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Political Economy of Institutions and Decisions
Institutions, Institutional Change and Economic Performance
Continuing his groundbreaking analysis of economic structures, Douglass North develops an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time. Institutions exist, he argues, due to the uncertainties involved in human interaction; they are the constraints devised to structure that interaction. Yet, institutions vary widely in their consequences for economic performance; some economies develop institutions that produce growth and development, while others develop institutions that produce stagnation. North first explores the nature of institutions and explains the role of transaction and production costs in their development. The second part of the book deals with institutional change. Institutions create the incentive structure in an economy, and organizations will be created to take advantage of the opportunities provided within a given institutional framework. North argues that the kinds of skills and knowledge fostered by the structure of an economy will shape the direction of change and gradually alter the institutional framework. He then explains how institutional development may lead to a path-dependent pattern of development. In the final part of the book, North explains the implications of this analysis for economic theory and economic history. He indicates how institutional analysis must be incorporated into neo-classical theory and explores the potential for the construction of a dynamic theory of long-term economic change. Douglass C. North is Director of the Center of Political Economy and Professor of Economics and History at Washington University in St. Louis. He is a past president of the Economic History Association and Western Economics Association and a Fellow, American Academy of Arts and Sciences. He has written over sixty articles for a variety of journals and is the author of The Rise of the Western World: A New Economic History (CUP, 1973, with R.P. Thomas) and Structure and Change in Economic History (Norton, 1981). Professor North is included in Great Economists Since Keynes edited by M. Blaug (CUP, 1988 paperback ed.)
159 pages, Paperback
First published October 26, 1990
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About the author
Douglass C. North
38 books101 followersDouglass Cecil North (November 5, 1920 – November 23, 2015) was an American economist known for his work in economic history. He was the co-recipient (with Robert William Fogel) of the 1993 Nobel Memorial Prize in Economic Sciences. In the words of the Nobel Committee, North and Fogel "renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change."
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Displaying 1 - 30 of 62 reviews
June 7, 2012
An excellent little book that should be mandatory reading for any student of economics. North does an incredible job of reminding students that much of the world still exists beyond neoclassical models, and ignoring this fact has badly damaged the reputation and reliability of the field.
While some of the comments below disparage North's writing, it's fine as far as economic writing is concerned. There's certainly much worse out there, and North's anecdotal examples - which appear more frequently in later chapters - are always illuminating.
All in all, it does the one thing all great books should do: it forces the reader to start asking tough questions. If institutions matter so much, what is happening to them in the US? Is the current level of social friction permanent? Have values really changed? Answering these will be key to the long-term health of our country.
While some of the comments below disparage North's writing, it's fine as far as economic writing is concerned. There's certainly much worse out there, and North's anecdotal examples - which appear more frequently in later chapters - are always illuminating.
All in all, it does the one thing all great books should do: it forces the reader to start asking tough questions. If institutions matter so much, what is happening to them in the US? Is the current level of social friction permanent? Have values really changed? Answering these will be key to the long-term health of our country.
December 30, 2023
Douglass North provides an account of the importance of mental models for individuals’ learning and vision of the world along with how individuals shape social, economic, and political institutions.
These include formal and informal rules as families, communities, and churches are driving force for good in society. These must be matched with key economic institutions that allow markets to efficiently work given limited, effective political institutions.
This book is one that will certainly change your view of the world around us. Check it out!
These include formal and informal rules as families, communities, and churches are driving force for good in society. These must be matched with key economic institutions that allow markets to efficiently work given limited, effective political institutions.
This book is one that will certainly change your view of the world around us. Check it out!
June 7, 2016
The funny thing about this book is that political scientists and sociologists had been saying for a long time that institutions matter. In economics, however, this rediscovery can earn you a Nobel Prize!
On a more serious note, however, this book is a theory of both why there has been divergence rather than convergence in economic performance, and why divergence has lead to persistent low-growth economies. In a sentence, there is divergence rather than convergence because transactions costs are everywhere, which leads to the need for institutions, which produce lock-in, which makes institutional change difficult, which prevents convergence. And there is persistently low performance because high performance economies require a very particular mix of institutions to sustain an extensive division of labor, specialization, and trade among anonymous parties.
This story is a plausible one. However, North also wants to integrate this theory of institutionalism with a theory of ideology or cultural beliefs. While institutions are rules of the game for North, they are also expectations and beliefs in agents' heads. For North, cultural beliefs are an important source of motivation, they reduce uncertainty about the behavior of others, and they "lower the cost of acting on our convictions." The trouble for North is that ideology and culture are endogenous to institutions. While he has a demand-side story for ideology, his supply-side story is that ideology and culture arise within an institutional context. There's a risk of a circular explanation here, or else we need some other account of ideology. One possibility, which North mentions, is that ideology and cultural beliefs imperfectly update. If we could frictionlessly update our beliefs, endogeneity of ideology wouldn't matter because we'd learn which institutions are successful. Part of this is due to complexity and unintended consequences--we don't learn the right things and change our beliefs appropriately due to experience. Instrumental rationality is hard when you can't link actions to outcomes.
Another way to look at this book is that North is trying to combine three things: rational choice, institutions, and ideas. It's very hard to fit all three of those together into a single theory.
On a more serious note, however, this book is a theory of both why there has been divergence rather than convergence in economic performance, and why divergence has lead to persistent low-growth economies. In a sentence, there is divergence rather than convergence because transactions costs are everywhere, which leads to the need for institutions, which produce lock-in, which makes institutional change difficult, which prevents convergence. And there is persistently low performance because high performance economies require a very particular mix of institutions to sustain an extensive division of labor, specialization, and trade among anonymous parties.
This story is a plausible one. However, North also wants to integrate this theory of institutionalism with a theory of ideology or cultural beliefs. While institutions are rules of the game for North, they are also expectations and beliefs in agents' heads. For North, cultural beliefs are an important source of motivation, they reduce uncertainty about the behavior of others, and they "lower the cost of acting on our convictions." The trouble for North is that ideology and culture are endogenous to institutions. While he has a demand-side story for ideology, his supply-side story is that ideology and culture arise within an institutional context. There's a risk of a circular explanation here, or else we need some other account of ideology. One possibility, which North mentions, is that ideology and cultural beliefs imperfectly update. If we could frictionlessly update our beliefs, endogeneity of ideology wouldn't matter because we'd learn which institutions are successful. Part of this is due to complexity and unintended consequences--we don't learn the right things and change our beliefs appropriately due to experience. Instrumental rationality is hard when you can't link actions to outcomes.
Another way to look at this book is that North is trying to combine three things: rational choice, institutions, and ideas. It's very hard to fit all three of those together into a single theory.
April 29, 2021
Very insightful read, goes into the fundamentals of any institution's workings, and how institutional changes influence economies. Douglass North went on to receive a Nobel Prize for this pioneering work.
Very interesting chapters on cooperation - a cornerstone for any institution to function - and how game theory fits in when you have repeated experiences and many different players. Challenges some behavioral assumptions we make for humans to always act rationally; how institutions evolve with people with different powers playing at the same game.
Probably because it was published in 1990, this was a very difficult read. I wish there were more examples, and less of the extremely-formal language. Will be looking for more contemporary interpretations of this book, because some of the principles mentioned here are crucial to understanding our current world of increasing socio-economic disparities, and how we could cooperate and exist within the changing dynamic.
Very interesting chapters on cooperation - a cornerstone for any institution to function - and how game theory fits in when you have repeated experiences and many different players. Challenges some behavioral assumptions we make for humans to always act rationally; how institutions evolve with people with different powers playing at the same game.
Probably because it was published in 1990, this was a very difficult read. I wish there were more examples, and less of the extremely-formal language. Will be looking for more contemporary interpretations of this book, because some of the principles mentioned here are crucial to understanding our current world of increasing socio-economic disparities, and how we could cooperate and exist within the changing dynamic.
December 8, 2022
I have formed a strange and inexplicable emotional attachment to this book
July 17, 2022
We all remember our development economics professors stressing the central role of "institutions" (in North's words: "institutions are the rules of the game in a society or, more formally, are the humanly-devised constraints that shape human interaction") in the nature, pace and sustainability of economic growth.
Over a career as a global markets professional, no single learning from university has stuck with me as much, and facilitated an understanding of why some economies have prospered and others have struggled. As a predictive tool of higher financial risk prospects over the economic cycle, weak institutional development - and its fundamental influence over the health of the investment climate - know no rivals. Ask an investor if they are confident about their ability to enforce a contract in the local courts of a country, and you have your answer in great measure whether you want to commit your capital there!
Much of our understanding of the what, why, and how is owed to the work of Nobel Laureate Douglass North. His analysis of the nature of institutions (formal v. informal), their underlying behavorial assumptions, the impact on exchange of transaction costs (measurement and enforcement), and the relationship of institutions with the broader economy challenged / clarified key elements of the Neo-classical growth paradigm.
A necessary read!!!
Over a career as a global markets professional, no single learning from university has stuck with me as much, and facilitated an understanding of why some economies have prospered and others have struggled. As a predictive tool of higher financial risk prospects over the economic cycle, weak institutional development - and its fundamental influence over the health of the investment climate - know no rivals. Ask an investor if they are confident about their ability to enforce a contract in the local courts of a country, and you have your answer in great measure whether you want to commit your capital there!
Much of our understanding of the what, why, and how is owed to the work of Nobel Laureate Douglass North. His analysis of the nature of institutions (formal v. informal), their underlying behavorial assumptions, the impact on exchange of transaction costs (measurement and enforcement), and the relationship of institutions with the broader economy challenged / clarified key elements of the Neo-classical growth paradigm.
A necessary read!!!
September 24, 2025
This book has set me on the path to solving a few questions with which I had been struggling for a few years now
i) What exactly is the nature of the non-market element that supports the market economy?
ii) How do we explain the ossification and stubbornness of state actors who do not emulate Western economies even though long-term gains seem so obvious?
iii) Is what beats in people's hearts and what runs through their minds as important a determinant of economic performance as say, strong property rights and better judicial systems?
This study is extremely cautious. It develops convincingly a theory of path dependence, which explains the behavior of both political and nonpolitical actors in terms of the aggregation of returns they receive as they interact with the incentive structures of their institutions. Some institutions are preferable to others because they manage to reduce transformation costs, and crucially, transaction costs. To put it simply, some ways of organizing societies make it easier for people to trade and then to pocket the benefits of such trade.
This remains one of the most influential books within economic history. I'm eager to engage more deeply with studies in this tradition.
i) What exactly is the nature of the non-market element that supports the market economy?
ii) How do we explain the ossification and stubbornness of state actors who do not emulate Western economies even though long-term gains seem so obvious?
iii) Is what beats in people's hearts and what runs through their minds as important a determinant of economic performance as say, strong property rights and better judicial systems?
This study is extremely cautious. It develops convincingly a theory of path dependence, which explains the behavior of both political and nonpolitical actors in terms of the aggregation of returns they receive as they interact with the incentive structures of their institutions. Some institutions are preferable to others because they manage to reduce transformation costs, and crucially, transaction costs. To put it simply, some ways of organizing societies make it easier for people to trade and then to pocket the benefits of such trade.
This remains one of the most influential books within economic history. I'm eager to engage more deeply with studies in this tradition.
April 24, 2014
douglas north's research on the effect of institutional factors on the economic performance is essential in point of drawing a framework on economic growth. north argues that the difference of the economic performances between countries is determined by the institutional factors which consists formal and informal rules-restrictions imposed by social life. the book should be in "to-read" shelves for anyone who interests economic growth and wonders the differences among countries.
December 21, 2015
This is the key book marking the discovery of institutions by neoclassical economics - no matter that the other social sciences had incorporated institutions decades or centuries earlier. The trick then is to assimilate institutions to methodological individualism - the focus on individuals making decisions in the presence of scarcity. Mission accomplished. Nobel Prize in Economics to follow. But what is all the fuss about?
November 11, 2016
My brother in law has given me a book about Libertarianism to read, so I thought I'd read something mainstream first. A book that discusses institutions, what they're meant to do, how they influence the economy and how they can improve.
I got lucky. This book by Douglass North is an excellent primer. In 14 short chapters (some 10 pages each) it covers a thousand pages' worth of ground, no exaggeration. Each chapter starts with an abstract. You could read the 14 abstracts (comfortably less than 20 pages, all told) and get the idea. After the abstract the author gives the main points of the chapter, with zero repetition. Within the text, rather than at the end, he lists several sources for further reading.
On the flip side, this ain't bedside reading. It's the bare bones of a textbook, written for people in academia. You cannot even dream of skimming it. It feels like 14 dense lectures, really.
Here are ten points I took away:
1. In a world of infinite choices, institutions are defined as a set of restrictions imposed on our freedom with the main aim of increasing efficiency. In every society there's one way to get married, one way to bury the dead, one way to sell a house, one way to participate in politics, one way to appeal to justice etc. These days there could be a couple ways, but you get the idea. So if you go to a foreign land you would not know where to start with the basics, you'd need a local to show you the institutions.
2. Efficiency creeps into the narrative as follows: In a repeated game, people will behave. In one-off games, however, (example: a one-off round of prisoner's dilemma, or the one time in your life when you might sell your house), the incentives are skewed toward selfish behavior. Similarly, if you are dealing with a stranger, you are significantly less likely to behave than if it's with somebody you know. This means that it could be costly to transact: The guy on the wrong side of the information asymmetry will compensate for the cost of gathering information and for the risk of doing a bad deal by adding back his costs to arrive at the price where he's happy to transact. Institutions are meant to reduce these costs.
3. This takes precedence over maximisation of welfare / wealth. Indeed, institutions can entrench inefficient local maxima. Moreover, institutions that are good for economic growth don't necessarily have an advantage over institutions that are bad for growth in terms of being sticky / persistent. Change happens at the margins.
4. Some institutions / rules are formal, like laws. Some are informal and unwritten, like customs. The former are easier to change with the stroke of a pen. The latter die hard. That said, the difference between formal and informal constraints is one of degree. In practice, there is a continuum between the formal and the informal. There is a distinct hierarchy in formal rules, for example. The Constitution is a bigger deal than a specific law, which is in turn a bigger deal than some local bylaw, which could incidentally be less enforceable than some old tradition.
5. It's chiefly political rules (also known as property rights) that influence economic rules, but change in economic rules can also eventually lead to changes in property rights / politics. Political rules, moreover, get more complicated as the sundry constituencies and interest groups become more varied and diverse.
6. The role of government is to enforce contracts. This, in turn causes a principal-agent problem. The people in government (be it legislation, justice or enforcement) will act rationally and do what's best for them, not those who elected them. The author does not claim to have the answer to this major problem! But a main thesis of the book is that in the rich countries of the world we've somehow got this balance right, at least when you compare us with the third world.
7. Since we all know what's going on everywhere else in the world these days, it does not take much to find out what institutions perform better. Regardless, we don't see the backward places adopting the institutions of the more advanced places. That's because there are costs in changing institutions. And if these "political transaction costs" are very high, inefficient property rights (also known as political institutions for the purposes of this book) can persist for a very long time.
8. Change in institutions (as well as resistance to change) often comes under pressure from organizations such as guilds, firms, unions etc. rather than individuals. These organizations accumulate knowledge and know-how that put them in a position to exert pressure on the polity to change the explicit rules, if not the informal ones such as customs and traditions. This they do mainly by changing relative prices, but not only. An institution that was not abolished via changes in relative prices, for example, was slavery. Typically, however, an organization succeeds in providing a service or making a product at a more competitive price (or enforces a higher price) and this leads both sides of a bargain to accept changes in the contracts that are nested in the hierarchy of norms, behaviours and rules.
9. Changes in informal institutions are more complex. They require changes in culture.
10. Not all changes in institutions are gradual. Lack of compromise (for example war or revolution) can often bring about sudden change in institutions. However, the issues over which compromise was not reached and eventually led to the lack of compromise ,will more often than not have festered for some time. Technological change can also result in sudden change of institutions.
Having made these points (and many more) in the first 100-odd pages of the book, the author goes on to make a rather major claim: Institutions are the underlying determinant of long-run performance of economies.
If we accept this to be true, then we need to reconsider the current (neoclassical) theory and do our best to embed what we know about institutions, with a large number of implications. It would introduce, for example, path dependence to our understanding of economies since we have established that institutions are sticky.
The evolution of modern finance also gets a very strong billing in the closing part of the book, which takes us through a bunch of stages we had to go through, each one involving a formal or informal organization introducing a financial innovation that reduced risk and eventually became an institution. It apparently all started with ways we had to devise to go around usury laws, and today it has culminated in insurance contracts which convert "uncertainty" into measurable "risk" that can be distributed. I was wondering out loud what Douglass North would make of today's derivatives world. This chapter could have been written by Greenspan himself (both for its content, but also unfortunately for its sometimes convoluted language)
In the closing chapter, Douglass North pats himself on the back for having rejected the neoclassical (and the Marxist) models for growth, but admits there is work to be done in using the tools he has introduced to point the way forward. The two obstacles he sees to growth should not come as a surprise to his readers: (i) the difficulty in overcoming inefficient informal institutions (also known as culture) and (ii) the impossibility of bearing the large political costs that will be necessary to move away from inefficient solutions.
So if you are looking for a way to unseat the 28 "closed professions" in Italy or the innumerable princelings and party insiders who lord it over China, all he's got to tell you is "good luck." Still, I loved reading the book. So I'll overlook the dense and often inscrutable writing style and award it a full score.
I got lucky. This book by Douglass North is an excellent primer. In 14 short chapters (some 10 pages each) it covers a thousand pages' worth of ground, no exaggeration. Each chapter starts with an abstract. You could read the 14 abstracts (comfortably less than 20 pages, all told) and get the idea. After the abstract the author gives the main points of the chapter, with zero repetition. Within the text, rather than at the end, he lists several sources for further reading.
On the flip side, this ain't bedside reading. It's the bare bones of a textbook, written for people in academia. You cannot even dream of skimming it. It feels like 14 dense lectures, really.
Here are ten points I took away:
1. In a world of infinite choices, institutions are defined as a set of restrictions imposed on our freedom with the main aim of increasing efficiency. In every society there's one way to get married, one way to bury the dead, one way to sell a house, one way to participate in politics, one way to appeal to justice etc. These days there could be a couple ways, but you get the idea. So if you go to a foreign land you would not know where to start with the basics, you'd need a local to show you the institutions.
2. Efficiency creeps into the narrative as follows: In a repeated game, people will behave. In one-off games, however, (example: a one-off round of prisoner's dilemma, or the one time in your life when you might sell your house), the incentives are skewed toward selfish behavior. Similarly, if you are dealing with a stranger, you are significantly less likely to behave than if it's with somebody you know. This means that it could be costly to transact: The guy on the wrong side of the information asymmetry will compensate for the cost of gathering information and for the risk of doing a bad deal by adding back his costs to arrive at the price where he's happy to transact. Institutions are meant to reduce these costs.
3. This takes precedence over maximisation of welfare / wealth. Indeed, institutions can entrench inefficient local maxima. Moreover, institutions that are good for economic growth don't necessarily have an advantage over institutions that are bad for growth in terms of being sticky / persistent. Change happens at the margins.
4. Some institutions / rules are formal, like laws. Some are informal and unwritten, like customs. The former are easier to change with the stroke of a pen. The latter die hard. That said, the difference between formal and informal constraints is one of degree. In practice, there is a continuum between the formal and the informal. There is a distinct hierarchy in formal rules, for example. The Constitution is a bigger deal than a specific law, which is in turn a bigger deal than some local bylaw, which could incidentally be less enforceable than some old tradition.
5. It's chiefly political rules (also known as property rights) that influence economic rules, but change in economic rules can also eventually lead to changes in property rights / politics. Political rules, moreover, get more complicated as the sundry constituencies and interest groups become more varied and diverse.
6. The role of government is to enforce contracts. This, in turn causes a principal-agent problem. The people in government (be it legislation, justice or enforcement) will act rationally and do what's best for them, not those who elected them. The author does not claim to have the answer to this major problem! But a main thesis of the book is that in the rich countries of the world we've somehow got this balance right, at least when you compare us with the third world.
7. Since we all know what's going on everywhere else in the world these days, it does not take much to find out what institutions perform better. Regardless, we don't see the backward places adopting the institutions of the more advanced places. That's because there are costs in changing institutions. And if these "political transaction costs" are very high, inefficient property rights (also known as political institutions for the purposes of this book) can persist for a very long time.
8. Change in institutions (as well as resistance to change) often comes under pressure from organizations such as guilds, firms, unions etc. rather than individuals. These organizations accumulate knowledge and know-how that put them in a position to exert pressure on the polity to change the explicit rules, if not the informal ones such as customs and traditions. This they do mainly by changing relative prices, but not only. An institution that was not abolished via changes in relative prices, for example, was slavery. Typically, however, an organization succeeds in providing a service or making a product at a more competitive price (or enforces a higher price) and this leads both sides of a bargain to accept changes in the contracts that are nested in the hierarchy of norms, behaviours and rules.
9. Changes in informal institutions are more complex. They require changes in culture.
10. Not all changes in institutions are gradual. Lack of compromise (for example war or revolution) can often bring about sudden change in institutions. However, the issues over which compromise was not reached and eventually led to the lack of compromise ,will more often than not have festered for some time. Technological change can also result in sudden change of institutions.
Having made these points (and many more) in the first 100-odd pages of the book, the author goes on to make a rather major claim: Institutions are the underlying determinant of long-run performance of economies.
If we accept this to be true, then we need to reconsider the current (neoclassical) theory and do our best to embed what we know about institutions, with a large number of implications. It would introduce, for example, path dependence to our understanding of economies since we have established that institutions are sticky.
The evolution of modern finance also gets a very strong billing in the closing part of the book, which takes us through a bunch of stages we had to go through, each one involving a formal or informal organization introducing a financial innovation that reduced risk and eventually became an institution. It apparently all started with ways we had to devise to go around usury laws, and today it has culminated in insurance contracts which convert "uncertainty" into measurable "risk" that can be distributed. I was wondering out loud what Douglass North would make of today's derivatives world. This chapter could have been written by Greenspan himself (both for its content, but also unfortunately for its sometimes convoluted language)
In the closing chapter, Douglass North pats himself on the back for having rejected the neoclassical (and the Marxist) models for growth, but admits there is work to be done in using the tools he has introduced to point the way forward. The two obstacles he sees to growth should not come as a surprise to his readers: (i) the difficulty in overcoming inefficient informal institutions (also known as culture) and (ii) the impossibility of bearing the large political costs that will be necessary to move away from inefficient solutions.
So if you are looking for a way to unseat the 28 "closed professions" in Italy or the innumerable princelings and party insiders who lord it over China, all he's got to tell you is "good luck." Still, I loved reading the book. So I'll overlook the dense and often inscrutable writing style and award it a full score.
April 27, 2019
This is a classic. It is actually very surprising that until not so long ago economists hadn’t paid much attention to the crucial role institutions play in economic exchanges and the performance of economies and societies. North objectively and concisely makes that recognition and structures his theory in this book by making the appropriate connections between Economics, History and Political Science regarding the importance of institutions in the whole economic phenomenon — from the influence on economic exchanges to the development of economies and countries.
The approach on the theme is very theoretical and the read is most of the times arid due to the relative abundance of coded language for those unfamiliar with economics concepts — that sometimes requires the reader to read the sentences more than once. In other passages, though, the read becomes surprisingly fluid and clear.
This is a perfectly-structured book. The author subdivided it all into short and objective parts, chapters and topics with almost the same (small) number of pages each, to avoid making it too dull a read considering its theoretical essence.
This was an important step in the evolution of the study of economics. It starts by criticizing the neoclassical assumptions, then integrates institutions into the economic thought as a key factor to the comprehension of the economic phenomenon, and finally leaves the field open for further study on other factors that also influence exchanges and outcomes. There is even a passage in which the author seemed to anticipate future works on behavioral economics (p. 111, 22nd printing 2006).
The approach on the theme is very theoretical and the read is most of the times arid due to the relative abundance of coded language for those unfamiliar with economics concepts — that sometimes requires the reader to read the sentences more than once. In other passages, though, the read becomes surprisingly fluid and clear.
This is a perfectly-structured book. The author subdivided it all into short and objective parts, chapters and topics with almost the same (small) number of pages each, to avoid making it too dull a read considering its theoretical essence.
This was an important step in the evolution of the study of economics. It starts by criticizing the neoclassical assumptions, then integrates institutions into the economic thought as a key factor to the comprehension of the economic phenomenon, and finally leaves the field open for further study on other factors that also influence exchanges and outcomes. There is even a passage in which the author seemed to anticipate future works on behavioral economics (p. 111, 22nd printing 2006).
May 28, 2007
This book is really influential in social science circles, which is why I read it. The point he makes is essential for anyone trying to do economics, like me. The basic lesson is simple: the rules of the game make a huge difference in whether mutually beneficial transactions are undertaken or not. Exploitation and oppression can be built into the structure by parties who have greater bargaining strength. The book can be a dry read, as North sometimes spends whole pages dealing in abstract generalities. The section comparing and contrasting U.S. and Latin America has some truth to it (as I have seen first hand living here in Peru, and dealing with/hearing stories about the bureaucracy). It will offend any radicals who think the whole difference between the U.S. and Latin America stems from the fact that the former exploits the latter. That's not true, but North is too facile with the emphasis on efficient/corrupt institutions and not enough emphasis on gunboat diplomacy, Monroe Doctrine, CIA covert operations, et cetera.
September 13, 2015
For political scientists this is a key text. The first chapter is often quoted, through defining institutions as the 'rules of the game'. Its an interesting read and engages with how institutions shape social and economic life.
October 28, 2015
كتب عميق جدا من اقتصادي و حائز على نوبل ، يشير الى دور المؤسسات في حياة الانسان من منظور اقتصادي في محاولة لتفسير السلوك الإنساني و كيف يمكن تبني نمذج لتغيير المؤسسات و من ثم النمو الاقتصادي ، انصح به للمهتمين باقتصاديات التنمية
October 6, 2024
Escrita não muito fluida mas excelente conteúdo
February 24, 2025
Whenever I read Douglass North, I'm struck by the idea that genius lies in expanding the domain of the obvious. Reading this book is like reading Asimov's Foundation for the first time: in both cases you find yourself surrounded by ideas that have become well-entrenched since the time of their publication, and in both cases you have to draw yourself back and remember that you are reading the source itself.
In a grand sense, the book is one treatment of the project to which North dedicated his career, that of arguing for the importance of historically specific institutions and customs in guiding the outcomes and developments of economic, social, and political units. With this book you get a grounding in all of the particulars of his thought, from the principles guiding institutional change to his underlying criticism of neo-classical economics (which he argues is only correct in describing an ahistorical environment where actors have perfect access to information; his own understanding of institutions becoming important in guiding developmental and decision pathways in an imperfect environment).
This foundation gives North the basis to discuss not just why some societies have succeeded, which in this case is an elaboration of what he wrote in the Rise of the West, but also why others have not. In the latter portions of the book he uses an ongoing comparison between the development of colonial America, England during and after the Stuarts, early-modern Spain, and Latin America to stress his view that less efficient economies/polities are constrained in path dependence by their previous institutional configurations.
The prose style is not beautiful, but it is generally very clear. I am not an economist, so my rate of apprehension was sometimes slowed by terms that I think someone with basic background would speed through.
The book has a lot of value for non-economists in a historiographical sense: you will notice as you read many developments that have close analogs in psychology, philosophy, and history.
In a grand sense, the book is one treatment of the project to which North dedicated his career, that of arguing for the importance of historically specific institutions and customs in guiding the outcomes and developments of economic, social, and political units. With this book you get a grounding in all of the particulars of his thought, from the principles guiding institutional change to his underlying criticism of neo-classical economics (which he argues is only correct in describing an ahistorical environment where actors have perfect access to information; his own understanding of institutions becoming important in guiding developmental and decision pathways in an imperfect environment).
This foundation gives North the basis to discuss not just why some societies have succeeded, which in this case is an elaboration of what he wrote in the Rise of the West, but also why others have not. In the latter portions of the book he uses an ongoing comparison between the development of colonial America, England during and after the Stuarts, early-modern Spain, and Latin America to stress his view that less efficient economies/polities are constrained in path dependence by their previous institutional configurations.
The prose style is not beautiful, but it is generally very clear. I am not an economist, so my rate of apprehension was sometimes slowed by terms that I think someone with basic background would speed through.
The book has a lot of value for non-economists in a historiographical sense: you will notice as you read many developments that have close analogs in psychology, philosophy, and history.
July 19, 2016
Стосовно цієї книги в мене змішані відчуття. По-перше, як соціолог, я не розумію, чому Норту дали Нобелівську премію за акцент на вивченні інституцій. Соціологи про інститути пишуть ще від часів Герберта Спенсера, тобто з сер. ХІХ ст. А культура опиняється в центрі уваги соціологів ще з 1940-х рр. Тобто соціологія явно випереджує економіку в наближенні до реальності. Але довкола соціологічних досліджень таких вигуків "еврика!" чомусь немає.
По-друге, це дійсно важлива книга.
Звісно, для економістів вона взагалі є проривом. Судячи з тексту Норта, до 1960-х рр. економісти вірили в homo oeconomicus, тобто раціонально мислячих людей, які а) володіють точною інформацією про реальність (або мають волю до отримання такої інформації) та б) діють максимально раціонально щодо цієї інформації. Як виявилось, модель не працює. 1960-і рр. (тобто розвиток країн Африки?) показали, що люди не є раціональними. Відтак, в економіці відбувається теоретичний прорив - звернення до еволюціонізму: менш пристосовані (тобто раціональні) організації економіки будуть програвати більш пристосованим. Відтак, більш раціональні організації будуть витісняти менш раціональні. І так економіка поступово наближатиметься до неокласичної моделі.
Цілком сподіваним є те, що в 1980-х рр. економісти виявили, що і ця модель не працює. Відтак, Норт та інституційний підхід (слід якого можна знайти і в роботах Менкура Олсона) виявляється дійсно революційним проривом. Проте цей прорив блякне на тлі соціологічних (та антропологічних) праць, де від еволюціонізму відмовилися ще на поч. ХХ ст., а подальші спроби його реанімувати були невдалими.
Особливо кумедним виглядають пасажі Норта, який пише, що індивіди мають свободу волі, але вона обмежена рамками інституцій (тобто офіційних та неофіційних правил), в яких людина перебуває. Але дії людини можуть ці інституції змінювати, хоча дуже поволі і поступово. Загалом, це agenda для представників напряму, який назвали structure-agency, тобто П'єра Бурдью та Ентоні Ґіденса, але і менш відомих соціологів - Алена Турена, Юрґена Габермаса тощо. Цікаво, що праця Бурдью, в якій він виклав ці ж ідеї, що і в Норта, вийшла в 1972 р. (маю на увазі Szkic teorii praktyki, poprzedzony trzema studiami na temat etnologii Kabylów).
Проте текст Норта засвідчує іншу важливу річ: соціологія, психологія, економіка, антропологія та політологія в ХХІ ст. мають об'єднатися (або зникнути). Адже кожна з них сама по собі не дає цілісної картини світу, а брак співпраці призводить до загального відставання всіх наук. Цікаво, що цю ідею висловив Імануіл Валерстайн, якого Норт не цитує, хоча їхні погляди на роль насильства в економічних стосунках дуже подібні. (І Валерстайн був першим).
Отже, Норт показує, що а) культура має значення, б) держава має бути активним учасником економічних процесів. Крім того, він пояснює тривкість існування економічно неефективних організацій та інститутів.
Якщо говорити про культуру, то Норт виділяє дві групи правил - офіційні та неофіційні. Другі є розширеним трактуванням перших, але не завжди. (Тут Норт починає суперечити сам собі, тому я спробую викласти більш цілісну схему, яка випливає з його тексту). Офіційні правила закріплені в письмовій формі. Неофіційні - це більш усна традиція, яка не є кодифікованою. Проте неофіційні правила є більш важливими, бо люди саме ними керуються в повсякденному житті. Відтак, коли розвиток відбувається "еволюційно", то офіційні правила є тісно пов'язаними з неофіційними: останні є більш розширеною версією офіційних. Коли ж країна починає переживати різкі зміни (реформи чи революції), то офіційні правила різко змінюються, але неофіційні - ні. Відтак, останні "гальмують" виконання перших. Норт наводить приклад країн Латинської Америки, які на поч. ХІХ ст. - після здобуття незалежності - переймають конституцію США, але отримують зовсім інший результат. Тому що конституція США була офіційним виразом неофіційних правил, які існували в колоніях. А от у випадку Латинської Америки неофіційні правила були сформовані іспанською культурою, а тому прийняття конституції США активно суперечило цим неофіційним правилам. Відтак, життя не змінювалося взагалі.
Отже, хочете змінювати економіку - змінюйте правила гри, тобто неофіційні правила.
Як це зробити? Норт неохоче визнає (а часто навіть не визнає) роль держави. Адже в умовах безособового обміну зростають трансакційні витрати - витрати на покриття ризику чи дотримання умов тощо. Проте лише одна інституція має достатньо ресурсу, щоб примушувати сторони до виконання угод, або карати їх за порушення - це держава. Саме держава гарантує права власності, що запускає процес накопичення капіталу. Саме держава створює правове поле, де капіталізм може процвітати. В цьому аспекті Норт говорить те ж, що і Валерстайн, але без марксизму (і часто замість "держава" пише "суди", хоча звідки суди отримують владу як не від держави?).
Як же існують неефективні організації? Відповідь Норта проста - бо вони гарантують стабільність. Дуже неефективну, але це той equilibrium, про який писав ще Парето: ніхто ним не задоволений, але він є ефективнішим від повного хаосу. Будь-які зміни відбуваються лише тоді, коли держава змінює правила гри, дозволяє активніше долучатися до продукування нового, а не перерозподілу благ, які вже існують. І Норт робить сумний висновок, який - він цього, щоправда не знав - стосується і пострадянських країн: в них неофіційні правила такі, що основне джерело збагачення - це доступ до владних ресурсів. Відтак, немає стимулів до розвитку економіки в підприємницький спосіб, бо права власності не є гарантованими. Тобто неофіційні правила є "гальмівними". Чи будуть ці суспільства самі змінюватися? Відповідь Норта проста: ні. Потрібен стимул, який дозволить ці правила змінити. Але це буде свідома та "революційна" політика: еволюційним шляхом такі держави до розвинутого стану не прийдуть.
Відтак, книга Норта є важливою і необхідною для прочитання - в Україні так точно. Але про це більш детально іншим разом і на іншій платформі.
По-друге, це дійсно важлива книга.
Звісно, для економістів вона взагалі є проривом. Судячи з тексту Норта, до 1960-х рр. економісти вірили в homo oeconomicus, тобто раціонально мислячих людей, які а) володіють точною інформацією про реальність (або мають волю до отримання такої інформації) та б) діють максимально раціонально щодо цієї інформації. Як виявилось, модель не працює. 1960-і рр. (тобто розвиток країн Африки?) показали, що люди не є раціональними. Відтак, в економіці відбувається теоретичний прорив - звернення до еволюціонізму: менш пристосовані (тобто раціональні) організації економіки будуть програвати більш пристосованим. Відтак, більш раціональні організації будуть витісняти менш раціональні. І так економіка поступово наближатиметься до неокласичної моделі.
Цілком сподіваним є те, що в 1980-х рр. економісти виявили, що і ця модель не працює. Відтак, Норт та інституційний підхід (слід якого можна знайти і в роботах Менкура Олсона) виявляється дійсно революційним проривом. Проте цей прорив блякне на тлі соціологічних (та антропологічних) праць, де від еволюціонізму відмовилися ще на поч. ХХ ст., а подальші спроби його реанімувати були невдалими.
Особливо кумедним виглядають пасажі Норта, який пише, що індивіди мають свободу волі, але вона обмежена рамками інституцій (тобто офіційних та неофіційних правил), в яких людина перебуває. Але дії людини можуть ці інституції змінювати, хоча дуже поволі і поступово. Загалом, це agenda для представників напряму, який назвали structure-agency, тобто П'єра Бурдью та Ентоні Ґіденса, але і менш відомих соціологів - Алена Турена, Юрґена Габермаса тощо. Цікаво, що праця Бурдью, в якій він виклав ці ж ідеї, що і в Норта, вийшла в 1972 р. (маю на увазі Szkic teorii praktyki, poprzedzony trzema studiami na temat etnologii Kabylów).
Проте текст Норта засвідчує іншу важливу річ: соціологія, психологія, економіка, антропологія та політологія в ХХІ ст. мають об'єднатися (або зникнути). Адже кожна з них сама по собі не дає цілісної картини світу, а брак співпраці призводить до загального відставання всіх наук. Цікаво, що цю ідею висловив Імануіл Валерстайн, якого Норт не цитує, хоча їхні погляди на роль насильства в економічних стосунках дуже подібні. (І Валерстайн був першим).
Отже, Норт показує, що а) культура має значення, б) держава має бути активним учасником економічних процесів. Крім того, він пояснює тривкість існування економічно неефективних організацій та інститутів.
Якщо говорити про культуру, то Норт виділяє дві групи правил - офіційні та неофіційні. Другі є розширеним трактуванням перших, але не завжди. (Тут Норт починає суперечити сам собі, тому я спробую викласти більш цілісну схему, яка випливає з його тексту). Офіційні правила закріплені в письмовій формі. Неофіційні - це більш усна традиція, яка не є кодифікованою. Проте неофіційні правила є більш важливими, бо люди саме ними керуються в повсякденному житті. Відтак, коли розвиток відбувається "еволюційно", то офіційні правила є тісно пов'язаними з неофіційними: останні є більш розширеною версією офіційних. Коли ж країна починає переживати різкі зміни (реформи чи революції), то офіційні правила різко змінюються, але неофіційні - ні. Відтак, останні "гальмують" виконання перших. Норт наводить приклад країн Латинської Америки, які на поч. ХІХ ст. - після здобуття незалежності - переймають конституцію США, але отримують зовсім інший результат. Тому що конституція США була офіційним виразом неофіційних правил, які існували в колоніях. А от у випадку Латинської Америки неофіційні правила були сформовані іспанською культурою, а тому прийняття конституції США активно суперечило цим неофіційним правилам. Відтак, життя не змінювалося взагалі.
Отже, хочете змінювати економіку - змінюйте правила гри, тобто неофіційні правила.
Як це зробити? Норт неохоче визнає (а часто навіть не визнає) роль держави. Адже в умовах безособового обміну зростають трансакційні витрати - витрати на покриття ризику чи дотримання умов тощо. Проте лише одна інституція має достатньо ресурсу, щоб примушувати сторони до виконання угод, або карати їх за порушення - це держава. Саме держава гарантує права власності, що запускає процес накопичення капіталу. Саме держава створює правове поле, де капіталізм може процвітати. В цьому аспекті Норт говорить те ж, що і Валерстайн, але без марксизму (і часто замість "держава" пише "суди", хоча звідки суди отримують владу як не від держави?).
Як же існують неефективні організації? Відповідь Норта проста - бо вони гарантують стабільність. Дуже неефективну, але це той equilibrium, про який писав ще Парето: ніхто ним не задоволений, але він є ефективнішим від повного хаосу. Будь-які зміни відбуваються лише тоді, коли держава змінює правила гри, дозволяє активніше долучатися до продукування нового, а не перерозподілу благ, які вже існують. І Норт робить сумний висновок, який - він цього, щоправда не знав - стосується і пострадянських країн: в них неофіційні правила такі, що основне джерело збагачення - це доступ до владних ресурсів. Відтак, немає стимулів до розвитку економіки в підприємницький спосіб, бо права власності не є гарантованими. Тобто неофіційні правила є "гальмівними". Чи будуть ці суспільства самі змінюватися? Відповідь Норта проста: ні. Потрібен стимул, який дозволить ці правила змінити. Але це буде свідома та "революційна" політика: еволюційним шляхом такі держави до розвинутого стану не прийдуть.
Відтак, книга Норта є важливою і необхідною для прочитання - в Україні так точно. Але про це більш детально іншим разом і на іншій платформі.
March 28, 2023
Critics of economics love to rail against its detachment from reality, but they conveniently overlook Douglass C. North’s attempts three decades ago to expand the field’s explanatory power.
It was a wake-up call to the frailty of economic models. North presented an alternative paradigm where norms are incorporated into the neoclassical model as an equally important force in play, besides the laws or the constitution. More recent scholarship, such as that of Acemoglu and Robinson, has only supported North’s perspective.
With the slow and enduring process of idea-shaping comes the automatic conclusion that unsightly regimes need decades, if not centuries, to change. It sounds discouraging but is time-tested. The take-home message is both relieving and disconcerting, because individual actors are finally empowered by North’s theory, only to realise that an institutional change will take ages.
Busting the myth that history is inevitable, although impressive, was evidently not his badge of honour. He renewed the pervasiveness of transaction costs, the enforcement role of the government, and displayed what I regarded as the true craftsmanship—exploring feedback on relative price changes that nudge group behaviours and organised ideologies, ultimately cementing unofficial constraints into official rules.
It was a wake-up call to the frailty of economic models. North presented an alternative paradigm where norms are incorporated into the neoclassical model as an equally important force in play, besides the laws or the constitution. More recent scholarship, such as that of Acemoglu and Robinson, has only supported North’s perspective.
With the slow and enduring process of idea-shaping comes the automatic conclusion that unsightly regimes need decades, if not centuries, to change. It sounds discouraging but is time-tested. The take-home message is both relieving and disconcerting, because individual actors are finally empowered by North’s theory, only to realise that an institutional change will take ages.
Busting the myth that history is inevitable, although impressive, was evidently not his badge of honour. He renewed the pervasiveness of transaction costs, the enforcement role of the government, and displayed what I regarded as the true craftsmanship—exploring feedback on relative price changes that nudge group behaviours and organised ideologies, ultimately cementing unofficial constraints into official rules.
January 19, 2018
Great book with many interesting concepts, but possibly outdated.
Douglass North's "Institutions, Institutional Change and Economic Performance", 1990, is a classic book. It is small, 152 pages including references and the index, but dense. North's stated goal with this book was to provide an outline of a theory of Institutions and Institutional Change, but He is really successful in showing that History matters "because de the present and the future are connected to the past by the continuity of a society's institutions."
It's an old book (27 years), so it is possible that many ideas just outlined or briefly discussed here have been better developed later in other works. For example, I believe that nowadays we know more about cultural evolution than in 1990. Despite that, I believe that the book deserves to be read.
I gave 4/5 because I really don't like how he explains some concepts using examples, it would be much clearer if he first developed and explained the concept and after used historical examples to illustrate it. But I believe that this is a question of personal preference and doesn't diminish the academical value of the book.
Douglass North's "Institutions, Institutional Change and Economic Performance", 1990, is a classic book. It is small, 152 pages including references and the index, but dense. North's stated goal with this book was to provide an outline of a theory of Institutions and Institutional Change, but He is really successful in showing that History matters "because de the present and the future are connected to the past by the continuity of a society's institutions."
It's an old book (27 years), so it is possible that many ideas just outlined or briefly discussed here have been better developed later in other works. For example, I believe that nowadays we know more about cultural evolution than in 1990. Despite that, I believe that the book deserves to be read.
I gave 4/5 because I really don't like how he explains some concepts using examples, it would be much clearer if he first developed and explained the concept and after used historical examples to illustrate it. But I believe that this is a question of personal preference and doesn't diminish the academical value of the book.
September 7, 2018
Livro muito importante e interessante para quem quer aprender sobre economia institucional, essa obra tenta adicionar ao arcabouço econômico tradicional as instituições e os impactos que elas trazem para o crescimento, desenvolvimento e comportamento dos agentes.
Ao se fazer isso, perde-se um pouco da modelagem, mas ganha-se muito na análise da economia real (ou alguém ignoraria a importância dos custos de transação em uma economia?). O autor faz isso, sem tentar entrar tanto no modelo padrão neoclássico de economia, trazendo muito mais os conceitos e problemas levantados pela economia institucional.
O livro é bom, mas North não acerta tanto o tom, pois acredito que quis fazer um livro tanto pra economistas que entendem bem o modelo neoclássico quanto para o leitor comum que se interessa por economia. Esse meio-termo faz a obra ficar chata por vezes. Fora isso, a análise de história econômica do fim poderia ter tido mais exemplos e ocupar mais espaço: pra quem gosta de História, fica a tristeza de não se ter avançado tanto nessa discussão, apesar do que está lá ser bem interessante.
Ao se fazer isso, perde-se um pouco da modelagem, mas ganha-se muito na análise da economia real (ou alguém ignoraria a importância dos custos de transação em uma economia?). O autor faz isso, sem tentar entrar tanto no modelo padrão neoclássico de economia, trazendo muito mais os conceitos e problemas levantados pela economia institucional.
O livro é bom, mas North não acerta tanto o tom, pois acredito que quis fazer um livro tanto pra economistas que entendem bem o modelo neoclássico quanto para o leitor comum que se interessa por economia. Esse meio-termo faz a obra ficar chata por vezes. Fora isso, a análise de história econômica do fim poderia ter tido mais exemplos e ocupar mais espaço: pra quem gosta de História, fica a tristeza de não se ter avançado tanto nessa discussão, apesar do que está lá ser bem interessante.
September 5, 2021
I have read some papers and books regarding institutions. But this is one can be called 'the basic', like Institutions 101. For those who want to read about institutions, this book should be included in their reading lists. This book put the perspective of institutions in economics, where the complex webs of people transactions and people responses regarding future outcomes and information are determined by the constraints they have within the institutions. A long stroy short; institutions consist of conventions, customs, laws etc., that regulate people behaviour when trading. It is important to note that institutions force behaviour, and people constantly change the institutions through technology and social innovation.
To conclude, I enjoy reading this book. The message is clear. This book is an 'entrance' to understand institutions and evaluate incorrect assumptions about the term for a lay reader like me.
To conclude, I enjoy reading this book. The message is clear. This book is an 'entrance' to understand institutions and evaluate incorrect assumptions about the term for a lay reader like me.
November 21, 2022
I know this is a classic. But sadly, either because North's thoughts are so embedded in economic thinking, or I learned about them too well in Zhou Qiren's New Institutional Economics class, almost nothing in this book sounds new… North's writing is extremely dry, and the audiobook narrator's formal and rigid tone makes it worse.
Also, some very immature thoughts: using the transaction cost theory to back out a history of institutional change is probably a dead end. This is because the readiness to reap benefits from a transaction with strangers is only a late phenomenon in human history. Even now, the human mind is largely shaped and bound by culture and norms that have deep historical roots. New institutional economists often expand the concept of "transaction cost" and redefine it as a measure of the efficiency of any human interaction and the institutions governing them. But the word "transaction" still limits the concept users' imagination.
Also, some very immature thoughts: using the transaction cost theory to back out a history of institutional change is probably a dead end. This is because the readiness to reap benefits from a transaction with strangers is only a late phenomenon in human history. Even now, the human mind is largely shaped and bound by culture and norms that have deep historical roots. New institutional economists often expand the concept of "transaction cost" and redefine it as a measure of the efficiency of any human interaction and the institutions governing them. But the word "transaction" still limits the concept users' imagination.
March 17, 2019
A former professor recommended North to me as one of his favorite authors. This book is the most impressive 141 page book I’ve yet seen (though fair warning it took about as long as a 400 page book because it took substantial thinking and rereading to process each chapter). In a compact book, it manages to do better in many ways than past tomes I’ve read on economic development and history. Overall, the author’s knowledge of history, economics, political science, and technology is, in a word, startling. His ability to meld those fields into a cohesive argument on the centrality of institutions to economic performance is well worth the Nobel Prize he was conferred. Highly recommend to anyone wanting a deeper understanding of transaction cost economics, institutions and economic performance, or economic history.
February 21, 2023
The subsequent success of the paradigm championed by the book makes reading it less interesting today than it may have been when it was published. The theoretical framework laid out in the first two thirds is somewhat slow going, not because it’s difficult, but because it’s influence has been so strong as to seem tediously familiar
The last third, devoted to historical examples and applications of the theory was the most enjoyable, but just scratches the surface and left me wanting more.
Still, however short, the institutional analysis of the development of merchant law, Spanish and Latin-American vs Anglo-American development, the souk, and the fall of feudalism are thought-provoking and worth the price of admission
The last third, devoted to historical examples and applications of the theory was the most enjoyable, but just scratches the surface and left me wanting more.
Still, however short, the institutional analysis of the development of merchant law, Spanish and Latin-American vs Anglo-American development, the souk, and the fall of feudalism are thought-provoking and worth the price of admission
August 13, 2025
I definitely think institutions serve a necessary function, particularly in handling transaction costs and information asymmetries. I also agree with some of the points made regarding economic methodology and assumptions. However, I remain wary of Professor North's claim that institutions are what matter most. Perhaps, after all, this book was not intended to provide an inquiry that goes beyond institutions to consider non-institutions. Institutions are not the essence of markets but rather an influence on them; they do not exist prior to markets.
January 29, 2022
Institutions, Institutional Change, and Economic Performance by Douglass North is basically an introductory textbook attempting to establish institutions and institutional as important agents in economic theory. I don't have a whole lot to say about it. I was told this was one of the groundbreaking works of IPE and Comparative Politics, but I really don't see it. Too much of it is obvious and basic. For what it is, I suppose its fine.
80/100
80/100
April 8, 2022
4/8/22 I read this for 'work'....a business I'm starting to improve how marketplaces work. This is a tough book to read as it's a text book. I found it by searching for 'Transaction Costs' on my Kindle and it popped. The fact that it was published in 1990, but still became a Kindle book in 2017 is a telling sign that the book is sought out.
If you're into how marketplaces work, this is a great book.
If you're into how marketplaces work, this is a great book.
June 24, 2022
A good read when researching on the subject of rent seeking and the role of institutions over the private economic space. Fairly technical and dense. The author's theory takes at least two chapters to develop, in a rather dry way, but the subject becomes interesting as the text goes on. Not a Sunday morning read by any mean.
December 14, 2023
an extremely thought provoking book that challenges and clarifies so much of my pre-conceived notions of (development of) institutions and organisations in social, political, economic and even cultural settings. a lot of the concepts still hold up very much today and a great way to understand and navigate human interaction. this is a book i will come back to read again and again
March 5, 2024
If one is going to write an absolute zinger of a book, one should try and come up with a title that isn’t quite so dull sounding.
I liked this quote in particular:
“There is nothing the matter with the rational actor paradigm that could not be cured by a healthy awareness of the complexity of human motivation and the problems that arise from information processing.”
I liked this quote in particular:
“There is nothing the matter with the rational actor paradigm that could not be cured by a healthy awareness of the complexity of human motivation and the problems that arise from information processing.”
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