Explaining Long Term Economic Change

A concise and accessible examination of the established models used to explain long-term and large-scale economic change.

This book contains the most sustained and serious attack on mainstream, neoclassical economics in more than forty years. Nelson and Winter focus their critique on the basic question of how firms and industries change overtime. They marshal significant objections to the fundamental neoclassical assumptions of profit maximization and market equilibrium, which they find ineffective in the analysis of technological innovation and the dynamics of competition among firms. To replace these assumptions, they borrow from biology the concept of natural selection to construct a precise and detailed evolutionary theory of business behavior. They grant that films are motivated by profit and engage in search for ways of improving profits, but they do not consider them to be profit maximizing. Likewise, they emphasize the tendency for the more profitable firms to drive the less profitable ones out of business, but they do not focus their analysis on hypothetical states of industry equilibrium. The results of their new paradigm and analytical framework are impressive. Not only have they been able to develop more coherent and powerful models of competitive firm dynamics under conditions of growth and technological change, but their approach is compatible with findings in psychology and other social sciences. Finally, their work has important implications for welfare economics and for government policy toward industry.

Recently, a growing body of work on "law and finance" and "legal origins" has highlighted the role of formal legal institutions in shaping financial institutions. However, these writings have focused largely on Europe, neglecting important non-Western traditions that prevail in a large part of the world. Law and Long-Term Economic Change brings together a group of leading scholars from economics, economic history, law, and area studies to develop a unique, global and, long-term perspective on the linkage between law and economic change. Covering the regions of Western Europe, East and South Asia, and the Middle East, the chapters explore major themes regarding the nature and evolution of different legal regimes; their relationship with the state or organized religion; the definition and interpretation of ownership and property rights; the functioning of courts, and other mechanisms for dispute resolution and contract enforcement; and the complex dynamics of legal transplantations through processes such as colonization. The text makes clear that the development of legal traditions and institutions—as embodiments of cultural values and norms—exerts a strong effect on long-term economic change. And it demonstrates that a good understanding of legal origins around the world enriches any debate about Great Divergence in the early modern era, as well as development and underdevelopment in 19th-20th century Eurasia.

This chapter discusses various past and future aspects of the global economy. There has been a huge transformation of the global economy in the last several years. Articles on the future of energy in the global economy by Jeffrey Ball and on measuring inequality by Jonathan Ostry and Andrew Berg are also illustrated. Since the 2008 global crisis, global economists must change the way they look at the world.

This monograph is about an exciting episode in the intellectual history of Europe: the vigorous debate among leading Polish historians on the sources of the economic development and non-development, including the origins of economic divisions within Europe. The work covers nearly fifty years of this debate between the publication of two pivotal works in 1947 and 1994. Anna Sosnowska provides an insightful interpretation of how local and generational experience shaped the notions of post-1945 Polish historians about Eastern European backwardness, and how their debate influenced Western historical sociology, social theories of development and dependency in peripheral areas, and the image of Eastern Europe in Western, Marxist-inspired social science. Although created under the adverse conditions of state socialism and censorship, this body of scholarship had an important repercussion in international social science of the post-war period, contributing an emphasis on international comparisons, as well as a stress on social theory and explanations. Sosnowska's analysis also helps to understand current differences that lead to conflicts between Europe’s richest and economically most developed core and its southern and eastern peripheries. The historians she studies also investigated analogies between paths in Eastern Europe and regions of West Africa, Latin America and East Asia.

Shows how thinking in evolutionary terms enhances our understanding of the economic and social change taking place at all levels.