Posts filed under ‘New Institutional Economics’
A guest post by John V. C. Nye. A related version appears at Reason.
| John Nye |
Douglass Cecil North passed away at the age of 95 on Nov. 23, 2015 at his home in Michigan. Joint recipient of the 1993 Alfred Nobel Memorial Prize in Economics, he will be remembered for his path breaking contributions to the field of economic history and his central role in creating the New Institutional Economics. He spent most of his academic career at two institutions — the University of Washington in Seattle, and Washington University in St. Louis. For much of the last two decades, he also maintained an association with the Hoover Institution at Stanford University.
Doug will be remembered for many things and others can go through his list of honors, awards, and accomplishments. But for me, two things will always stand out — his devotion to his students and his personal role in my life as mentor, colleague, and friend.
On the first point, one could note the large number of great scholars who emerged under his supervision in both Seattle and St. Louis or those who were simply inspired by his teaching to pursue careers in academia. But perhaps it is sufficient to observe that when the Jonathan Hughes Memorial Prize in teaching was instituted by the Economic History Society, North was the first recipient and an overwhelming favorite — not least of which because Jon Hughes had been one of Douglass’s first graduate students. On the day North received the Nobel prize, he cut off his interviewers to teach his regular courses, and reporters got a first-hand look at North the teacher. (more…)
| Peter Klein |
I’m sorry to report that Doug North passed away yesterday at the age of 95. North was a key figure in the “cliometrics revolution” which sought to apply neoclassical economic theory and quantitative methods to the study of economic history, for which he received a Nobel Prize. He was also a founder, along with Ronald Coase and Oliver Williamson, of the “New Institutional Economics.” His work on economic growth, the role of institutions on national and international economic performance, the relationship between economic and political institutions, and many other fields has been extremely influential.
I met North at the inaugural ISNIE conference in St. Louis in 1997, and saw him occasionally after that. He was friendly and approachable and interested in the work of younger scholars. North was an interdisciplinary thinker but always considered himself an economist first and foremost. I remember a small-group dinner at which he revealed an interesting conversation among the founders of International Society for New Institutional Economics (now SIOE). Coase had proposed calling the new organization the “International Society for New Institutional Social Science.” North reported that he replied, “Ronald, if you call it that, I will wish you well, but I won’t ever attend!”
Here is a nice reminiscence from Mike Sykuta.
Update: Here are obits in the NYT and WaPo. The former describes North in a way that makes economic history sound pretty interesting: “a diminutive, effervescent bon vivant [who] indulged his interests in haute cuisine, photography, fast cars, flying his own plane, hunting, fishing, tennis, hiking and swimming, pursuing some of them into advanced age.” (There is a story, perhaps apocryphal, about Washington University agreeing to pay North’s moving expenses when he took a professorship in St. Louis, then finding out later that transporting his wine collection required a refrigerated truck costing tens of thousands of dollars.)
| Peter Klein |
Armen Alchian’s friend and colleague Susan Woodward has a nice piece in a forthcoming Journal of Corporate Finance special issue on Alchian. Here are a few passages that may be of special interest to O&Mers:
Orley Ashenfelter asked Armen to write a book review of Oliver Williamson’s The Economic Institutions of Capitalism (such a brilliant title!). I got enlisted for that project too (Alchian and Woodward (1988)). Armen began writing, but I went back to reread Institutions of Capitalism. Armen gave me what he had written, and I was baffled. “Armen, this stuff isn’t in Williamson.” He asked, “Well, did he get it wrong?” I said, “No, it’s not that he got it wrong. These issues just aren’t there at all. You attribute these ideas to him, but they really come from our other paper.” And he said “Oh, well, don’t worry about that. Some historian will sort it out later. It’s a good place to promote these ideas, and they’ll get the right story eventually.” So, dear reader, now you know.
This from someone who spent his life discussing the efficiencies of private property and property rights—to basically give ideas away in order to promote them? It was a good lesson.
Of course, the book review also had a brilliant title: “The Firm is Dead: Long Live the Firm!” It also introduced the term “plasticity” as a not-quite-substitute for asset specificity. (I still prefer the more precise term relationship-specific investment.) And this:
Armen had no use for formal models that did not teach us to look somewhere new in the known world, nor had he any patience for findings that relied on fancy econometrics. What was Armen’s idea of econometrics? Merton Miller told me. We were chatting about limited liability. Merton asked about evidence. Well, all public firms with transferable shares now have limited liability. But in private, closely-held firms, loans nearly always explicitly specify which of the owner’s personal assets are pledged against bank loans. “How do you know?” “From conversations with bankers.” Merton said said, “Ah, this sounds like UCLA econometrics! You go to Armen Alchian and you ask, ‘Armen, is this number about right?’ And Armen says, ‘Yeah, that sounds right.’ So you use that number.”
| Dick Langlois |
I was saddened to learn that Masa Aoki passed away on July 15. He was only 77. Masa was a towering figure in the economics of institutions and organizations, and a true gentleman.
| Peter Klein |
I’ve long been involved with the International Society for New Institutional Economics (ISNIE). (In fact, I first met the esteemed Professor Foss at the inaugural ISNIE conference in St. Louis in 1997.) ISNIE was established as an global academic society promoting the study of institutions within the broad tradition established by the organization’s co-founders Ronald Coase, Oliver Williamson, and Douglass North. ISNIE has been a great success, holding annual conferences in the US and Europe, sponsoring an important working-paper series, and boasting thousands of members from all over the world.
Times change, and over the last two decades the study of institutions has moved from the periphery towards the center of economic, social, political, and legal analysis. The statement, “institutions matter,” which might have been controversial in social science in the 1990s, seems trite today. As such, some of ISNIE’s leaders and members saw a need to reposition and rebrand the society to reflect the current academic and policy climate. Last year ISNIE’s members voted, and this year the board approved, a name change. The organization is now SIOE, the Society for Institutional and Organizational Economics. Along with the change is a new website, featuring news, information, a blog, and many other features. The site is a work in progress and editors Bruno Chaves and Jens Prüfer would be happy to receive comments and suggestions.
I’m looking forward to the next twenty years with SIOE!
| Peter Klein |
O&M friends Avner Greif, Lynne Kiesling, and John Nye have edited an important collection of essays by students, colleagues, and friends of the distinguished economic historian Joel Mokyr: Institutions, Innovation, and Industrialization: Essays in Economic History and Development (Princeton University Press, 2015). Dust-jacket blurb:
This book brings together a group of leading economic historians to examine how institutions, innovation, and industrialization have determined the development of nations. Presented in honor of Joel Mokyr — arguably the preeminent economic historian of his generation–these wide-ranging essays address a host of core economic questions. What are the origins of markets? How do governments shape our economic fortunes? What role has entrepreneurship played in the rise and success of capitalism? Tackling these and other issues, the book looks at coercion and exchange in the markets of twelfth-century China, sovereign debt in the age of Philip II of Spain, the regulation of child labor in nineteenth-century Europe, meat provisioning in pre-Civil War New York, aircraft manufacturing before World War I, and more. The book also features an essay that surveys Mokyr’s important contributions to the field of economic history, and an essay by Mokyr himself on the origins of the Industrial Revolution.
| Peter Klein |
We have been using the term “judgment-based view” to describe our approach to entrepreneurship. The term “judgment” of course comes from Knight, and was used also by Mises, Casson, and many others. Contemporary entrepreneurship research is still dominated by the opportunity-discovery view, but increasing criticism from the judgement-based view, the effectuation and bricolage approaches, the opportunity-creation view, and other perspectives is challenging the notion that profit opportunities exist, waiting to be discovered, and even that “opportunity” is a meaningful construct at all.
Nicolai and I organized a themed section in the Journal of Institutional Economics on the judgment-based view with papers from Niklas Halberg, Jeff McMullen, and Andrew Godley and Mark Casson. Our introduction reviews the increasing importance of entrepreneurship in economics and management research, explains the relationship between entrepreneurship and economic organization, discusses some microfoundations of judgment, and distinguishes judgment from luck and judgment per se from good or skilled judgments.
The papers are available electronically at the links above, and in hardcopy in the Fall 2015 issue of JOIE.