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Douglass C. North: An Appreciation

Our greatly respected colleague Nobel Laureate Professor Douglass C. North passed away on 23 November 2015, aged 95. He was Spencer T. Olin Professor in Arts and Sciences at Washington University in St. Louis and gave the very first WIDER Annual Lecture at the invitation of the then director of UNU-WIDER, Professor Andrea Cornia. This initiated a series of annual lectures — some 19 so far — that has become very important to the international profile of UNU-WIDER over the years.

Professor North’s major interest was the evolution of economic and political institutions. He was highly influential in encouraging economists to look again at the institutional underpinnings of economic prosperity— in particular, the way in which transaction costs in market exchanges encourage the formation of institutions, such as secure property rights that reduce such costs. His work became highly influential in the late 1980s and 1990s, as the transition economies of East Europe, the former Soviet Union, and China, engaged in deep, and often problematic, market reforms with varying degrees of success. His emphasis on informal institutions (‘norms’) as being as important (often more important) than formal rules embodied in formal institutions was highly relevant in explanations of success and failure in economic transition.

In 1997, in giving the WIDER Annual Lecture, Douglass North stressed the importance of understanding the economic significance of institutions. The lecture was published later entitled ‘The Contribution of the New Institutional Economics to an Understanding of the Transition Problem’. This was at a time when the movement of the centrally-planned economies towards market economies was still ongoing, with many questioning the early enthusiasm for market liberalization in the context of very weak regulatory institutions. In the annual lecture he wrote: ‘Policy makers were confronted not only with restructuring an entire society, but also with the blunt instrument that is inherent in policy changes that can only alter the formal rules but cannot alter the accompanying norms and even have had only limited success in inducing enforcement of policies’. This is as true today as it was nearly twenty years ago and has application to a wide range of economic situations, not least those of countries emerging from conflict and violence.

Professor North was the co-recipient (with Robert William Fogel) of the 1993 Nobel Memorial Prize in Economic Sciences for his research on the economic history of the USA and Europe, as well as for his significant contributions to understanding how economic and political institutions change over time. His most recent publications included Understanding the Process of Economic Change (2005), and Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (2009).

In a very long and full life, Douglass North showed the importance of stepping outside the intellectual mainstream, of deep and wide scholarly initiative, and of focusing attention on some of the most important questions of the time.

Tony Addison, Deputy Director-Chief Economist, UNU-WIDER