This paper derives career lessons for economists by examining the unusual career of Brian J. Loasby in terms of Loasby’s own key ideas. Loasby’s early career ran into difficulties after he chose to become a postgraduate for lifestyle rather than career reasons, with his insufficiently ambitious reference standards resulting in unduly narrow search for both options and new connections. His eventual success came because of a path-dependent process whereby he developed an organizing framework that was conducive to finding problems and making intellectual connections. It was a process in which making personal connections also had a key role, though some intellectual connections that he earlier failed to make resulted from trusting other people. In the market for contributions to knowledge, his way of branding and positioning his work in relation to management decision-making and the growth of knowledge gave it a wider appeal than would have been the case if he had aligned himself with a particular school of thought or ‘heterodox economics’ in general.

National innovation systems (NISs) have been important in the literature since the 1990s for highlighting the institutional performance of economies and promoting economic development. Inclusion in systemic innovation activities is an emerging area of research. However, the definition of inclusion within innovative activities remains unclear and is associated with numerous forms and characteristics depending on the context visited. Our work highlights the conceptual gap that exists around the notion of inclusive innovation by characterising three forms of inclusion in relation to innovation activities. We thus set out, in the form of a typology, three distinct framings which enable us to identify three different levels associated with specific institutional mechanisms and forms of inclusion. This typology makes it possible to identify appropriate innovation policies, depending on how inclusive innovation is characterised (low, medium, and high). It also helps to clarify the inclusive nature of innovation in NIS approaches.

This paper examines the effects of state capacity on the reported Covid-19 infection (and mortality) rate and its policy implications. We analyse two dimensions of state capacity which were critical during the pandemic. The healthcare capacity acted to contain the virus outbreak (an effect we call containment). The information capacity acted to detect contagious yet asymptomatic cases (an effect we call detection). We argue that containment pushes down the reported infection rate. In contrast, detection pushes it up, thus generating a non-linear combined effect that we estimate systematically using Colombian municipality-level as well as country-level data, different data sources, and various empirical strategies. Our findings indicate that the infection (and mortality) rates were likely under-reported, especially in areas with a low state capacity level, due to their poor capabilities to detect the virus. Our study put the emphasis on the many facets of state capacity, each affecting in complex ways our understanding of important phenomena, such as the Covid-19 outbreak.

Taking inspiration from the work of Douglass North, much institutional research attempts a distinction between ‘formal’ and ‘informal’ institutions. North often associated ‘formal institutions’ with rules enforced through a legal system. It is suggested here that this lead should be followed and refined. In which case ‘legal system’ and ‘law’ require definitions. An alternative claim, that ‘formal’ basically means ‘written down’, is arguably less useful. Stressing the importance of clear definitions in this area, this paper considers a case where slight modifications yield strikingly different results. Some options concerning the meanings of ‘culture’ and their relation to institutions are briefly noted. Changes in, and interactions between, ‘formal’ and ‘informal’ institutions are considered, with illustrative examples. Contrary to some authors, informal institutions can sometimes change rapidly, in some cases in response to state legislation.

Grounded in Hofstede cultural dimensions theory, we examine how informal institutional factors shape cross-country venture capital (VC) flows. Separating VC activity into flows, our method studies how an increment in inflows supports ventures, and an increment in outflows more investing activity. Results suggest that (1) uncertainty avoidance negatively affects investors and ventures (the last with a larger effect), (2) individualistic attitudes equally support both investors and ventures, and (3) a higher level of power distance contributes to a larger private investors sector, an effect that is greater under strong formal institutions (FIs). Effects of masculinity, long-term orientation, and indulgence are inconclusive. Results are robust to various specifications, use of instruments, and endogeneity treatments. The implication is that the optimal characteristics of informal institutions for fostering VC activity differ depending on the level of FIs, as both institutions interact to affect both investors and ventures.

Using information from all International Monetary Fund conditionality programmes from 1990 to 2018, we implement a dynamic Augmented Inverse Probability Weighting Regression Adjustment approach to enquire whether public-sector employment retrenchment may be incompatible with the goal of shrinking the informal economy. The estimated effect 5 years after the policy intervention indicates an increase in the share of the shadow economy to GDP by about 1.3 percentage points. More importantly, this change involves a sizable reallocation of private economic activity from its formal to its informal part; that is, the size of the formal private sector relative to the size of the informal sector decreases by seven percentage points. We interpret these findings through a two-sector model in which there is interdependence between worker incomes and the allocation of product demand across the formal and informal sectors.

Recently, scholars have advanced an ideal of the entrepreneurial state in which industrial policy is pursued in a mission-directed manner. Crucially, this perspective does not merely call for the heavier use of industrial policy, but envisions the state as a central focal point, mobilising society around the pursuit of a common mission. Using the historical example of East Asia's developmental state, which closely resembles its contemporary variant, I demonstrate that mission-directionality – should it be consistently applied – tends towards the pursuit of a singular overarching mission, and could require the use of authoritarian and disciplinary mechanisms to sustain mission focus in an environment of uncertainty. In turn, this potential risk arises because mission-directionality seeks to transcend the otherwise directionless nature of market-based and democratic decision-making through the use of bureaucratic discretion, to align the behaviour of social actors in a cohesive and directional manner.

Normative reasoning within the mainstream economic framework has been largely shaped by utilitarian ethics. The growing popularity of effective altruism indicates that the utilitarian spirit has also permeated the sphere of social sentiment, evaluating our pro-social behaviour and charitable giving in terms of efficiency. The present study assesses the appropriateness of judging social outcomes through the prism of allocative efficiency by questioning to what extent the society of effective altruists is robust, sustainable, and resilient. Using computer simulations based on the dictator game, we demonstrate that a society of welfare-maximising effective altruists can achieve an optimal outcome alongside equality under extremely restrictive assumptions, such as the uniformity of giving strategies (i.e. interacting with other effective altruists exclusively) and initial equality of wealth distribution. Yet, in the world of unequal opportunities, utilitarian giving tends to increase wealth disparity. In addition, in polymorphic societies, effective altruists underperform compared to deontological (or unconditional) altruists. Consequently, we demonstrate that striving for allocative efficiency might undermine the equality and resilience objectives and question whether the former should remain the dominant economic normative principle.

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.