From Property Rights and Institutions, to Beliefs and Social Orders : Revisiting Douglass North’s Approach to Development

Douglass North is a uniquely creative and inspiring social scientist. The impact of North’s ideas in the area development cooperation can hardly be overstated. By stressing the role of institutions, this scholar has immensely influenced development thinking and practice, providing intellectual underpinnings to the dominant good governance paradigm. North’s landmark Institutions, Institutional Change and Economic Performance is one of the most cited books in the social sciences. This paper contends, however, that North’s ideas are widely cited, but not always properly understood. Moreover, some of his core arguments have been overlooked, ignored, or misrepresented, not least by the aid community. This paper provides a systematic assessment of the content and evolution of North’s writings, from his pioneering works on property rights and institutions in the 1970s, to his recent scholarship on beliefs and political violence. The focus is on identifying the key analytical problems and remaining challenges of the institutional approach to development. The paper also takes issue with the inconsistencies and policy gaps of the good governance consensus. In doing so, it also reflects upon the future of the research program on institutions and development. Would the renewed emphasis on politics, conflict, inequality, and context lead to an improved governance agenda or to a shift towards a post-institutionalist paradigm?

Phase Diagram for Turbulent Transport: Sampling Drift, Eddy Diffusivity and Variational Principles

We study the long-time, large scale transport in a three-parameter family of isotropic, incompressible velocity fields with power-law spectra. Scaling law for transport is characterized by the scaling exponent $q$ and the Hurst exponent $H$, as functions of the parameters. The parameter space is divided into regimes of scaling laws of different {\em functional forms} of the scaling exponent and the Hurst exponent. We present the full three-dimensional phase diagram. The limiting process is one of three kinds: Brownian motion ($H=1/2$), persistent fractional Brownian motions ($1/2<H<1$) and regular (or smooth) motion (H=1). We discover that a critical wave number divides the infrared cutoffs into three categories, critical, subcritical and supercritical; they give rise to different scaling laws and phase diagrams. We introduce the notions of sampling drift and eddy diffusivity, and formulate variational principles to estimate the eddy diffusivity. We show that fractional Brownian motions result from a dominant sampling drift

Gordon Unbound: The Heresthetic of Central Bank Independence in Britain

This article combines theory and historical narratives to shed new light on the politics surrounding the making of central bank independence in contemporary Britain. Its central argument is that Gordon Brown’s decision to rewrite the British monetary constitution in May 1997 constituted an act of political manipulation in a Rikerian sense. The institutional change involved can be conceptualized as a heresthetic move, that is, structuring the process of the political game so you can win. The incoming government removed a difficult issue from the realm of party politics in order to signal competence and enforce internal discipline in the context of a government that was moving toward the right. But building on Elster’s constraint theory, the paper argues that the institutional reform was not a case of self-binding in an intentional sense. Rather, Brown adopted a precommitment strategy that was aimed at binding others, including members of his government. The reform had dual consequences: it was not only constraining, it was also enabling. The institutionalization of discipline enabled New Labour to achieve key economic and political goals. By revisiting the political rationality of precommitment, this paper questions the dominant credibility story underlying the choice of monetary and fiscal institutions.

Governing the Irish Economy : A Triple Crisis

The international economic crisis hit Ireland hard from 2007 on. Ireland’s membership of the Euro had a significant effect on the policy configuration in the run-up to the crisis, as this had shaped credit availability, bank incentives, fiscal priorities, and wage bargaining practices in a variety of ways. But domestic political choices shaped the terms on which Ireland experienced the crisis. The prior configuration of domestic policy choices, the structure of decision-making, and the influence of organized interests over government, all play a vital role in explaining the scale and severity of crisis. Indeed, this paper argues that Ireland has had to manage not one economic crisis but three – financial, fiscal, and competitiveness. Initial recourse to the orthodox strategies of spending cuts and cost containment did not contain the spread of the crisis, and in November 2010 Ireland entered an EU-IMF loan agreement. This paper outlines the pathways to this outcome

Explaining Variations in Patterns of Fiscal Consolidation

The comparative study of debt and fiscal consolidation has acquired a new focus with the re-emergence of debt as a major problem consequent upon the global financial crisis. This leads us to re-evaluate the literature on fiscal consolidation that flourished during the 1980s and 1990s. We identify two broad schools of analysis, one which segments episodes of fiscal change into discrete observations, the other comparing budget profiles at two points in time. We argue that both strategies miss the dynamic features of government strategy, especially in the choices made between expenditure-based and revenue-based fiscal consolidation strategies. We propose a focus on pathways rather than episodes of adjustment, to recapture what Pierson terms 'politics in time'. We draw on classical explanatory tools of comparative political economy, including structures of interest intermediation, the role of ideas in shaping the set of feasible policy choices, and the situation of national economies in the international political economy. We support our argument with qualitative data based on paired comparisons of Ireland and Britain, and Greece and Spain.

The European Context of Ireland’s Economic Crisis

The current economic crisis has hit all European countries hard, but some are more severely affected than others. The problems manifest in European peripheral countries that are also members of the Eurozone, that is, Ireland, Spain, and Greece, have roots in domestic policy mistakes. However, the European context of these policy profiles also needs to be taken into account. The creation of the Euro initially yielded large credibility gains for the weaker economies, extending low interest rates across the Eurozone. But it also introduced a set of perverse incentives toward fiscal expansion which were supposed to be managed at domestic level. Weak European coordinating capacity meant there were few effective external disciplines on national decision making. The sanctions built into the Stability and Growth Pact proved more controversial and, therefore, less constraining than originally envisaged. The problems accumulating in the weaker economies made them particularly exposed to crisis when the downturn came. The crisis is not merely one of peripheral economies’ policy errors, but extends to the design of European decision making and the management of monetary union, and to the underlying structural differences in relative trade capabilities between Eurozone member states. These issues are explored with reference to the Irish case: the crisis of the Irish and other peripheral economies points to a number of unresolved difficulties at the heart of European politics.

Ballistic aggregation: a solvable model of irreversible many particles dynamics

The adhesive dynamics of a one-dimensional aggregating gas of point particles is rigorously described. The infinite hierarchy of kinetic equations for the distributions of clusters of nearest neighbours is shown to be equivalent to a system of two coupled equations for a large class of initial conditions. The solution to these nonlinear equations is found by a direct construction of the relevant probability distributions in the limit of a continuous initial mass distribution. We show that those limiting distributions are identical to those of the statistics of shocks in the Burgers turbulence. The analysis relies on a mapping on a Brownian motion problem with parabolic constraints.Comment: 23 pages, 6 figures include