Douglass C. North passed away in November 2015 at his home in Benzonia, Michigan. He was president of the Economic History Association in 1972, and editor of the Journal of Economic History from 1960 to 1966. He received the Alfred Nobel Memorial Prize in Economics in 1993 jointly with Robert Fogel for their contributions to economics and economic history. Doug was an integral member of the generation of scholars who created the “new” economic history and Cliometrics in the 1960s. He was also a founding figure of the new institutional economics, along with Ronald Coase and Oliver Williamson. Among his many strengths as a scholar were his ability to adopt new ideas and to admit that he had been wrong. Many laudatory memorials have stressed the incredible growth and change over his career. Here, I want to emphasize the unchanging core of Doug's research agenda.

I met Doug North in the winter of 1975 when I was 22 and he was 54. He supervised my undergraduate honors thesis and PhD thesis at the University of Washington. We began to co-author papers in 1981, and together with Barry Weingast, wrote, Violence and Social Orders: A Conceptual Framework for Interpreting Recorded History (2009). This essay is inevitably personal as well as professional and I have chosen to refer to “Doug” rather than the more formal “North.” There is no way to understand Doug's influence without understanding something of him as a person and how he interacted with people around him. Personality mattered.

Doug was a controversialist, he loved to argue, and he was always asking interesting new questions. He continually insisted that our status quo understanding of central questions in economic history, economics, and the wider social sciences needed to be updated. Doug was also a curmudgeon. He constantly asserted that everyone was asking the wrong question. To his lasting credit, he suggested new questions that we should ask. Indeed, his career may be best described as a series of great questions. Each new question indicated the next best question to ask, rather than providing a tight answer to the previous question. He correctly identified, and pioneered with others, a research agenda on the use of quantitative and theoretical methods in economic history, the importance of property rights and transaction costs, the centrality of institutions for economic development, the need to integrate cognitive and behavioral sciences into economics, and the central role of violence in the organization of societies. Shortly before his death he was still asking: What is the state and what do we mean by government? It is a very impressive list.

Many years ago Doug and I were talking about careers. He said that the one thing he most wished he could have done in his life was to write a symphony, but that he was neither talented nor smart enough to do that. Instead, he would settle for constructing a framework that explains how societies work. As an organizing question “How do societies work?” is broad. In practice Doug focused on asking: How do people coordinate? From the very beginning Doug used social coordination to explain the process of economic growth and development. He followed Adam Smith's insight that growing specialization was the primary source of improved economic performance. Doug became famous for work that went “Beyond the New Economic History,” but everything he did was rooted in the central question that launched the new economic history: How do we understand what determines the economic performance of societies? That perspective informed his work until the very end.

The core of Doug's early work focused on regional specialization, trade, and growth, culminating in his book The Economic Growth of the United States, 1790–1860 (1961). Leading up to the book were a Journal of Political Economy (1955) article on regional growth, a Journal of Economic History (1958) piece on ocean shipping rates, and a chapter on the balance of payments in Trends in the American Economy in the Nineteenth Century (1960). The overall project represented a large data collection effort to document the extent and conditions of U.S. trade from Independence to the Civil War. It was one of the first pieces of Cliometric research: extensive work on data sources organized within a theoretical framework. Doug worked on the project while spending a year at the National Bureau of Economic Research. His experience there had a profound impact on him: “The National Bureau provided a most hospitable environment. I continuously sought and received advice from many members of the staff. It was a privilege to work under conditions so conducive to scholarly inquiry” (North Reference North1960, vol. 24, p. 573).

Along with Doug, authors in Volume 24 included future EHA Presidents Robert Gallman, Richard Easterlin, William Parker, and Stanley Lebergott. Each was deeply involved in the early Cliometrics meetings that began in 1960. The early Clio group also included Jonathan Hughes, Robert Fogel, Lance Davis, Paul David, and Peter Temin. Together they gave economic history a distinct personable cast, for many became close personal friends and yet fierce professional competitors. Doug was a vocal leader for the new ideas. In a 1965 note in the American Economic Review, Doug argued “we need to sweep out the door a good deal of the old economic history, to improve the quality of the new economic history, and it is incumbent upon economists to cast a skeptical eye upon the research produced by their economic history colleagues to see that it lives up to standards which they would expect in other areas of economics.” (p. 91)

Two scholars figure prominently as inspiration for The Economic Growth of the United States, Adam Smith and Guy S. Callender. The first sentence of the first chapter acknowledges “The analytical framework of this study is a composite of several propositions, the most important of which was a cornerstone of The Wealth of Nations” (North Reference North1961, p. 1). In the Preface Doug notes “his debt” to Callender's classic 1902 article on “Early Transportation and Banking Enterprises.” Callender laid out a simple three-region model: a manufacturing northeast, a cotton-producing south, and a food-producing northwest. Each region needs access to markets to realize its comparative advantage, but is hampered by high internal transportation costs and inadequate financial facilities. Callender's emphasis on markets is pure Smith. Market prices generate signals about costs and benefits that enable people to devote resources to uses with higher values. Coordination through markets produces the gains from specialization that drive economic growth.

In his first Journal of Political Economy (JPE) article, Doug challenged the existing regional economy paradigm where development occurred in a series of stages, starting from subsistence agriculture and ending with industrialization. Doug argued, quite reasonably, that the early United States had not developed this way. From their beginnings, the colonies and then states were oriented towards external trade. The Smithian gains from capturing comparative advantage suggested a much different pattern of regional development. Doug's alternative explanation, without offering proof, was that U.S. growth could be characterized by the “staples hypothesis” (borrowed from Harold Innis). The article reflects the recurrent feature of Doug's thinking: asking better questions. Rather than proving that the staples hypothesis was right, Doug argued that the existing economic framework was incapable of explaining the phenomenon at hand—thus was wrong—and he suggested a plausible alternative explanation, without proving, in either the typical theoretical or empirical sense, that his explanation was right. Doug was asking a new question: Could we not understand early American economic history better if we looked at the problem as the result of growing regional specialization instead of the way we had been looking at it as a problem of internal development?

Although neither Smith nor Callender appear in the JPE article, they provided a natural framework for Doug's investigation of regional growth between 1790 and 1860. Expanding southern cotton exports drove the pattern of regional specialization, ala Callender, and each region exported to other regions. Significantly, the story implied that industrialization was not key to early American growth (a point that became much more important over time). The research project involved the collection of data on international trade, domestic trade, changing transportation costs, and internal economic performance. It was one of the first large cliometric exercises.

It was not, however, representative of the kind of cliometric work that would later appear. Doug's theoretical framework suggested that as individuals and organizations within the economy became better coordinated economic growth would ensue. Despite the enormous empirical effort and the persuasive argument that the U.S. economy had become better integrated and coordinated, there was no clean clear quantitative measurement of the impact of coordination and integration on U.S. economic growth. This is not a criticism of the book. It is to note that Doug was beginning to understand that the new economic history would not deliver quantitative answers to the big questions he wanted to ask. The answers would involve more than narrow Cliometrics. The new Cliometric work that followed in the 1960s would focus on more manageable empirical questions. The income and product data produced a clearer picture of the aggregate economy, but did not afford the ability to test explanations about why economies grew, not even in the case of the United States.

Launching from the income and product accounts, the rising new economic historians found themselves in a historical sweet spot in the early 1960s. University enrollments exploded as the first baby boomers aged into their college years; computers emerged as a powerful new tool; and a range of historical topics were ripe for application of theoretical and empirical advances in economics. The new economic historians got jobs, tenure, and promotions in economics departments at the best universities and their students began doing the same. New economic tools allowed economic historians with the right predilections to fit easily into economics department.

The new tools of neo-classical economics, particularly of the “price” theory strain of neo-classical economics, were perfectly suited for asking the kind of partial equilibrium questions that dominated the new economic history agenda. Conceiving of markets as coordinating devices not only suited Doug and his Smithian tendencies, it gave a consistent focus on the importance of markets and relative prices to the new economic history. Doug and a generation of his students continued to develop the income and product account agenda for earlier time periods. Terry Anderson, Gary Walton, and James Shepherd did original and valuable work on the colonial period, as economic historians tried to understand the rise of a “national economy.”

Yet, as the economics profession has come to realize, markets alone cannot explain economic development. By their very nature as keepers of the economic past, economic historians understood that a history of markets alone would not be enough to explain modern development. While Doug had been a leader of the movement to incorporate aggregate economic measures as well as economic theory into economic history, he did so because he believed that using these new tools could provide better answers to the old questions of why the United States developed: If we can measure it we can explain it.

Doug had called on economists in 1965 to check the work of economic historians “to see that it lives up to standards which they would expect in other areas of economics.” Eight years later, in his 1973 Presidential Address to the Economic History Association he asserted that the “systematic use of standard neo-classical economic theory… has imposed strictures on enquiry that narrowly limit its horizons — and that some of my former revolutionary compatriots show distressing signs of complacency with the new orthodoxy” (North Reference North1974). In those eight years Doug went from chastising economic historians for not being good enough economists, to chastising them from depending too much on economics. He appears to have had a conversion experience during that time.

Although warm and generous, and often with a twinkle in his eye, Doug could be cantankerous. He stood about 5’ 4” and, as a result, often tangled with people bigger than him. He was fearless. He could seem cocky and overconfident because he was literally willing to take on anyone. But I think what appeared to some as cockiness, was really true courage. On his 90^th birthday I toasted him for his courage. In the many times when I doubt what I am doing, it is the example of Doug's courage that has meant the most to me. Doug often in public and private would say, in no uncertain terms, that some ideas were wrong, no matter who put forward the idea or how widely accepted it was. His first big JPE article begins by pointing out that the accepted way of understanding regional development cannot be right for the United States. Pointing out that other people are wrong hardly distinguishes one academic from another; we almost all do it.

What set Doug apart was his certainty that all of us had an imperfect and usually wrong conception of the world around us. Doug often described both how people and societies worked as well as how research was conducted as “stumbling and bumbling along.” Doug believed that the more certain you were that you were right, the more likely you were wrong. He believed that about himself as well. In most academic conversations the statement that “you are wrong” is usually paired with “because I am right!” For Doug, the critical “you are wrong” was usually paired with “there must be a better way to ask this question! Try this.” Doug's personality mattered vitally, for he was willing to take on the biggest names in the field, and after his initial successes, they were willing to listen to him, if not to agree with him. There is a world of difference between arguing with someone who says you are wrong because he is right, and someone who says we have both been wrong and need a better way forward. Doug picked such obvious wrongs, and then, rather than insisting that he was right, insisted that we stumble and bumble in a new direction.

Little of this would have mattered had Doug not been able to deliver on the “try this” part of the process. Ex post it is clear that the suggestions Doug made for what we should try next turned out to be brilliant, but why did people listen? Doug's personality really mattered to why people listened. Part of Doug's charm was an utter disregard for whether he was absolutely right. Margaret Levi and Barry Weingast (Reference Levi and Weingast2015) opened their memorial to Doug published in the Monkey Cage: “Doug would say he was dumb, that he had to mull things over and over again, that it took him a long time to realize what he was up to. In truth, he was a visionary. Often he could not say why he was convinced that a particular idea was relevant to the question we had posed, but three months later it would be obvious.”

Doug loved to argue, and he was no pushover, but he was not particularly concerned about winning arguments. Doug genuinely listened to and often agreed with the people he argued with. Doug and I argued hundreds of times, and I usually left our conversations feeling like I had convinced Doug that he was wrong, only to find the next day that he had not changed his mind. Doug possessed a generous openness to ideas and an incredible ability to integrate new ideas with the status quo. Those combinations generated a continual stream of new questions borne out of the synthesis. That is the source, if you will, of Doug's genius, the stream of new questions that opened up new areas of research in economic history, economics, and the social sciences more generally.

Now is the time for me to justify the two assertions made at the beginning of this memorial: that Doug's research always focused on social coordination and that the emphasis was apparent from his earliest through his latest work. Doug spent the 1966/67 academic year in Geneva “retooling” as a new economic historian focused on Europe. From 1967 to 1973, Doug wrote a series of articles and books, most of them coauthored. The two books were with Lance Davis, Institutional Change and American Economic Growth (Reference Davis and North1971) and the other with Robert Paul Thomas, The Rise of the Western World: A New Economic History (1973). The articles were North (Reference North1968), Davis and North (Reference Davis and North1970), and North and Thomas (Reference North and Paul Thomas1970, Reference North1971, Reference North and Paul Thomas1977).

Many associate Doug's retooling as a European economic historian with his turn to institutions as a focus of research. Indeed, many people start with the Rise of the Western World (RWW) when they talk about institutions today. As I emphasize later, North and Thomas became the much more widely read book, yet the books share the same intellectual agenda: developing a deeper neo-classical theory of institutions and institutional change. Three articles, Davis and North (Reference Davis and North1970), North and Thomas (Reference North and Paul Thomas1970), and North (Reference North1971) all describe a new approach to understanding institutional change. Each proposes the same model in which institutional change is driven by profit maximization on the part of social actors: it is a purely neo-classical theory of institutional change. Institutions change only when the benefits of change exceed the costs, and since institutions are generally costly to change, they typically change slowly. What are institutions? “For our purposes, we shall define an ‘institution’ as an arrangement between economic units that defines and specifies the ways by which these units can co-operate or compete” (North and Thomas Reference North and Paul Thomas1970, p. 5). Markets coordinate through competition, organizations coordinate internally through co-operation and among and between each other through competition and co-operation. Institutions, therefore, are arrangements that create and sustain coordination, either through co-operation or competition, or through markets or organizations.

Doug's creation of a neo-classical theory of institutional change in these articles and books is crucial to understanding why, in his 1973 Presidential Address to the EHA, he criticized the new economic historians for focusing too much on neo-classical economics. “What the new economic history contributed was the systematic use of theory and quantitative methods to history. The use of a scientific methodology has put a distinctive stamp on this approach, which clearly delineates it from the old economic history, but it is the theory that provides a particular cast to the contribution. It is the systematic use of standard neo-classical economic theory which both has provided the incisive new insights into man's economic past and also serves to limit the range of enquiry.” “… I submit to you that the new economic history as it has developed has imposed strictures on enquiry that narrowly limit its horizons — and that some of my former revolutionary compatriots show distressing signs of complacency with the new orthodoxy” (North Reference North1974, p. 1). Had Doug changed his mind about the role of economic theory in economic history?

My answer is an unequivocal no. In the late 1960s and early 1970s, Doug labored mightily to construct a neo-classical theory of institutions, indeed a neo-classical theory of how society works. The attempt was unsuccessful, which left Doug with two alternatives: accept that he failed to develop a useful neo-classical theory of society or to claim that it was impossible to construct a theory of society out of neo-classical theory alone. In the end, he chose the latter option, which is the essential point of his best book Structure and Change in Economic History (1981).

Doug did not abandon economics or economic theory. He felt strongly that any theory of society would have to include a solid foundation in economics, both for conceptual reasons and as a check on unconstrained theorizing. What he came to doubt was the idea that markets and prices were the only key coordinating feature (or “institution”) that explained economic performance through time or the emergence of modern economies, specifically of the United States and Northwestern Europe in the nineteenth century.

Davis and North's 1970 Journal of Economic History (JEH) article, “Institutional Change and American Economic Growth: A First Step Towards a Theory of Institutional Innovation” makes a concerted effort to construct a neo-classical theory of institutional change, an argument made in more detail in their book. The conceptual framework is mechanical, dry, and not particularly insightful. The model has rational actors, making choices about institutions and institutional change based on considered maximization. Their conclusion is less than optimistic: “Moreover, it should be equally clear that we have not been able to predict everything, and that the total picture is one of something considerably less than universal success. The model appears to yield results that are particularly poor” for explaining politics and the institutional environment (p. 148).

Doug's work with Bob Thomas was more creative, including several papers that attempt to model specific historical instances of significant institution and institutional change: the rise of the west, feudalism, and the neolithic revolution (1970, 1971, and 1977, respectively). What made RWW work so well was the use of comparative examples, rather than remaining limited to the American examples of Davis and North. By comparing European societies, the connection between institutions and economic performance becomes immediately obvious, if still hard to understand.

RWW lays out the same neo-classical theory of institutions, motivated by the costs and benefits of changing institutions. At critical junctures either the costs fall, the benefits rise, or both, and institutions change. A key example in the first part of the book is the Black Death, which changed the relative price of labor and land, but brought a response in Northwest Europe that led to wage labor, and in the East a return to serfdom. The same relative price shock produced different institutional responses depending on existing conditions. In the second part of the book, explicit comparisons between Britain, France, the Netherlands, and Spain make clear both the difference in institutions across the societies and the apparent effect of those institutions on economic performance. RWW has had a large and continuing impact. The conceptual framework in Daron Acemoglu and James Robinson (Reference Acemoglu and Robinson2012) Why Nations Fail is largely the framework of North and Thomas. The framework appeals to economists because of its familiar neo-classical roots.

But the framework did not satisfy Doug. The open question for Doug at the end of Rise of the Western World was not why Britain and the Netherlands grew, but why France and Spain did not. A theory of institutional change needed to explain why bad institutions persist and why new institutions were often no better than the old ones at enhancing economic performance. A neo-classical theory of institutions offered answers that were not very interesting or revealing. Efficiency is a powerful and intuitive concept in economics. As a rule of thumb it serves economists well, for when they see a social outcome they tend to look for rational reasons for why the outcome is efficient, for the dynamic interaction of economic agents that makes the outcome sustainable. But efficiency does not help us explain why economies fail to grow. Doug was coming to see the failure to grow as the more interesting problem. In his presidential address he wrote: “The study of the decline of political economic units or the failure of many to grow is more interesting than the study of successful ones. This is so because the logic of micro-economic theory and simple welfare economics suggests that growth should be inevitable” (North Reference North1974, p. 6).

Just as Doug had done in the 1950s, when he found that the predictions of regional growth models did not apply fully to the United States, in the 1970s he drew the obvious predictions from the theoretical orientation of the new economic history to show that neoclassical theories were incomplete in describing much of human history. It was an unusual Presidential Address. The leader of a successful academic movement publicly announced to his peers, to his friends and allies in the fight for the new economic history, that the path we have been following will not get us where we want to go. He was not abandoning neo-classical theory, but strongly claiming that those who used only neoclassical economics would not reach the goal they sought. We are wrong, so what do we try next?

Many people, myself included, believe that Structure and Change (S&C) is Doug's best book. Indeed, it is a great book. It is great because of how it delivers on the promise made in his Presidential Address to see a way forward “beyond the new economic history.” In that address he identified four locations of decision making in societies where coordination was key:

In S&C, how Doug thinks about these four sources of decision making become a theory of demography, a theory of the state, a theory of organizations, in addition to our existing theory of markets, and a new, and preliminary, theory of ideology. These four loci of decision making do not always incorporate information from or about the other loci in a way that enables coordinated decisions to allocate resources effectively. The iconic example is demography. Because families do not take the effect of an additional child on the rest of society into account, populations tend to grow and Malthusian dynamics sometimes result. Free riding, transaction costs, ideologies, and limited cognitive abilities all produce inabilities to coordinate within or between the different realms of decision making. As a result, the “efficiency” that neo-classical economics assumes undergirds decisions and inevitably produces growth, does not appear. S&C makes explicit that the coordination underpinning efficiency hinges on information from a much wider set of decisions and groups within a society. In no society does the price mechanism reach far into households, governments, or indeed many organizations, and even not completely into business firms. Assuming that market prices enables an “efficient” allocation of resource to production and consumption is wrong. This is classic Doug. That result simply does not carry over into the world: Efficiency is not a good rule of thumb for understanding how societies work.

S&C can be a bit confusing. Despite its withering criticism of neo-classical price theory, the book offers a neo-classical theory of the state, a neo-classical theory of demography, and a neo-classical theory of organizations. Doug argues that the best set of tools for understanding how societies work remains neo-classical economic theory, but economic theory operating in areas of human interaction where prices often do not exist and the standard simplifying assumptions of perfect information, zero transaction cost, and secure property rights simply do not apply. While others in economics made these points in the 1970s and 1980s, Doug was the only person thinking about how relaxing all these assumptions would work at the level of whole societies.

Doug had much more to give: three books, many articles, and lots of great ideas (North (Reference North1978, Reference North1990, Reference North2005), North and Weingast (Reference North and Weingast1989), and North, Wallis, and Weingast (Reference North, Joseph Wallis and Weingast2009). Yet S&C perfectly captures the courage, humility, and creativity that made Doug, as a person as well as a scholar, so important to economic history, economics, and the social sciences over his lifetime. “You (or we) are all wrong, here is a way forward” was how he operated. The ways forward he pointed out have proven to be important avenues in economics and the social sciences. Doug won the Nobel prize for asking the best questions, specifically for identifying what the best next question to ask was.

Doug became famous for work that went “Beyond the New Economic History,” but everything he did was grounded in the central question that launched the new economic history: How do we understand what determines the economic performance of societies? For Doug, the answer was always rooted in Adam Smith's notion that higher degrees of social coordination enabled greater specialization and division of labor. For the first ten years of his career he tried to show how coordination, working through price making markets, could explain American economic growth in the early nineteenth century. For the next 15 years he tried to show how a broader view of markets, encompassing transaction costs and property rights, could explain European and American growth and the emergence of modern economic development in the early nineteenth century. In the process he became aware that how and why societies shrink was as important as how and why they grow. Unsatisfied with his own explanations, for the last 40 years he showed how the ability of societies to enhance coordination, created and sustained by a wide variety of humanly constructed organizations—households, voluntary organizations (business firms and others), governments, and markets—combined to produce the world we live in and its history. He never abandoned Adam Smith, but he took economics and economic history to places and ideas they had never been before.