Institutions and Economic Development: Economic History and Human Arrangement

This chapter is essentially a survey of a number of controversies and debates in economic history touching on the general issue of the importance of institutions in the course of economic change and development since the sixteenth century. Its context is, of course, the general theme of this book: the respective role of institutions and markets in economic development, a topic recently revived as a central theme of economic theory. But since my perspective is that of the economic historian rather than the economist, it is perhaps worthwhile emphasizing that, although economic historians have always and invariably taken it for granted that institutions (including, of course, attitudes) have played a vital role in economic processes, they very rarely deploy the sort of systematic, analytical approach which now characterizes so much of the approach of modern economics. Nevertheless, the fact remains that much debate in economic history is, at bottom, driven by disagreement as to where the balance lies between institutions shaping economic activity (that is, playing an exogenous role) or being shaped by economic imperatives (that is, playing an endogenous role). At the same time, the fact remains that economic historians have rarely challenged the significance of institutions. Indeed, that is what the subject’s critics often say: that economic history is too atheoretical, descriptive and narrative.