The role of institutions in driving economic change: comparing the thoughts of Ibn Khaldūn and Douglass C. North

Khalid, Haniza (2015) The role of institutions in driving economic change: comparing the thoughts of Ibn Khaldūn and Douglass C. North. Intellectual Discourse, 23 (2). pp. 177-199. ISSN 0128-4878

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Abstract

This article compares various elements of Ibn Khaldūn’s and Douglass C. North’s thoughts on the role of institutions in influencing or forcing economic change. There are a number of interesting similarities in ideas, thoughts, approaches, and methodologies, which prove that New Institutional Economics may actually mirror much of (and can benefit from) Ibn Khaldūn’s fourteenth century ideas than was previously thought. Both Ibn Khaldūn’s continuum of badāwah to ḥaḍārah and North’s theory on changes from informal to formal institutions lead to the same fundamental conclusions: (i) change is incremental as it is a result in small cumulative changes in the cost-benefit outcomes of the market agents over time, and therefore (ii) economic performance inevitably depends on the existence and effectiveness of formal institutions that alter those outcomes. It is also noted that ‘aṣabiyyah or group feeling, another cornerstone of Ibn Khaldūn’s thought, corresponds perfectly to North’s treatise that social cohesion and institutional efficiency are more important than the amount of resource endowment in bringing about economic development and change. In addition, Ibn Khaldūn’s views on the government’s commercial activities are reviewed in the study in light of North’s transaction costs and property rights framework.

Item Type:	Article (Journal)
Additional Information:	3350/46944
Uncontrolled Keywords:	Douglass C. North; history of economic thought; Ibn Khaldūn; New Institutional Economics; structure, scope, and performance of government
Subjects:	H Social Sciences > HB Economic Theory > HB3711 Business cycles. Economic fluctuations H Social Sciences > HJ Public Finance > HJ7451 Expenditures. Government spending
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Dr. Haniza Khalid
Date Deposited:	31 Dec 2015 15:03
Last Modified:	13 May 2016 14:18
URI:	http://irep.iium.edu.my/id/eprint/46944

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