ECONOMY
Douglass C. North, Maverick Economist and Nobel Laureate, Dies at
95
By ROBERT D. HERSHEY Jr.NOV. 24, 2015
Douglass C. North became known for challenging traditional methods of economic
analysis.CreditWashington University in St. Louis
Douglass C. North, a Nobel laureate
whose work in applying economic
theory to history offered a new
understanding of how societies
coordinate peoples behavior, died on
Monday at his home in Benzonia,
Mich. He was 95.
The cause was esophageal cancer, his
niece Julie Case said.
The son of a high school dropout,
Professor North traced an unlikely
path to academic renown and the
halls of government in China, Latin
America, Eastern Europe and
elsewhere, where he was a sought-
after consultant.
In academia, where his teaching
career spanned seven decades, and in
his many books and articles as an
economics historian, he became
known for challenging traditional
methods of economic analysis, in
which markets hold sway, finding that
they often fell short of explaining
long-term economic growth.
In casting his net wider, he took into
account, among other things, the
economic impact of social and
political institutions, of laws and
customs regarding property rights,
and of religious beliefs and human
cognition.
He hypothesized, for example, that
when various economic groups
farmers or bankers or railroad
companies find that institutions
inhibit them from making bigger
profits, they will come together to
change the institutions.
Norths genius is figuring out what
question to ask next, which often
comes as an answer to the question
What cant I explain with my current
conceptual framework? John Joseph
Wallis, a professor of economics at the
University of Maryland and a North
protg and collaborator, wrote in a
paper he delivered in celebration of
Professor Norths 90th birthday. To
do this requires a very unusual
combination of humility and
confidence.
While at the University of
Washington, in Seattle, where he
taught for 33 years, Professor North
helped found a branch of inquiry
called cliometrics, named for the
muse of history, Clio, after he and
others had concluded that traditional
market-oriented economics faltered in
measuring some aspects of economic
performance quantitatively.
Professor North contended that
traditional economics did not fully
recognize that markets are embedded
in institutions, which evolve slowly
and can be understood only by
studying the cultural phenomena
behind them.
When he examined why the cost of
ocean transportation had fallen
sharply from 1750 to 1910, for
example, he found that it was not
because it had become cheaper to
operate ships. Rather, the main
reasons were an increase in trade, a
decline in piracy and privateering and
an improvement of ports. The line of
study came to be called the new
institutional economics.
His work was recognized in 1993 with
a Nobel Memorial Prize in Economic
Sciences, which he shared with Robert
W. Fogel, who did similar work
independently. (Professor
Fogel died in 2013.) In presenting the
prize, the Royal Swedish Academy of
Sciences cited both men for having
renewed research in economic history
by applying economic theory and
quantitative methods in order to
explain economic and institutional
change.
Professor North came to this
approach after applying traditional
economic tools, fruitfully, in an
analysis of American economic
history, resulting in a seminal work,
The Economic Growth of the United
States 1790 to 1860, published in
1961.
But when he turned his attention to
Europe, as he did in The Rise of the
Western World (1973), written with
Robert Paul Thomas, he found the
challenge unexpectedly severe and
began rethinking his methods.
Retooling turned out to change my
life radically, he wrote in an
autobiographical sketch for the Nobel
ceremony, since I quickly became
convinced that the tools of neo-
classical economic theory were not up
to the task of explaining the kind of
fundamental societal change that had
characterized European economies
from medieval times onward.
In one instance he studied the
economic effects of the Black Death,
perhaps the most devastating
pandemic in history, a plague that
peaked in the 14th century, wiping out
tens of millions of people in Europe
and Asia and shriveling the labor
force.
Professor North found that classical
theory could not account for the fact
that wages rose in Western Europe
after that scourge but not in Eastern
Europe, much of which remained in
serfdom. We needed new tools, but
they simply did not exist, he wrote.
So he and his fellow cliometricians
began creating them, using vast
amounts of quantitative data.
One of Professor Norths conclusions
was that England and the Netherlands
industrialized faster than other
countries because guilds, with their
strict workplace rules and hiring
restrictions, were weaker there.
Professor Norths own work led to
another level of inquiry not
followed by other cliometricians
which drew on cognitive science to
understand why people make the
choices they do, often in the face of
uncertainty and ambiguity. What, for
instance, prompts people to give
blood when there is no financial
incentive to do so?
Much of this latter research was
conducted at Washington University
in St. Louis, where he spent 28 years
in a second long stretch of teaching.
Doug North has always challenged
the adequacy of the current
intellectual consensus about how
history and social science explained
long-term social change, Professor
Wallis said in an interview.
Barry R. Weingast, a former colleague
who is now a professor of political
science at Stanford, said Professor
North had been at the forefront of
several revolutions in economic
theory, involving the application of
traditional economics and statistics to
history, the importance of specifying
and enforcing property rights and,
most important, the crucial role of a
cultures institutions in economic
performance.
When taking a consulting job
overseas, Professor North insisted on
spending at least six months in a
country, absorbing its belief systems
and its organization and institutional
framework before offering his advice.
Outside the classroom, Professor
North, a diminutive, effervescent bon
vivant, indulged his interests in haute
cuisine, photography, fast cars, flying
his own plane, hunting, fishing,
tennis, hiking and swimming,
pursuing some of them into advanced
age.
At various times he owned two
ranches. One, comprising 160 acres in
a remote stretch of Northern
California, was bought for $10 an
acre. The money, he said, came from
his winnings at poker.
Douglass Cecil North was born on
Nov. 5, 1920, in Cambridge, Mass.,
and though he grew up in the shadow
of Harvard and the Massachusetts
Institute of Technology, there was
little in his background to suggest that
he would become a renowned
economics historian. His father, he
said, had left high school to work for
the Metropolitan Life Insurance
Company as an office boy, and
Professor North did not know if his
mother had finished secondary
school.
He himself had been an indifferent
student, making only slightly better
than a C average, he said, as an
undergraduate at the University of
California, Berkeley, where he became
an avowed Marxist and a radical
activist who did little classwork. For a
time he refused to join his young
Communist friends in shifting their
support to the American war effort
after the Japanese attacked Pearl
Harbor in 1941.
On graduation, Professor North, who
was morally opposed to combat,
joined the merchant marine as a
deckhand. He was thrust into
navigation when his ship, with
officers who had only rudimentary
education, lost its way on a voyage to
Australia and the captain summoned
him to the bridge.
We are lost, and Ill give you 24
hours to learn to navigate, the
captain said, as Professor North
recalled the episode in an interview
for this obituary in 2011 at his home
in Benzonia, in northern Michigan.
He crammed all night, then guided
the ship to Melbourne and remained a
navigator.
Two years in the South Pacific and a
year teaching navigation in California
allowed for continuous reading that
led him to decide to become an
economist.
In his Nobel essay he wrote, I went
back to graduate school with the clear
intention that what I wanted to do
with my life was to improve societies,
and the way to do that was to find out
what made economies work the way
they did or fail to work.
He earned straight As at Berkeley and
landed a job at the University of
Washington, where he formed a
pivotal friendship with Donald
Gordon, a colleague and daily chess
opponent.
I beat him at chess, and he taught me
theory, Professor North said in the
2011 interview. That was where we
invented cliometrics.
In 1944 Professor North married Lois
Hiester, with whom he had three
sons. She became a prominent
member of the Washington State
Legislature. The marriage ended in
divorce, and in 1972 he married
Elisabeth W. Case, who survives him.
Other survivors include his sons,
Douglass, Christopher and Malcolm; a
half sister, Sheila; and four
grandchildren. He also had a home in
St. Louis.
After officially retiring from
Washington University, Professor
North continued to teach classes there
and at Stanford University into his
early 90s.
Professor North spent a lifetime
studying what separates prosperous
societies from poor ones, but he
shunned political dogmatism, having
long abandoned Marxism, saying he
was neither wholly liberal nor wholly
conservative.
He also had no particular view about
the proper size of government.
Economic history has taught us that
the world is an evolving complex
system, always changing, he said.
My contribution is to make people
aware of this dynamic process.