The purposes of this book are twofold: first, to call into question what the author takes to be the dominant economic approach to explaining institutional change—and thus public policy outcomes—and second, to offer an alternative explanatory approach rooted in what the author calls “volitional pragmatism.” According to the dominant view, institutional change can (or should) be explained “endogenously” in terms of the utility-maximizing choices of individuals: “In the received story, institutions change—machinelike—when it is efficient for them to change. And if they do not change, then it is efficient that they not change” (p. 214). When, contrary to theoretical expectations, institutions change or fail to change in a way that economists take to be inefficient, then this is said to be the result of collective (political) interference with and distortion of otherwise efficient individual choices. Such interference is explained by appealing to the irrationality or ignorance of political actors (Daniel Bromley calls this the “dimwit conjecture,” p. 124) or, perhaps more commonly, by the fact that the political process has been captured by “special interests.”

Bromley finds this familiar story wanting in two major respects. Methodologically speaking, the choice-theoretic models on which it relies are deductive in nature, and their value must therefore be measured by their ability to use general axioms about human behavior to generate reliable and testable predictions about particular social outcomes. Although he grants that this is, in principle, a perfectly legitimate method of explanation, he argues that in practice, welfare economists are often more faithful to their “analytical engines” than to the empirical phenomena that they claim to study: “Deduction can readily find confirming evidence for its theoretical discoveries, and the avid deductivist will then declare satisfaction.” In such cases “we do not explain events—we justify them” (p. 102). This line of argument will be familiar to many political scientists (see especially Donald Green and Ian Shapiro, Pathologies of Rational Choice Theory, 1996), though it is interesting (for this reader at least) to see it applied to the economic literature from which political scientists have drawn so much inspiration.

From a normative standpoint, Bromley argues that the standard economic claim that only Pareto-efficient institutional changes are to be approved or expected is nugatory, because according to standard economic theory “[f]or any possible [institutional] setting, we can rely on a competitive market and the associated atomistic bargaining therein to produce and sustain a Pareto-optimal state” (p. 123). The appeal to efficiency, therefore, does little if anything to distinguish better from worse outcomes. The usual response to this dilemma is to take the status quo, tacitly or not, as the institutional baseline, and to regard any deviation that cannot be shown to result from atomistic bargaining and/or changes in relative prices as Pareto-inefficient and therefore economically unsound. The obvious practical implication of such an approach is to render those whose interests are well served by the status quo arrangement immune to (legitimate) political interference with their established “rights.” Bromley argues against this view that “[t]he only intellectually honest (and theoretically correct) way to consider … new institutional arrangements is to inquire as to whose will—whose interests—are to govern the creation of these new institutional arrangements…. All other questions are bogus and merely diversionary” (p. 50).

Bromley suggests, borrowing a term from the pragmatist philosopher Charles Sanders Peirce, that an “abductive” approach to explanation provides a better means of explaining institutional change than the currently dominant deductive models. The key feature of abduction is that it is problem-driven; it begins not with behavioral axioms but with (what a given inquirer takes to be) a surprising or anomalous result. The abductive inquirer works back from the observable phenomena to identify a plausible explanation for this result, and then tests this explanation by applying it to further cases. Bromley holds that in the realm of human behavior, our explanations should be expressed in terms of final rather than efficient causes; we must appeal “not [to] desires (or preferences) but reasons” (p. 31). According to this view, institutional change results not from the “mechanical” pursuit of Pareto efficiency or utility maximization, but rather from a collective effort to bring about a desired but uncertain future state of affairs—what the author calls, following the economist G. L. S. Shackle, a “created imagining.” When we act with the reasonable expectation of bringing about such a state of affairs, then we are said to have sufficient reason for pursuing institutional change.

Taken together, the appeal to abduction, final causes, and “created imaginings” defines the method of inquiry that Bromley calls “volitional pragmatism”: “volitional” because of its emphasis on the human will in action, and “pragmatism” because of its problem-driven, experimental approach and its prospective orientation. This book is therefore of interest not only as a thoughtful and thought-provoking contribution to the ongoing debate over the utility of rational choice theory, but also as a creative and fruitful application of pragmatic philosophy in the realm of empirical social science.

Bromley's practical aim is to make welfare economists more receptive to state-centered approaches to institutional change, and if economists and political scientists often place undue faith in the wisdom of markets, he sometimes places undue faith in the wisdom of democratic politics. The case for the market rests not only on an appeal to Pareto efficiency, but also on an appeal to the superiority of decentralized over centralized decision mechanisms. Bromley does not, despite a couple of swipes at Friedrich Hayek, directly confront this line of argument, and his enthusiasm about “the expansive and inclusive considerations that emerge from the political process” (p. 202) will strike many political scientists—and many ordinary citizens—as being rather starry-eyed. Nevertheless, this book provides a useful corrective to the often unthinking allegiance to markets in current political and academic discourse, and provides a rich conceptual and theoretical apparatus for thinking through the alternatives.