Tuesday, July 05, 2005

New ideas not in old bottles

In 1970 (and practically in another galaxy), the grad students that I knew were grappling with Burmeister and Dobell's Mathematical Theories of Economic Growth. About the only thing that now rings a bell is Robert Solow's introduction. The founding member of the neo-classical economic growth school had kind words for his students' work, noted all the intellectual progress since his own, and ended by extrapolating and noting that the mind boggles when thinking about how far his students' students might go.

Neo-classical growth economics has been supplanted (thank God) by the New Institutional Economics which asks, bigger questions, looks to anthropology, cognitive science, geography, history, you name it -- and is a lot more fun.

Douglass North's just published Understanding the Process of Economic Change (thanks, Lanlan) is one of those books that I plan to re-read -- for the pure delight of its many fascinating insights and the thinking that they prompt.

Institutions matter, as does culture, and smart people have good ideas on how each evolve. The jargony "multi-disciplinary" now makes sense -- and sets the stage for lots more interesting work as we continue to grapple with differences in the performance and the wealth of nations.