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A Conceptual Framework for Interpreting Recorded Human History

Author

Listed:
  • Douglass C. North
  • John Joseph Wallis
  • Barry R. Weingast

Abstract

Neither economics nor political science can explain the process of modern social development. The fact that developed societies always have developed economies and developed polities suggests that the connection between economics and politics must be a fundamental part of the development process. This paper develops an integrated theory of economics and politics. We show how, beginning 10,000 years ago, limited access social orders developed that were able to control violence, provide order, and allow greater production through specialization and exchange. Limited access orders provide order by using the political system to limit economic entry to create rents, and then using the rents to stabilize the political system and limit violence. We call this type of political economy arrangement a natural state. It appears to be the natural way that human societies are organized, even in most of the contemporary world. In contrast, a handful of developed societies have developed open access social orders. In these societies, open access and entry into economic and political organizations sustains economic and political competition. Social order is sustained by competition rather than rent-creation. The key to understanding modern social development is understanding the transition from limited to open access social orders, which only a handful of countries have managed since WWII.

Suggested Citation

  • Douglass C. North & John Joseph Wallis & Barry R. Weingast, 2006. "A Conceptual Framework for Interpreting Recorded Human History," NBER Working Papers 12795, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12795
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    References listed on IDEAS

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    1. Naomi R. Lamoreaux & Jean-Laurent Rosenthal, 2004. "Legal Regime and Business's Organizational Choice: A Comparison of France and the United States," NBER Working Papers 10288, National Bureau of Economic Research, Inc.
    2. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    3. North, D-C, 1997. "The Process of Economic Change," Research Paper 128, World Institute for Development Economics Research.
    4. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 158-183, December.
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    More about this item

    JEL classification:

    • A0 - General Economics and Teaching - - General
    • K0 - Law and Economics - - General
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • N0 - Economic History - - General
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • P0 - Economic Systems - - General
    • P1 - Economic Systems - - Capitalist Systems
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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