A dominant paradigm these days in economics is “neo-institutionalism,” pushed for decades by Douglass North (1920–2015; Nobel 1993) and now the orthodoxy at the World Bank. It says, like a recipe book, “Add institutions and stir.” Institutions such as sharecropping or land reform or modern courts are seen as causal.
Much of the evidence is historical. Much of it is mistaken.
An influential scientific paper of 1989 by North and the political scientist Barry Weingast, for example, supposes that English law was radically altered by the so-called Glorious Revolution of 1688. But it wasn’t. Weingast claimed in another essay, startlingly, that “the medieval world lacked the standard neoclassical assumptions of secure property rights, contract enforcement, rule of law, and a lack of violence.” Few medieval historians would agree. Weingast’s assertions are of a piece with the North-and-Weingast notion in their joint paper and subsequent books that 1688 was a New Day in the institutions of the law and the economy. The notion is adopted by neo-institutionalist economists who have not themselves looked into the evidence. But the legal historians, like the social and economic historians of medieval Europe, have not agreed with North, Weingast, and their followers such as Daron Acemoglu (Nobel 2024) that English law was notably defective before the Glorious Revolution. It wasn’t. And so the modern world was not, as the neo-institutionalists suppose, caused by better property rights. They were already “better.”
The associated case by North–Weingast for “legal centralism,” retailed for example in books by Acemoglu and James Robinson, is also not justified by the historical evidence. Weingast claimed that “none of these conditions [for markets] can exist without government.” The origin of property itself is at issue here. James VI of Scotland, soon to be James I of England, claimed in The True Law of Free Monarchies (1598), that kings arose “before any estates or ranks of men, before any parliaments were holden, or laws made, and by them was the land distributed, which at first was wholly theirs. . . . And so it follows of necessity that kings were the authors and makers of the laws, and not the laws of the kings.”
In fact and in logic and in history, King James, like North and Weingast, was mistaken. The evidence is overwhelming that private property was big from the earliest human times, having nothing to do with the top-down supposition of James VI. “It takes an overly narrow view of human history,” write Kimbrough, Smith, and Wilson in a 2010 paper, “to argue that no property existed prior to the creation of law and the state. Both agriculture and animal husbandry [both requiring clear private property] far pre-date the state.” Bart Wilson argues in a recent book persuasively that property is anyway as old as complex tool-making.
Mainly ethics—not mainly law viewed as institutional enactments by the masters in court or parliament—holds societies together. Changes in the ethics push societies forward.
Or back.
Weekly column in Folha de São Paulo, Brazil
Translated into Portuguese for the newspaper.
This historical argument is convincing, and it may have a cleaner derivation than historians alone provide.
Property norms are stable equilibria in repeated interaction games, as Ostrom demonstrated. They solve the coordination problem of who gets what, and on what terms, in ways that predate any centralised enforcement mechanism. The state didn't create property; it eventually formalised and controlled the adjudication of property disputes.
Which means systems don't change state in response to single events. Interaction rules that produce outcomes accumulate through iterated rounds of trial, error, and selection. If English property rights were already doing genuine work before 1688, then the Glorious Revolution can't be the causal hinge that North and Weingast claim it to be. What it plausibly did was serve as a common-knowledge event: making existing norms not merely recognised but publicly known to be recognised, which can shift behaviour even when the underlying rights haven't changed, and, of course, increase their legibility to many economists constructing origin stories several centuries later.
The same logic extends to the ethics argument. My read is that ethics don't float free. Norms persist where reputational information travels and defectors can be excluded, suggesting that the ethical shift and structural conditions co-evolved, neither causing the other but each amplifying the other. Grant that, and the move that dissolves the linear framework isn't to reverse the arrow: it's to recognise that ethics and structural conditions are mutually constitutive. Neither caused the other; each made the other possible.