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.

/pdf/corruption-and-growth-2z9d0x0u16.pdf

Corruption and Growth

I. La historia economica trata acerca del desempeno de las economias a lo largo del tiempo. El objetivo de investigacion en este campo no solo es arrojar nueva luz sobre el pasado, sino tambien contribuir a la teoria economica proporcionando un marco analitico que nos permite comprender el cambio economico. Una teoria de la dinamica economica comparable en presicion a la teoria del equilibrio general seria la herramienta de analisis ideal...

https://www.jstor.org/stable/info/20856741

El desempeño económico a lo largo del tiempo

Empirical Studies in Institutional Change: Constitutions and commitment: the evolution of institutions governing public choice in seventeenth-century England

In this essay I intend to assess the road we have travelled in the ten years since the first conference on Institutional Economics with the objectives of suggesting where we should go from here. The suggestions will be personal reflecting both my special interests as an economic historian and my undoubtedly subjective perceptions of the road we have travelled and of an agenda of research. The title of my essay gives away the key questions that I believe we must answer. How have economies in the past developed institutions that have provided the credible commitment that has enabled more complex contracting to be realized; and what lessons can we derive from that experience that will be of value today in the on going process of building or rebuilding economies?

Institutions and Credible Commitment

This book applies the conceptual framework of Douglass C. North, John Joseph Wallis and Barry R. Weingast's Violence and Social Orders (Cambridge University Press, 2009) to nine developing countries. The cases show how political control of economic privileges is used to limit violence and coordinate coalitions of powerful organizations. Rather than castigating politicians and elites as simply corrupt, the case studies illustrate why development is so difficult to achieve in societies where the role of economic organizations is manipulated to provide political balance and stability. The volume develops the idea of limited-access social order as a dynamic social system in which violence is constantly a threat and political and economic outcomes result from the need to control violence rather than promoting economic growth or political rights.

In the Shadow of Violence

Why do developing countries fail to adopt the institutions and policies that promote development? Our answer is the violence trap. The trap is set by the unavoidable interdependence of economic and political development. Key political reforms—opening access and reducing the risk of state predation—are typically feasible only when the domestic economy reaches a given level of specialization and integration (for reasons we specify); yet the economy typically can only reach the required threshold of development when key political reforms are already in place (for standard reasons). The trap entails violence because, as we show, the structure of unreformed polities (natural states) ensures poor adaptive efficiency. Following shocks to the distribution of military and economic power and bargaining to adjust to the shocks often fail among those with access to violence, due to the low economic cost of violence, asymmetric information, and commitment problems. Indeed, we show that violence is endemic in the developing world, with the median regime experiencing violent leadership turnover once every eight years. The trap is hard to escape because whenever overt violence breaks out, leaders seeking to restore order face an unspecialized economy, to which the best response is yet another unreformed polity. Indeed, the limits on access and rents characteristic of natural states are necessary to re-establish peace. Yet, these rents and limits also deter specialization, thereby keeping the economic costs of resorting to force low and ensuring that future bargaining will be in the shadow of viable military outside options.

Douglass C. North

Papers

El desempeño económico a lo largo del tiempo

Empirical Studies in Institutional Change: Constitutions and commitment: the evolution of institutions governing public choice in seventeenth-century England

Institutions and Credible Commitment

In the Shadow of Violence

The violence trap: a political-economic approach to the problems of development