Institutional Revolution
Measurement and the Economic Emergence of the Modern World
Few events in the history of humanity rival the Industrial Revolution. Following its onset in eighteenth-century Britain, sweeping changes in agriculture, manufacturing, transportation, and technology began to gain unstoppable momentum throughout Europe, North America, and eventually much of the world – with profound effects on socioeconomic and cultural conditions.
In "The Institutional Revolution", Douglas W. Allen offers a thought-provoking account of another, quieter revolution that took place at the end of the eighteenth century and allowed for the full exploitation of the many new technological innovations. Fundamental to this shift were dramatic changes in institutions, or the rules that govern society, which reflected significant improvements in the ability to measure performance – whether of government officials, laborers, or naval officers – thereby reducing the role of nature and the hazards of variance in daily affairs. Along the way, Allen provides readers with a fascinating explanation of the critical roles played by seemingly bizarre institutions, from dueling to the purchase of one's rank in the British Army.
Engagingly written, "The Institutional Revolution" traces the dramatic shift from premodern institutions based on patronage, purchase, and personal ties toward modern institutions based on standardization, merit, and wage labor – a shift which was crucial to the explosive economic growth of the Industrial Revolution.
Reviews
"Douglas W. Allen has written a brilliant and challenging book that puts the measurement problem in the foreground to convincingly explain the logic of premodern institutions – institutions that the typical modern person, until reading Allen, views as the embodiment of chaos, inefficiency, corruption, and ineptitude. 'The Institutional Revolution' contains a wealth of historical information that anyone with an interest in history will find interesting and often delightful" – Thrainn Eggertsson, New York University
"I thoroughly enjoyed this excellent book" – Tyler Cowen, Marginal Revolution
"This is a very important book that increases understanding of how changes in measurement and institutions can increase trade and welfare. Allen uses economic logic to show that quaint premodern institutions – including the social rules of the old aristocracy, and the practice of dueling – aligned incentives at a time when variance in outcomes due to the enormous effects of nature could not easily be separated from those due to human behavior. Especially interesting is his insight into how the industrial and institutional revolutions in Britain developed interactively. This wonderful book sets the groundwork for further essential investigation into the micro foundations of specific institutional changes and economic growth, topics that are at the forefront of modern efforts to increase welfare" – Gary D. Libecap, University of California, Santa Barbara
