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131-681: The Imperial Clan Court or Court of the Imperial Clan was an institution responsible for all matters pertaining to the imperial family under the Ming and Qing dynasties of imperial China . This institution also existed under the Nguyễn dynasty of Vietnam where it managed matters pertaining to the Nguyễn Phúc clan . Established in 1389 by the Hongwu Emperor , it was based on previous institutions like

262-783: A Fellow of the Econometric Society in 2005. He was elected to the American Academy of Arts and Sciences in 2006, and to the National Academy of Sciences in 2014. He is also a Senior Fellow at the Canadian Institute for Advanced Research , and a member of several other learned societies. He edited Econometrica , an academic journal published by the Econometric Society , from 2011 to 2015. Acemoglu has authored hundreds of academic papers. He noted that most of his research has been "motivated by trying to understand

393-436: A centrist . Why Nations Fail was well received by both liberal and conservative economists. Acemoglu's and Robinson's long-time collaborator Simon Johnson suggests that their "point is not just about how things may become awful when the government goes off track (a right-leaning point). They are also more deeply concerned about how powerful people fight to grab control of the state and otherwise compete to exert influence over

524-475: A "guaranteed-income program [that] would offer transfers only to individuals whose monthly income is below $ 1,000, thereby coming in at a mere fraction of a UBI's cost." He calls for " universal health care , more generous unemployment benefits, better-designed retraining programs, and an expanded earned income tax credit (EITC)." Acemoglu supports a negative income tax , calling it a "more sensible" alternative to UBI. Acemoglu believes that nation-building by

655-778: A 2011 survey among American economists. In 2015, he was named the most cited economist of the past 10 years per Research Papers in Economics (RePEc) data. According to the Open Syllabus Project , Acemoglu is the third most frequently cited author on college syllabi for economics courses after Mankiw and Krugman. In 2024, Acemoglu, James A. Robinson , and Simon Johnson were awarded the Nobel Memorial Prize in Economic Sciences for their comparative studies in prosperity between states and empires. Kamer Daron Acemoğlu

786-410: A 2012 paper titled "Can't We All Be More Like Scandinavians?", co-written with Robinson and Verdier, he suggests that "it may be precisely the more 'cutthroat' American society that makes possible the more 'cuddly' Scandinavian societies based on a comprehensive social safety net, the welfare state and more limited inequality." They concluded that "all countries may want to be like the 'Scandinavians' with

917-437: A Darwinian evolution of institutions over time. Public choice theory , another branch of economics with a close relationship to political science, considers how government policy choices are made, and seeks to determine what the policy outputs are likely to be, given a particular political decision-making process and context. Credibility thesis purports that institutions emerge from intentional institution-building but never in

1048-434: A bargain. Artificial implementation of institutional change has been tested in political development but can have unintended consequences. North, Wallis, and Weingast divide societies into different social orders: open access orders, which about a dozen developed countries fall into today, and limited access orders, which accounts for the rest of the countries. Open access orders and limited access orders differ fundamentally in

1179-645: A bit of a masterpiece." Clive Crook wrote in Bloomberg News that the book deserves most of the "lavish praise" it received. In his review in Foreign Affairs Jeffrey Sachs criticized Acemoglu and Robinson for systematically ignoring factors such as domestic politics, geopolitics, technological discoveries, and natural resources. He also argued that the book's appeal was based on readers' desire to hear that "Western democracy pays off not only politically but also economically." Bill Gates called

1310-408: A cluster of institutions; the two are distinct in the sense that organizations contain internal institutions (that govern interactions between the members of the organizations). An informal institution tends to have socially shared rules, which are unwritten and yet are often known by all inhabitants of a certain country, as such they are often referred to as being an inherent part of the culture of

1441-426: A country's constitution; or that they may evolve over time as societies evolve. In the case of institutional evolution, it is harder to see them since societal changes happen in a slow manner, despite the perception that institutional change is rapid. Furthermore, institutions change incrementally because of how embedded they are in society. North argues that the nature of these changes is complicated process because of

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1572-407: A country. Legitimacy allows for there to be an incentive to comply with institutional rules and conditions, leading to a more effective institution. With political power, its centralization within a small group of individual leaders makes it easier and more effective to create rules and run an institution smoothly. However, it can be abused by individual leaders which is something that can contribute to

1703-403: A custom might call for each party to keep to their own right (or left—such a choice is arbitrary, it is only necessary that the choice be uniform and consistent). Such customs may be supposed to be the origin of rules, such as the rule, adopted in many countries, which requires driving automobiles on the right side of the road. Secondly, how do institutions affect behaviour? In this perspective,

1834-458: A free society is attained when the power of the state and of society evolved in rough balance. Published in 2023, Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity is a book by Acemoglu and Simon Johnson on the historical development of technology and the social and political consequences of technology. The book addresses three questions, on the relationship between new machines and production techniques and wages, on

1965-406: A given country. Informal practices are often referred to as "cultural", for example clientelism or corruption is sometimes stated as a part of the political culture in a certain place, but an informal institution itself is not cultural, it may be shaped by culture or behaviour of a given political landscape, but they should be looked at in the same way as formal institutions to understand their role in

2096-404: A given country. The relationship between formal and informal institutions is often closely aligned and informal institutions step in to prop up inefficient institutions. However, because they do not have a centre, which directs and coordinates their actions, changing informal institutions is a slow and lengthy process. According to Geoffrey M. Hodgson , it is misleading to say that an institution

2227-493: A great risk to U.S. democracy" because he is "looking for a new order with elements of anti-liberalism, misinformation and a lax attitude to corruption. If he is re-elected next year, it will be the beginning of the end of American democracy." According to Acemoglu, the three obstacles for economic growth under authoritarian regimes are the tendency of authoritarian regimes to become more authoritarian, their tendency to use power to halt " Schumpeterian creative destruction , which

2358-602: A long-established strategy of rewarding loyalty, which can be seen in his high-level appointments to date. This is all topped by an unwavering belief in his abilities." In a 2019 interview with Der Spiegel , Acemoglu stated that he sees similarities between Trump and the Republican Party and the Nazis: "Surely, Trump and the Republicans are no Nazis. But they are exploiting the same political sentiment." He argues that Trump "poses

2489-411: A mental institution. To this extent, "institutionalization" may carry negative connotations regarding the treatment of, and damage caused to, vulnerable human beings by the oppressive or corrupt application of inflexible systems of social, medical, or legal controls by publicly owned, private or not-for-profit organizations. The term "institutionalization" may also be used in a political sense to apply to

2620-628: A more extensive safety net and a more egalitarian structure," however, if the United States shifted from being a "cutthroat [capitalism] leader", the economic growth of the entire world would be reduced. He argued against the US adopting the Nordic model in a 2015 op-ed for The New York Times . He again argued: "If the US increased taxation to Denmark levels, it would reduce rewards for entrepreneurship, with negative consequences for growth and prosperity." He praised

2751-540: A particular institutional arrangement. Other approaches see institutional development as the result of evolutionary or learning processes. For instance, Pavlović explores the way compliance and socio-economic conditions in a consolidated democratic state are important in the emergence of institutions and the compliance power they have for the rules imposed. In his work, he explains the difference between wealthy societies and non-wealthy societies; wealthy societies on one hand often have institutions that have been functioning for

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2882-465: A particular time, culture and society, produced by collective human choice, though not directly by individual intention. Sociology traditionally analyzed social institutions in terms of interlocking social roles and expectations. Social institutions created and were composed of groups of roles, or expected behaviors. The social function of the institution was executed by the fulfillment of roles. Basic biological requirements, for reproduction and care of

3013-446: A phenomenon called path dependence, which states that institutional patterns are persistent and endure over time. These paths are determined at critical junctures, analogous to a fork in the road, whose outcome leads to a narrowing of possible future outcomes. Once a choice is made during a critical juncture, it becomes progressively difficult to return to the initial point where the choice was made. James Mahoney studies path dependence in

3144-547: A review written with James A. Robinson , he argues that Thomas Piketty and Karl Marx are "led astray" due to their disregard for "the key forces shaping how an economy functions: the endogenous evolution of technology and of the institutions and the political equilibrium that influence not only technology but also how markets function and how the gains from different economic arrangements are distributed." In 2019, Acemoglu argued in favor of social democracy . He stated: "[Social democracy, when practiced by competent governments]

3275-401: A significant and robust positive effect on GDP" and suggested that " democratizations increase GDP per capita by about 20% in the long run." In another paper, Acemoglu et al. found that "there is a significant and robust effect of democracy on tax revenues as a fraction of GDP, but no robust impact on inequality." Acemoglu and Philippe Aghion argued in 2001 that although deunionization in

3406-468: A society make also have lot to do in the survival and eventual evolution of an institution: they foster groups who want to maintain the set of rules of the game (as described by North), keeping a status quo impeding institutional change. People's interests play an important role in determining the direction of institutional change and emergence. Some scholars argue that institutions can emerge spontaneously without intent as individuals and groups converge on

3537-472: A strong incentive to overthrow it. These processes depend on (1) the strength of civil society, (2) the structure of political institutions, (3) the nature of political and economic crises, (4) the level of economic inequality, (5) the structure of the economy, and (6) the form and extent of globalization." Romain Wacziarg praised the book and argued that its substantive contribution is the theoretical fusion of

3668-487: A successful popular initiative that legalized the sale of recreational marijuana. In a 2016 interview with National Public Radio , he opined that the US infrastructure is in a "pitiful state, with negative consequences for US economic growth." Acemoglu argues that socialist states have not been successful in creating prosperity. He wrote that socialist regimes "from Cuba to the eastern bloc have been disastrous both for economic prosperity and individual freedom." In

3799-584: A superficial form of Western government but with malfunctioning institutions. In a 2020 study, Johannes Gerschewski created a two-by-two typology of institutional change depending on the sources of change (exogenous or endogenous) and the time horizon of change (short or long). In another 2020 study, Erik Voeten created a two-by-two typology of institutional design depending on whether actors have full agency or are bound by structures, and whether institutional designs reflect historical processes or are optimal equilibriums. Institutions and economic development In

3930-441: A system of human-made, nonphysical elements – norms, beliefs, organizations, and rules – exogenous to each individual whose behavior it influences that generates behavioral regularities." Additionally, they specify that organizations "are institutional elements that influence the set of beliefs and norms that can be self-enforcing in the transaction under consideration. Rules are behavioral instructions that facilitate individuals with

4061-530: A system of rules that are complied with in practice and has a high risk of punishment. It is essential because it will create a slippery slope effect on most laws and transform the nature of once-effective institutions. Many may identify the creation of these formal institutions as a fitting way for agents to establish legitimacy in an international or domestic domain, a phenomenon identified by DiMaggio and Powell and Meyer and Rowan as "isomorphism" and that Levitsky and Murillo liken to window dressing. They describe

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4192-549: A technology, institutions (in the form of law, policy, social regulations, or otherwise) can become locked into a society, which in turn can shape social or economic development. Arthur notes that although institutional lock-in can be predictable, it is often difficult to change once it is locked-in because of its deep roots in social and economic frameworks. Randall Calvert defines institution as "an equilibrium of behavior in an underlying game." This means that "it must be rational for nearly every individual to almost always adhere to

4323-573: A teenager. He was educated at the University of York , where he received a BA in economics in 1989, and at the London School of Economics (LSE), where he received an MSc in econometrics and mathematical economics in 1990, and a PhD in economics in 1992. His doctoral thesis was titled Essays in Microfoundations of Macroeconomics: Contracts and Economic Performance . His doctoral advisor

4454-491: A vision of how new technologies could be harnessed for social good. They see the Progressive Era as offering a model. They also discuss a list of policy proposals for the redirection of technology that includes: (1) market incentives, (2) the break up of big tech , (3) tax reform , (4) investing in workers, (5) privacy protection and data ownership, and (6) a digital advertising tax. In a 2001 article, Acemoglu argued that

4585-405: A weak institution, actors cannot depend on one another to act according to the rules, which creates barriers to collective action and collaboration. Other social scientists have examined the concept of institutional lock-in. In an article entitled "Clio and the Economics of QWERTY" (1985), economist Paul A. David describes technological lock-in as the process by which a specific technology dominates

4716-643: A while, but also have a stable economy and economic development that has a direct effect in the society's democratic stability. He presents us with three scenarios in which institutions may thrive in poor societies with no democratic background. First, if electoral institutions guarantee multiple elections that are widely accepted; second, if military power is in evenly equilibrium; and third, if this institutions allow for different actors to come to power. Other scholars see institutions as being formed through social contracts or rational purposeful designs. Origin of institutional theory John Meyer and Brian Rowan were

4847-529: Is de facto (informal) institutions as opposed to de jure (formal) institutions in observing cross-country differences. For instance, Lars Feld and Stefan Voigt found that real GDP growth per capita is positively correlated with de facto , not de juri , institutions that are judicially independent. Scholars have also focused on the interaction between formal and informal institutions as well as how informal institutions may create incentives to comply with otherwise weak formal institutions. This departure from

4978-402: Is a "price that we pay for providing incentives for people to contribute to prosperity." However, high levels of inequality create problems as the rich who control significant portions of the societal resources use them to create an "unequal distribution of political power." He sees the solution in increasing social mobility by "providing an opportunity for the bottom to become rich, not forcing

5109-449: Is a form of behavior. Instead, Hodgson states that institutions are "integrated systems of rules that structure social interactions." Examples of institutions include: In an extended context: While institutions tend to appear to people in society as part of the natural, unchanging landscape of their lives, the study of institutions by the social sciences tends to reveal the nature of institutions as social constructions , artifacts of

5240-495: Is a level of persistence and continuity. Laws, rules, social conventions and norms are all examples of institutions. Institutions vary in their level of formality and informality. Institutions are a principal object of study in social sciences such as political science , anthropology , economics , and sociology (the latter described by Émile Durkheim as the "science of institutions, their genesis and their functioning"). Primary or meta-institutions are institutions such as

5371-470: Is a phenomenal success. Everywhere in the west is to some degree social democratic, but the extent of this varies. We owe our prosperity and freedom to social democracy." However, he qualified this statement by arguing that social democracy "did not achieve these things by taxing and redistributing a lot. It achieved them by having labor institutions protecting workers, encouraging job creation and encouraging high wages." Following from this, Acemoglu opined that

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5502-955: Is a utilitarian argument that assumes institutions will evolve to maximize overall welfare for economic efficiency. Contrastingly, in Variation in Institutional Strength , Levitksy and Murillo acknowledge that some formal institutions are "born weak," and attribute this to the actors creating them. They argue that the strength of institutions relies on the enforcement of laws and stability, which many actors are either uninterested in or incapable of supporting. Similarly, Brian Arthur refers to these factors as properties of non-predictability and potential inefficiency in matters where increasing returns occur naturally in economics. According to Mansfield and Snyder, many transitional democracies lack state institutions that are strong and coherent enough to regulate mass political competition. According to Huntington,

5633-417: Is by far his most cited work. Graham Mallard described it as an "excellent example of his work: an influential paper that has led to much debate." They argue that Europeans set up extractive institutions in colonies where they did not settle, unlike in places where they did settle and that these institutions have persisted. They estimated that "differences in institutions explain approximately three-quarters of

5764-496: Is considered a follower of new institutional economics . His influences include Joel Mokyr , Kenneth Sokoloff , Douglass North , Seymour Martin Lipset , and Barrington Moore . Published by Cambridge University Press in 2006, Economic Origins of Dictatorship and Democracy by Acemoglu and Robinson analyzes the creation and consolidation of democratic societies. They argue that "democracy consolidates when elites do not have

5895-432: Is important to understand what drives institutional change. Acemoglu, Johnson and Robinson assert that institutional change is endogenous. They posit a framework for institutional change that is rooted in the distribution of resources across society and preexisting political institutions. These two factors determine de jure and de facto political power, respectively, which in turn defines this period's economic institutions and

6026-411: Is key to sustaining growth" and the instability and uncertainty caused by internal conflicts. He believes that Saudi Arabia would be like a poor African country without the oil, while the "only thing that is keeping [Russia] going is a big boom in natural resources and a clever handling of the media." He believes that China has managed to achieve significant economic growth because it "sort of picked up

6157-526: Is married to Asuman "Asu" Ozdağlar , a professor of electrical engineering and computer science at MIT, who is the daughter of İsmail Özdağlar , a former Turkish government minister. Together, they have authored several articles. As of 2015 , they live in Newton, Massachusetts , with their two sons, Arda and Aras. Acemoglu was a lecturer in economics at the London School of Economics from 1992 to 1993. He

6288-630: Is only a matter of degree. He suggests that free markets are not unregulated markets. In September 2008, Acemoglu signed a petition condemning the Bush administration's bailout plan for the US financial system. As the main cause of the financial crisis of 2007–2008 , he stated that policy makers were "lured by ideological notions derived from Ayn Rand 's novels rather than economic theory" and opined: "In hindsight, we should not be surprised that unregulated profit-seeking individuals have taken risks from which they benefit and others lose." In an early analysis of

6419-547: Is provided by Jack Knight who defines institutions as entailing "a set of rules that structure social interactions in particular ways" and that "knowledge of these rules must be shared by the members of the relevant community or society." Definitions by Knight and Randall Calvert exclude purely private idiosyncrasies and conventions. Douglass North argues that institutions are "humanly devised constraints that shape interaction". According to North, they are critical determinants of economic performance, having profound effects on

6550-443: Is the mimetic process where organizations adopt other organizations' practices to resolve internal uncertainty about their own actions or strategy. Lastly, it is the normative pressure where organizations adopt changes related to the professional environment like corporate changes or cultural changes in order to be consistent. In order to understand why some institutions persist and other institutions only appear in certain contexts, it

6681-650: The Cournot duopoly model is based on an institution involving an auctioneer who sells all goods at the market-clearing price. While it is always possible to analyze behaviour with the institutions-as-equilibria approach instead, it is much more complicated. In political science , the effect of institutions on behavior has also been considered from a meme perspective, like game theory borrowed from biology. A "memetic institutionalism" has been proposed, suggesting that institutions provide selection environments for political action, whereby differentiated retention arises and thereby

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6812-469: The Great Recession , Acemoglu wrote: "When channeled into profit-maximizing , competitive, and innovative behavior under the auspices of sound laws and regulations, greed can act as the engine of innovation and economic growth. But when unchecked by the appropriate institutions and regulations, it will degenerate into rent-seeking , corruption, and crime." He argues that the heavy overrepresentation from

6943-646: The Massachusetts Institute of Technology since 1993, where he is currently the Elizabeth and James Killian Professor of Economics, and was named an Institute Professor at MIT in 2019. He received the John Bates Clark Medal in 2005, and the Nobel Prize in Economics in 2024. Acemoglu ranked third, behind Paul Krugman and Greg Mankiw , in the list of "Favorite Living Economists Under Age 60" in

7074-605: The family or money that are broad enough to encompass sets of related institutions. Institutions are also a central concern for law , the formal mechanism for political rule-making and enforcement. Historians study and document the founding, growth, decay and development of institutions as part of political, economic and cultural history. There are a variety of definitions of the term institution . These definitions entail varying levels of formality and organizational complexity. The most expansive definitions may include informal but regularized practices, such as handshakes, whereas

7205-517: The income per capita differences across former colonies." Historical experience dominated by extractive institutions in these countries has created a vicious circle , which was exacerbated by the European colonization. Daron Acemoglu and James A. Robinson , in their article "Income and Democracy" (2008) show that even though there is a strong cross-country correlation between income and democracy, once one controls for country fixed effects and removes

7336-505: The minimum wage and unemployment benefits "shift the composition of employment toward high-wage jobs. Because the composition of jobs in the laissez-faire equilibrium is inefficiently biased toward low-wage jobs, these labor market regulations increase average labor productivity and may improve welfare." Furthermore, he has argued that "minimum wages can increase training of affected workers, by inducing firms to train their unskilled employees." Acemoglu et al. found that "democracy has

7467-739: The "Court of the Imperial Clan" ( 宗正寺 , Zōngzhèng Sì ) of the Tang and Song dynasties and the "Office of the Imperial Clan" ( 太宗正院 , Tài Zōngzhèng Yuàn ) of the Yuan dynasty . Under the Ming dynasty, the Court was managed by the Ministry of Rites ; during the Qing, it was outside the regular bureaucracy. Under both dynasties, the Court was staffed by members of the imperial clan. Imperial clansmen who committed crimes were not tried through

7598-469: The "lock-in" phenomenon in which adds a lot of value to a piece of technology that is used by many people. It is important for policymakers and people of higher levels within an institution to consider when looking at products that have a long term impact on markets and economic developments and stability. For example, recently the EU has banned TikTok from official devices across all three government institutions. This

7729-465: The Central American countries. Though institutions are persistent, North states that paths can change course when external forces weaken the power of an existing organization. This allows other entrepreneurs to affect change in the institutional framework. This change can also occur as a result of gridlock between political actors produced by a lack of mediating institutions and an inability to reach

7860-602: The Japanese people and government. Under this analysis, says Ian Lustick, Japan was stuck on a "local maxima", which it arrived at through gradual increases in its fitness level, set by the economic landscape of the 1970s and 80s. Without an accompanying change in institutional flexibility, Japan was unable to adapt to changing conditions, and even though experts may have known which changes the country needed, they would have been virtually powerless to enact those changes without instituting unpopular policies that would have been harmful in

7991-568: The Marxist dialectical materialism ("institutional change results from distributional struggles between two distinct social groups, a rich ruling class and a poor majority, each of whose interests are shaped primarily by economic forces") and the ideas of Barry Weingast and Douglass North , who argued that "institutional reform can be a way for the elite to credibly commit to future policies by delegating their enactment to interests that will not wish to reverse them." William Easterly called it "one of

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8122-624: The Republican period has been characterized by an unwillingness to accept ethnic minorities. In 2014, Acemoglu condemned the widespread anti-Armenian rhetoric in Turkish textbooks, and demanded that the books be pulled from circulation. Acemoglu has criticized Recep Tayyip Erdoğan and his government for its authoritarian rule. In a 2013 op-ed in The New York Times , following the crackdown of Gezi Park protests , Acemoglu wrote that "Even before

8253-555: The Scandinavian experience in poverty reduction , creation of a level playing field for its citizens, and higher social mobility . This was critiqued by Lane Kenworthy , who argues that, empirically, the US's economic growth preceded the divergence in 'cutthroat' and 'cuddly' policies, and there is no relationship between inequality and innovation for developed countries. " The Colonial Origins of Comparative Development ", co-written by Acemoglu, Robinson, and Simon Johnson in 2001,

8384-458: The US and UK since the 1980s is not the "underlying cause of the increase in inequality", it "amplifies the direct effect of skill-biased technical change by removing the wage compression imposed by unions." According to Acemoglu and Robinson, unions historically had a significant role in creating democracy, especially in western Europe, and in maintaining a balance of political power between established business interests and political elites. In

8515-526: The West is no longer possible around the world because the West now lacks the resources and commitment that were present in post-World War II Germany and Japan , and because countries where progress is needed today, such as in the Muslim- and Arab-majority world, do not trust the West. He views the US war on drugs as a "total and very costly failure", and supported the 2013 ballot referendum Colorado Amendment 64 ,

8646-400: The ability to cause change over a long period of time. For example, Levitsky and Murillo stress the importance of institutional strength in their article "Variation in Institutional Strength." They suggest that in order for an institution to maintain strength and resistance there must be legitimacy within the different political regimes, variation in political power, and political autonomy within

8777-440: The amount of freedom of a society, or the quality of life of the individuals within. The term "institutionalization" is widely used in social theory to refer to the process of embedding something (for example a concept, a social role, a particular value or mode of behavior) within an organization, social system, or society as a whole. The term may also be used to refer to committing a particular individual to an institution, such as

8908-504: The association between income per capita and various measures of democracy, there is "no causal effect of income on democracy." In "Non-Modernization" (2022), they further argue that modernization theory cannot account for various paths of political development "because it posits a link between economics and politics that is not conditional on institutions and culture and that presumes a definite endpoint—for example, an 'end of history'." Journalists and economists have described Acemoglu as

9039-407: The attention of academia by Tony Atkinson , Thomas Piketty , and Emmanuel Saez . Acemoglu is in favor of raising and indexing the minimum wage . Acemoglu believes that universal basic income is "expensive and not generous enough" and that a "more efficient and generous social safety net is needed." He further called it a "flawed idea" and a "poorly designed policy." He instead advocates for

9170-443: The behavior prescriptions of the institution, given that nearly all other individuals are doing so." Robert Keohane defined institutions as "persistent and connected sets of rules (formal or informal) that prescribe behavioral roles, constrain activity, and shape expectations." Samuel P. Huntington defined institutions as "stable, valued, recurring patterns of behavior." Avner Greif and David Laitin define institutions "as

9301-421: The benefits they can derive from the change. North describes the institutional change as a process that is extremely incremental, and that works through both formal and informal institutions. North also proposes that institutional change, inefficiencies, and economic stagnation can be attributed to the differences between institutions and organizations. This is because organizations are created to take advantage of

9432-562: The best policies and practices." For example, "Soviet Russia generated rapid growth as it caught up rapidly with some of the advanced technologies in the world [but] was running out of steam by the 1970s" because of a lack of creative destruction. The book was written for the general audience. It was widely discussed by political analysts and commentators. Warren Bass wrote of it in The Washington Post : "bracing, garrulous, wildly ambitious and ultimately hopeful. It may, in fact, be

9563-460: The book a "major disappointment" and characterized the authors' analysis as "vague and simplistic." Ryan Avent, an editor at The Economist , responded that "Acemoglu and Robinson might not be entirely right about why nations succeed or fail. But at least they're engaged with the right problem." In The Narrow Corridor. States, Societies, and the Fate of Liberty (2019), Acemoglu and Robinson argue that

9694-600: The brutal suppression of the demonstrations, the belief that Turkey was on its way to becoming a mature democracy — a role model for the rest of the Middle East — had already become untenable." In a May 2014 op-ed in Foreign Affairs , Acemoglu wrote that the drift from democracy by Erdogan is lamentable, but an "almost predictable, stage of Turkey's democratic transition." In the late 2010s, Acemoglu often criticized Turkey's economic policies and consequently became popular with

9825-430: The changes in rules, informal constraints, and the effectiveness of enforcement of these institutions. Levitsky and Murillo explore the way institutions are created. When it comes to institutional design, the timeframe in which these institutions are created by different actors may affect the stability the institution will have on society, because in these cases the actors may have more (or less) time to fully calculate

9956-420: The cognitive task of choosing behavior by defining the situation and coordinating behavior." All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and norms are all examples of institutions. Organizations and institutions can be synonymous, but Jack Knight writes that organizations are a narrow version of institutions or represent

10087-404: The concept of a fitness landscape and local maxima only makes sense if one institution can be said to be "better" than another, and this in turn only makes sense insofar as there exists some objective measure of an institution's quality. This may be relatively simple in evaluating the economic prosperity of a society, for example, but it is difficult to see how objectively a measure can be applied to

10218-502: The context of institutions and how they are formed, North suggests that institutions ultimately work to provide social structure in society and to incentivize individuals who abide by this structure. North explains that there is in fact a difference between institutions and organizations and that organizations are "groups of people bound by some common purpose to achieve objectives." Additionally, because institutions serve as an umbrella for smaller groups such as organizations, North discusses

10349-488: The context of national regime change in Central America and finds that liberal policy choices of Central American leaders in the 19th century was the critical juncture that led to the divergent levels of development that we see in these countries today. The policy choices that leaders made in the context of liberal reform policy led to a variety of self-reinforcing institutions that created divergent development outcomes for

10480-671: The costs of exchange and production. He emphasizes that small historical and cultural features can drastically change the nature of an institution. Daron Acemoglu , Simon Johnson , and James A. Robinson agree with the analysis presented by North. They write that institutions play a crucial role in the trajectory of economic growth because economic institutions shape the opportunities and constraints of investment. Economic incentives also shape political behavior, as certain groups receive more advantages from economic outcomes than others, which allow them to gain political control. A separate paper by Acemoglu, Robinson, and Francisco A. Gallego details

10611-451: The countries with ineffective or weak institutions often have a gap between high levels of political participation and weak political institutions, which may provoke nationalism in democratizing countries. Regardless of whether the lack of enforcement and stability in institutions is intentional or not, weakly enforced institutions can create lasting ripples in a society and their way of functioning. Good enforcement of laws can be classified as

10742-512: The country in question becomes the beneficiary from the asymmetric world equilibrium." In an op-ed in Foreign Policy , Acemoglu claimed that President Donald Trump shared political goals and strategies of Hugo Chávez , Vladimir Putin , and Recep Tayyip Erdoğan , such as "little respect for the rule of law or the independence of state institutions, ... a blurred vision of national and personal interests, ... little patience with criticism and

10873-522: The country's longer-term possibilities for prosperity." Acemoglu opined that the Republic of Turkey, formed in 1923 by Atatürk , "is very continuous with the Ottoman Empire." Although the shift from empire to republic brought some positive changes, he argues, the model was largely maintained by the reformers who took power, citing a persistent concentration of power and economic activity. He suggests that

11004-411: The creation or organization of governmental institutions or particular bodies responsible for overseeing or implementing policy, for example in the welfare or development. Daron Acemoglu This is an accepted version of this page Kamer Daron Acemoğlu ( Turkish: [daˈɾon aˈdʒemoːɫu] ; born September 3, 1967) is a Turkish-American economist of Armenian descent who has taught at

11135-430: The developing world institutions as "window-dressing institutions" that "are often a response to international demands or expectations." It also provides an effective metaphor for something that power holders have an interest in keeping on the books, but no interest in enforcing. The dependence developing countries have on international assistance for loans or political power creates incentives for state elites to establish

11266-499: The economists of US presidential candidate Bernie Sanders , who is an advocate of democratic socialism along the lines of the Nordic model , "don't understand basic economics. They are not just dangerous, they are clueless." Acemoglu argued that a "tradition of strong labor movement or social democratic party, by constraining the actions of the social planner, can act as a commitment device to egalitarianism, inducing an equilibrium in which

11397-585: The extent that they are associated with changes in institutions. In European history, particular significance is attached to the long transition from the feudal institutions of the Middle Ages to the modern institutions, which govern contemporary life. Scholars have proposed different approaches to the emergence of institutions, such as spontaneous emergence, evolution and social contracts. In Institutions: Institutional Change and Economic Performance , Douglas North argues that institutions may be created, such as

11528-456: The faults of these policies. As an example, Lustick cites Amyx's analysis of the gradual rise of the Japanese economy and its seemingly sudden reversal in the so-called "Lost Decade" . According to Amyx, Japanese experts were not unaware of the possible causes of Japan's economic decline. Rather, to return Japan's economy back to the path to economic prosperity, policymakers would have had to adopt policies that would first cause short-term harm to

11659-545: The financial sector in the top 1% "has been an outcome of the political processes that have removed all of the regulations in finance, and so created the platform for 40 percent of U.S. corporate profits to be in the financial sector." He argues that a platform, particularly in Wall Street, has been created "where the ambition and greed of people, often men, has been channeled in a very anti-social, selfish and socially destructive direction." Acemoglu has voiced concerns regarding

11790-626: The first scholars to introduce institutional theory to inspect how organizations are shaped by their social and political environments and how they evolve in different ways. Other scholars like Paul DiMaggio and Walter Powell proposed one of the forms of institutional change shortly after: institutional isomorphism. There were three main proposals. The first one is the coercive process where organizations adopt changes consistent with their larger institution due to pressures from other organizations which they might depend on or be regulated by. Such examples include state mandates or supplier demands. The second one

11921-559: The focus is on behaviour arising from a given set of institutional rules. In these models, institutions determine the rules (i.e. strategy sets and utility functions) of games, rather than arise as equilibria out of games. Douglass North argues, the very emergence of an institution reflects behavioral adaptations through his application of increasing returns . Over time institutions develop rules that incentivize certain behaviors over others because they present less risk or induce lower cost, and establish path dependent outcomes. For example,

12052-435: The formation of smaller groups with other goals and objectives is crucial for an institution's survival. Additionally, technological developments are important in the economic development of an institution. As detailed by Brian Arthur in "Competing Technologies, Increasing Returns, and Lock-in by Historical Events", technological advancements play a crucial role in shaping the economic stability of an institution. He talks about

12183-630: The granting of monopoly and oligopoly rights. They say that the Industrial Revolution began in Great Britain , because the English Bill of Rights 1689 created such restraints. Acemoglu and Robinson insist that "development differences across countries are exclusively due to differences in political and economic institutions, and reject other theories that attribute some of the differences to culture, weather, geography or lack of knowledge about

12314-461: The impact of institutional change and the ways in which it can cause economic performance to decline or become better depending on the occurrence. This is known as "path dependence" which North explains is the idea of historical and cultural events impacting the development of institutions over time. Even though North argues that institutions due to their structure do not possess the ability to change drastically, path dependence and small differences have

12445-467: The impact of institutions on economic development in various countries, concluding that institutions in prosperous countries like the United States induced a net increase in productivity, whereas institutions in Third World countries caused a net decrease. Scholars of this period assumed that "parchment institutions" that were codified as law would largely guide the behavior of individuals as intended. On

12576-495: The impacts the institution in question will have, the way the new rules affect people's interests and their own, and the consequences of the creation of a new institution will have in society. Scholars like Christopher Kingston and Gonzalo Caballero also pose the importance of gradual societal change in the emergence of brand new institutions: these changes will determine which institutions will be successful in surviving, spreading, and becoming successful. The decisions actors within

12707-519: The importance of institutional strength can be found in Lacatus' essay on national human rights institutions in Europe, where she states that "As countries become members of GANHRI, their NHRIs are more likely to become stronger over time and show a general pattern of isomorphism regarding stronger safeguards for durability." This demonstrates that institutions running independently and further creating spaces for

12838-503: The inability of institutions to adapt as a symptom of being stuck on a local maxima within a fitness landscape does nothing to solve the problem. At the very least, however, it might add credibility to the idea that truly beneficial change might require short-term harm to institutions and their members. David Sloan Wilson notes that Lustick needs to more carefully distinguish between two concepts: multilevel selection theory and evolution on multi-peaked landscapes. Bradley Thayer points out that

12969-487: The increasing inequality in the US, which in his view turns into political inequality, in turn undermining the inclusiveness of US institutions. In 2012 he identified societal polarization, caused by economic inequality, as the biggest problem for the US. He argues that "democracy ceases to function because some people have so much money they command greater power." He states that he is comfortable with economic inequality which comes through different social contributions as it

13100-497: The individual actors within an institution. This can also be seen in the recent issue with Silvergate and money being moved to crypto exchanges under the SEN Platform institution, which has led the bank to "delay the filing of its annual report due to questions from its auditors." Additionally, they lost many crypto clients the next day allowing the bank's stock price to fall by 60% before it stabilized again. These examples demonstrate

13231-407: The individual liberty of a truly free society. Economics , in recent years, has used game theory to study institutions from two perspectives. Firstly, how do institutions survive and evolve? In this perspective, institutions arise from Nash equilibria of games. For example, whenever people pass each other in a corridor or thoroughfare, there is a need for customs, which avoid collisions. Such

13362-411: The institution to improve any further, it would first need to decrease its overall fitness score (e.g., adopt policies that may cause short-term harm to the institution's members). The tendency to get stuck on local maxima can explain why certain types of institutions may continue to have policies that are harmful to its members or to the institution itself, even when members and leadership are all aware of

13493-411: The labor economics field. Acemoglu has extensively collaborated with James A. Robinson , a British political scientist, since 1993. Acemoglu has described it as a "very productive relationship." They have worked together on many articles and books, most of which are on the subject of growth and economic development. The two have also extensively collaborated with economist Simon Johnson . Acemoglu

13624-560: The low hanging fruit from the world technology frontier, but that sort of growth is not going to last until China goes to the next step, which is harnessing innovation," which he argues will be impossible "unless economic institutions become even more open and the extractive political institutions in China will be a barrier to that." He and Robinson wrote for the HuffPost that the "limited rights [China] affords its citizens places major restrictions on

13755-404: The market, even when the technology is not the most efficient of the ones available. He proceeds to explain that lock-in is a result of path-dependence, where the early choice of technology in a market forces other actors to choose that technology regardless of their natural preferences, causing that technology to "lock-in". Economist W. Brian Arthur applied David's theories to institutions. As with

13886-556: The most important contributions to the literature on the economics of democracy in a long time." Edward Glaeser described it as "enormously significant" work and a "great contribution to the field." In their 2012 book, Why Nations Fail , Acemoglu and Robinson argue that economic growth at the forefront of technology requires political stability, which the Mayan civilization (to name only one) did not have, and creative destruction . The latter cannot occur without institutional restraints on

14017-441: The most narrow definitions may only include institutions that are highly formalized (e.g. have specified laws, rules and complex organizational structures). According to Wolfgang Streeck and Kathleen Thelen , institutions are, in the most general sense, "building blocks of social order: they represent socially sanctioned, that is, collectively enforced expectations with respect to the behavior of specific categories of actors or to

14148-426: The next period's political institutions. Finally, the current economic institutions determine next period's distribution of resources and the cycle repeats. Douglass North attributes institutional change to the work of "political entrepreneurs", who see personal opportunities to be derived from a changed institutional framework. These entrepreneurs weigh the expected costs of altering the institutional framework against

14279-638: The opportunities created by institutions and, as organizations evolve, these institutions are then altered. Overall, according to North, this institutional change would then be shaped by a lock-in symbiotic relationship between institutions and organizations and a feedback process by which the people in a society may perceive and react to these changes. Lipscomb argues that patterns of institutional change vary according to underlying characteristics of issue areas, such as network effects. North also offers an efficiency hypothesis, stating that relative price changes create incentives to create more efficient institutions. It

14410-404: The originally intended form. Instead, institutional development is endogenous and spontaneously ordered and institutional persistence can be explained by their credibility, which is provided by the function that particular institutions serve. Political scientists have traditionally studied the causes and consequences of formal institutional design. For instance, Douglass North investigated

14541-498: The other hand, recent scholars began to study the importance of institutional strength, which Steven Levitsky and María Victoria Murillo define in terms of the level of enforcement and sustainability of an institution. Weak institutions with low enforcement or low sustainability led to the deterioration of democratic institutions in Madagascar and the erosion of economic structures in China. Another area of interest for modern scholars

14672-508: The performance of certain activities. Typically, they involve mutually related rights and obligations for actors." Sociologists and anthropologists have expansive definitions of institutions that include informal institutions. Political scientists have sometimes defined institutions in more formal ways where third parties must reliably and predictably enforce the rules governing the transactions of first and second parties. One prominent Rational Choice Institutionalist definition of institutions

14803-668: The regular legal system. Qing imperial clansmen were registered under the Eight Banners , but were still under the jurisdiction of the Imperial Clan Court. The Court used regular reports on births, marriages, and deaths to compile the genealogy of the imperial clan ( 玉牒 , Yùdié ). The imperial genealogy was revised 28 times during the Qing dynasty. Institution An institution is a humanly devised structure of rules and norms that shape and constrain social behavior. All definitions of institutions generally entail that there

14934-499: The relationships between institutions, human capital, and economic development. They argue that institutions set an equal playing field for competition, making institutional strength a key factor in economic growth. Authors Steven Levitsky and María Victoria Murillo claim that institutional strength depends on two factors: stability and enforcement. An unstable, unenforced institution is one where weak rules are ignored and actors are unable to make expectations based on their behavior. In

15065-571: The rest of society (a left-leaning perspective)." Acemoglu has praised the successes of the Progressive Era , and argued in favor of its replication. He argues that the market economy is the only system that creates prosperity, and believes in finding an appropriate balance between "incentivizing creativity, hard work and risk-taking and creating the essential public services , social safety nets and equality of opportunity ." For Acemoglu, markets work only with regulations and predictable laws and that all markets are regulated to some extent; it

15196-562: The rich to become poor." Acemoglu has praised the American tradition of vibrant protest movements dating back to the Populists and the Progressives . He has also praised Occupy Wall Street for "putting the question of inequality on the agenda, but also for actually standing up for political equality." He notes that Occupy Wall Street brought the 1% to the attention of the wider public, and to

15327-707: The short-term. The lessons from Lustick's analysis applied to Sweden's economic situation can similarly apply to the political gridlock that often characterizes politics in the United States. For example, Lustick observes that any politician who hopes to run for elected office stands very little to no chance if they enact policies that show no short-term results. There is a mismatch between policies that bring about short-term benefits with minimal sacrifice, and those that bring about long-lasting change by encouraging institution-level adaptations. There are some criticisms to Lustick's application of natural selection theory to institutional change. Lustick himself notes that identifying

15458-504: The social sciences, particularly those with the institution as a central concept, can benefit by applying the concept of natural selection to the study of how institutions change over time. By viewing institutions as existing within a fitness landscape , Lustick argues that the gradual improvements typical of many institutions can be seen as analogous to hill-climbing within one of these fitness landscapes. This can eventually lead to institutions becoming stuck on local maxima , such that for

15589-419: The sources of poverty." His research includes a wide range of topics, including political economy , human capital theory, growth theory , economic development , innovation, labor economics , income and wage inequality, and network economics , among others. He noted in 2011 that most his research of the past 15 years concerned with what can be broadly called political economy. He has made contribution to

15720-426: The supposed human "propensity to truck, barter and exchange". Modern feminists have criticized traditional marriage and other institutions as element of an oppressive and obsolete patriarchy . The Marxist view—which sees human nature as historically 'evolving' towards voluntary social cooperation, shared by some anarchists —is that supra-individual institutions such as the market and the state are incompatible with

15851-451: The traditional understanding of institutions reflects the scholarly recognition that a different framework of institutional analysis is necessary for studying developing economies and democracies compared to developed countries. In history, a distinction between eras or periods, implies a major and fundamental change in the system of institutions governing a society. Political and military events are judged to be of historical significance to

15982-440: The way in which technology could be harnessed for social goods, and on the reason for the enthusiasm around artificial intelligence. Power and Progress argues that technologies do not automatically yield social goods, their benefits going to a narrow elite. It offers a rather critical view of artificial intelligence (AI), stressing its largely negative impact on jobs and wages and on democracy. Acemoglu and Johnson also provide

16113-432: The way power and influence is distributed. As a result, open access institutions placed in limited access orders face limited success and are often coopted by the powerful elite for self-enrichment. Transition to more democratic institutions is not created simply by transplanting these institutions into new contexts, but happens when it is in the interest of the dominant coalition to widen access. Ian Lustick suggests that

16244-525: The ways in which institutions and the economy interact, and how the well-being of the economy is essential for the institution's success and ability to run smoothly. North argues that because of the preexisting influence that existing organizations have over the existing framework, change that is brought about is often in the interests of these organizations. This is because organizations are created to take advantage of such opportunities and, as organizations evolve, these institutions are altered. This produces

16375-403: The weakening of an institution over time. Lastly, independence within an institution is vital because the institutions are making decisions based on expertise and norms that they have created and built over time rather than considerations from other groups or institutions. Having the ability to operate as an independent institution is crucial for its strength and resistance over time. An example of

16506-655: The young, are served by the institutions of marriage and family, for example, by creating, elaborating and prescribing the behaviors expected for husband/father, wife/mother, child, etc. The relationship of the institutions to human nature is a foundational question for the social sciences. Institutions can be seen as "naturally" arising from, and conforming to, human nature—a fundamentally conservative view—or institutions can be seen as artificial, almost accidental, and in need of architectural redesign, informed by expert social analysis, to better serve human needs—a fundamentally progressive view. Adam Smith anchored his economics in

16637-513: Was Kevin W. S. Roberts . James Malcomson , one of his doctoral examiners at the LSE, said that even the weakest three of the seven chapters of his thesis were "more than sufficient for the award of a PhD." Arnold Kling called him a wunderkind due to the age at which he received his PhD (25). Acemoglu is a naturalized US citizen . He is fluent in English and Turkish , and speaks some Armenian . He

16768-545: Was appointed an assistant professor at MIT in 1993, where he became the Pentti Kouri Associate Professor of Economics in 1997, and was tenured in 1998. He became a full professor at MIT in 2000, and served as the Charles P. Kindleberger Professor of Applied Economics there from 2004 to 2010. In 2010, Acemoglu was appointed the Elizabeth and James Killian Professor of Economics at MIT. In July 2019, he

16899-565: Was born in Istanbul to Armenian parents on September 3, 1967. His father, Kevork Acemoglu (1938–1988), was a commercial lawyer and lecturer at Istanbul University . His mother, Irma Acemoglu ( d.  1991 ), was the principal of Aramyan Uncuyan  [ tr ; hy ] , an Armenian elementary school in Kadıköy , which he attended, before graduating from Galatasaray High School in 1986. He became interested in politics and economics as

17030-456: Was due to "cybersecurity concerns" and data protection in regards to data collection by "third parties." This concern regarding TikTok's growing popularity demonstrates the importance of technological development within an institutional economy. Without understanding of what these products are doing or selling to the consumers, there runs a risk of it weakening an institution and causing more harm than good if not carefully considered and examined by

17161-458: Was named an Institute Professor , the highest faculty honor at MIT. As of 2019 , he has mentored over 60 PhD students. Among his doctoral students are Robert Shimer , Mark Aguiar , Pol Antràs , and Gabriel Carroll . In 2014, he made $ 841,380, making him one of the top earners at MIT. Acemoglu is a research associate at the National Bureau of Economic Research (NBER), and was elected

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