateral system, political leaders in other countries ask whose rules these are and what values they represent. Western insistence that their leaders created the international economy in a dramatic act of enlightened altruism at the end of the Second World War offers a clear and compelling answer. Non-Western governments know they were not present at that creation, and they also know the implications of being absent. Each time they propose the creation of a new international economic order or the reform of multilateral institutions, those non-Western governments face Western opposition, foot-dragging, or intransigence. Such actions only underscore that the system as created offers advantages that non-Western governments do not share. As in the domestic context, the only solution for this ‘minority’ group is to disrupt and reform the existing set of institutions or replace them with another set that is more representative of non-Western values and interests. That is what governments in the ‘Global Majority’ countries hope to accomplish.

The challenge for ideological institutionalists who hope to preserve both domestic and international constitutional arrangements is to accommodate those groups who face institutionalized discrimination. They do so by reforming institutions – regulations, laws, tax codes, government programmes, voting requirements, textbooks, speech norms, etc. – to reflect a wider range of values. This process is both complicated and time-consuming insofar as each individual reform has knock-on implications for a wide range of other institutions that must be made compatible with the new arrangement. It is also complicated because the number of groups represented in the process of institutional reform tends to increase beyond the capacity of existing rules for deliberation and decision making to foster a productive conversation at any level of aggregation. And any effort to amend those rules only adds to the number of choke points or veto plays and so further lengthens and complicates the conversation. Ideological institutionalists may be well-intentioned in its efforts to use the characteristic features of institutions to help foster a more inclusive society – and it may be right in insisting there really is no alternative if the goal is to preserve the wider rules-based constitutional arrangement – but academic institutionalists, like sociologist Michel Crozier or economist Mancur Olson, are quick to point out that institutions are too slow to adapt accordingly. Worse, those who hold existing positions of power and influence are likely to push in the opposite direction.

Half-Baked Revolution

The danger for the system increases as the institutionalist ideological agenda progresses far enough to begin disrupting the existing constitutional order and so forcing the pace of an ever-expanding process of adaptation, but not far enough to eliminate institutionalized discrimination or even adapt existing decision-making arrangements to accommodate the wider range of groups that need to be represented. This is the moment at which the previous ‘majority’ – meaning those whose interests are most reflected in existing institutions and who see the most to lose from having to accommodate the influence of new groups, and therefore new interests and values. These previous ‘majority’ groups face a stark choice. They can push back against the institutionalist ideological agenda, they can accept a comprehensive reform of the system, or they can try their chances in a world without some overarching constitutional arrangement and hence also without access to some of the characteristic features of institutions.

This is the choice that Barack Obama and Joe Biden faced when looking at the international system. Both administrations tried to preserve Western leadership, but they realized that at least at some level they would not prevail. Obama pushed back against Chinese efforts to build an Asian Infrastructure Investment Bank, but he could not stop that institution from coming into being. He tried to preserve the role of the World Trade Organization but then decided it would protect U.S. interests better if he refused to confirm appointments to that organization’s appellate body and so cripple its role in dispute resolution. Biden went even further to announce a foreign policy for the middle class that would challenge ‘non-market’ countries like China, and he would focus American economic policy on working with a smaller group of like-minded governments more interested in preserving Western values. These policy decisions were not exactly populist or irrational, but they reflect a change in America’s relationship with the international economic order the West created that left many of the United States’ allies scratching their heads. Why would the United States turn its back on institutions it created to serve American interests?

That question arises even more strongly when asked about the American electorate. Without suggesting there is a moral equivalence, the logic is roughly the same. A large number of American voters have expressed dismay with an institutional reform agenda that reflects the values of other groups and that challenges their privileged position in the existing institutional arrangement – which extends from the operation of constitutional checks and balances through to the language written in high school textbooks or used in polite conversation. This dismay comes not only from the rejection of new values, but also from the sense that those values represented in existing institutions will be diminished in ways that will be deep and transformative. Meanwhile, these voters see governance arrangements that are unable to adapt to the many demands being placed on decision-making institutions and so ineffective in dealing with day-to-day business that could be considered distinct from the wider transformative institutionalist ideological agenda. Worse, they worry that the institutions of government have already been amended to embrace that transformative agenda in ways that make it impossible to reset priorities so that the day-to-day business comes first. As a result, these voters worry that the system has been ‘rigged’ against them. Whether that is really the case is less important than the sense of aggrievement. What was once the ‘majority’ is now the new ‘minority’ insofar as its interests were not represented when this transformative agenda was put in place.

The question for many of these voters is whether they could do better in a world that lacks many of the characteristics that academics identify with institutions. If they see the reform agenda as a threat to their values, then those institutions are no longer socially embedded in Polanyi’s sense of the term and so easier to do away with. They already see themselves as partly outside of the system, and where they see themselves sitting gives them less incentive to preserve the system – particularly if they fear they cannot stop its ‘inevitable’ transformation. They do not recognize the system of checks and balances as an instrument to protect their interests; instead, they see it as an instrument that is being used against them both to promote reform and to prevent the day-to-day functioning of government. The rule of law is not neutral, in that respect. It is political. This makes finding some way to work around those checks and balances and to control the rule of law a matter of self-interest.

These voters surely know that doing away with institutions will lower transparency and accountability, while increasing inefficiency and unpredictability. But the impact of these things on daily life is ambivalent. Society as a whole may be diminished, but individuals have greater discretion to do as they please and without unwanted institutional interference. Transactions may become less efficient, but the changeover will create opportunities for arbitrage – like building things in America – or substitution – think crypto ETFs versus equities – that can make it easier for individuals to make money. Indeed, unpredictability (or volatility) is a boon in this environment because fortunes will be made even if they are also lost.

Most important, this more unstructured environment is at the same time inclusive of more degrees of difference and it creates new opportunities to form alternative majorities. When there is no system, the system cannot be rigged. That is the inclusive aspect. And as society starts to feel the disadvantages of living without robust and encompassing institutions, the demand for a fresh round of institution building will create new opportunities for empowerment at different levels of aggregation. A national minority can be a state, regional, or local majority in that sense. And freed from the requirements to align local institutions with state, national, or global values, those local majorities will have a greater chance to ensure that their values are represented. This is what the British meant by ‘taking back control’ in the context of Brexit.

Whose Rationality?

The abandonment of ideological institutionalism is not an irrational act, and neither is the revolt against institutions. Fundamentally, it reflects a fight over the values that institutions embed and the opportunity structures those institutions create or constrain. This is something academics and policymakers how long understood. From Madison to Ostrom, the values embed institutions and the opportunities they create or constrain have always been a source of concern as well as admiration. Madison saw achieving the right balance as key to the success of liberal democracy; Ostrom saw it as essential to avoiding the tragedy of the commons. Both also recognized that institutional arrangements could become unbalanced and fail – with consequences that would extend far beyond the calculus of individual rationality. Democracy could slide into authoritarianism, or in the extreme case, society could simply collapse. And that is the point.

Anyone asking why voters are electing candidates who would tear the system down are asking the wrong question. There are strong arguments that can set out the rationality behind such a choice. It may not be a shared rationality, but that is not necessary to guide an individual’s decision making. Their personal rationality is sufficient. The right question to ask is how we can create an awareness that a shared rationality is more important when casting a vote than any narrow definition of self-interest. People need to believe in society if they are going to believe in social institutions or institutionalism. Otherwise, they are likely to embrace disintegration – which is what this choice against institutional entails – until they find a group they are willing to live with even if that group is not large enough to deal with the challenges those people have to face.

***

The (better!) edited version of this article was published on 28 October 2025.  The citation is: ‘Abandoning Institutionalism.’ Current History 124 (2025) pp. 283-288. https://doi.org/10.1525/curh.2025.124.865.283