The New Institutionalism

The theory of the firm and the theory of the family represent two of the earliest contributions to the new institutionalism. [...] Both critiques lead to positive insights, the first regarding the importance of time and the second the importance of politics. [...] Institutions? Just what counts as an institution? In The Economic Origins of the Western World, North makes little effort to define the term; his discussion suggests, however, that the term applies to whatever brings the “private rate of return close to the social rate of return.” (North and Thomas 1973, p. [...] Uganda and Kenya in the 1970s: As in Kenya, the coffee industry in Uganda was governed by a marketing board; indeed, the enabling statutes of the two boards are virtually identical, empowering them both to serve as sole purchaser of the crop, to provide research and agricultural services, and to promote, in these and other ways, the prosperity of the coffee sector. [...] In exchange for the votes that kept them in office, they used public power to enhance the wealth of their constituents and to defend the wealth of the industry from efforts by other regions to lay claim to its resources.