Goals
This is a course in Economic History, with special emphasis on
theories of institutional change. Economic History applies economics
to history. The methods of economics are used to explore historical
issues, and historical examples are used to understand the process of
economic development. Obviously,
the issue(s) of trade underscores our study of institutional chance. However, before we take up trade specifically, we will pursue
four goals which will lay the groundwork for a more structured
discussion.
First,
the course will make you better aware of the historical dynamics that
propelled the contemporary economic system to its present position.
Second, the course will illustrate how the main body of
economic knowledge can be enriched by the study of institutional
change. Third, it will
highlight the importance of markets in the allocation of society’s
resources throughout history. Fourth,
examining historical events within a unified methodology enhances the
usefulness and power of the approach when directed at current issues.
Among the latter will be the role of trade in development,
barriers to trade and others.
Texts
and Materials
There
is no formal text. Reading
material is on reserve at the library.
Criteria
for Evaluating Teaching and Student Performance
There
will be a take home mid-term exam and a take home final over material
covered in class. Both will be overnight take homes.
1.
Introduction
Why are we here?
Current
Issues
Regional
and Global Integration
Free
Markets and Liberalization Programs.
Productivity
and Convergence
Nathan,
Rosenberg & L.E. Birdzell., How the West Grew Rich, (NY:
Basic Books, 1985) pp. 163-165.
How
do we approach these? Can we continue to rely solely on neoclassical
economics?
Why
Not?
What
is the alternative?
2. Methodological Issues, or, Why Neoclassical Economics is not
Enought.
The
Concept of Economic Efficiency
The
Prisoner’s Dilemma
The
Problem of The Commons
Nathan,
Rosenberg & L.E. Birdzell., How the West Grew Rich, (NY:
Basic Books, 1985) pp 3-36, 113-143, 144-188, 242-268, 269-235.
North,
Douglass C., Institutions, Institutional Change and Economic
Performance (Cambridge: Cambridge University Press, 1990) Chapter
1.
Langlois,
Richard., “The New Institutional Economics: An Introductory
Essay,” in Richard
Langlois, ed., Economics As
a Process: Essays in the New Institutional Economics
(Cambridge: Cambridge University Press, 1986), 1-25.
North,
Douglass C., “Some Fundamental Puzzles in Economic
History/Development,” Washington
University, Draft (1995?).
Kronman,
Anthony., “Contract Law and the State of Nature,” Journal
of Law, Economics, and Organization Vol. 1, No.1 (Fall 1985) 5-32.
Williamson,
Oliver., “Credible Commitments: Using Hostages to Support
Exchange,” American Economic
Review Vol. 73 (1983)
519.
Olson,
Mancur., The Logic of Collective Action (Cambridge, MA: Harvard
University Press, 1965) Introduction.
North,
Douglass., Structure and Change in Economic History (NY:
Norton, 1991) Chapter 3, A Neoclassical Theory of the State.
3.
The Alternative: The New Institutional Economics Precursors
Coase,
Ronald., “The Nature of the Firm,”
Economica (November
1937).
Coase,
Ronald., “The Problem of Social Cost,” Journal
of Law & Economics (October 1960) 1-44.
Schumpeter,
Joseph., Capitalism, Socialism and Democracy (NY: Harper &
Row, 1942) 59-164.
Hayek,
Friedrich., The Counter-Revolution of Science (Liberty Press,
1979), 17-77, 77-182.
A.
Institutions & Transactions Costs
North,
Douglass C., “Institutions,”
Journal of Economic Perspectives
5 (Winter 1991).
North,
Douglass C., “Institutions, Ideology and Economic Performance, Cato
Journal Vol. 11
(1992).
North,
Douglass C., Institutions, Institutional Change and Economic
Performance (Cambridge: Cambridge University Press, 1990) Chapter
4, A Transaction Cost Theory of Exchange.
Williamson,
Oliver., “Transaction-Cost Economics: The Governance of Contractual
Relations,” Journal of Law and
Economics 22 (October 1979) 233-362.
Reprinted in O.E. Williamson, The Economic Institutions of
Capitalism (New York: The Free Press, 1985) Chapters 1-3, 13, 15.
Klein,
Benjamin, R. Crawford & Armen Alchian., “Vertical Integration,
Appropriable Rents, and the Competitive Process,” Journal
of Law & Economics V.
21 (1978) 297-326.
B.
Transactions Cost
Property
Rights
Libecap,
Gary, “Property Rights in Economic History,”
Explorations in Economic
History (July 1986)
227-252
Alchian,
Armen and Harold Demsetz, “The Property Rights Paradigm,”
Journal of Economic History (March 1973) 16-27.
Demsetz,
Harold, “Towards a Theory of Property Rights,” American
Economic Review (1967)
347-359.
McManus,
John C., "An Economic Analysis of Indian Behavior in the North
American Fur Trade," Journal of Economic
History Vol. 32, No.1 (March, 1967) 36-53.
North,
Douglass., Structure and Change in Economic History (NY:
Norton, 1991) Chapter 7.
Anderson,
Terry L. & D. J. Hill., "The Evolution of Property Rights: A
Study of the American West," Journal of Law and Economics Vol.
18, No.1 (1975) 163-179.
C.
The Problem of Collective Action
Olson,
Mancur., The Logic of Collective Action (Cambridge, MA: Harvard
University Press, 1965).
Hardin,
Russell., Collective Action (Baltimore: Johns Hopkins
University Press, 1982).
Hardin,
Russell., "The Social Evolution of Cooperation," in Karen
Schweers Cook and Margaret Levi, eds., The Limits of Rationality
(Chicago: University of Chicago Press, 1990).
Taylor,
Michael., The Possibility of Cooperation (Cambridge: Cambridge
University Press, 1987) Chapter 1, The Problem of Collective Action.
Taylor,
Micheal., "Cooperation and Rationality: Notes on the Collective
Action Problem and Its Solution," in Karen Schweers Cook and
Margaret Levi, eds., The Limits of Rationality (Chicago:
University of Chicago Press, 1990).
Axelrod,
Robert., The Evolution of Cooperation (NY: Basic Books, 1984) 3-87.
North,
Douglass., Structure and Change in Economic History (NY:
Norton, 1991) Chapter 5, Ideology and the Free Rider Problem..
The
Evolution of Institution
David,
Paul., “Clio and the Economics of QWERTY” AEA Papers and
Proceedings (May 1985) 332-337.
Liebowitz,
S.J. and Stephen Margolis, “The Fable of the Keys,” Journal of Law
& Economics Vol. 33 (April 1990) 1-25.
Lyons,
Bruce., "Organizations," in Shaun Hargraves Heap, Martin
Hollis, Bruce Lyons, Robert Sugden & Albert Weale, The Theory of
Choice: A Critical Guide (Oxford: Basil Blackwell, 1992).
North,
Douglass C., Institutions, Institutional Change and Economic
Performance (Cambridge: Cambridge University Press, 1990) Chapter
10 and 11..
Long
Distance Trad
Greif,
Avner., “Cultural Beliefs and the Organization of Society: A
Historical and Theoretical Reflection on Collectivist and
Individualist Societies,” Journal
of Political Economy Vol. 102, No.5 (1994) 912-950.
Development
of Merchant Codes of Conduc
Milgrom,
Paul, Douglass C. North & Barry Weingast., “The Role of
Institutions in the Revival of Trade: Law Merchants, Private Judges
and The Champagne Fairs,” Economics
& Politics Vol. 2 (1990) 1-24.
Converting
Uncertainty to Risk - the Development of Marine Insurance
Bills
of Exchange, the Developments of Impersonal Capital Markets and the
growth of early banking
Overcoming
Moral Hazard, Adverse Selection and Agency Problems
Nathan,
Rosenberg & L.E. Birdzell., How the West Grew Rich, (NY:
Basic Books, 1985) pp. 113-143, 144-188.
Current
Issues: Sources of Growth
North,
Douglass., Structure and Change in Economic History (NY:
Norton, 1991) Chapter 13.
Orr,
Daniel & Thomas S. Ulen., “The Role of Trust and the Law in
Privatization,” The
Quarterly Review of Economics and Finance, Vol. 33, Special Issue,
(1993) 135-155.
Bardham,
Pranab., “The Nature of Institutional Impediments to Economic
Development,” California
at Berkeley, Dept. of Economics WP (March 1996).