All these premises having, as I think, been clearly made out, it is impossible that the rulers now on earth should make any benefit, or derive any the least shadow of authority from that, which is held to be the fountain of all power, Adam's private dominion and paternal jurisdiction; so that he that will not give just occasion to think that all government in the world is the product only of force and violence, and that men live together by no other rules but that of beasts, where the strongest carries it, and so lay a foundation for perpetual disorder and mischief, tumult, sedition and rebellion, (things that the followers of that hypothesis so loudly cry out against) must of necessity find out another rise of government, another original of political power, and another way of designing and knowing the persons that have it, than what Sir Robert Filmer hath taught us.

Two Treatises of Government.

The History of Economic Analysis

relationship. All subsequent studies confirmed it (see for example King and Levine, 1993, and the review in: Pagano, 1993). Goldsmith used a sample of 35 countries for the period between 1860 and 1963 to show the relationship between income and financial depth measured by the ratio between bank's assets and GDP. He also showed that in periods of rapid growth, financial depth grows faster than income. More details about measuring financial depth can be found in this paper. FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH Velimir Šonje

/pdf/financial-development-and-economic-growth-1933kuo17q.pdf

Financial development and economic growth

An Inquiry into the Nature and Effects of the Paper Credit of Great Britain

A drawback of the Handbook’s emphasis on introducing disparate groups of researchers to one another is that these groups sometimes seem to be talking past each other. The editors do not attempt to develop an overarching framework that would “make sense” of the work and family field by locating different topics and perspectives within a coherent whole. The reader is left to puzzle out how research on the determinants of government policies relates to work on the intra-psychic processes generating individual stress, how cultural interpretation of employers’ use of family metaphors fits with investigation of quantitative variation in work schedules over the life course, and how rigorous positivist methodologies mesh with a clear normative commitment to increasing work-family integration for both men and women. But perhaps it is too early in the game to ask for this kind of coherence. By the time of the next edition of the Handbook, the work-family field may have matured sufficiently to allow a clearer mapping of the terrain. In the meantime, the Handbook represents a rich and valuable collection that will be important for any scholar whose research and teaching focuses on work, family, or the links between the two.

Institutions and the Path to the Modern Economy: Lessons from Medieval TradeInstitutions and the Path to the Modern Economy: Lessons from Medieval Trade, by GreifAvner. Cambridge, UK: Cambridge University Press, 2006. 526 pp. $34.99 paper. ISBN: 0521671345.

Though Bitcoin currently enjoys a healthy niche, the aspirations of many in the project are grander: to supplant the existing regime of fiat currencies with cryptocurrencies, and to do so outside of normal political channels. Its primary practical obstacle is its purchasing power volatility, arising from a rigid money stock in the face of wide swings in demand. Nevertheless, the historical example of gold, another (much more successful) money commodity with a more or less rigid supply, illuminates the institutional prerequisites for purchasing power stability, economic efficiency, and sustained growth – namely a market of financial intermediaries whose liabilities denominated in the base money themselves circulate as media of exchange. This paper discusses potential benefits and hurdles to establishing financial intermediation in cryptocurrency, as well as the possibility of managing the money supply to create a stable purchasing power cryptocurrency without the need for intermediation at all. Such schemes ultimately require an existing market of intermediaries in order to provide any benefits, the emergence of which governments are for the moment well-positioned to prevent.

Cryptocurrency and the Problem of Intermediation

Despite the past decade’s rapid innovation in adapting blockchain technology to new uses, financial intermediation remains elusive except in basic and highly collateralized forms. We introduce the concept of the technical frontier to delimit the kinds of interactions that can feasibly be structured algorithmically among pseudonymous agents, as on a blockchain, and show that lending and financial intermediation – unlike monetary exchange – lie outside it, even in simple forms. The path forward for truly blockchain-native financial applications, therefore, must involve the integration of real-world identity information in order to disincentivize defection. We discuss several potential technologies for doing so, and conclude that such integration is possible without compromising pseudonymity, provided real-world identity is available in the breach.

What's Holding Back Blockchain Finance? On the Possibility of Decentralized Autonomous Finance

If there exist no incentive or selective mechanisms that make cooperation in large groups incentive-compatible under realistic circumstances, functional social institutions will require a divergence between subjective preferences and objective payoffs – a “noble lie”. This implies the existence of irreducible and irreconcilable “inside” and “outside” perspectives on social institutions; that is, between foundationalist and functionalist approaches, both of which have a long pedigree in political economy. The conflict between the two, and the inability in practice to dispense with either, has a number of surprising implications for human organizations, including the impossibility of algorithmic governance, the necessity of discretionary enforcement in the breach, and the difficulty of an ethical economics of institutions.

Inside and Outside Perspectives on Institutions: An Economic Theory of the Noble Lie

This paper is an attempt at both a historically grounded theory and a theoretically grounded history of monetary exchange and its relation to the complexity of social organization. Taking evidence from anthropology, cognitive science, and evolutionary biology, it conceives of exchange institutions as involving a tradeoff between fixed and marginal cognitive costs. Up-front investment in increasingly higher fixed-cost exchange institutions lowers marginal costs of exchange, resulting in increasing returns to the division of labor. Those costs account for the persistence of more or less direct barter in more primitive societies, despite the “inevitability” of monetary exchange that seems to be a feature of Menger’s story in “On the Origin of Money”. In identifying the relevant fixed costs of money and its institutional substitutes throughout the world, the paper advances a framework through which the successes and failures of modern development can be understood.

Cameron Harwick

Papers

Cryptocurrency and the Problem of Intermediation

Cryptocurrency and the Problem of Intermediation

What's Holding Back Blockchain Finance? On the Possibility of Decentralized Autonomous Finance

Inside and Outside Perspectives on Institutions: An Economic Theory of the Noble Lie

Money and Its Institutional Substitutes: The Role of Exchange Institutions in Human Cooperation