Re-Reading Douglass North

When I read Peter Turchin’s Ultrasociety, I thought that it covered some of the same ground and had some similar ideas as Douglass North’s Structure and Change in Economic History, which appeared in 1981. In fact, it is hard to find anything in Turchin’s book that supercedes North, notwithstanding 35 more years of anthropological research and the new discipline of cultural evolution. It seems that North’s intuition was pretty sound.

Anyway, here is quote (p. 201) that exemplifies North’s treatment of institutions that Deirdre McCLoskey thinks is stunted.

Institutions are a set of rules, compliance procedures, and moral and ethical behavioral norms designed to constrain the behavior of individuals in the interests of maximizing the wealth or utility of principals.

But consider this (p. 169-170):

The Industrial Revolution was characterized by sustained efforts to develop new social and ethical norms. Peter Mathias described this effort as follows: “A set of social norms, embodied in emergent social institutions, did develop in response to these new needs, however imperfectly they were practised. The virtues of hard work–the gospel of work preached by Samuel Smiles–saving, thrift, sobriety became the new social imperatives dinned into the heads of the working classes by their social betters by every known means of communication. They were enshrined in nonconformist and evangelical doctrine. In Sunday schools, pulpits, the mechanics’ institutes after 1824 and all forms of literature in the hands of middle-class publicists were preached the golden rules as they attempted to diffuse the bourgeois virtues down the social scale.”

[my emphasis]

The remaining excerpts are relevant to Turchin. p. 25:

The cost of protection would be relative to the state of military technology and would specify the size of the political-economic unit as “efficient” when the marginal cost of protection was equal to the incremental tax revenue.

p. 30:

The transformation of the Greek city-state from monarchy to oligarchy to democracy (in the case of Athens) occurred as a consequence of a change in military technology (the development of the phalanx) which could only be accomplished with a citizen army; the price the ruler paid was the dilution of his rule-making powers.

p. 89:

The First Economic Revolution was not a revolution because it shifted man’s major economic activity from hunting and gathering to settled agriculture. It was a revolution because the transition created for mankind an incentive change of fundamental proportions…When common property rights over resources exist, there is little incentive for the acquisition of superior technology and learning. In contrast, exclusive property rights which reward the owners provide a direct incentive to improve efficiency and productivity, or, in more fundamental terms, to acquire more knowledge and new techniques. It is this change in incentive that explains the rapid progress made by mankind in the last 10,000 years in contrast to his slow development during the long era of primitive hunting/gathering.

p. 93-94:

A society made up of specialized individuals requires the establishment of a mechanism for distributing the community output among the population. This is a relatively simple task in a hunting and gathering society but involves far more coordination and decision making in a society in which specialization and division of labor exist.

p. 138

[in the 15th century] Whether the development of an exchange economy was a sufficient condition for expanding the optimum scale of warfare or technological innovations augmented the scale may still be argued. What cannot be argued is that it expanded. As a consequence, the conditions for political survival were drastically altered. Survival now required not only a larger army, but a trained, disciplined fighting force supported by costly equipment in the form of cannons and muskets…Warfare on land and at sea. . .had dramatically altered the size of the financial resources necessary for survival.

p. 165-166:

in sum, an increase in the rate of technological progress will result from either an increase in the size of the market or an increase in the inventor’s ability to capture a larger share of the benefits created by his invention.

p. 169:

The emphasis in much of the literature on the Industrial Revolution goes the wrong way–that is, from technological change to the factory system; rather than from central workplace, to supervision, to greater specialization, to better measurement of input contributions, to technical change. . .it was increased specialization which induced organizational innovations, which induced the technical change, which in turn required further organizational innovation to realize the potential of the new technology.

p. 192:

the efforts of an evolving urban society to deal with growing “public bads.” In 1890, 26 percent of cities [in the U.S.] with over 10,000 population had no sewers at all, and of those that did only 45 percet of the dwellings were connected to a sewage system. By 1907 nearly every city had a sewage system. In 1900 less than 3 percent of cities had treated water supplies; by 1920 nearly 37 percent were so supplied.