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I received word today that Douglass North passed away yesterday at the age of 95 (obit here). Professor North shared the Nobel Prize in Economic with Robert Fogel in 1993 for his work in economic history on the role of institutions in shaping economic development and performance.

Doug was one of my first professors in graduate school at Washington University. Many of us in our first year crammed into Doug’s economic history class for fear that he might retire and we not get the chance to study under him. Little did we expect that he would continue teaching into his DoughNorth_color_300-doc80s. The text for our class was the pre-publication manuscript of his book, Institutions, Institutional Change and Economic Performance. Doug’s course offered an interesting juxtaposition to the traditional neoclassical microeconomics course for first-year PhD students. His work challenged the simplifying assumptions of the neoclassical system and shed a whole new light on understanding economic history, development and performance. I still remember that day in October 1993 when the department was abuzz with the announcement that Doug had received the Nobel Prize. It was affirming and inspiring.

As I started work on my dissertation, I had hoped to incorporate a historical component on the early development of crude oil futures trading in the 1930s so I could get Doug involved on my committee. Unfortunately, there was not enough information still available to provide any analysis (there was one news reference to a new crude futures exchange, but nothing more–and the historical records of the NY Mercantile Exchange had been lost in a fire).and I had to focus solely on the deregulatory period of the late 1970s and early 1980s. I remember joking at one of our economic history workshops that I wasn’t sure if it counted as economic history since it happened during Doug’s lifetime.

Doug was one of the founding conspirators for the International Society for New Institutional Economics (now the Society for Institutional & Organizational Economics) in 1997, along with Ronald Coase and Oliver Williamson. Although the three had strong differences of opinions concerning certain aspects of their respective theoretical approaches, they understood the generally complementary nature of their work and its importance not just for the economic profession, but for understanding how societies and organizations perform and evolve and the role institutions play in that process.

The opportunity to work around these individuals, particularly with North and Coase, strongly shaped and influenced my understanding not only of economics, but of why a broader perspective of economics is so important for understanding the world around us. That experience profoundly affected my own research interests and my teaching of economics. Some of Doug’s papers continue to play an important role in courses I teach on economic policy. Students, especially international students, continue to be inspired by his explanation of the roles of institutions, how they affect markets and societies, and the forces that lead to institutional change.

As we prepare to celebrate Thanksgiving in the States, Doug’s passing is a reminder of how much I have to be thankful for over my career. I’m grateful for having had the opportunity to know and to work with Doug. I’m grateful that we had an opportunity to bring him to Mizzou in 2003 for our CORI Seminar series, at which he spoke on Understanding the Process of Economic Change (the title of his next book at the time). And I’m especially thankful for the influence he had on my understanding of economics and that his ideas will continue to shape economic thinking and economic policy for years to come.

Profile-Pic-3-professional-200x300Truth On the Market is pleased to announce that Kristian Stout of the International Center for Law and Economics (“ICLE”) has joined our team of writers. Kristian was recently hired by ICLE as Associate Director for Innovation Policy, bringing with him over ten years of experience as a technology professional and entrepreneur. In his role at ICLE, Kristian’s work is focused on the areas of Innovation, Data, Privacy, Telecom, and Intellectual Property.

Kristian has previously been a lecturer in the computer science department of Rutgers University,  is frequently invited to speak on law and technology topics, and has been published in law journals and legal treatises on intellectual property and innovation policy. Kristian is an attorney licensed to practice law in New Jersey and Pennsylvania, is a partner at A&S Technologies, a software services firm, and sits on the board of CodedByKids, a nonprofit organization that provides STEM education to underprivileged children.

Kristian graduated magna cum laude from the Rutgers University School of law, served on the editorial board of the Rutgers Journal of Law and Public Policy, and was awarded a Governor’s Executive Fellowship from the Eagleton Institute of Politics.

He is excited to join the TOTM team, bringing with him a fusion of technological-optimism and a belief in the power of free markets to enhance the welfare of all humanity.

The famous epitaph that adorns Sir Christopher Wren’s tomb in St. Paul’s Cathedral – Si monumentum requiris, circumspice (“if you seek his monument, look around you”) – applies equally well to Henry Manne, who passed away on January 17.  Wren left a living memorial to his work in St. Paul’s and the many other churches he designed in the City of London.  Manne’s living memorial consists in the law and economics institutions which he created and nurtured during a long and productive career.

Manne is justly deemed one of the three founders of the law and economics movement, along with Guido Calabresi and the late Ronald Coase.  Manne’s original work on the theory of the firm and the efficiency justifications for insider trading was brilliant and provocative.  Of greatest lasting significance, however, was his seminal role in creating and overseeing institutions designed to propagate law and economics throughout the legal profession – such as the Law and Economics Institutes for Professors, Judges and Economists, and the Center for Law and Economics at Emory University (later moved to George Mason University).  Furthermore, with the expansion of law and economics programs to include foreign participants, law and economics insights are influencing litigation, transactions, and regulatory analysis in many countries.  Manne’s initiative and entrepreneurial spirit were a critical catalyst in helping trigger this transformation.

The one institution that is perhaps most intimately associated with Manne and his philosophy – Manne’s St. Paul’s Cathedral, if you will – is George Mason Law School in Arlington, Virginia.  When Manne became George Mason’s Dean in 1986, he arrived at a fledgling school of no particular distinction, which was overshadowed by major long-established Washington D.C. law schools.  Manne immediately went about overhauling the faculty, bringing in scholars with a strong law and economics orientation, and reinstituting the Center for Law and Economics at Mason.  Within a few years Mason Law became a magnet for first rate young law and economics scholars of a free market bent who found a uniquely collegial atmosphere at Mason.  Mason retained its law and economics orientation under subsequent deans.  Today its faculty is not only a source of pathbreaking scholarship, it is a fount of wisdom that provides innovative (and highly needed) advice to help inform and improve Washington D.C. policy debates.  This would not have been possible without Henry Manne’s academic leadership and foresight.  (Full disclosure – I have been an adjunct professor at George Mason Law School since 1991.)

Finally, I should mention that those of us who write for Truth on the Market (TOTM), not to mention countless other websites that share TOTM’s philosophical orientation, are indebted to Henry Manne for his seminal role in the law and economics movement.  I am sure that I speak for many in offering my heartfelt condolences to Henry’s son, Geoffrey Manne, the driving force behind TOTM.  Geoff, like the visitors to Christopher Wren’s masterwork, we look around us and delight in your father’s accomplishments.

Today at 11AM PT I will be participating on the live webcast “This Week in Law” along with TechFreedom Senior Adjunct Fellow Larry Downes. Denise Howell will be hosting and we will also be joined by fellow participant Evan Brown. This week we will be discussing various topics in tech policy including Senator Al Franken’s lambast of Facebook and Google, the newly opened antitrust investigation of Motorola Mobility by the European Commission, and the continued problem of spectrum crunch.

This Week in Law is recorded live every Friday at 11:00am PT/2:00pm ET and covers topics primarily in law, technology, and public policy. You do not have to register, just follow this link at 11:00am PT/2:00pm ET to watch.

Don’t laugh.  It’s got a major international airport, cheap housing, major league sports and culture. It’s close to a world class university, great natural areas and another country. The urban pioneers who enriched other cities are increasingly priced out of them, and are mobile.  State and local politicians must actually improve the place in order to steal from it. Private money is coming it. It’s a blank canvas ready for experimentation.  And now it’s got buzz.

Peter Klein (over at Organizations and Markets) and I recently edited a volume for the Elgar Companion series titled The Elgar Companion to Transaction Cost Economics. At long last, the volume will be available in the US in November, 2010; in plenty of time for spring semester classes that might want to incorporate some or all of the readings in the book.

Transaction cost economics (TCE)  has become a dominant, if not mainstream, theoretical approach for understanding a variety of applied topics such as vertical integration, the structure of networks and alliances, franchise contracting, the multinational firm, parts of antitrust analysis, marketing channels, and more. The influence TCE has come to have in law, economics and organization theory was recognized last year when the Nobel  Prize in Economic Sciences was awarded, in part, to Oliver Williamson “for his analysis of economic governance, especially the boundaries of the firm”, which has come to be known as TCE.

Our objective in editing this volume was to create a thorough, if not exhaustive, resource for individuals interested in better understanding TCE, its intellectual origins, the fundamental concepts underlying the theory, TCE’s application in a broad array of specific fields, and some critiques of the theory. The volume includes articles from a range of leading scholars in their respective fields, including my fellow blogger, Josh Wright.

Scott Masten, one of the early scholars to apply and promulgate TCE, offered these comments in his review of the book:

‘Not too long ago it was possible to be familiar with all of the important works and latest developments in transaction cost economics. That that is no longer the case is a testament to the intellectual appeal and empirical success of the transaction cost approach. For newcomers, the entries in this volume, by some of TCE’s most knowledgeable and eloquent contributors, offer an excellent introduction to the issues, methods, discoveries, and debates in the field; for veterans, the volume provides a highly valuable resource for catching up on the newest research.’

Following is a copy of the table of contents, for those interested.

Continue Reading…

I’ve resisted posting about this, since everything that could be said has been said. But I can’t abide the views expressed everywhere, even among my friends and colleagues, that I’m a bigot or ignorant or anti-Muslim or xenophobic for thinking the proposed Park51 project (nee Cordoba House) should be voluntarily moved by its backers. Continue Reading…