What is the Credibility Thesis?

The Credibility Thesis posits “that what ultimately determines the performance of institutions is not their form in terms of formality, privatization, or security, but their spatially and temporally defined function. Otherwise stated, institutional function presides over form by which the former can be expressed by the level of credibility, that is, the perceived social support at a given time and space.” P. Ho (2017), Unmaking China’s Development, Cambridge University Press, p. 81.

Does the prediction that persisting institutions are functional, imply they are stable?

The premise that persisting institutions have a function does not imply that institutions and their credibility are fixed in stone. When functions change, institutions change, and thus also the levels of credibility – a process evident in shifts in conflict.” See P. Ho, “An Endogenous Theory of Property Rights”, Journal of Peasant Studies, 2016, 43/6, p. 1134

Is there proof for the Credibility Thesis?

“For instance, the historical ‘persistence’ of share-cropping (Byres 1983) led Cheung (1968) to conclude that it is efficient (i.e. credible and functional). That premise turns around the neo-liberal, neo-classical argument, but by no means entails that credibility or functionality is equal to harmony and peace.” P. Ho, “An Endogenous Theory of Property Rights”, Journal of Peasant Studies, 2016, 43/6, p. 1127.

Other examples include: informal settlements in the UK, India, and Chile; apartment rights in the Global North, or urban commons in Southern Europe (for more articles, see the publication page).

How is credibility related to conflict?

“[C]redibility is undoubtedly related to distributional conflict, it does not posit that a ‘fully credible institution’ – if that ever exists – would also be free from conflict. Instead, credibility assumes that distributional conflict is part and parcel of any property rights arrangement.” For this reason: “[O]ne might argue that a steady status is never reached.” See P. Ho, “The ‘Credibility Thesis’ and its Application to Property Rights, Land Use Policy, 2014, 40, Sept., p. 16.

For examples on the relation between credibility and conflict, see Fan et al., 2019; Yang and Ho, 2019; Arvanitidis and Papagiannitsis, 2020; Krul et al., 2021.

What is Dynamic Disequilibrium?

The theorem on “Dynamic Disequilibrium” is defined along two dimensions:

1. Dynamism, or the premise that institutions are in perpetual flux, moving onward from one state to the other. That change, however, can manifest itself at different speeds – sometimes infinitesimally, imperceptibly small (resembling a nearly horizontal line, e.g. t3–t4); sometimes with great velocity, strides and shocks (depicted as a steep curve, e.g. t2–t3);
2. Non-equilibrium, i.e. the premise that institutional change never reaches a state of balance between actors’ interests, power and resources, as tension and conflict is present in any institutional arrangement.

How is credibility related to power?

“[W]hen an actor forcefully aims to change institutions against the functions that other actors accord to it, the result will be a struggle of power.” See P. Ho, “An Endogenous Theory of Property Rights”, Journal of Peasant Studies, 2016, 43/6, p. 1134.

In this sense one should be reminded that: “[O]rdaining and prohibiting belong to a mode of institutional intervention that will only work when the function of what is intended already concurs with what locally exists as actors’ aggregate perceptions. Ironically, … governments often chose ordaining and prohibition in a symbolic demonstration of resolve or to strike deals with other powerholders. The outcome is a contested institution lacking credibility, or an empty institution decoupled from actors’ daily praxis.” See ibid., p. 1141.

What differentiates credibility theory’s notion of power from a neo-classical reading?

“First and foremost, the neo-classical and neo-liberal schools hardly consider that the institutions they propagate are the result of power as well.” (…) Thus, the idea that formalization and privatization, too, are driven by power dynamics does not play any significant role in the analysis of neo-classically trained scholars (…). By contrast, formalization (and privatization) (…) [are in the credibility view] taken as a fundamental point of departure to study how divergences in power may work out. See Peter Ho, “Empty Institutions, Non-Credibility and Pastoralism: China’s Grazing Ban, Mining and Ethnicity”, Journal of Peasant Studies, 2016, Vol. 43., No. 6, p. 1151

“Second, in the neo-classical view formalization and privatization are seen as exogenously designable interventions. From there it is not a far step to establish democracy, good governance and human rights in other economies, societies and cultures in the name of freedom, open markets and private property rights.” (…) “Yet adhering to endogeneity implies that actors’ action is inevitably followed by reaction, triggering chains of interdependent actions and reactions, that tie an alleged external ‘designer’ of institutions into a spontaneously ordered game in which intentions are inherently watered down into something different or unintended.” See ibid., p. 1151.

“Third, in the endogenous view power is not to be seen in moral terms of inefficiency, but in the way it structures institutions into credible, non-credible or empty arrangements.” (…) “Ergo, when institutions persist over time and space, they are credible and functional, as they have evolved from a spontaneously ordered evolution, regardless of how that has been engendered by divergences of power. This principle equally applies to the change and extinction of less and non-credible institutions, as apparent through rising levels of distributional conflict, contestation and cleavage.” See ibid., p. 1151.

How is credibility related to neo-classical theory, particularly neo-institutionalism?

“It is not being insinuated that a single body of literature exists that represents the ‘neo-liberal’ or the ‘neo-classical’ theory that is consistent in its entirety. Instead, their premises comprise diverse inconsistencies and constituent elements that may concur or be contradictory in nature. However, it is asserted that certain neo-liberal, neo-classical postulates or assumptions exist around which scholarly debate and regular empirical validation occur. These wield significant ascendancy over developmental policy and intervention. These postulates include: (1) institutions can be designed exogenously (i.e. intentionally) and subsequently enforced; (2) institutional change is characterized by equilibrium; and (3) the form of institutions (i.e. formal, secure and private property rights) is imperative for development and growth.

By contrast, alternative postulates are put forward.” See: P. Ho, “An Endogenous Theory of Property Rights”, Journal of Peasant Studies, 2016, 43/6, p. 1124.

Why does credibility theory oppose teleology?

Within neo-institutionalism, there is a group of scholars that assumes that the evolution of institutions has a certain purpose, directive principle, or ultimate goal. For instance, it is posited that institutions tend to evolve from informal to formal, from “second-best” to “best”, and from autocratic to democratic arrangements. On this issue, credibility theory states that:

“Secure, democratic, and participatory institutions do not imply that they are credible. Contrarily, neither do insecure, autocratic, and (semi)authoritarian institutional arrangements mean that they are by definition non-credible or empty. In fact, democratic and transparent institutional arrangements, such as codes of good conduct or regulations for Corporate Social Responsibility (or CSR), might actually be disruptive in certain contexts, while autocratic, authoritarian, and non-transparent ones might not. (…) The credibility thesis makes no prediction of institutional teleology, nor does it pass moral judgment on institutional form, as it is concerned with function alone. Yet, the thesis does postulate that one might be able to gauge the extent to which institutions are credible or contested, as indicated – among numerous other indicators – by the level, incidence, and source of generated conflict.” See P. Ho, “The ‘Credibility Thesis’ and its Application to Property Rights, Land Use Policy, 2014, 40, Sept, p. 23.

What does credibility theory has to say about institutional convergence?

“The idea of convergence or the teleological principle of an ultimate final form has incited considerable debate and scholarly confusion (Radice 2000, Streeck and Thelen 2005), not least because empirical study has yielded a dazzling variety of institutional forms. (…). The notion of credibility, or what could perhaps be termed the ‘credibility thesis’, posits that even when rejecting the neo-liberal reading, we might in fact still be examining the question within the same paradigm, as we reason from the importance of form over function.” See P. Ho, “In Defense of Endogenous, Spontaneously Ordered Development”, Journal of Peasant Studies, 2013, 40/6, p. 1093 and 1096.

“Instead of focusing on what out of paradigmatic necessity must be considered an ‘empirical anomaly’ through the lens of neo-liberal institutional teleology and evolution, we had better first focus on the question of how institutions function, or fail to function, at a given time and place. Then, and only then, can we – through meticulous description of the ‘rules of the game’ that constitute the institution – establish what its form is. That scholarly endeavor – the meticulous description of institutions – is done far too little, yet is absolutely critical to understand the distinction between form and function.” See P. Ho, “In Defense of Endogenous, Spontaneously Ordered Development”, Journal of Peasant Studies, 2013, 40/6, p. 1096.

To what theories is credibility theory related?

See the links at: https://en.wikipedia.org/wiki/Credibility_thesis