Showing papers by "Douglass C. North published in 2016"
01 Jan 2016
TL;DR: The third annual conference on the New Institutional Economics as discussed by the authors has been held since 1985, with a focus on the way in which institutions change and therefore alter the available choice set over time.
Abstract: I am pleased to have been invited to provide concluding comments to this third annual conference on the New Institutional Economics. Following last year's final speaker, Oliver Williamson, I would begin by quoting Ronald Coase's concluding comment to the first conference. "Modern institutional economics should study man as he is, acting within the constraints imposed by real institutions. Modern institutional economics is economics as it ought to be." (Coase [1984], p. 231) But as is appropriate for a new thriving subdiscipline of economics, my remarks about what the new institutional economics is and where it is going sometimes disagree with those of Williamson [1985]. Modern institutional economics begins with two premises: 1) that the theoretical framework should be capable of integrating neo-classical theory with an analysis of the way institutions modify the choice set available to human beings; and 2) that this framework must build upon the basic determinants of institutions, so that we can not only define the choice set really available to people at any time, but also analyze the way in which institutions change and therefore alter the available choice set over time.
242 citations
Posted Content•
TL;DR: In this paper, the authors explore some of the dimensions of the economic historian's task to explain the transformation of the structure of the American economy in the past century, which has equally compelling implications for the economic theorist.
Abstract: JHE CLIOMETRIC revolution in ecoknomic history wedded neoclassical economics and quantitative methods in order to describe and explain the performance of economies in the past' Economic history gained in rigor and scientific pretension, but at the expense of exploring a much more fundamental set of questions about the evolving structure of economies that underlies performance2 Cliometricians have turned their backs on a long tradition stretching back from Joseph Schumpeter to Karl Marx to Adam Smith These scholars regarded economic history as essential because it added a dimension to economics Its purpose was to analyze the parameters held constant by the economist If economics is a theory of choice subject to specified constraints, a task of economic history was to theorize about those evolving constraints The failure of economic historians to provide their colleagues with a historical dimension to their perspective has reduced the effectiveness of economists in dealing with contemporary problems Failure of economists to appreciate the transitory character of the assumed constraints and to understand the source and direction of these changing constraints is a fundamental handicap to further development of economic theory The challenge to the economic historian which has equally compelling implications for the economic theorist is to explain the transformation of the structure of the American Economy in the past century3 In the rest of this essay I shall explore this issue in order to specify some of the dimensions of the economic historian's task
178 citations
01 Jan 2016
TL;DR: In this article, the authors propose a general framework for analyzing the changing structure of economies over time, which is what economic history is all about, and suggest its implications for rethinking our views on economic history.
Abstract: Since the cliometric revolution the building blocks used in the study of economic history have been those of neo-classical economics. That body of theory was designed to explain and analyze the allocation of resources at a moment of time under the severely restrictive test condition of zero transaction costs. In its pristine form, it assumed perfectly operating markets. While recent extensions have devoted attention to positive information costs, uncertainty and transaction costs, they are nowhere integrated into a general framework that allows us to analyze the changing structure of economies over time, which ie what economic history is all about. In this paper, I shall propose such a framework and suggest its implications for rethinking our views on economic history1.
58 citations
01 Jan 2016
TL;DR: In this article, the authors extend the transaction cost approach to political exchange and explore the interaction of political and economic institutions in the development of polities and economies, and the implications of the consequent political rules for economic rule formation.
Abstract: /The differential performance of polities and economies over time is fundamentally influenced by the way institutions evolve. We do not, however, have a framework which allows us to integrate institutional analysis into political economy. The key to developing such an analytical framework is, I believe, the underlying costs of exchange. The transaction cost literature has focused on economic exchange and the institutions that shape those costs. In this essay I wish therefore to extend the transaction cost approach to political exchange and to explore the interaction of political and economic institutions in the development of polities and economies. I begin by describing the basic characteristics of political and economic rules. I then elaborate a transaction cost approach to political rules and the implications of the consequent political rules for economic rule formation. The final section analyzes the nature of political and economic institutional change and the way that institutional change shapes the historical performance of economies.
14 citations