North, Douglass 1920-

BIBLIOGRAPHY

The American economist Douglass Cecil North shared the 1993 Nobel Memorial Prize in Economic Sciences with Robert W. Fogel, “for having renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change” (Nobel Foundation 1993). North’s work spans decades of inquiry into American economic history, European economic history, and economic development. His most recent research explores the intersection of economics and cognitive science.

North was born on November 5, 1920, in Cambridge, Massachusetts. He graduated from the University of California, Berkeley in 1942 and, following a stint in the merchant marine, he received his PhD from Berkeley in 1952. He started his career at the University of Washington in 1950, where he remained until 1983, when he moved to Washington University in Saint Louis. The influence of his colleagues, such as Yoram Barzel and Stephen N. S. Cheung, is apparent in North’s emphasis on property rights, transaction costs, and culture.

North has also held visiting positions at Cambridge University, Rice University, and Stanford University’s Center for Advanced Studies in the Behavioral Sciences. He currently holds an appointment as the Bartlett Burnap Senior Fellow at Stanford University’s Hoover Institution. A former president of the Economic History Association and the Western Economic Association, North has also served as a member of the board of directors of the National Bureau of Economic Research and as editor of the Journal of Economic History.

North helped found two influential professional organizations: the Cliometric Society in 1983 and the International Society for New Institutional Economics (ISNIE) in the 1990s. The field of cliometrics, which applies quantitative methods and neoclassical economic theory to history, was at first controversial among traditional historians. North followed the 1991 Nobel Laureate Ronald Coase as the second president of ISNIE, which focuses scholarly attention on the role of institutions in economic development.

North shifted his focus away from insurance and toward American economic development in the mid-1950s. His research on the U.S. balance of payments, conducted under the auspices of the National Bureau of Economic Research in 1956 and 1957, formed the basis for his first two books on the history of the American economy.

North’s first studies of institutions assumed that institutions—which he defines as “formal rules,” “informal norms,” and “enforcement characteristics” that define a society’s property rights—are efficient. His research on Western ascendancy, however, showed him that narrowly applied neoclassical economic theory, which also assumes efficient institutions, is an inadequate framework for understanding economic change. He thus spent the 1970s studying the emergence of inefficient institutions. This culminated in his influential 1981 book, Structure and Change in Economic History.

North’s major contributions in the 1980s included estimates (with his student John Wallis) that an increasing share of the gross national product was devoted to the cost of transactions and research, suggesting that changes in institutions and property rights may lead to economic growth. North refined his theory, and in 1989 he published an influential study in which he and coauthor Barry Weingast argued that certain institutional arrangements may solve what is called the “sovereign debt problem.” First analyzed by Jeremy Bulow and Kenneth Rogoff, this problem suggests that any state strong enough to win a war is quite likely strong enough to renege on its promises (including loans), while any state so weak that it cannot successfully renege is also unlikely to last. North and Weingast showed how institutional change emanating from the Glorious Revolution of 1688 provided a partial solution to this problem.

In 1990 North published one of his most influential studies, Institutions, Institutional Change, and Economic Performance, which offered “a political-economic framework to explore long-run institutional change.” This contribution began to explicitly incorporate questions of culture and ideology into a more general social-scientific framework.

North’s ideas have attracted a certain amount of criticism. For example, one of his most important works, The Rise of the Western World (coauthored with Robert P. Thomas), was criticized for basing a theory of institutional change on a Malthusian model in which resource scarcity leads to alternative bargains for property rights. His ideas have endured, however, and they continue to shape research in economic history and development. The breadth of North’s influence is perhaps most apparent through the distinctive mark it has left on widely cited research in development economics. North continues to push the frontiers of social science in his quest to understand why some people are rich and other people are poor, and it is perhaps most appropriate to close with a quote from his prologue to a 1997 collection of essays published in his honor:

We still have a long way to go. I believe that an understanding of how people make choices, under what conditions the rationality postulate is a useful tool, and how individuals make choices under conditions of uncertainty and ambiguity are fundamental issues that we must address in order to make further progress in the social sciences. But we are making progress. (Frontiers of the New Institutional Economics 1997)

SEE ALSO Cliometrics; Coase, Ronald; Development Economics; Economics, Nobel Prize in; Institutionalism; Neoinstitutionalism; Property Rights; Transaction Cost

BIBLIOGRAPHY

PRIMARY WORKS

North, Douglass. 1961. The Economic Growth of the United States 1790–1860. Englewood Cliffs, NJ: Prentice Hall.

North, Douglass. 1966. Growth and Welfare in the American Past. Englewood Cliffs, NJ: Prentice Hall.

North, Douglass. 1971. Institutional Change and American Economic Growth (with Lance E. Davis). Cambridge, U.K.: Cambridge University Press.

North, Douglass. 1973. The Rise of the Western World: A New Economic History (with Robert Paul Thomas). Cambridge, U.K.: Cambridge University Press.

North, Douglass. 1981. Structure and Change in Economic History. New York: Norton.

North, Douglass. 1986. Measuring the Transaction Sector of the American Economy (with John Joseph Wallis). In Income and Wealth: Long-Term Factors in American Economic Growth, ed. Stanley Engerman and Robert E. Gallman. Chicago: University of Chicago Press.

North, Douglass. 1989. Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England (with Barry Weingast). Journal of Economic History 49 (4): 803–832.

North, Douglass. 1990. Institutions, Institutional Change, and Economic Performance. Cambridge, U.K.: Cambridge University Press.

North, Douglass. 1997. Prologue. In The Frontiers of the New Institutional Economics, ed. John N. Drobak and John V. C. Nye, 3–12. San Diego, CA: Academic Press.

North, Douglass. 2005. Understanding the Process of Economic Change. Princeton, NJ: Princeton University Press.

SECONDARY WORKS

Coelho, Philip R. P. 2001. The Rise of the Western World, A New Economic History. Review Essay. EH.Net Project 2001 Reviews. http://eh.net/bookreviews/library/coelho.

Fogel, Robert W. 1997. Douglass C. North and Economic Theory. In The Frontiers of the New Institutional Economics, ed. John N. Drobak and John V. C. Nye, 13–28. San Diego, CA: Academic Press.

Nye, John V. C. 2003. North, Douglass Cecil. In Oxford Encyclopedia of Economic History, ed. Joel Mokyr, 107–108. New York: Oxford University Press.

Nobel Foundation. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 1993. http://nobelprize.org/nobel_prizes/economics/laureates/1993/.

Art Carden