Douglas North Case

The exploration and discovery of new countries allows for new opportunities in all facets of life. The most obvious opportunity that arises come on the economic front, which include the new trade routes and trade partnerships that will ensue. New countries often rely on help from other more established countries to get their economic, social and political lives started. In the book Structure and Change in Economic History by Douglas North, he concludes, "The consequence of the expansion was ultimately to integrate the rest of the world with the western European nations..."(North 143).

In order to evaluate this conclusion it is crucial to understand what Douglas North means by the word integrate. The premise for North's conclusion is based on the idea of property rights, the exclusive authority to determine how a resource is used and whether it is owned by the government or by individuals. The numerous European countries had different ideas on how property rights should be handled. These various ideas played a huge role in the development of new countries as well as the existing ones. North's definition of integration can be described as a co-dependent relationship between a mother country and developing country. The mother country will retain its structure of law and property rights upon the emerging country to attempt to form one in the same. North claims that with integration there is "widening of the market" and "increased opportunities for profit" in the short term which is true, but what North fails to mention is the detrimental effects that will come in the long run.

North lives under the belief that society today is not very knowledgeable on the process of how paths of development come into life. "Rather the difficulty of turning economies around is a function of the nature of political markets and, underlying the belief system of the actors." (North 1993) Evidently, North believes that economic development is dependent upon other variables. Economic prosperity is based off the workings of the state and according toNorth one of the most important aspects in that category comes in the efficiency and inefficiency of property rights. To him the more efficient option has to do with the basis of power resting in the hands of property affairs.

The perception North uses is on the basis of differing classes and how social power has a role in economic life but ultimately social power is an outcome of property affairs. With the emergence of large population growth from expansion another important issue arose in the division and classification of labor. Systems like feudalism, (in which the nobility held land appointed by the king in exchange for military service, and the vassal were tenants of the nobles while the peasants live on the land and gave him labor in exchange for protection) slavery (the full out owning of another person) and indentured servitude (a system in which a worker worked under contract in exchange for life's necessities) were all experimented with during the expansion to the new world.

Most noticeably, North use the economic actions performed by the Dutch and Spanish while also using actions from the French, English and Portuguese to illustrate his thoughts and ideas. "In the case of the less successful countries the absolute level of taxation and the specific forms by which fiscal revenues were obtained resulted in personal incentives." (North) The Spanish system of property rights was based on the social group of the mestas, also known as the sheepherders. The wool industry was far and away the number one producing economical aspect of the Spain. " In return for being the principal source of revenue of the crown to finance the war with the moors, the mesta was given expanded privileges to move sheep back and forth across Spain: in consequence, the development of efficient proper rights in land was thwarted for centuries." The mesta became the most powerful part of the Spanish society with legal staff and an armory to follow them on their routes. They were essentially untouchable because of the king's inability to ignore the massive amount of profits he enjoyed North is under that impression that a ruler is consciously or subconsciously aware of "poor performance" but it is the inherent nature of the society that makes it so difficult to fix.

"The long decline of Spain, from the glories of the Habsburg empire, to the sixteenth century, to its sorry state under Franco in the twentieth