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Understanding the Process of Economic Change (Princeton Economic History of the Western World) [Kindle Edition]

Douglass C. North
4.2 out of 5 stars  See all reviews (6 customer reviews)

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Book Description

"In this landmark work, a Nobel Prize-winning economist develops a new way of understanding the process by which economies change. Douglass North inspired a revolution in economic history a generation ago by demonstrating that economic performance is determined largely by the kind and quality of institutions that support markets. As he showed in two now classic books that inspired the New Institutional Economics (today a subfield of economics), property rights and transaction costs are fundamental determinants. Here, North explains how different societies arrive at the institutional infrastructure that greatly determines their economic trajectories. North argues that economic change depends largely on ""adaptive efficiency,"" a society's effectiveness in creating institutions that are productive, stable, fair, and broadly accepted--and, importantly, flexible enough to be changed or replaced in response to political and economic feedback. While adhering to his earlier definition of institutions as the formal and informal rules that constrain human economic behavior, he extends his analysis to explore the deeper determinants of how these rules evolve and how economies change. Drawing on recent work by psychologists, he identifies intentionality as the crucial variable and proceeds to demonstrate how intentionality emerges as the product of social learning and how it then shapes the economy's institutional foundations and thus its capacity to adapt to changing circumstances. Understanding the Process of Economic Change accounts not only for past institutional change but also for the diverse performance of present-day economies. This major work is therefore also an essential guide to improving the performance of developing countries."


Editorial Reviews

Review

"Anyone with an interest in world poverty can benefit from this carefully crafted and closely argued book. It is a pleasure and a delight to read."--Paul Ormerod, Times Higher Education

"[North] sets forth a radical reconceptualization of the task and methods of the social sciences in general and economics in particular, providing a glimpse at an economics that refuses to 'assume a can opener.'"--Will Wilkinson, Cato Journal

"[This book] provides a sweeping view of the relationships among human belief systems, social institutions, and what [North] calls 'the adaptive efficiency' of societies in coping with changes in demographics, technology, and other factors."--Richard N. Cooper, Foreign Affairs

"A courageous attempt to enlarge the arsenal of theoretical tools available for economists."--Diego Rios, Journal of Evolutionary Economics

From the Inside Flap

"Just as Douglass North's earlier classic, Institutions and Institutional Change, ushered in the revolution in understanding institutions that dominated the nineties, his new book, Understanding the Process of Economic Change, seeks an equally revolutionary change. North now integrates the cognitive component into this analysis: how the mind works, how we form beliefs and understandings about the world, and how societies solve--or fail to solve--the problems they face. This book is vintage North."--Barry Weingast, Professor of Political Science, Stanford University

"In this book Douglass North once again opens new frontiers in economic research. He calls for probing into the human mind to seek an understanding of how knowledge acquired by individuals and societies manifests itself culturally and institutionally to shape processes of change. The analysis makes a courageous foray into territories unfamiliar to most economists, such as social psychology and cognitive science, and uses the findings to further our understanding of the most pressing economic question of our time: why, despite the production capacity of modern technology, do many economies fail to prosper?"--Avner Greif, Bowman Family Professor in the Humanities and Sciences and Professor of Economics, Stanford University

"This short book by a great master will be read, discussed, and debated widely. It boldly goes where few have dared to tread. It is a book about something more ambitious than economic growth or even economic history. It is about economic change, and it dares to ask questions that the profession will still be scratching its head over for many years to come."--Joel Mokyr, Northwestern University, author of The Gifts of Athena: Historical Origins of the Knowledge Economy

"This deeply exciting book culminates North's research agenda, and points the way to solving the most valuable but intractable problem in economics today: how institutions evolve. When I first read it I immediately saw implications for my own research, and began rethinking several fundamental ideas about how economies and their governments interrelate. What you learn from North changes how you think, and changing how people think is the best measure of intellectual influence."--John Joseph Wallis, University of Maryland


Product Details

  • File Size: 689 KB
  • Print Length: 200 pages
  • Publisher: Princeton University Press; Revised edition edition (January 3, 2005)
  • Sold by: Amazon Digital Services, Inc.
  • Language: English
  • ASIN: B0026IUP1I
  • Text-to-Speech: Enabled
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  • Lending: Not Enabled
  • Amazon Best Sellers Rank: #458,119 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

4.2 out of 5 stars
(6)
4.2 out of 5 stars
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Most Helpful Customer Reviews
14 of 14 people found the following review helpful
3.0 out of 5 stars Great Thesis, ponderous writing October 5, 2008
Format:Hardcover|Verified Purchase
Having attended several lectures by Dr. North I know him to be a brilliant man, but not the most engaging communicator.

This book has a small summation of several important ideas of the role of uncertainty and technological change, and how economic actors move to adapt to these. Nothing could be more topical these days. Unfortunately, I find the writing unnecessarily dense and even the simplest issues are treated in a verbose manner. I always love reading Hayek, Friedman, Mandelbrot and so many others; but despite my great interest in the subject reading this book was a chore.

Only for the technical experts or very motivated enthusiasts.
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21 of 26 people found the following review helpful
3.0 out of 5 stars Starts out great but fizzles out December 25, 2006
Format:Hardcover
North starts his book out emphasizing the important role played in economic development by the uncertainty of the future that impacts the decision makers whose actions will create technological and institutional change over time.This uncertainty is the uncertainty emphasized by Schumpeter,Keynes,Knight,Ellsberg,and Mandelbrot( or mild risk versus wild risk),as opposed to the risk emphasized by neoclassical economics in the form of the standard deviation of a normal probability distribution.Throughout the book North correctly emphasizes uncertainty and not risk as being the environment in which decision makers make choices that will determine future economic growth and change.Unfortunately,North devotes only one small paragraph on p.13 to this vital distinction(uncertainty versus risk).North needs to have spent much more time and pages carefully covering this distinction since it is crucial to understanding the process of economic change .North needs to provide the reader with at least two chapters devoted to covering the risk versus uncertainty topic.The only readers who will benefit from this book would be readers who have already read the relevant works of Knight ,Keynes,Schumpeter,Ellsberg,and Mandelbrot that deal with this topic.I would recommend that a potential reader first cover chapters 7 and 8 of Knight's 1921 book,Risk,Uncertainty and Profit ,and then read chapter 7 on the business cycle from Schumpeter's 1912 book The Theory of Economic Development.North needs to substantially revise the book .His preliminary chapter on cognitive psychology can be filled out more completely once he has added the chapters on uncertainty and its impact on the irreversible nature of investment in long run,long lived, physical,durable capital goods which is " cast in concrete " and essentially irrevocable.
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1 of 1 people found the following review helpful
5.0 out of 5 stars Excellent - do not be put off by the dense ... August 23, 2014
Format:Kindle Edition|Verified Purchase
Excellent - do not be put off by the dense language. North takes economics out of it's box and places is in a much broader context, including culture, belief systems, values and cognitive factors which are outside the comfort zone of many economists, regulators and politicians. It's not light reading, but as with all North's works, the concepts are relevant on many levels. Highly recommend it.
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