A Darwinian Framework for the Economic Analysis of Institutional Change in History

Adopting a critical stance towards North's recent theory of institutional change and economic performance, the paper proposes a concept of global efficiency which encompasses not only standard allocative efficiency, but also the efficiency of political institutions in competition among groups. A Darwinian theory of institutions is unfolded in eight propositions which are discussed in some detail. Core concepts include competition among rules and institutions, hierarchical selection, power as proximate goal and criterion of adaptive success, the role of cognitive models, and unintended effects. In particular, the emergence of the state is mostly an unintended effect of the strive for and conflicts over power (in particular, warfare), and in many cases economic institutions emerge as unintended effects of the evolution of the state. Enpirically, a major issue in the Darwinian approach to institutional change is to relate conventional measures of economic efficiency with ecological indicators such as measures of adaptive success proposed by Corning