Several scholars anticipated Ludwig von Mises's calculation argument against socialism. The present paper summarises the contributions by the members of the German Historical School of Economics who preceded Mises and provides several examples of anticipation that have not been discussed in the literature. Furthermore, the paper explains why it is not a coincidence that members of the Historical School claimed as early as the nineteenth century that socialism was unfeasible due to calculation and knowledge problems. In their attempts to understand historically specific features of capitalism, they developed an approach to capital that involved the institutions of private property, money, the market, the enterprise, and monetary calculation. Starting from this institutional approach to capital and capitalism, it was only a small step to the question of what it means for socialist systems that those institutions are lacking.

This is an introduction to the special issue that presents new research on the state and its links to economic and social development. The special issue focuses on the processes of institutional transformation of the state, looking at how fiscal states arise in the developing world. The resulting set of articles presents a variety of approaches, ranging from case studies (at state and regional level), to comparative historical analysis and to macro-quantitative (country and cross-country level) perspectives. The overarching message is that historical, political and institutional factors are key to understanding the process of fiscal states formation and change around the developing world.

The article proposes an economic theory of customary measurement systems. The form of such systems is driven by two transaction-cost factors: minimising costs of implementation, and coordinating on shared standards. These factors combine to yield seven principles of customary measurement, supported with illustrative examples from the traditional Anglo-American, Egyptian, Greek, Roman, Chinese, and Indian measurement systems. The theory illuminates various confounding features of such systems, including ubiquitous binary patterns, frequent appearance of duodecimal ratios, and persistence of trade-specific measures.

This article is Part 1 of a survey of Russia's position as one of the great powers and how it has evolved from 1815 to the present day. It begins with the situation in 1815 and the path to it, and devotes attention to important Russian institutions then, soldiers' cooperatives, autocracy and serfdom. The subsequent wars and their consequences are discussed. The end of the Empire, the creation of the USSR and Soviet institutions are considered. Consideration is also given to the relative economic position of Russia/USSR and its changes over time. Attention is paid to the economic policies of Witte and Stalin. Explanatory theories used include List's economic recommendations for medium-developed countries, the institutional theories of Acemoglu, North and others, Modelski's evolutionary analysis of global politics and Tilly's analysis of the war–state relationship. Part 1 ends on the eve of the Great Patriotic War (1941).

We examine whether the differences in the legal origins of countries (Common Law versus Civil Law) can explain the variations in the price efficiencies of the stock markets of different countries. Based on multifractal detrended fluctuation analysis of the daily stock indices of 34 countries over 21 years, we find that the stock price indices in Common Law origin countries show greater price efficiency than the stock price indices in Civil Law countries. These results provide additional evidence that the legal origins of countries affect their economic activities and outcomes.

This article is Part II of a survey of Russia's position as one of the great powers and how it has evolved from 1815 to the present day. Part 1 ended on the eve of the Great Patriotic War (1941‒1945), and Part II begins where Part 1 left off, with some data on the Great Patriotic War and its influence on the USSR's position as a great power. It deals with post-war reconstruction and then considers the Cold War and post-Soviet Russia (1992‒2022). Attention is paid to Soviet economic policies, the reasons for the long-run decline in Soviet economic growth, and the state collapse of 1991. Explanatory theories used include List's economic recommendations for medium-developed countries, Wintrobe's political economy of dictatorship, and Tilly's analysis of the war–state relationship. It is concluded that a relatively poor country can become a great power and maintain that position for long periods if it has institutions that enable it to squeeze its population for military purposes.

Sharing resources between members of different tribes and collectives is common and well-documented. Surprisingly, little is known about factors that are conducive to building social relationships between groups. We design a common-pool resource experiment, where after harvesting, groups can send some of their harvest to augment the resource of the outgroup. We compare donations made by individuals collectively and independently of other group members, under the conditions of equal and unequal resources. We find that individuals acting as decision-makers, but not groups, donate harvests frequently even though it is payoff-reducing. We conduct an additional treatment, where each donation is matched (doubled) by an equivalent transfer of resources, making sharing between groups payoff-improving. Under matching donations, sharing between groups flourishes, but fails to prevent resource decline in most groups. Finally, our experiment reveals that members of low-endowment groups overharvest resources in expectation of donations from affluent groups, which leads to the tragedy of the commons.

We explore how macro and micro networks influence the diffusion of technological innovation and cultural/social behavior. Across the historical regimes in China and Europe, dynastic lordship's macro networks afforded different advantages in technological innovation. A network particular to Europe, the Roman Church, extended deep into local parishes with ethical norms prescribing fairness to strangers, and these cultural foundations helped guilds, trade associations, merchant courts, and universities operate cooperatively far beyond kinship. In contrast, Chinese emperors relied on ancient Confucian moral codes and system-spanning Confucian-educated officialdom; but fiscal limitations compelled officials to defer to local lineage orders, resulting in an enduring cultural pattern of guanxi and a polity whose institutional problem-solving capacity falter beyond the local level. Yet the civil service system has enabled China to outperform similar lineage-dependent regimes. Probing network topologies, we find that system-spanning networks can facilitate technological diffusion, but local networks influence cultural and behavioral change.

Contemporary Austrian theory has expanded widely on the relationship between entrepreneurship and the structure of production, yet it has never touched on the existence of an exploration-exploitation dilemma within organizations. The objective of the article is to show that the integration of the exploration-exploitation dilemma into the Austrian theory adds new fruitful elements to the function of the destructive entrepreneur, as presented by the Austrian economists of the firm. By showing how an organization's complexity can motivate destructive entrepreneurship on competition, it firstly explains how their analytical tools, which were limited in this area to the infra-organizational field, can also be applied to the catallactic field; it secondly enriches the traditional Austrian vision of the relation between institutions and entrepreneurship, in highlighting a reverse causal relationship, that has not yet been pointed by Austrian literature on entrepreneurship, between bad institutions and the destructive entrepreneur.

We argue that tax revenues and political institutions placing constraints on the executive power may reinforce each other over time and so co-evolve in the long run. This may also bring a shift in the composition of revenues, from taxes levied on a narrow base to broadly levied taxes. To test these hypotheses, we use historical cross-country data covering 31 countries for 1800–2012 and panel time series methods allowing for different forms of country-specific heterogeneity and cross-section dependence. The results offer three main findings. First, executive constraints, whether they are judicial or legislative, and tax revenues are cointegrated. While in the short run they can drift apart, this will be temporary because there is a long-run relationship between the two. Second, evidence of cointegration is strongest for revenues from direct taxes, suggesting that the existence and nature of a long-run relationship may be mainly related to the emergence of broad-based taxation. Third, long-run causality runs mostly from executive constraints to taxation. This is most evident for income taxes. Our findings link Sustainable Development Goals 16 and 17, implying that the goal of promoting inclusive and accountable institutions may work in synergy with that of generating internal resources to finance development goals.

This paper discusses a research agenda for post-Northian institutional economics, which focuses on economic cognitive institutions and minds–institutions interactions. Douglass North introduced the ‘shared mental models’ and ‘shared beliefs’ concepts, which were considered the cutting edge of cognitive science at that time, the so-called first wave of extended mind theory. Subsequently, two more waves arose, but they went unnoticed by institutional economists who mostly continue to use internalist and reductionist approaches to cognition. Post-Northian institutional economics offers a deeper understanding of the relationship between cognition and institutions in the spirit of third-wave extended mind theory. The research agenda emphasizes a focus on socially extended cognition and the conception of cognitive institutions as shared mental processes (Petracca and Gallagher, 2020). I propose an alternative definition of cognitive institutions as interactively and polycentrically co-produced cognitive norms; this approach highlights normativity, co-production, and distributed active agency in extended cognitive processes. I propose two domains in which this third-wave framework can be used: ecological rationality and cognitive–cultural niche construction. This paper encourages a discussion on the prospects of a third-wave enactivist turn in institutional economics.

We investigate whether workplace voice through institutionalized forms of employee representation (ER) affects the design of firm hierarchies. We look at the role of ER within a knowledge-based view of hierarchies, where the firm's choice of hierarchical layers depends on the trade-off between communication and knowledge acquisition costs. Using a sample of more than 20,000 private-sector firms in 32 countries, we find that the presence of ER is positively associated with the number of organizational layers, though the relationship is tempered by firm size. ER positively correlates with job training, skill development and enhanced internal communication via staff meetings. The analysis of managers' perceptions suggests the higher frequency of meetings in firms with ER does not lead to more delays in the implementation of organizational changes. Taken together, our findings point to ER as facilitating the flow of information to top decision-makers and hence reducing communication costs. This may enable the firm to economize scarce cognitive resources without retarding the accumulation of new shop-floor capabilities. We contribute to recent literature on organizational design by suggesting ER institutions as possibly relaxing the trade-off between communication and knowledge acquisition costs within firms.

In this article, we reconceptualize, using an extended discrete and dynamic Ostrom's classification, the specific intellectual property (IP) regimes that support geographical indications (GIs) as ‘knowledge commons’, e.g. a set of shared collective knowledge resources constituting a complex ecosystem created and shared by a group of people that has remained subject to social dilemma. Geographical names are usually considered part of the public domain. However, under certain circumstances, geographical names have also been appropriated through trademark registration. Our analysis suggests that IP laws that support GIs first emerged in Europe and spread worldwide as a response to the threat of undue usurpation or private confiscation through trademark registration. We thus emphasize the nature of the tradeoffs faced when shifting GIs from the public domain to shared common property regimes, as defined by the EU legislation pertaining to GIs. In the context of trade globalization, we also compare the pros and cons of regulating GIs ex-ante rather than engaging in ex-post trademark litigation in the courts.

In this paper, I introduce an important dynamic function performed by social institutions, which consists in helping individual actors to adapt to significant changes taking place in their environment. This adapting function is juxtaposed against the statically-oriented properties of institutions, which comprise their enabling, constraining, and orienting functions. I explicate the three major adapting roles of social institutions, which correspond to the cognitive, normative, and regulatory institutional elements, and explore the nine principal mechanisms by which social institutions can accelerate the adaptation processes. I examine the main outcomes of the adaptation processes supported by social institutions, as well as the key enablers and barriers to successful adaptation. I present a co-evolutionary model of adaptive dynamics involving individuals, institutions, and the broader external environment, and discuss the major implications of the proposed framework.

The question of the impact of institutional arrangements on the nature of goods is insufficiently addressed in the literature. By the nature of goods, we refer to the economic taxonomy of goods, meaning their privateness is defined according to their degrees of excludability and subtractability. This paper aims to fill this research gap by examining whether institutional arrangements developed for the management of private goods can reduce the degrees of excludability of these goods. To this end, we analyse four collective farmland management projects in the Isère department in France. We adapt the tool of property as a bundle of rights in order to characterize the impact of these projects on the nature of farmland. Our results show that the distribution of land rights, as well as the rules designed to define land rights, influence the degree of excludability of farmland. We discuss the impact of these findings on public policy-making.

This paper interrogates certain contractarian theoretical presumptions concerning the development and maintenance of political constitutions. Specifically, the extent to which constitutional agreement is said to be inclusive of all persons affected by the activation of proposed provisions, and the extent to which such provisions remain agreeable, is critically appraised. For example, rectifying historical exclusions of indigenous peoples from constitutional agreement procedures, and the constitutional accommodation of demands for racial equality and recognition of indigenous rights, presents as an important motivation for constitutional change in actually existing societies. The objective of this paper is to interpret constitutional developments on matters of indigenous rights as the manifestation of complex, adaptive arrangements, instituted by actions seeking to restructure political rules and reframe the boundaries of permissible political action. Taking the Australian case, this paper illustrates how acts of constitutional entrepreneurship by indigenous groups have contributed to constitutional changes such as racially non-discriminatory treatment and recognition of indigenous governance. Entrepreneurship is seen as a part of broader endogenous processes reshaping constitutions, including constitutional arbitrage by activists between legislatures and judiciaries, and mobilizing popular support for indigenous rights. The framework presented in this paper extends constitutional political economy insights regarding the evolution of basic political institutions.

This paper contributes to research on the institutional determinants of tax capacity using annual data from 39 sub-Saharan African countries from 1985 to 2018 to construct a measure of tax capacity for each country based on the trend component of the ratio of actual to potential tax revenue. Potential revenue is estimated by a parsimonious tax performance specification, including only variables found to be robust determinants of the tax/GDP ratio. The results show that, on average, tax capacity is high (given potential) and has improved over time (especially for low-income countries). The final stage of analysis selects, from a wide variety of economic and institutional variables, the most important determinants of cross-country variation in tax capacity. Equal distribution of resources is the most important institutional factor associated with greater capacity, consistent with perceptions of equity supporting the fiscal bargain; corruption is associated with lower capacity, consistent with undermining trust in government. Private consumption and resource rents are associated with greater capacity. Other institutional factors are indirectly associated with greater capacity, such as accountability and elements of democracy associated with equity in the allocation and use of public resources.

This paper assesses how to quantitatively classify countries as conforming to the ideal of an ‘open access order’ in the spirit of Douglass North, John Joseph Wallis, and Barry Weingast's Violence and Social Orders. It does so by taking the harmonic mean of already existing measures of economic freedom, liberal democracy, and state capacity. Thirty-five countries out of 161 in 2020 were assessed to be open access orders. A main dataset is constructed for the years 1950 to present, and a supplementary dataset for select countries is constructed for years back to 1850. Switzerland has the highest index score for open access orders in 2020, is classified to be an open access order continuously since 1950, and is the first country to be classified as an open access order (in 1875).

This paper contributes to the debate on domestic revenue mobilization and state-building in the Global South by exploring the concept of fiscal states and the common assumption that such states are present in sub-Saharan Africa. We systematically review the diverse understandings of the fiscal state across relevant literatures to revisit its conceptualization. On that basis, we define the fiscal state as a state whose public revenue base is dominated by tax revenue and loans, and where the relationship between taxation and external and domestic borrowing is balanced and thereby sustainable and characterized by interdependence. We distinguish the fiscal state conceptually from the tax, debt, and rentier states and present a typology of these ideal state types, discussing illustrative empirical examples of different states in sub-Saharan Africa. These illustrate that not all sub-Saharan states can be categorized as fiscal states. This is important because when African states are regarded as fiscal states, assumptions are made about their economic structures; yet, to the extent that these are absent, fiscal policy reforms are unlikely to carry long-term positive effects.

Building on the Hodgson–Mokyr debate in this journal (Volume 18, Issue 1, 2022), this article discusses how modern economic growth occurred in pre-Industrial Revolution Britain, with a particular focus on coalition politics and the marginalization of conservative political groups – vetoers to change. Such political marginalization was unusual before the 19th century, when monarchs had substantial political power and land-based conservative groups were their main political allies. This article finds the source of the English exceptionalism in the unique system of non-imperial personal union that Britain then had with the Dutch Republic and Hanover. Under this system, foreigner monarchs chose their local ally in Britain based on the security needs of their home states. It created a significant disadvantage to the Tories, the incumbent conservative groups, while providing a window of opportunity for the Whigs, the opposition group supported by new commercial interests, to form a coalition with the Crown. The long absence of the Tories from power resulted in the incorporation of their constituencies into the Whig-led regime, making the traditional economic interests the regime's ‘junior partners’, instead of formidable political competitors to the new commercial interests, which was the case before and elsewhere at that time.