The Faustian Bargain: Power-Sharing, Constitutions, and the Practice of Polycentricity in Governance

We explore how different processes of constitution formation involve tradeoffs between exclusion, stability, and commitment, as institutional arrangements are devised for managing cooperation, competition, and conflicts among independent decision-making centers. We build upon John Searle’s institutional theory and explain how it helps us better understand Vincent Ostrom’s idea of a “Faustian bargain”, in which individuals and small-scale organizations give up some of their autonomy to higher level governments in the hope of capturing various economies of scale benefits, while trying to avoid enabling top-down abuses of power. Searle’s theory also allows us to better model the formal and informal processes of institutional change. We explore these challenges of constitution formation and power sharing among centers of decision making using two examples: New York City watersheds, in which power-sharing occurs at different levels, between the city government, counties, towns and villages, the state of NY; and the post-civil war situation in Somalia, in which leaders of different ethnic groups built agreements and eventually introduced democracy.