On his way to the Nobel prize, Douglass C. North traveled a
long, ideological road from Karl Marx to Adam Smith.
As a college student at the University of California at
Berkeley in the 1940s and later as a young economics professor in
the 1950s, North found Marxism to be "the only organized theory
around" that explained the Depression and "provided an intellectual
explanation of what was going on in the world."
In the decades since, North has become one of the nation's
leading economic innovators, developing his own organized theory of
the world. That theory is a modern-day version of the laissez-faire
doctrine of limited government propounded by Adam Smith in the 18th
To North, the key to economic development is for a nation's
institutions to provide incentives to growth by protecting private
property and contracts.
Until now, North's has been an iconoclastic view whose
adherents were in the minority among economists. "Intellectually,
he has never been bothered about being outside the mainstream,"
says Lee Benham, the Washington University professor instrumental
in luring North to the university a decade ago.
"He's 72, but he goes to conferences and accuses his younger
colleagues of being old fogies. He has been in professional combat
all his life, with most of the professors in his field disagreeing
with him most of the time."
At a news conference on Tuesday, North smiled when asked if the
Nobel prize offered vindication. "You're darn right it does," he
Later, while crossing the campus to a reception of colleagues
and students, he remarked, "It's a long job to persuade people when
there is a paradigm in the profession, so I did not expect to see a
big change before I died."
In each of North's ideological incarnations, he has focused on
one simple question: Why are some societies rich and others poor?
With memories of the Depression still fresh, North thought Marx
provided the answer. But after he became an economics professor at
the University of Washington in the 1950s, his Marxist leanings
began to fall away over chess games with colleague Dan Gordon. The
two discussed economics over rooks and knights, and "Gordon won all
of the arguments."
Ready To Challenge
Early in the 1960s, North was ready to take on the first
convention of the profession. He argued that the mathematical rigor
of quantitative economic analysis should be injected into economic
North and other leaders of this "new economic history movement"
- called cliometrics - reanalyzed historical economic data and
debunked long-accepted explanations for historical developments.
For example, they challenged the explanation for the industrial
revolution that still appears in every child's history text. They
concluded that new inventions, such as the steam engine, did not
have as big an impact on the rapid economic growth in England as
historians had assumed.
Similarly, Robert Fogel, the University of Chicago professor
who shared the Nobel with North, concluded that the railroad had
not had the decisive impact on the development of the American West
ascribed to it in historical accounts. …