Did colonial policies in India deliver excessive returns to British investors? We answer this question using annual data on Indian securities trading on the London Stock Exchange. We present new series on market capitalization, capital gains, dividend yields, and total returns of railway securities from 1880 to 1929. The average annual total return on the largest and most important Indian railway securities was 3.7%. These returns were not excessive by any financial standard. Indeed, they were lower than the return on railway securities in North America, Latin America, and Asia. We also undertake an event study analysis to assess whether Indian railways significantly benefited British investors. When the Government of India purchased large positions in the private railway companies between 1880 and 1910, there were opportunities for profit making. However, we find no evidence of abnormal investor returns in the years leading to the purchase of railway companies. Broadly our findings call into question the extractive nature of colonial railway policy.

Culture, mainly defined as values and beliefs, has recently attracted much attention in economics. Cultural practices receive less attention, as emphasized in anthropology. We argue that the notion of ‘ritual’ can enrich economic research on culture as a specific form of socially standardized interactions that create shared contexts and emotions to build mutual trust and community. China is an important case in point, because ritual is a central concern in common interpretations of traditional Chinese culture. We look at practices of Chinese entrepreneurs that activate rituals in various settings. We conclude that these phenomena can be analytically condensed in the cultural complex of a ‘ritual economy’.

In this paper a sophisticated conception of individuality is developed that extends beyond simple heterogeneity and is consistent with the approach of institutional economics. Studies of human biological and psychological development are used to illustrate the foundations of human individuality and the impact of the social environment on individual development. The link between the social environment and ongoing agential properties is established through the role of habits, which provide some continuity to individual personalities over time and assist them in navigating the social context they inhabit. Reflexivity is established via an agency-structure framework that endows individuals a changeable self-concept and an ability to interpret their relationship to the social context. The coordination of different individuals is explained not simply through reference to institutional structure, but also through the agent-level properties of shared habits. While reducing differences between individuals to one of degrees, shared habits are shown to be particularly important in the context of agent-sensitive institutions. Finally, the potential for different institutional experiences to impact the reflexivity of individuals is explored.

This paper highlights a link between measures for precolonial institutions and ethnic fractionalisation in postcolonial countries. A conceptual explanation is provided for why countries that were more politically centralised in precolonial times should be less ethnically fractionalised in current times. This result is confirmed for a sample of postcolonial countries in Africa, Asia and the Pacific. This is followed by a comparative case study in the South Pacific countries of Papua New Guinea, Tonga and Samoa. It is hoped that these results will lead to further empirical work focused at delving deeper into the link between these two measures to better understand what they are actually measuring, and why both are so closely related to economic development.

In the present paper we trace the development of property rights during the Hellenistic period (3rd–2nd centuries bce), focusing on Athens, the democratic Hellenistic federations and the Ptolemaic Kingdom in Egypt. Property rights had been already well developed and protected by courts and state laws during the previous Classical period in ancient Greece, but we argue that they further evolved during the Hellenistic period due to the introduction of a series of new political and economic institutions. We found that there was a causal relationship between the evolution of property rights and the further development of economic institutions in Hellenistic Athens and the Hellenistic federations. We finally argue that the development and adoption of market-oriented economic institutions by the Ptolemaic Kingdom should be attributed to the great influence that these institutions had in the entire Hellenistic world, which resulted in their diffusion from the democratic states to kingdoms.

It has been an enduring concern of institutional economics and critical realism to understand how individuals are able to exercise agency in the context of social structures, and to maintain appropriate connections, separations and balances between these two levels of causal power. This paper explores the contribution of Alasdair MacIntyre's neo-Aristotelian philosophy to the topic. Empirical data are provided from the career narratives of senior Scottish bankers recalled in the aftermath of the global financial crisis of 2007/8. The method of the study is interpretive, using themes drawn from MacIntyre's writings. These bankers faced moral choices as tensions developed between their own professional standards and the new corporate goals of the banks. We discuss MacIntyre's understanding of individual moral agency as a narrative quest in the context of different types of institution with different and often conflicting ideas about what constitutes good or right action. Habituation and deliberation are important in enabling action, but fully developed moral agency also depends on individuals being able to make choices in the space opened up by tensions within and between institutions.

In this paper, we develop a framework to analyze the relationship between evidence and policy. Postulating a normative criterion based on cost–benefit analysis and the value of a piece of information, as well as a topology of the policy space defined by three characteristics (epistemic uncertainty, interests, and the degree of value conflicts), we identify the (Nash) equilibria of an interaction between experts and citizens in providing information to a decision maker. In this setup, we study three institutional arrangements (evidence-based policy, deliberative governance, and negotiated conflict) that differ in terms of reliance on experts and citizens for providing information. We show that different degrees of uncertainty, interests, and value-relevance surrounding the issue at stake result in vastly different arrangement performances; hence, to foster efficiency, rules should be contingent.

This article presents a theory of social protection expansion in late-developing open economies based on actors’ perceptions of complementarity. Drawing on recent theories of institutional change and political economic theories of welfare regimes, the article explains why in late-developing open economies, processes of liberalization often result in social welfare expansion. The explanation is based on the existence of institutional complementarity between the production regime and the social welfare regime. The article offers an agent-based theory of change according to which actors – state or market actors – are likely to promote welfare expansion amid their expectations of higher payoffs and/or improved performance of the liberalized economy. This theory challenges the more conventional Power Resource Theory, according to which welfare regimes are shaped primarily by the balance of power between workers and employers. To test the theory, the article analyzes the enactment of the unemployment insurance law in Israel (1972).

The Swedish school system suffers from profound problems with teacher recruitment and retention, knowledge decline, and grade inflation. Absenteeism is high, and psychiatric disorders have risen sharply among Swedish pupils. In this pioneering analysis of the consequences of combining institutionalized social constructivism with an extensive marketization of education, we suggest that these problems are to no small extent a result of an unlikely combination of a postmodern view of truth and knowledge, the ensuing pedagogy of child-centered discovery, and market principles. We show how the stipulated view of truth and knowledge and the design of the system impacts on the incentives for the various agents involved: pupils, parents, teachers, principals, school owners, the municipality, the central government, and, ultimately, the general public. Our study implies that caution is necessary for countries that have a tradition of social-constructivist practices in their education systems and are considering implementing or expanding market-based school reforms.

This article explores the challenges of redefining property rights for land, with application to monarchical Iraq from 1944 to 1958. We apply two processes in the analysis of economic institutions to study history: a puzzle-solving method at the micro level, with broader interest in the role of institutions in development and economic growth at the macro level. Thus, we explore the interaction between demanders and suppliers of land reform in the political market, focusing on the parliamentary influence of big landholders as an interest group. We conclude that despite increasing demand for land reform, politicians were able to supply quantitative change only, consisting of the allocation of newly arable land to landless cultivators, rather than the redistribution of existing assets or qualitative change. We analyse these findings in relation to our concern for the role of institutions in development. Our discussion uncovers key insights into Iraq's political economy and its institutions.