Douglass North at Length
By Arnold Kling
From my latest essay.
In textbook economics, the only external environmental factors that affect the individual are technology and prices. Social norms, habits, and rules play no role. North shows that institutions are fundamental determinants of poverty and prosperity. This essay will explain what North means by institutions and why they are so central.
One point on which I would criticize North is his use of the term “institutions” when what he means are norms and patterns of behavior. “Institutions” has a somewhat different connotation most of the time, and it is too easy to slide back and forth between North’s use of the term and the ordinary connotation.