How behavior and institutions are affected by social relations is one of the classic questions of social theory. This paper concerns the extent to which economic action is embedded in structures of social relations, in modern industrial society. Although the usual neoclasical accounts provide an "undersocialized" or atomized-actor explanation of such action, reformist economists who attempt to bring social structure back in do so in the "oversocialized" way criticized by Dennis Wrong. Under-and oversocialized accounts are paradoxically similar in their neglect of ongoing structures of social relations, and a sophisticated account of economic action must consider its embeddedness in such structures. The argument in illustrated by a critique of Oliver Williamson's "markets and hierarchies" research program.

Economic Action and Social Structure: The Problem of Embeddedness

Scholars of the theory of the firm have begun to emphasize the sources and conditions of what has been described as “the organizational advantage,” rather than focus on the causes and consequences of market failure. Typically, researchers see such organizational advantage as accruing from the particular capabilities organizations have for creating and sharing knowledge. In this article we seek to contribute to this body of work by developing the following arguments: (1) social capital facilitates the creation of new intellectual capital; (2) organizations, as institutional settings, are conducive to the development of high levels of social capital; and (3) it is because of their more dense social capital that firms, within certain limits, have an advantage over markets in creating and sharing intellectual capital. We present a model that incorporates this overall argument in the form of a series of hypothesized relationships between different dimensions of social capital and the main mechanisms and proces...

https://www.jstor.org/stable/pdfplus/259373.pdf

Social Capital, Intellectual Capital, and the Organizational Advantage

In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.

https://www.jstor.org/stable/pdfplus/259056.pdf

The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage

Output per worker varies enormously across countries. Why? On an accounting basis, our analysis shows that differences in physical capital and educational attainment can only partially explain the variation in output per worker--we find a large amount of variation in the level of the Solow residual across countries. At a deeper level, we document that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which we call social infrastructure. We treat social infrastructure as endogenous, determined historically by location and other factors captured in part by language.

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Why Do Some Countries Produce so Much More Output Per Worker than Others

This paper analyzes a newly assembled data set consisting of subjective indices of corruption, the amount of red tape, the efficiency of the judicial system, and various categories of political stability for a cross section of countries. Corruption is found to lower investment, thereby lowering economic growth. The results are robust to controlling for endogeneity by using an index of ethnolinguistic fractionalization as an instrument.

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Corruption and Growth

Preface vii CHAPTER ONE: An Outline of the Process of Economic Change 1 PART I: THE ISSUES INVOLVED IN UNDERSTANDING ECONOMIC CHANGE 9 INTRODUCTION 11 CHAPTER TWO: Uncertainty in a Non-ergodic World 13 CHAPTER THREE: Belief Systems, Culture, and Cognitive Science 23 CHAPTER FOUR: Consciousness and Human Intentionality 38 CHAPTER FIVE: The Scaffolds Humans Erect 48 CHAPTER SIX: Taking Stock 65 PART II: THE ROAD AHEAD 81 INTRODUCTION 83 CHAPTER SEVEN: The Evolving Human Environment 87 CHAPTER EIGHT: The Sources of Order and Disorder 103 CHAPTER NINE: Getting It Right and Getting It Wrong 116 CHAPTER TEN: The Rise of the Western World 127 CHAPTER ELEVEN: The Rise and Fall of the Soviet Union 146 CHAPTER TWELVE: Improving Economic Performance 155 CHAPTER THIRTEEN: Where Are We Going? 166 Bibliography 171 Index 183

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Understanding the Process of Economic Change

A radically new interpretation, offering a unified explanation for the growth of Western Europe between 900 A. D. and 1700, provides a general theoretical framework for institutional change geared to the general reader. North and Thomas seek to explain the "rise of the Western world" by illuminating the causal importance of an efficient economic organization that guarantees a wide latitude of property rights and both incentives and protection for economic growth. Although they pay homage to both Marxian and neoliberal theory, they take a theoretical middle ground that privileges the sociopolitical backdrop of economic affairs (as opposed to solely private or class-based activity) and in doing so identifies the roots of modernization as far back as the 10th Century. To justify the novelty and originality of this approach, they write that most analysts have misidentified the symptoms of modern economic growth (technological change, human capital, economies of scale) as the causes. In doing so, previous scholars have failed to answer the question "if all that is required for economic growth is investment and innovation, why have some societies missed this desirable outcome?" (2). Their answer is that some societies (England and the Netherlands) were better than others (France and Spain) at providing an efficient economic organization that could guarantee conditions favorable to per capita economic growth among a rapidly growing population.

The Rise of the Western World: A New Economic History

Economic history is about the performance of economies through time. The objective of research in the field is not only to shed new light on the economic past but also to contribute to economic theory by providing an analytical framework that will enable us to understand economic change. A theory of economic dynamics comparable in precision to general equilibrium theory would be the ideal tool of analysis. In the absence of such a theory we can describe the characteristics of past economies, examine the performance of economies at various times, and engage in comparative static analysis; but missing is an analytical understanding of the way economies evolve through time.

Economic Performance Through Time

Preface 1. The conceptual framework 2. The natural state 3. The natural state applied: English land law 4. Open access orders 5. Explaining the transition from limited to open access orders: the doorstep conditions 6. The transition proper 7. A new research agenda for the social sciences Afterword.

/pdf/violence-and-social-orders-a-conceptual-framework-for-siccwi651o.pdf

Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History

Denzau and North argue that ideas matter, and that the way that ideas are communicated among people is crucial to building useful theories that will enable us to deal with strong uncertainty problems at the individual level. Under conditions of uncertainty, individuals' interpretation of their environment will reflect the learning that they have undergone. Individuals with common cultural backgrounds and experiences will share reasonably convergent mental models, ideologies and institutions and individuals with different learning experiences (both cultural and environmental) will have different theories (models, ideologies) to interpret that environment. It is the argument of this essay that in order to understand decision making under such conditions of uncertainty we must understand the relationship between the mental models that individuals construct to make sense out of the world around them, the ideologies that evolve from such constructions, and the institutions that develop in a society to order interpersonal relationships.

https://ecsocman.hse.ru/data/957/750/1216/9309003.pdf

Douglass C. North

Papers

Understanding the Process of Economic Change

The Rise of the Western World: A New Economic History

Economic Performance Through Time

Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History

Shared Mental Models: Ideologies and Institutions