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Structure and Change in Economic History Paperback – October 17, 1982

ISBN-13: 978-0393952414 ISBN-10: 039395241X

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Structure and Change in Economic History + Institutions, Institutional Change and Economic Performance (Political Economy of Institutions and Decisions) + Understanding the Process of Economic Change (Princeton Economic History of the Western World)
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Product Details

  • Paperback: 240 pages
  • Publisher: W. W. Norton & Company (October 17, 1982)
  • Language: English
  • ISBN-10: 039395241X
  • ISBN-13: 978-0393952414
  • Product Dimensions: 0.7 x 5.6 x 8 inches
  • Shipping Weight: 11.4 ounces (View shipping rates and policies)
  • Average Customer Review: 4.3 out of 5 stars  See all reviews (9 customer reviews)
  • Amazon Best Sellers Rank: #344,994 in Books (See Top 100 in Books)

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29 of 31 people found the following review helpful By -_Tim_- on December 2, 2004
Format: Paperback Verified Purchase
This book aims to explain the structure and evolution of institutions. The author, Nobel laureate Douglass North, concludes that the tension between gains from specialization and attendant costs is "the basic source of structure and change in economic history." Institutions arise to exploit the gains from division of labor or to reduce transaction costs. This theory appears to offer considerable economy and power of explanation.

North asserts that, in the prehistoric era, human population increase would lead to declining labor productivity as resources were exhausted. New technologies could increase productivity but, if property rights were nonexclusive, as they must have been in a nomadic hunter-gatherer society, new technologies would simply accelerate resource depletion. Only if a tribe or band could exclude rivals from exploiting the resource, as they could in a settled agricultural society, would the productivity gains from new technology be sustained. The advantage that agriculture offered, then, was the opportunity to establish exclusive communal property rights. This produced what North calls the first economic revolution.

The first economic revolution, occasioned by the rise of agriculture, produced the state, "the most fundamental achievement of the ancient world." The state specialized in providing security, keeping order within societies and protecting them from outside threats, while the complex demands of an agricultural economy (compared to those of a hunter-gatherer economy) required increased specialization throughout the rest of society as well.
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21 of 23 people found the following review helpful By Pervert on November 27, 2000
Format: Paperback
Professor North's work is divided into two parts. The first briefly outlines a theory of structural change of institutions through time. North argues that the most interesting aspects of economic history involve assumptions that standard, neoclassical economic theory holds contant. In particular, North argues that "The physiography and resources of the regions together with the state of military technology played decisive roles in determining the size and characteristics of the state and in shaping the forms of economic organization" (pg. 64), and that those forms overcome shirking, known as the Free Rider Problem, through the elaboration of a dominant ideology. It is just such considerations that neoclassical theory cannot account for in its model of the utilitarian actor and yet which are so vital in understanding the essential elements of economic history (rather than economics) - structure and change.
The second part applies the ideas of the first to a few thousand years of human history. At least that is the aim. It is actually little more than a brief recounting of major events in world, particularly Western history. North starts with the so-called First Economic Revolution; that is, mankind's switch from a primarily hunter/gatherer existence to one based mostly on agriculture. He then moves through the decline of the ancient world, spending most all of his time on the fall of the Roman Empire. From there he covers the rise of western Europe and then the American economy at the turn of the last century.
It is this second part that is the book's weakest link. North should either have spent more time discussing how his theory relates to the event he surveys or let the reader apply the theory on her own and left the historical essays out entirely.
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14 of 14 people found the following review helpful By D. W. MacKenzie on April 28, 2008
Format: Paperback
Structure and Change in Economic History is an insightful and informative book. Much of what you find here is standard Comparative Institutional analysis, as developed by Mancur Olson, Ronald Coase, and James Buchanan. North aims at understanding institutions as humanly devised structure within which we all interact. Institutions are constraints that enable us to deal with real problem: free riding, high transaction costs, coordination failures... To some extent we must understand institutions in terms of utilitarian calculations. However, we must not limit our analysis to the utilitarian calculus of welfare economics.

Institutions are founded upon ideology. Ideological change drives institutional change. The aim of ideology is to "energize groups to behave contrary to a simple hedonistic individual calculation of costs" (p53). Ideology is definitely important to understanding institutions. But New Institutional and Public Choice Economists tend to ignore ideology, in favor of explaining institutions strictly in terms of utility maximizing choice.

We can see how ideology plays out with institutions that are relatively insulated from pressure groups and voters. Life tenure for judges might enable them to rule on cases based on their worldviews, rather than narrow utilitarian considerations. We must examine the role of `intellectual entrepreneurs' who develop `contrasting worldviews'. North has the right kind of mix between the issues that economists and other academics explore. Economists are right about the need for understanding human behavior in terms of a utilitarian calculus. However, economists have often erred by ignoring factors like ideology. North makes no such mistakes.
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