Episode 27: Institutions and Economic Development

Episode #027
(53:48 min 49.2MB)

1993 Nobel Memorial Prize in Economics laureate Douglass C. North speaks on the formation of human societies. Restricted social orders continue to be the norm in most of the contemporary world. These limited access societies are ruled by elites through monopolies or rents. These coalitions are based on personal ties, hence he calls such societies “natural” states. However, a number of countries have developed into open access societies where competition in economic and political markets, instead of rent-creation, sustains civil order.

The challenge therefore is how to transit from a limited access society into an open access one. He explains that the answer is not deliberately imposing the characteristics of a free society on a restricted one. What is needed is to encourage a limited access society towards maturity by working within the constraints of its cultural heritage, informal norms and belief systems.

Read more on the natural state here.

The music is provided by Dieter Bachmann.

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