Douglass North

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Lore & Background

Douglass North was born in Cambridge, Massachusetts, on November 5, 1920. He moved several times as a child due to his father's work at MetLife, living in Ottawa, Ontario, Canada; Lausanne, Switzerland; New York City; and Wallingford, Connecticut. He was educated at Ashbury College in Ottawa and the Choate School in Wallingford. Accepted at Harvard, he instead attended the University of California, Berkeley, where he was a member of Chi Phi fraternity. In 1942, he graduated with a general B.A. in the humanities, completing a triple major in political science, philosophy, and economics with slightly better than a "C" average. That same year, he entered the US Merchant Marine Academy, graduated a year later, and went to sea for three years as a deck officer. A conscientious objector in World War II, North became a navigator in the Merchant Marine, traveling between San Francisco and Australia. During that time, he read economics and picked up his hobby of photography. He taught navigation at the Maritime Service Officers' School in Alameda during the last year of the war, struggling with the decision of whether to become a photographer or an economist. North returned to UC Berkeley, obtaining a Ph.D. degree in economics in 1952.

Reader's Guide

North's significance lies in his foundational role in New Institutional Economics. He argued, "Institutions provide the incentive structure of an economy; as that structure evolves, it shapes the direction of economic change towards growth, stagnation, or decline." His research included property rights, transaction costs, the institutional basis of markets, and economic organization in history as well as economic development in developing countries. In his 1991 paper "Institutions," North defined institutions as "humanly devised constraints that structure political, economic and social interactions," distinguishing between formal rules (constitutions, laws, property rights) and informal restraints (sanctions, taboos, customs, traditions, codes of conduct). He described economic development in stages, from local village exchange—where "people have an intimate understanding of each other, and the threat of violence is a continuous force for preserving order"—to long-distance trade and capital markets, highlighting how institutions reduce transaction costs and enable cooperation. Along with Ronald Coase and Oliver Williamson, he helped found the International Society for the New Institutional Economics, which held its first meeting in St. Louis in 1997. North served as an expert for the Copenhagen Consensus and as an advisor to governments around the world. He was engaged in research with John J. Wallis and Barry Weingast on how countries emerge from "the natural state" into long-run economic growth.

Did You Know?

• North was a conscientious objector in World War II and served as a navigator in the Merchant Marine, traveling between San Francisco and Australia.
• He graduated from UC Berkeley in 1942 with a triple major in political science, philosophy, and economics, despite having slightly better than a "C" average.
• North taught navigation at the Maritime Service Officers' School in Alameda during the last year of the war and struggled with whether to become a photographer or an economist.
• In 1991, he became the first economic historian to win the John R. Commons Award, established by the International Honors Society for Economics in 1965.
• A collection of North's papers is housed at the Rubenstein Library at Duke University.