Understanding the Process of Economic Change (Princeton Economic History of the Western World) by North Douglass C

Author:North, Douglass C. [North, Douglass C.]
Language: eng
Format: mobi
Publisher: Princeton University Press
Published: 2005-01-02T16:00:00+00:00

FIGURE 7.12. Scientific Periodicals, 1780-Present. Source: Law and Kim (2003).

* Taken from the HOLLIS Catalog of Harvard University. Number of titles in HOLLIS Catalog equals the number of records returned from subject keyword searches of the HOLLIS Journal’s database.

The specialization and division of labor that has been a key feature of growth has as an essential feature specialization in knowledge, which has resulted in immense increase in human productivity. One indicator of this specialization in knowledge is the extraordinary growth of specialized scientific journals in the twentieth century (see figure 7.12). The integration of this specialized knowledge with low costs of transacting requires more than an effective price system. Institutions and organizations were necessary to supplement the price system where externalities, information asymmetries, and free rider problems had to be overcome. The increasingly dispersed knowledge of modern societies requires a complex structure of institutions and organizations to integrate and apply that knowledge. The implication is fundamental to this study: The growth of knowledge is dependent on complementary institutions which will facilitate and encourage such growth and there is nothing automatic about such development.

The foregoing discussion has been focused narrowly on knowledge directly relevant to the performance of economies; but as emphasized in early chapters, we must equally be concerned with knowledge in its wider context. We know much less about the overall growth of the stock of knowledge and about the way evolving perceptions and beliefs have influenced the direction of that growth. A thorny question is just what we mean by knowledge since human decision making has, throughout history, been guided by possessed beliefs that have more often than not proven to be incorrect. Indeed the heart of this study is about the uncertainty humans face and the way they have dealt with that uncertainty. Are beliefs knowledge? Medical beliefs in the early nineteenth century were as often counter-productive as productive, “centering, as they did, on treatment by means of emetics, cathartics, diuretics, and bleeding” (Rosenberg 1979, 13). And such erroneous beliefs are not just a historical problem; a survey in Bangladesh in 1986 found that less than 30 percent of mothers believed that contaminated food or water might be responsible for diarrhea (Easterlin 1996, 15).

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