The Institutional Revelation: A comment on Douglas W. Allen's The Institutional Revolution

Joel Mokyr*, José Antonio Espín-Sánchez

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

2 Scopus citations

Abstract

Institutions are a central topic in economic history. Allen's work differs in that he is interested in institutions per se, not as a means to economic performance and prosperity. The purpose of this book is to explain the institutions of the premodern world and to show why they changed. His argument is that in a Principal-Agent situation, before the Industrial Revolution, it was harder for the Principal to attribute whether the failure of the project was due to acts of nature or some acts of the agent, hence the "strange" institutions. In a modern world, with a much improved monitoring technology, we can use more "efficient" institutions, hence the Institutional Revolution. Although innovative and interesting, the author over-stresses his argument. Much more than monitoring in a principal-agent relationship is needed to explain the Industrial Revolution and the changes in institutions associated with it.

Original languageEnglish (US)
Pages (from-to)375-381
Number of pages7
JournalReview of Austrian Economics
Volume26
Issue number4
DOIs
StatePublished - Dec 1 2013

Keywords

  • Innovation
  • Institutions
  • Monitoring
  • Moral hazard
  • Technological change

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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