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The Institutional Revolution

I thoroughly enjoyed Douglas Allen’s new book, The Institutional Revolution: Measurement and the Economic Emergence of the Modern World.

Here is a summary excerpt:

Having consistent weights and measures, like knowing the precise time, allowed for — almost by definition — more accurate and less costly monitoring. The lowered transaction costs of measurement meant that institutions which relied on measurement could be used more effectively. Productivity could be measured in terms of output per unit of time, speeds could be accurately recorded and tracked, commerce could flourish without confusion and error, land and buildings could be surveyed accurately, and fraud could be mitigated. Today, these matters are dealt with easily and to a much tighter standard. Without the ease of measurement, the variability of life would be drastically higher; we would be uncertain about what we were getting and giving in most exchanges.

…The impossibility of reliable power, the inability to tell time accurately, and the problem of multiple and varying weights and measures were matters of the physical world, but high variability works its way even more deeply into the human condition.

…When the wold is extremely variable, bad behaviors abound because failure to perform can always be blamed on nature. … And men, when they know they can blame nature, will behave badly.

Also interesting was Allen’s discussion on hostage capital, factory location, and private lighthouses.

You can buy the book here.

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