Lecture by Professor Douglas North

Speaker: Professor Douglas North

Key Highlights

Dean of Lee Kuan Yew School of Public Policy, Keshawn Maboob Ani, introduced Professor Douglas North.
Emphasized audience members to silence their cell phones to avoid distractions.
Mentioned how Professor North's life story defies the typical Singapore model of success.

Early Life: Nomadic childhood, born in Cambridge, Massachusetts; moved across the USA, Europe, and Canada due to his father's business.
Education: Parents did not complete high school but valued good education. North aimed to be a photographer; won several prizes in an international competition.
Higher Education: Offered a place at Harvard but chose UC Berkeley. His undergraduate record was slightly better than a C average with a triple major in Political Science, Philosophy, and Economics.
World War II: A pacifist, joined the Merchant Marine as a navigator. Spent his time reading and decided to become an economist.
Post-War: Returned to UC Berkeley for graduate studies, clear about wanting to improve global societies through economics.

Research Fellowship: 1956, invited as a research fellow at the National Bureau of Economic Research (NBER), where he met leading economists.
Nobel Prize: Won the Nobel Prize in Economics in 1993 along with Bob Fogel.
Influence in Governance: Advocated for incorporating good governance in public policy.
New Institutional Economics: Key proponent, explores how institutions, governance, organizations, and public policies are interconnected.

Economic Development Failures: Despite spending over $150 billion on global economic development, success has been limited.
Core Issue: The need for increased productivity to enhance economic status.
Institutions: Well-defined property rights, effective judicial systems—essential but insufficient alone.

Beliefs: How we understand and interpret the world around us, affected by individual and collective experiences.
Time: Evolution of beliefs over time shapes cultural and institutional frameworks.
Culture: Beliefs and institutions inherited from the past that constrain present-day choices.
Institutions: Structure human interaction through formal rules, informal norms, and enforcement mechanisms.

Three Fundamental Social Orders: Primitive Societies, Natural States (Limited-Access), Open-Access Societies.
Focus mainly on two: Natural States (Limited-Access) and Open-Access Societies.

Predominant since the Agricultural Revolution (~8000 BC).
Characterized by elites preventing violence through cooperation and rent-seeking.
Types: Fragile, Stable, Mature. Each represents differing levels of institutional complexity and stability.

Emerged recently, initially in Western Europe (Netherlands, England, France).
Defined by competition in economic and political markets, fostering continual innovation (Joseph Schumpeter’s ‘creative destruction’).
Low transaction costs and impersonal knowledge/exchange are key features.

Transition from Limited-Access to Open-Access societies is complex and gradual.
Steps for Transition:
- Establish Property Rights, extend to larger groups.
- Development of Autonomous Organizations.
- Military under Civilian Control.

China vs. India: Different methods from Western examples. China’s transition differs sharply from India.
Globalization: Pros and cons in the context of open and limited-access societies.

Dynamic Process: Societal evolution and change are continuous and context-specific.
Nonlinear Progress: Emphasized the importance of adaptability and continuous assessment.
Q&A Session: Addressed questions on topics such as Marxism, competition, and specific country contexts like South Africa and India.