Quandaries of War and of Union in North America: 1763 to 1861

Abstract

The key theoretical idea underlying this article is that an institutional equilibrium in the economic domain can be destroyed or transformed by rapid belief changes in the political domain. Events circa 1776, 1787, and 1860 in the United States are all examined in an attempt to understand the interaction between these economic and political transformations. More explicitly, the author views the economic domain as fundamentally three dimensional, characterized by the use of land, labor, and capital. In contrast to general economic reasoning, he considers the equilibrium in this domain to be institutional, rather than the consequence of the interplay of economic forces. Threats, generated in the political domain, have consequences in the economic domain, and these in turn induce belief changes in the political domain. Such belief changes may bring about war, or constitutional disequilibrium, leading possibly to a new political economic stasis.