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Adaptation and the Economy

Arnold Kling writes in TCSDaily:

In textbooks, economics is often defined as the study of the allocation of scarce resources among competing ends. Douglass North says that adaptation is more important than allocation.

Textbook economics looks at how policies affect the allocation of resources. For example, taking a country that was closed to other nations and opening it up to trade can improve the allocation of resources by allowing the country’s work force to specialize in those industries where it is comparatively productive, relying on imports for those goods and services where other countries are relatively more productive. A policy is something that seemingly can be changed simply and apart from other considerations.

In contrast, Douglass North’s economics looks at the formal rules and informal norms that affect economic behavior. As I pointed out in the previous essay, North refers to these rules and norms as institutions. (This use of the term “institutions” differs somewhat from ordinary language, where we tend to use institutions to refer to tangible enterprises, such as universities or hospitals.) Institutions change slowly. They are conditioned on the past and on other institutions. Therefore, when better outcomes depend on institutional improvement, the challenge is much more difficult than is assumed in standard economics.

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Categories: Economics
  1. June 21, 2007 at 2:37 pm

    i so much concerned about the policy of adaptation and allocation of resources.please i want more facts on this issue

  2. June 21, 2007 at 2:45 pm

    my comment on the issue above is adaptation of resources has to do with getting to know about the resources and making it a part and parcel of it. for allocating of resources, it has to do with the distribution of resources to the required place.

  3. June 21, 2007 at 3:18 pm

    In response to Oganna Emmanuel:

    Below are some more sources on the subject, I hope this helps. I’d also be interested if you find any relevant resources for review.

    On-line:

    >> Douglass C. North’s, Economic Performance Through Time
    >> Arnold Kling, Due North
    >> A. Abraham & J.P. Platteau, Participatory Development in the Presence of Endogenous Community Imperfections (PDF)
    >> ephemera journal on theory & politics in organizing (PDF
    >>
    The Power of the State in a Global Economy
    >> Dynamic Adaptation To Resource Scarcity…

    Books:

    >> The author of the posted article, Arnold Kling, has a book on the topic called Learning Economics.
    >> John McMurtry, Unequal Freedoms
    >> Galbraith’s theories on economics

  4. June 21, 2007 at 3:39 pm
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