Property Rights Approach to Government - Douglass C. North's Historic Economic Perspective on the Philosophy of the State

Seminar Paper , 2006 , 27 Pages , Grade: 1,7

Economics - History

The paper will give a general overview on Douglass C. North’s theoretical work during the last twenty years on economic history as well as on new institutions economics and institutional change. While the paper is more concerned on how North approaches the origin and development of the state via property rights it also will take his theory of institutional change and the way he emphasizes economies of scale and transaction costs into account.

Part One of this paper will give a short introduction into the topic of the philosophy of the state. This will be followed by North’s argumentation and thus his philosophy of the state derived in his numerous works.

To begin with, Part Two of this paper gives an introduction into North’s argumentation on the role of property rights for economic growth. Part Three will then explain what role government has in economic organization. The role of economies of scale for property rights and fiscal policies will be looked upon thereafter in Part Four. The circle will then be closed by linking economic growth and property rights with the development of the state. Analogously to North’s argumentation in his book “The Rise of the Western World” the paper takes a section of ten millennia in economic history in order to explain the tension between property rights and the role of government as North sees it. North’s model of the state will then be introduced in Part Six, followed by a short introduction into his Theory of Institutional Change in Part Seven of this paper.

A short critique will be given at the end.

Inhaltsverzeichnis (Table of Contents)

• I. INTRODUCTION
• II. PROPERTY RIGHTS AND THEIR ROLE FOR ECONOMIC GROWTH
• III. GOVERNMENT AND ITS ROLE IN ECONOMIC ORGANIZATION
  • 1. PUBLIC GOODS
  • 2. FREE-RIDER PROBLEM
• IV. THE ROLE OF ECONOMIES OF SCALE FOR PROPERTY RIGHTS AND FISCAL POLICIES
  • 1. THE EXISTENCE OF ECONOMIES OF SCALE ON THE MARKET. ECONOMIES OF SCALE INFLUENCE ON THE FISCAL POLICY
• V. FROM FEUDAL MANOR TO THE MODERN STATE
  • 1. 10TH CENTURY FEUDALISM
  • 2. THE MALTHUSIAN TRAP OF THE 13TH CENTURY
  • 3. FIRST CHANGES IN PROPERTY RIGHTS
  • 4. FAMINE, PESTILENCE AND WAR - FURTHER CHANGES IN PROPERTY RIGHTS
  • 5. THE EARLY MODERN PERIOD – 16TH AND 17TH CENTURY
    • i. Industrial Revolution
    • ii. Second Economic Revolution
• VI. A FRAMEWORK FOR ANALYZING ECONOMIC ORGANIZATION IN HISTORY. NORTHS MODEL OF THE STATE
  • 1. A MODEL FOR ECONOMIC GROWTH
  • 2. A THEORY OF THE STATE
    • i. North's model of the state
    • ii. A theory of transaction costs
    • iii. A theory of ideology
    • iv. Deficiencies
• VII. THEORY OF INSTITUTIONAL CHANGE
  • 1. UNDERLYING INSTITUTIONAL FRAMEWORK
  • 2. IMPLICATIONS FOR THE POLITICAL-ECONOMIC SYSTEM
  • 3. CHANGES OVER TIME
• VIII. SUMMARY AND CRITIQUE

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This paper delves into Douglass C. North's theoretical work on economic history, new institutional economics, and institutional change. The focus is on understanding how North approaches the emergence and evolution of the state through the lens of property rights, while also considering his theory of institutional change and its emphasis on economies of scale and transaction costs.

• The role of property rights in promoting economic growth
• The influence of the state on economic organization
• The impact of economies of scale on property rights and fiscal policies
• The historical development of property rights and the state
• North's framework for analyzing economic organization and his model of the state

Zusammenfassung der Kapitel (Chapter Summaries)

• I. INTRODUCTION: This chapter introduces the philosophy of the state and its various perspectives, highlighting different theories of state based on assumptions about human behavior. It then introduces North's contribution to neoclassical theory by incorporating transaction costs, rationality, and the time dimension.
• II. PROPERTY RIGHTS AND THEIR ROLE FOR ECONOMIC GROWTH: This chapter examines North's argument for the importance of property rights for economic growth, emphasizing that efficient economic organization relies on established property rights. The chapter also explores the concept of "true economic growth" and its relation to incentives and the social and private rates of return.
• III. GOVERNMENT AND ITS ROLE IN ECONOMIC ORGANIZATION: This chapter delves into the role of government in economic organization, focusing on the provision of public goods and the challenges of the free-rider problem.
• IV. THE ROLE OF ECONOMIES OF SCALE FOR PROPERTY RIGHTS AND FISCAL POLICIES: This chapter analyzes the influence of economies of scale on property rights and fiscal policies, considering the impact of economies of scale on market dynamics and the role of government in influencing market outcomes.
• V. FROM FEUDAL MANOR TO THE MODERN STATE: This chapter takes a historical journey, examining the evolution of property rights and the state over a period of ten millennia. The chapter looks at different periods, including feudalism, the Malthusian trap, and the Industrial Revolution, highlighting the interplay between property rights, government intervention, and economic development.
• VI. A FRAMEWORK FOR ANALYZING ECONOMIC ORGANIZATION IN HISTORY. NORTHS MODEL OF THE STATE: This chapter introduces North's model of the state, explaining its framework for analyzing economic organization and growth. The chapter also explores North's theory of transaction costs, ideology, and the limitations of his model.
• VII. THEORY OF INSTITUTIONAL CHANGE: This chapter delves into North's theory of institutional change, discussing the underlying institutional framework, its implications for the political-economic system, and how these institutions evolve over time.

Schlüsselwörter (Keywords)

This paper examines Douglass C. North's contributions to economic history and institutional economics, with a focus on property rights, the state, economic growth, transaction costs, economies of scale, and the theory of institutional change.

• College: Humboldt-University of Berlin
• Grade: 1,7
• Author: Nicole Petrick (Author)
• Publication Year: 2006
• Pages: 27
• Catalog Number: V73651
• ISBN (eBook): 9783638730846
• ISBN (Book): 9783640394104
• Language: English
• Tags: Property, Rights, Approach, Government, Douglass, North, Historic, Economic, Perspective, Philosophy, State