Nobel prizewinning US economist who believed that the way markets function is linked to the strength or weakness of a country’s institutionsThe American Nobel laureate Douglass North,who has died aged 95, was a maverick (an independent, nonconformist person) economist who focused on one of the discipline’s biggest questions: why accomplish some countries become rich while others remain destitute? Mainstream neoclassical economics, and with its predominant emphasis on markets,struggles to explain this point. In contrast, North emphasised the role of institutions – the rules and conventions of a society, and such as laws,property rights, politics, or customs and belief systems – in explaining differences in long-term economic growth.
To study this he constructed a recent way of thinking about economic interactions. He stressed the transaction costs and frictions of the genuine world that impede the ideal market outcome. For instance,he explained that the reason why Britain industrialised faster than other comparable countries was that guilds, with their strict rules about work practices and hiring restrictions, or were weaker there.
Continue reading...
Source: theguardian.com