North’s Early Life and Education
Douglass Cecil North (1920–2015) was born in Cambridge, Massachusetts. His father was an insurance company executive who was often relocated due to his work.
Growing up, North lived in New York City and Wallingford, Connecticut, in the US, as well as Ottawa, in Canada, and Lausanne, in Switzerland.
North received his secondary education from private boarding schools in Ottawa and in Wallingford.
North’s father was relocated to the West Coast just as the son was preparing to enter college. As a result, the future economist turned down an offer from Harvard in order to attend the University of California–Berkeley.
In 1942, North received his bachelor’s degree from UC–Berkeley with a triple major in political science, philosophy and economics.
Upon graduation, he joined the US Merchant Marine, attended their officer training academy for a year, and served for three more years in the Pacific theater as a navigator until the end of World War II.
After the war, North returned to UC–Berkeley, where he obtained his PhD in economics in 1952.
North’s Career
North’s first teaching position was at the University of Washington, where he taught from 1951 until 1960.
In 1960, North was appointed a professor of economics at the University of Washington (UW), where he taught until 1983. He served as chairman of the economics department at UW from 1967 through 1979.
During the last three years of his tenure at UW, North also held joint appointments, first at Rice University in Houston, Texas, and then at Cambridge University in the UK.
In 1983, North moved to Washington University in St. Louis, Missouri, where he held the Henry R. Luce Professor of Law and Liberty chair in the Department of Economics, a position he held until his retirement in 1990.
Inn 1993, North was awarded, together with Robert Fogel, the Nobel Memorial Prize in Economic Sciences. His Nobel lecture, entitled “Economic Performance Through Time,” was published the following year in the American Economic Review (see “Selected Works by North” below).
In 1997, North co-founded the International Society for the New Institutional Economics (ISNIE), along with Ronald Coase and Oliver Williamson.
North’s Ideas
North’s academic work was focused on the impact of institutions on the economy, especially from a historical perspective.
Among the more specific research topics that North cultivated, we may mention economic organization, the institutional basis of markets, transaction costs, property rights, and economic development in developing countries.
North is considered to be the most important founding father of the New Institutional Economics (NIE). NIE may be defined by its emphasis on the following theoretical prescriptions and perspectives:
- Economic analysis ought to be extended to the “institutions”—meaning the social norms and mores and legal rules and regulations—which underlie economic activity.
- Economic analysis ought also to be extended beyond the neoclassical model of the “utility-maximizing” rational agent, by taking into consideration such factors as the role of culture in economic development.
- Economic analysis ought to recognize that rational agents have various kinds of cognitive limitations, including lack of complete information and difficulty in monitoring and enforcing agreements.
- Economic analysis must recognize the reciprocal action of the above factors on institutions themselves, which often come into existence as a means of dealing with transaction costs.
In addition to the foregoing, NIE rejects the following claims outright:
- that the state is a neutral economic actor (on the contrary, the state can very well facilitate or hinder the effectiveness of institutions)
- that there are ever zero transaction costs
- that economic actors have fixed preferences
Selected Works by North
1. Works Authored or Co-authored by North
The Economic Growth of the United States, 1790–1860 (1961).
Growth and Welfare in the American Past; A New Economic History (1966).
Institutional Change and American Economic Growth, with Lance E. Davis (1971).
The Rise of the Western World: A New Economic History, with Robert Paul Thomas (1973).
Abortion, Baseball and Weed: Economic Issues of Our Times, with Roger LeRoy Miller (1973).
Structure and Change in Economic History (1982).
“Institutions and Economic Growth: An Historical Introduction,” World Development, 17: 1319–1332 (1989).
Institutions, Institutional Change and Economic Performance (1990).
“Institutions,” Journal of Economic Perspectives, 5: 97–112 (1991).
Transaction Costs, Institutions, and Economic Performance (out of print) (1992).
“Economic Performance Through Time,” American Economic Review, 84: 359–68 (1994).
“The Role of Institutions in Economic Development,” Geneva, Switzerland: UN Economic Commission for Europe, Discussion Paper Series No. 2003.2 (2003).
Understanding the Process of Economic Change (2005).
Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History, with John Joseph Wallis and Barry R. Weingast (2009).
Economics of Public Issues, with Roger LeRoy Miller and Daniel K. Benjamin (twentieth edition: 2017).
2. Book Co-edited by North
Empirical Studies in Institutional Change, with Lee J. Alston and Thráinn Eggertsson (1996).
Selected Works about North
Field, Alexander J., “The Problem with Neoclassical Institutional Economics: A Critique with Special Reference to the North-Thomas Model of pre-1500 Europe,” Explorations in Economic History, 18: 174–98 (1981).
Field, Alexander J., “Douglass North,” in David A. Clark, ed., The Elgar Companion to Development Studies. Cheltenham, UK: Edward Elgar Publishing; pp. 423–426 (2006).
Galiani, Sebastian and Itai Sened, eds., Institutions, Property Rights, and Economic Growth: The Legacy of Douglass North (2014).
Krul, Matthijs, The New Institutionalist Economic History of Douglass C. North: A Critical Interpretation (2018).