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Wednesday, July 30, 2003

Institutional Impacts

Brad has another little gem buried away in his recent posts. It refers to 'institutionalism' of the Doug North variety:

Property rights. Doug North has made a career out of talking about how parliamentary government and independent courts established secure property rights in Britain, and arbitrary royal government and dependent intendents created insecure property rights in France, hence the English economy boomed while the French economy stagnated in the century and a half before the coming of the Industrial Revolution.

I've always had two worries about this line of argument. First, if Britain is the most successful late-early modern social formation in the world, France ranks no lower than number three. Britain, Holland, France--and behind them come all the rest, every single other nation and principality and empire in the world. To treat late-early modern Britain and France as if they are at opposite poles of success and failure may make sense if you are an eighteenth or nineteenth century British or French historian or politician. It makes no sense for anybody else. The number two superpower in any era is doing something very right.
Source: Semi Daily Journal

Brad is clearly right. The institutional argument cannot do so much of the heavy lifting. This point has relevance for economic policy in the contemporary environment. That's why I lean towards demography, technology transfer and learning by doing (which also implies cultural openness to learning).

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