Although Lippmann's The Good Society was written to address the crisis in liberal democracies in the 1930s, we argue that it offers a novel and plausible institutionalist account of the productivity slowdown and the increase in the experience of insecurity that has characterised most liberal democracies over the last 20–40 years. Central to Lippmann's account is a Smithian-institutionalist model of growth where property rights have to evolve both to encourage continued levels of risk taking in the face of new uncertainties and also to offset new sources of unequal bargaining power that the very process of growth itself creates. When property rights fossilise and fail to evolve, as in the 1930s and plausibly also now, productivity growth slows down, insecurity rises, and illiberal political creeds prosper. To avoid this, Lippmann's analysis suggests that property rights have to change to re-energise risk taking and to offset the new sources of unequal bargaining power. For example, in current circumstances, new ‘positive’ property rights arising from the development of social insurance might encourage risk taking and new ‘negative’ property rights in personal data might help offset the new sources of unequal bargaining power that have emerged.

Applying the framework of North et al. (2009, Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History. Cambridge: Cambridge University Press), this paper analyses institutional and economic development in a new setting – the Grand Duchy of Lithuania between 1245 and 1386. Although remaining a fragile limited access order, Lithuania achieved positive institutional change. Its elite became more stable by restricting ruling privileges to the grand duke's family and integrating rival dukes through administrative positions and hereditary property rights. This arrangement encouraged land accumulation and productive activity over extraction, while the elite started providing better security to traders and craftsmen seeking to finance its war against the Teutonic Order. Synthesised material evidence reflects development at the extensive margin. However, health data shows no increase in average living standards, potentially due to population growth and inequality. Both sets of findings are consistent with the conceptual framework, as it expects fragile limited access orders to be underdeveloped from a static perspective, but improve following institutional development.

This article is about a partially untold story: the central role played by intermediate or ‘meso’ institutions in urban water supply. Three central functions are identified: translating policies and laws into operational targets; monitoring; and incentivizing operators. This paper considers which aspects of institutional design and capacity allow meso-institutions to perform these functions successfully, and conversely what constrains them from doing so. It explores this issue through a careful examination of urban water provision in seven Asian cities which represent a range of macro-institutional environments and micro-institutional arrangements. The analysis shows that in many cases meso functions are performed inadequately or not at all for water supply, with negative consequences for the quality of service. This is particularly evident in cases where ownership and decision rights are not clearly defined and allocated.

Although crises provide an opportunity for meaningful institutional change, the results often fall short of expectations because the reforms undertaken are informed by top-down, global-standard blueprints and fail to consider the informal, long-established, functionally credible institutions that exist at the local level. Seeking to explore how the interplay between formal and informal institutions can affect institutional change, the study focuses on Stagiates, a small community that has been struggling for more than 10 years against the uniform implementation of the 2010 administrative reform (prescribed in light of the Greek government-debt crisis), which threatens to dismantle their 350-year-old, functionally credible commons. To this end, the paper uses case study methodology, Historical-Institutional Analysis and Ostrom's Social-Ecological System framework. It concludes by emphasising the need for institutional analysis and policy to look more closely at the dynamic and complex dialectic between formal and informal institutions and the role that community needs, norms and values play in meaningful institutional change, paying due attention (as original institutionalism did) to the informality and the function-based social credibility of institutions.

This paper analyses the institutional incentives and constraints of the Black Mouth Society – the traditional police of the pre-colonial Mandan and Hidatsa tribes – to understand how it successfully maintained social order without abusing power. The Black Mouth Society was a fraternal organization of middle-aged men that monitored and enforced rules created by the village council and chiefs. Two categories of institutions ensured reliable policing. First, on the front end, a long probationary period and system of unanimous consent facilitated the selection of reputable men who would wield policing power responsibly, reducing the chance of predation. However, individual Black Mouths occasionally abused their power. Therefore, on the back end, public communication created common knowledge, leading to social sanctions in the form of shame and restitution that punished abuses and limited further abuse. Thus, well-functioning self-governance, including reliable policing, is possible without a centralized state, as these tribes have demonstrated.

Conflicts over resources with poorly defined property rights have fuelled both deforestation and violence in the Brazilian Amazon. However, what happens when the State enhances its ability to monitor and enforce existing environmental laws? We study the case of the list of Municípios Prioritários, a policy that allocates additional resources to verify compliance with environmental laws in municipalities with high deforestation rates. Employing a difference-in-differences approach, our findings suggest that an improvement in the ability of the State to monitor and enforce environmental laws can reduce conflicts over the appropriation of value from resources with poorly defined property rights. Consistent with existing studies, we also find that the policy led to a reduction in deforestation rates in the Brazilian Amazon. Finally, we discuss the limitations of the current approach to curb violence in a region where the activity of mafias has considerably grown since the turn of the twenty-first century.

Academic freedom is a cornerstone of modern academic life. It is not only implied by basic liberal principles but also contributes to scientific progress and economic growth. It is therefore important to better understand what affects how free scholarly pursuits are, and to that end, we ask whether economic freedom can help explain variation in academic freedom across countries. In our case, relating the Economic Freedom of the World index and its five areas to V-Dem's index of academic freedom and its five areas reveals that the rule of law is positively and robustly related to academic freedom in all its forms. This suggests that the rule of law, in its general and broad sense, can arguably serve as a guarantor of academic freedom. Where the rule of law is weakened, academic freedom can be at risk. There are some indications that regulatory freedom is similarly related to academic freedom, but less robustly so, maybe indicating that interventionism in one policy area (economics) can breed interventionism in another (academia).

This empirical study extends the public choice literature on the allocation of death during war by examining the political economy of foreign fighter deaths in the Russo-Ukrainian War since the 24 February 2022 invasion. The study explores the roles played by various demographic factors, military institutions, and international trade relations in determining the number of foreign fighters from a variety of countries who have died in support of either Ukraine or Russia during the Russo-Ukrainian War. Unlike other related studies, this study also investigates the importance of, and finds evidence in support of, both economic freedom and a robust democracy in shaping the choices made by individuals around the globe to venture to, and die fighting on, the battlefields of Ukraine.

This paper reveals a novel and perhaps surprising ingredient in the mix of influences that inspired and informed the work of Elinor and Vincent Ostrom on self-governance: cybernetics, understood as a theory of control via feedback mechanisms. Based on this crucial insight, the paper portrays self-governance as involving an architecture of multiple levels of so-called ‘second order’ feedback mechanisms. Such compounded systems of organization are the key to understanding any self-governance process and the paper argues that their intrinsic logic provides a critical link between the work of the Ostroms and the public choice and constitutional political economy perspectives on institutional order. The paper thereby offers both a fresh perspective on the Ostromian view of self-governance and also of also of governance theory in general.

Technology is a complex adaptive system that is both shaped by, and shapes, institutional arrangements. This critical insight, developed in depth by W. Brian Arthur – the father of complexity economics – is relevant to researchers interested in institutions. Arthur provides a method for capturing the underlying dynamics. He offers conceptual tools centred on the concept of increasing returns to make sense of some crucial challenges. He also suggests technical tools, including agent-based modelling, to tackle ill-defined economic, legal, and institutional problems. This article explores his body of work and derives some institutional insights from it.

This paper explores the role of artificial intelligence (AI) within economic institutions, focusing on bounded rationality as understood by Herbert Simon. Artificial Intelligence can do many things in the economy, such as increasing productivity, enhancing innovation, creating new sectors and jobs, and improving living standards. One of the ways that AI can disrupt the economy is by reducing the problem of bounded rationality. AI can help overcome this problem by processing large amounts of data, finding patterns and insights, and making predictions and recommendations. This insight raises the question: can AI overcome planning problems – could it be that central planning is now a viable option for economic organisation? This paper argues that AI does not make central planning viable at either the nation-state level or the firm level, simply because AI cannot resolve the knowledge problem as described by Ludwig von Mises and Friedrich Hayek.

Recent work has argued for a Hayekian behavioural economics, which combines Austrian economics with behavioural economics as developed by Kahneman, Thaler, Sunstein, and others. We suggest that this hybrid is misguided because it relies on individual cognitivism. This view of cognition is incompatible with the Hayekian view of cognition which treats rationality as an emergent phenomenon of social interaction in an institutional environment. This Hayekian view, which we call epistemic institutionalism, is compatible with an alternative prominent perspective in psychology, that of the extended mind, sometimes known as 4E cognition. We demonstrate how the Hayekian perspective on individualism, the price system, and the evolution of rules can be connected to the extended mind programme, through concepts such as the coupling of the individual and their environment, cognitive off-loading, and affordances. We suggest that this alternative combination of Austrian economics and psychology provides a more fruitful way forward, especially because it foregrounds the processes of learning, error-correction, and institutional orders, rather than choice, bias, and individual rationality. To explain why Austrian economists have been receptive to behavioural economics, we distinguish epistemic institutionalism from the (radical) subjectivist approach, which shares key assumptions of individual cognitivism.

Is ‘individualism’ pure selfishness? The climate change literature often assumes so. However, individualism can be seen as capturing values aligned with self-determination and self-achievement but also universalism. Indeed, cultural psychology recognises individualism as reflecting both personal agency and one's embeddedness, not in narrowly defined in-groups, but in society broadly. Through this lens, individualism can be consistent with adopting pro-social behaviours, including climate-friendly behaviours. But the under-exploration of the concept means empirical evidence is limited. Using cross-country, cross-sectional data we find that individualistic values are associated with an increased willingness to take individual-level actions against climate change. Individualism is also not associated with less support for additional taxes levied to fight climate change, and those willing to take more individual level actions against climate change are also more supportive of additional climate change taxes. Overall, our results confirm that individualism can be associated with taking actions for the greater good.

The Economic Freedom of the World report measures five dimensions of economic freedom, one of them being Sound Money. Compared to where it had been in decades for most of the West, inflation skyrocketed in 2021. Yet the indicator which measures inflation in the most recent year barely budged due to how it is specified and parameterized. This paper explores potential improvements on the methodology, although ultimately only modest improvements are achieved over simply changing the value of inflation that corresponds to zero (the lowest index score) in the simplest linear specification.

This paper highlights scholarly neglect of political legitimacy, the idea of a state's use of power in ways acceptable to its citizens. We argue that political legitimacy affects a state's ability to formulate and implement its policies, thus affecting governance. Our paper provides the first empirical evidence of the positive relationship between political legitimacy and governance. We combine novel cross-sectional data on political legitimacy and several governance indicators from 66 countries. Our results show that a one-standard-deviation increase in the legitimacy score increases the rule of law indicator by about one-third standard deviation. These results are robust across OLS, an instrumental variable method, and several other governance indicators. Moreover, our results reveal that in the presence of greater trust, political legitimacy has an enhanced impact on governance.

In this paper we seek to integrate human needs and self-actualisation into the design of organisational governance. We problematise the assumptions that guide established justifications for governance, thus providing an opportunity for this type of theoretical approach. Drawing on Maslow's human psychology, we consider the potentially regressive features of the prescriptions of transaction cost theory (TCT), particularly the new institutionalist approach, and suggest inclusiveness as a mode of coordination that firms may wish to pursue to enhance self-actualisation. The main value added of this contribution is to highlight the need to discern among modes of governance design, using criteria of welfare maximisation by enabling opportunities for self-actualisation within the firm, different from the TCT focus on internal efficiency.

This paper advances a pre-colonial institutional thesis to explain the variation in the salience of ethnicity in African societies. It posits that pre-colonial political centralization facilitated the accumulation of economic and institutional advantages, positioning descendants of centralized ethnic groups to benefit from these advantages within postcolonial states. Social identity choices are rational; therefore, descendants of centralized ethnic groups, who enjoy greater advantages within the nation, find less incentive to choose their ethnicity over their national identity. Examples from Ethiopia and Ghana as well as the evidence from combining individual-level survey data from the Afrobarometer with historical data on pre-colonial political centralization support the theoretical claim. In particular, the paper presents both theory and evidence indicating that individuals with ancestors from politically centralized pre-colonial societies are less likely to favour their ethnic identity over their national identity . These findings underscore the importance of considering pre-colonial legacies when promoting national unity.

This paper draws on macroeconomics, the economics of institutions and the economics of trust to explain private savings at the national level for 33 OECD (mostly European) countries from 2002 to 2012. More specifically, it raises two questions: (i) is it the quality of institutions or trust in institutions that drives private savings? (ii) if trust matters, what is the appropriate institutional level at which it operates? To answer these questions, we add to the usual explanatory variables of private savings three measures of institutional quality and six measures of institutional trust, distributed between the following institutional levels, presented in assumed hierarchical order: political, legal, financial and social. We find that trust in political institutions is the most significant driver of private savings. This contributes to the literature underlining the importance of subjectivity in social and economic phenomena and suggests, for private bank savings in countries having highly regulated banking systems, the existence of a hierarchy of trust in which trust in the highest-ranking institutions (political – and to a lesser extent legal – institutions) acts as a substitute for trust in every lower-ranking institution (financial institutions and social trust).

It is now abundantly clear that social norms channel behaviour and impact economic development. This insight leads to the question: How do social norms evolve? In a companion paper (Voigt (2023). Journal of Institutional Economics, 20), I survey studies showing that geographical conditions can have direct and long-lasting effects on social norms. This paper goes one step further: It surveys studies that show how different geographical conditions affect both religious beliefs as well as traditions of family organization and how these, in turn, affect social norms.