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"Douglass North transformed his field. He first encountered economic history as a branch of economics; his work has reconstituted it as a branch of political economy. Economic historians focus on endowments, technologies, preferences and the operations of markets, and seek, among
other things, to explain rates and patterns of economic growth. North introduced another factor -- the society's endowment of institutions. In a variety of studies, he argues that societies with similar economic endowments would vary in their economic performance, should their institutions differ. Societies with institutions that safeguarded property rights; equated the social and private returns to productive effort; reduced the costs of transacting; or facilitated the making of credible commitments would elicit higher rates of economic growth, all else being equal, than would societies lacking such institutions. It is governments that create institutions, or that provide the legal framework that empowers them. Thus did North's insight encourage those
trained as political scientists — Barry Weingast, Margaret Levi, Jean-Laurent Rosenthal, and others — to turn to economic history, or to the adjacent field of development." |
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