The increased attention of economists and the general public to the relationship between institutions and economic growth, as well as to the importance of studying economic history-heightened by the awarding of the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel-is a welcome development. However, this recognition should be contextualized within the broader history of economic thought. Doing so will better equip those seeking meaningful answers to the questions about Economic growth-promoting institutions raised by the 2024 laureates.
For example, one of the key “inclusive” institutions (described as “good” by Acemoglu and his colleagues) ironically turns out to be a major redistributive institution—essentially, an “extractive” one. This paradox highlights the shortcomings of attempting to frame terms in ways that appeal to radical anti-capitalists, ultimately resulting in a lack of conceptual clarity.
For comparison, consider the definitions used by Douglass North and Ludwig von Mises:
Douglass North (1990): Institutions are categorized as either efficient (promoting economic growth, Chapter 11) or inefficient (hindering growth). North emphasizes the critical role of property rights, particularly their ability to facilitate economic development (e.g., pp. 176–178).