Ideas not Institutions, part 2

2008-01-15 · Original WordPress address

[T]he Malthusian epoch is governed by economic forces that will inevitably generate industrialisation and a transition to sustained economic growth. The rapidity of this process may be influenced by different factors including institutions. But institutions, by themselves, do not trigger a take-off from stagnation to sustained economic growth. They simply affect the speed of this transition. Institutions can be viewed as the oil that lubricates the wheels of a train that is already in motion. The presence or absence of oil may affect the speed of the train, but it does not trigger its initial motion.