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

Recent research has shown that institutions contribute significantly to long-run economic growth. Paradoxically, a separate line of research has produced mixed results concerning the effect of political instability on economic growth. How can it be that political institutions matter, but that during periods of political instability there is no systematic effect on growth? We attempt to resolve this paradox by modeling an institutional equilibrium as a coordination game whose payoffs are related to the value of the nexus of contracts governed by the prevailing institutions. The stability of this equilibrium in the face of political instability depends on the extent to which formal political institutions govern the underlying nexus of contracts. If formal political institutions matter, then political instability should cause a large decline in the value of contracts and a change in the institutional equilibrium is more probable. If informal institutions play a greater role, then political instability should have less impact on the value of trades and the opportunity cost of institutional change is correspondingly higher. We test this theory using a System-GMM panel estimator approach and panel data on political instability, institutions, and economic growth. JEL Classifications: N0, 011, 040,

Political Instability, Institutions, and Economic Growth

La historia economica se ocupa de la evolucion de las economias en el transcurso del tiempo El objetivo de las investigaciones que se realizan en este campo no es solo aportar alguna luz sobre el pasado economico, sino tambien contribuir a la teoria economica ofreciendo un marco analitico que nos permita comprender los cambios economicos El instrumento analitico ideal seria una teoria de la dinamica economica que fuera comparable por su precision a la teoria de equilibrio general En ausencia de una teoria de ese tipo, podemos describir las caracteristicas de las economias pasadas, examinar su comportamiento en determinados momentos y realizar un analisis de estatica comparativa; pero falta una comprension analitica de la manera en que evolucionan las economias con el paso del tiempo

/pdf/la-evolucion-de-las-economias-en-el-transcurso-del-tiempo-2528scflgm.pdf

La evolución de las economías en el transcurso del tiempo

The upper-income, advanced industrial countries of the world today all have market economies with open competition, competitive multi-party democratic political systems, and a secure government monopoly over violence. Such open access orders, however, are not the only norm and equilibrium type of society. The middle and low-income developing countries today, like all countries before about 1800, can be understood as limited access orders that maintain their equilibrium in a fundamentally different way. In limited access orders, the state does not have a secure monopoly on violence, and society organizes itself to control violence among the elite factions. A common feature of limited access orders is that political elites divide up control of the economy, each getting some share of the rents. Since outbreaks of violence reduce the rents, the elite factions have incentives to be peaceable most of the time. Adequate stability of the rents and thus of the social order requires limiting access and competition-hence a social order with a fundamentally different logic than the open access order. This paper lays out such a framework and explores some of its implications for the problems of development today.

Limited access orders in the developing world:a new approach to the problems of development

Before we explore these six centuries in more detail, it is well to specify much more precisely the explanatory theory implicit in the previous chapters. The pressure to change property rights emerges only as a resource becomes increasingly scarce relative to society's wants. In the world of the tenth century, at the point where we entered into it, land was abundant and therefore not worth the cost of devising exclusive rights to its use. When one piece of land was taken up, more was always available. Because the countryside lay under constant threat of ravage by marauding bands of Vikings, Moslems, Magyars or even of native brigands, greater value attached to any areas protected by a fortification and skilled soldiers. Such land, from the very beginning of the manorial system, was never a completely ‘common-property’ resource in the sense that economists use that phrase. Customs and precedents limited its usage to preclude overgrazing and other hazards implicit in common use. We shall see later that manorial regulations grew more restrictive as land became scarce. Two other basic elements entered into the manorial economy; the functions of protection, and the role of labor. In the matter of protection, the fortified castle and armored knights on horseback, having specialized skills in warfare, provided local security which could never be equalled by any group of peasants ill-armed with primitive weapons and lacking military skills.

Douglass C. North

Papers

Political Instability, Institutions, and Economic Growth

La evolución de las economías en el transcurso del tiempo

Limited access orders in the developing world:a new approach to the problems of development

Property Rights in Land and Man

Partnership as a Means to Improve Economic Performance