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Newsletter Spring 1998 Volume 1, Number 1 INTERNATIONAL SOCIETY FOR NEW INSTITUTIONAL

President’s Message Douglass C. North from the Earhart Foundation, which will allow us to offer modest travel This is the first newsletter of the In- subsidies to persons in developing ternational Society for New Institu- countries who otherwise would not tional Economics (ISNIE). The Soci- be able to attend a meeting. ety was founded in 1997, in response Additionally, the University of to a rising awareness of the worldwide Paris I has subsidized the organiz- interest in the new institutional eco- ing committee for this year’s meet- nomics and through the efforts of, pri- ing. marily, Lee and Alexandra Benham of We are off to a good start, and Washington University in St. Louis, we look forward to moving from Missouri. strength to strength. And right now Announcement of the Society’s I look forward to seeing many of you existence was made on the Internet; in Paris in September. the response was almost overwhelm- Douglass C. North, ing: two hundred and fifteen persons ISNIE President from 24 countries attended the first Contents meeting, held in St. Louis in Septem- research. The second meeting of ber, 1997. (A report on that meeting the Society is to be held in Paris President’s Message 1 comes later in this newsletter.) A ses- this September (more about that ISNIE on the Internet 2 sion of the American Economics As- meeting below). Message from sociation annual meeting in January Any organization such as this 3 of this year devoted to the new insti- one needs some financing. Dues Invitation to Join the tutional economics and the Society have been set for membership—we Society 4 drew a standing-room-only audience. have tried to keep them low and At this time we are attempting membership therefore affordable. 1997 Conference to disseminate information about the A few individuals have made in St. Louis 4 Society even more widely—through a much-appreciated private contri- Legal Status of ISNIE 4 newsletter as well as via the Internet. butions. After initial support from Forthcoming Conference Both should have the highly important Washington University, we re- in Paris 5 function of putting scholars from ceived grants from the Bradley Join/ Renew Your around the world in contact with each Foundation, enabling us to have the other as they will serve as a clearing administrative help necessary to Membership 6 house for information about ongoing run the Society effectively; and

ISNIE NEWSLETTER SPRING 1998 1 ISNIE on the Internet International Society for Michael Sykuta New The Society has a new World Wide Web address: President http://www.isnie.org Douglass C. North This site includes information on membership in the Society, a directory of NIE Network members, Past President coverage of the 1997 St. Louis conference including Ronald H. Coase audio and video clips and most papers presented there, and information on the upcoming Paris conference. Executive Committee There will again be a conference paper gallery. Those Lee K. Benham, Washington University, USA who are presenting papers at the Paris conference are requested to send electronic copies of their papers to John N. Drobak, Washington University, USA Michael Sykuta: Claude Menard, University of Paris, France [email protected] Douglass C. North, Washington University, USA The preferred format is Adobe (pdf), but any Mary M. Shirley, World Bank, USA format that can be read by Microsoft Word97 will be accepted. Other members who wish to make their Provisional Board of Directors research available are welcome to submit electronic copies of their papers. Benito Arrunada, University Pompeu Fabra, Spain The site also contains links to bibliographic and Lee K. Benham, Washington University, USA data sources of interest to members. We hope to add Ronald H. Coase, University of , USA new features to enable members to communicate more , University of California, efficiently with one another. Your ideas are welcome. The official homepage of the European Web site Los Angeles, USA of the Society is: John N. Drobak, Washington University, USA http://www.univ-paris1.fr/ATOM/nie/nie.html Scott E. Masten, , USA This site includes the first four issues of the Paris Claude Menard, University of Paris, France newsletter begun in November 1996, plus information on upcoming conferences and calls for papers, and Douglass C. North, Washington University, USA lists of recent publications and working papers by Rudolf Richter, University of Saarland, Germany members. Mary M. Shirley, World Bank, USA Note that from now on, the official newsletter Barry R. Weingast, , USA of the Society will be published in St. Louis, initially in paper form. The former newsletter issued in Paris Oliver E. Williamson, University of California, (primarily through the Internet) will become an e-mail Berkeley, USA letter and will be distributed electronically to members and friends of the Society. Coordinator Mary E. Drobak This newsletter is published by the International Society for New Institutional Economics. Subscription is provided with Newsletter paid membership in the Society. Alexandra Benham International Society for New Institutional Economics Elisabeth Case Department of Economics, Campus Box 1208 Michael Merithew Washington University One Brookings Drive St. Louis, MO 63130-4899 USA World Wide Web site: Telephone: (314) 935-8571 http: //www.isnie.org Fax: (314) 935-4156 E-mail: [email protected] 2 ISNIE NEWSLETTER SPRING 1998 Message from Ronald Coase

I am very happy that the of living of people in that economy. International Society for New However, the level of transaction Institutional Economics has been costs depends on the of a formed. Its goal is to bring about a country, its legal system, its political restructuring of economics. system, its culture and so on. This is Although it will require the work of why we must include the influence many scholars over many years, I of these institutions in our study of have no doubt that its success is the working of an economic system assured. and why we should include in our As we all know, mainstream membership those of our colleagues economics has become more and in law, anthropology, sociology, more abstract over the years. It is and similar Ronald Coase, elegant but sterile. It is sterile disciplines, who wish to collaborate Founding President of ISNIE because it fails to include the major in our great enterprise. factors determining the performance There is another aspect of our (American and non-American) will of the economy. It analyses how Society that I would like to mention. play a significant part in bringing supply and demand determine price It is an international society. It is not about the restructuring of economics but not what determines what goods an American society to which non- that is needed. and services are traded and therefore Americans can belong. The United It is impossible to predict priced. However, as we know, the States is now the dominant country exactly what will be accomplished welfare of a people in any economy in economics. But it is not so long and I, personally, will never know. depends on the flow of real goods ago that England was the dominant But many of you, I feel sure, will and services over time. Adam Smith country. And in the past, important see in your lifetime significant said, and he was right, that the contributions to economics have been improvements in economics brought productivity of an economic system made by economists in France, Italy, about by the work of our members. depends on specialisation. But Germany, Austria, Sweden and other I take pleasure in having specialisation is only possible if there countries. We can be sure that in the played a small part in the formation is exchange. And the lower the costs future major contributions will be of our Society and in contemplating of exchange (transaction costs as made to the New Institutional all that it will accomplish. they have come to be called) the more Economics by scholars outside the specialisation there will be, the United States. Our Society will Ronald Coase greater the productivity of the encourage and support them. I have April 5, 1998 economy and the higher the standard no doubt that members of our Society

And the lower the costs of exchange (transaction costs as they have come to be called) the more specialisation there will be, the greater the productivity of the economy and the higher the standard of living of people in that economy. However, the level of transaction costs depends on the institutions of a country, its legal system, its political system, its culture....

ISNIE NEWSLETTER SPRING 1998 3 Invitation to Join ISNIE Legal Status of the Society Ronald Coase and conference announced for September John Drobak 1997 in St. Louis. Information was The International Society for We invite you to join the disseminated through word of mouth New Institutional Economics has International Society for New and Web sites. After the number of been incorporated under Missouri Institutional Economics, which persons registering for the law as a nonprofit corporation. The has been formed to bring together conference far exceeded original Society has also been registered in people working in this area, estimates, fees were doubled, and France. particularly those doing empirical registration finally had to be closed. The officers of the Society are work. Scholars working in applied The total number of people attending President — Douglass North: Vice NIE include political scientists, was three times the original estimate, President — Lee Benham; Treasurer anthropologists, sociologists, and well over 200 individuals from more — Mary Shirley; Secretary — John lawyers, as well as economists in than two dozen countries, including Drobak. Claude Menard and the such diverse fields as economic Argentina, Belgium, Brazil, Britain, four officers constitute the Executive history, , public Canada, Colombia, Denmark, Committee of the Board of policy, , Finland, France, Germany, Hungary, Directors. Other members of the business, and . India, Israel, Italy, Japan, Mexico, Board are Benito Arrunada, Ronald The Society aims to bring Netherlands, New Zealand, Norway, Coase, Harold Demsetz, Scott together scholars in countries all Peru, Poland, Russia, Spain, Masten, Rudolf Richter, Barry over the world who are working Sweden, Taiwan, Tanzania, Weingast, and Oliver Williamson. on transaction costs, contracting, Venezuela, and the USA. The Board is responsible for political rules of the game, the rule The 32 papers at the overseeing the affairs of the Society, of law, norms and culture, and so conference dealt with the present and with the Executive Committee acting on, and who pursue these interests future of the new institutional on behalf of the Board when issues using standard scientific methods. economics, current work in arise between regular meetings of the While theorists are very welcome, economics, political science, Board. Day-to-day affairs are the main emphasis is empirical. sociology, and anthropology; handled by the officers. All transaction costs, creating and individuals serving as officers or monitoring institutions, and directors are volunteers; none is rights in comparative systems. paid. St. Louis Conference 1997 Among many issues, the new The Society is awaiting institutional economics addresses the confirmation from the U. S. Internal Lee Benham formal and informal prerequisites for Revenue Service of its nonprofit The founding of ISNIE market exchange. We believe this status for federal income tax originated in discussions held among conference has provided a beginning purposes. Once that is achieved, Ronald Coase, Claude Menard, for an improved market for these which should be sometime in May, Mary Shirley, and faculty of the ideas. contributions to the Society will be Center for New Institutional Ronald Coase gave the deductible for income tax purposes. Economics at Washington founding presidential address, which The Bradley Foundation has agreed University. Our objective was to is available on video tape for those to provide initial financial support provide an institutional framework who join the Society. to help the Society get organized and to facilitate the production and More details are available on to assist the 1998 annual conference exchange of ideas in this field. The the ISNIE website: in Paris. first major effort was the initial http://www.isnie.org

4 ISNIE NEWSLETTER SPRING 1998 Second Annual Conference of the International Society for New Institutional Economics Paris, France September 18-19, 1998 Claude Ménard Conference Organizer University of Paris 1, ATOM [email protected] .

To Register: The second conference of the Parallel sessions (three at a Only members of the Society International Society for New time) will be held on Friday afternoon may register for the Paris conference. Institutional Economics will be held and Saturday morning. Forty-eight If you have not already submitted in Paris on September 17-19, 1998, contributions from over 10 different your 1998 membership form and fee, under the Presidency of Douglass C. countries will be presented. see the last page of this newsletter. North. Douglass North is working on the The conference fee is $125 US The Conference will be final program that should be (800 FF) until June 1, l998. After preceded by a special session in available in the coming days. June 1, l998, if space is still honor of Ronald Coase on Thursday On Friday evening there will available, the fee will be $250 US afternoon, September 17. Douglass be dinner aboard a boat (“bateau- (1600 FF). This fee includes two North, Lars Werin, and Oliver mouche”) on the Seine River with the lunches and one dinner. Relevant Williamson will deliver lectures. presidential address given by information and registration forms Professor Coase will then receive an Douglass North. The closing address are available on the web site: honorary degree from the Sorbonne. on Saturday afternoon, September http://www.univ-paris1.fr/ The official opening of the 19, will be delivered by Masahiko ATOM/nie/nie.html Conference will be on Friday, Aoki. or by e-mail: September 18. A program is also being [email protected] will deliver the opening address. planned for persons accompanying or by fax: 331 55 43 43 20 Plenary sessions will follow on conference attendees. Friday morning. There will also be Because of space constraints, plenary sessions on Saturday the number of participants attending afternoon. Plenary speakers will the conference must be limited. include: Lee Benham, Yoram Registration is on a first-come/first- Barzel, Harold Demsetz, Thrainn served, space-available basis. The Eggertsson, Jean Ensminger, Yujiro 1997 conference was over- Hayami, Margaret Levi, Scott subscribed, and this is likely to Masten, Richard Nelson, Jean- happen again in 1998. Philippe Platteau, Mary Shirley, We hope to see you in Paris! Oliver Williamson, Witt Ulrich, and Decio Zylbersztajn. Claude Menard

ISNIE NEWSLETTER SPRING 1998 5 Join the International Society for New Institutional Economics

Membership in the Society is open to everyone interested in the New Institutional Economics, regardless of academic discipline or professional employment. There is an annual membership fee of $40 US (FF 250). Members for 1998 will receive a videotape of Ronald Coase’s presidential address at the inaugural conference in St. Louis 1997. They will also receive a subscription to the Society Newsletter and will be included in the NIE Network, a web-based directory and information service. To join the Society, fill out a copy of the form below (please type or print clearly) and send the completed form, along with a check or money order, to one of the following addresses: USA Europe Send check or money order for $40 Send check or money order for 250 FF payable payable to “International Society for to “AINEI (International Association for New New Institutional Economics” to: Institutional Economics)” to: Mary E. Drobak Claude MENARD Department of Economics, ATOM - Université de Paris I Campus Box 1208 (Panthéon-Sorbonne) Washington University 106-112 bd. de L’Hôpital One Brookings Drive 75013 Paris St. Louis, MO 63130-4899 FRANCE USA

ISNIE Membership Form – 1998 Last Name: ______First Name: ______E-mail Address: ______Organization/Company:______Street Address: ______City, State, Postal (ZIP) Code: ______Country: ______Telephone:______Fax: ______Personal homepage URL: ______Research Interests: ______Recent Publications/Working Papers: ______6 ISNIE NEWSLETTER SPRING 1998