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The *macroscope* in institutional history

Mentor said: “Theory is what we do on the weekends”. As he uttered those words I believe he was looking not at me but towards forested hills on the outskirts of campus. His walking boots and stick stood waiting behind the door. It may have been a Saturday on one of those quiet warm days in early spring. His office looked, as usual, like a gallery display of the long evolutionary accretion of upturned books, photocopied articles, student essays, research proposals, and management instructions for faculty reorganization.

Any visitor to this extremely cluttered office would see it as jumble of micro details. Mentor saw it at the macrolevel. He saw the order in the chaos.

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Yes I’m still thinking about the macro-micro link. It being Saturday, to theory.

It is only a slight simplification to say that debates about institutional change in the history of modern political economy (broadly the relationship of governments to economies) revolve around a question -- are institutions ‘made’, or do they ‘grow’? Are they designed and constructed, or do they evolve incrementally and spontaneously?

Almost everyone will accept that in reality all institutional change combines some ‘growing’ and some ‘making’. Douglas North and Friedrich Hayek (both Nobel Laureates) tend to be associated with the view that institutions have mainly changed incrementally and continuously; in other words, slowly.

In his most important book, Institutions, Institutional Change and Economic Performance, Douglass North fairly explicitly rejects the idea that there can be much significant “discontinuous” change in history.

Joseph Schumpeter, writing on the topic before either Hayek or North, believed that the essence of modern history is “discontinuous” change. It is no exaggeration to say that Schumpeter is the supreme theorist of capitalist crises. In his under-read and under-rated (difficult) book Business Cycles he concludes that the entire history of capitalism has been “more like a series of explosions than a gentle though incessant transformation”.

Clearly this observation is quite relevant today.

Schumpeter was aware of what is now called the incrementalist viewpoint. He called it “microscopic”. His preferred method of looking at history was “macroscopic”. Whether you choose a microscopic method emphasizing continuity, or a macroscopic method emphasizing discontinuity, partly depends on the purpose of the analysis.

For example, if you want bring about change in developing countries you might focus on the turning or tipping points (crises) when conscious human agency can more easily step in to help make societies “jerk and jump” in a good direction.

The following passage is found buried deep inside Business Cycles. I just love the way this man wrote:

A point properly pertaining to the realm of general methodology must be touched on in order to eliminate an apparent contradiction between our way of looking at economic or social change and the principle of historic continuity which tends to assert itself in historical analysis. Our theory of the mechanism of change stresses discontinuity. It takes the view that evolution proceeds by successive revolutions, or that there are in the process jerks or jumps which account for many of its features. As soon, however, as we survey the history of society or of any particular sector of social life, we become aware of a fact which seems, at first sight, to be incompatible with that view: every change seems to consist in the accumulation of many small influences and events and comes about precisely by steps so small as to make any exact dating and any sharp distinction of epochs almost meaningless. Cooperation of many minds and many small experiences acting on a given objective situation and coordinated by it slowly evolve what appears as really new only if we leave out intermediate steps and compare types distant in time and space. The decisive step in bringing about a new thing or ultimate practical success is, in most cases, only the last straw and often relatively insignificant in itself. Needless to say, this holds true also of the process of change in social institutions. Now it is important to note that there is no contradiction whatever between our theory and a theory of history which bases itself on these facts. What difference there is, is a difference of purpose and method only...

There is as little contradiction between [microscopic and macroscopic points of view] as there is between calling the contours of a forest discontinuous for some and smooth for other purposes...

Ah, yes, the forest. I reckon Mentor thought about stuff like that on his Saturday walk in the hills.