A comment on the north and david papers

Abstract

North’s title-Economic Growth: What Have We Learned from the Past’?makes the actual content of the paper a surprise. Aside from a single introductory paragraph, the essay is concerned entirely with property rights and their effects on incentives and forms of government. There is no review of empirical research on amounts of growth, differences among times and places in growth rates or in levels of per capita output, changes in the structure of output and employment that accompany growth, sources of growth, or sensitivity of output to changes in its various determinants. There is almost nothing about income distribution and nothing about advances in living standards or other consequences of growth. If one were to take North literally, one might conclude that economists have learned nothing at all about growth. For he indicates that the ignorance of property rights, the subject he does discuss, is abysmal while growth analysis can go nowhere without a theory of property rights and, therefore, a theory of the state-neither of which is available. For me to discuss the subject of North’s title would require a new paper rather than a comment, because he does not discuss 98 percent of what I think the title should cover. Rather, I shall treat the essay as if it had a title like “The Effect of Property Rights on Incentives and Growth.” I am no expert on that subject but will offer a few comments and questions. First, one should be grateful to North for stressing property rights and incentives. There is no question that they are important determinants of output levels and, under some circumstances, of growth rates. The historical review he provides serves to recall some of the important changes that have occurred in the last hundred centuries, and it makes interesting reading. But, is it not necessary to specify more precisely than is done in these anecdotes who it is that property is to be defended against, if generalizations about effects on incentives are to be drawn from such a review? There is protection of the property of an entire community or nation against confiscation or destruction by another community or by “barbarians at the gates.” There is protection of the property of a private individual or family