- Chs. 4, 7 in Acemoglu and Robinson, 2012, Why Nations Fail
- Milgrom, North, and Weingast (1990), “The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champaigne Fairs”
- Grief (1989), “Reputation and Coalitions in Medieval Trade: the Case of the Maghribi Traders”
- Grief, Milgrom, and Weingast (1994), “Coordination, Commitment, and Enforcement: The Case of the Merchant Guild”
- Ogilvie (2014), “The Economics of Guilds”
- Benson (1989), “The Spontaneous Evolution of Commercial Law”
- Read the quotes by classical economists (Smith, Hume, Bastiat) on mercantilism, starting on slide 153
Questions to Read For:
Why did the Industrial Revolution occur England in the 1800s? Why not elsewhere, or at other times?
What remnants of feudal ideas, institutions, and customs remain today?
Was feudalism optimal or efficient for societies at the time, given their constraints?
Why did feudalism last so long? What prevented an escape to another (better?) system?
How specifically did feudalism transition into something else – mercantilism, capitalism, socialism, etc. What were the main mechanisms of change?
How do reforms come about? How are they made incentive-compatible, so that the elite (that would lose power during reform) permit it? How well do Olson and Weingast’s models fit feudalism, and what will come after (or remain today in some countries)?
Were monopolies, guilds, created rents and rent-seeking, and other restrictions on trade as bad as we economists would say they are today in markets?
What are the legacies of colonialism and European imperialism?
How did European colonists decide what kind of colony to set up (inclusive or extractive, to use Acemolgu & Robinson’s terms)?
Most (if not all) of the inclusive colonies tended to be British. Is that an important factor?
Mercantilism as a coherent philosophy is archaic today. But how are some of its economic tenets (e.g. positive trade surplus) practiced or believed today?
In what ways are today’s developing countries mercantilist? In what ways are they NWW’s natural states?
Adam Smith, Bastiat, and the Classical Economists ridiculed Mercantilism to a pulp, such that no serious economist today supports mercantilist ideas about trade. But how should we view Mercantilism in the context of its time?
Ending mercantilism is simple, in theory - get rid of trade barriers, monopoly privileges, and other restrictions. Why is it so hard? And in particular, should we encourage developing countries to do this?
How does the American Revolution, Constitutional Convention, and other “democratic popular revolutions” fit in the logic of natural states and elites? Or do they?
Now that we’ve explored geography and institutions more, does geography affect development, perhaps through institutions? Consider Acemoglu and Robinson’s arguments about the different types of colonies - was that choice affected by geography?
Below, you can find the slides in two formats. Clicking the image will bring you to the html version of the slides in a new tab. Note while in going through the slides, you can type h to see a special list of viewing options, and type o for an outline view of all the slides.
The lower button will allow you to download a PDF version of the slides. I suggest printing the slides beforehand and using them to take additional notes in class (not everything is in the slides)!