Abstract
The economic historian Douglass North is most famous for developing a theory that interprets the causes of economic change by explaining them in terms of social institutions. This theory, the New Institutionalist Economic History, has had a far-reaching influence. In this chapter, Krul explains how this theory originated in existing institutionalist ideas within economics, how it built on these ideas and developed them further, and how it contributed to the rise of a new way of thinking across the fields of social science concerned with economic thought. Krul also discusses the reception of North’s theory, both by its supporters and its critics. As shown here, for understanding North’s approach it is important to distinguish the specifics of his theory from other forms of New Institutionalist Economics.
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- 1.
Often the approach is called by its practitioners the New Institutional Economics (e.g. North 1986; Alston 2008) instead. However, in the philosophy of social science literature reference to ‘(new) institutionalism’ is more prevalent, and it is also so used in comparative context (Nee 2005). I follow here the philosophical convention (see Mäki 1993), which also has the advantage of distinguishing it from the adjectival derivation ‘belonging to an institution’. The terms are in any case entirely equivalent.
- 2.
I shall throughout distinguish ‘economics’ as a discipline from ‘economic thought’. The latter will be used for convenience as an umbrella term for all fields of social science concerned with economic structures and behavior as their primary subject matter, including economic history, economic sociology, economic anthropology, and so forth.
- 3.
Another element she identifies is the debate about public goods and free riding, to which I will also return later in the context of North’s NIEH. However, to avoid category mistakes this is best seen as a subject matter rather than a component school of theory.
- 4.
Much of the material of this book was prepared before the recent death of Douglass North, on November 3, 2015. In order to emphasize the ongoing relevance of his work, I have not changed the tense used. Discussions of past phases of North’s NIEH will be in past tense, while his arguments as formulated in the final phase, most notably his last two monographs, will be in present tense.
- 5.
As Robert Bates has put it, “If anyone can lay claim to being the founder of the new institutionalism, it would be Douglass North” (Bates 2014).
- 6.
A lengthier treatment of the origins of the term “NIE” and “NIEH” and their relation to differences between North and other NIE authors can be found in Richter (2005).
- 7.
For a discussion of this term, see Weintraub (1979).
- 8.
Another early contributor to this theoretical line of thought was Allen Barton, who however did not publish it (Harcourt et al. 2016: 271). I thank Geoff Harcourt for this reference.
- 9.
The decisive step here for North was the abandonment of the assumption that institutional arrangements are necessarily efficient in some sense, which inaugurated the second stage of his NIEH (North 1981).
- 10.
However, the relationship between game theoretical approaches and North’s analysis of individual strategic behavior, given rules-as-constraints, will come up again when I discuss North’s concept of the ‘rules of the game’ in depth. See chap. 3.
- 11.
The only other book-length discussion specifically devoted to North’s work is, by my knowledge, the honorary collection of essays published as Galiani and Sened (2014). I refer to some of its contributions here.
- 12.
This means that the present work does not deal in any detail with North’s earliest, purely Cliometric work. As it is unconnected to the NIEH project until the point that North becomes dissatisfied with it, it does not properly belong to a discussion of North’s NIEH. It should certainly be part of an intellectual biography of North, which I do not here intend to write.
- 13.
A point also noted by Boldizzoni (2011: 19–22).
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Krul, M. (2018). Introduction: Douglass North’s NIEH in Context. In: The New Institutionalist Economic History of Douglass C. North. Palgrave Studies in the History of Economic Thought. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94084-7_1
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