North & Weingast (1989)
Revision as of 13:02, 7 June 2011 by imported>Bo
Theory Questions:
What is the author's hypothesis?
The author believes that England was able to develop its economy and dominate the world because it had a secure property rights system. This enabled investment and growth.
The key threat to the property rights system was the monarchy -- who was unable to credibly commit upholding property rights. In particular, wars would frequently starve the monarchy of revenue -- thus tempting the monarch to violate property rights and expropriate money from the population (mainly the nobility).
The authors show that the Glorious Revolution introduced an institutional arrangement that strengthened property rights. The key institutional feature was the Parliament, which provided a veto point against the monarch.
