On 16 May 2017, the Rafael del Pino Foundation organised the Keynote Lecture "The Essences of Long-Term Economic Behaviour" to be given by John Joseph Wallis.
John Joseph Wallis is a disciple of Douglass North, Professor Wallis has deeply analysed phenomena such as corruption and its systematic character or violence and social order. An economic historian, his work ranges from institutions, political economy and development economics to political science and the study of history. His main focus is on determining the evolutionary patterns of economic institutions and their interaction with political institutions.
John Joseph Wallis is Research Associate at the NBER and Professor of Economics at the University of Maryland. He received his PhD in economics from the University of Washington and pursued postdoctoral studies at the University of Chicago before joining the Economics Department at the University of Maryland.
Professor Wallis' publications include: "Constitutions, corporations, and corruption" (Journal of Economic History); "The concept of systematic corruption in American History", a chapter in the book coordinated by Professors Glaeser and Goldin; "Corruption and reform: lessons from America "s Economic History" (University of Chicago Press); and "Violence and social orders: a conceptual framework for interpreting recorded human history", co-authored with Douglass North and Barry Weingast (Cambridge University Press).
Summary:
On 16 May 2017, the Rafael del Pino Foundation hosted a lecture by John Wallis on "The Essences of Long-Term Economic Behaviour". Wallis, Professor of Economics at the University of Maryland, explained that what produces long-term economic growth is, above all, the reduction in the frequency and intensity of recessions. This is due to institutional changes that take place over time. Historical analysis has shown that short-term growth rates and the frequency and intensity of recessions have been high for most of history. In developing countries they remain high and highly variable. So why do improvements in long-term growth occur? Because the frequency and intensity of recessions have declined. In fact, the short-term growth rate has tended to fall over time, rather than rise, when long-term growth has improved. As a result, the way countries get richer is with low but sustained growth. This explains why rich countries are getting richer, because in poor countries crises occur more frequently and are more intense. Adam Smith taught us that long-term economic growth depends on the size of markets, productive specialisation and the division of labour, as he explained with his well-known example of the pin factory. In this world, technological development, demographic transition, structural changes in economies and wars can also contribute to economic growth. However, this alone is not enough to overcome the Malthusian trap without an intervention to make it possible. This is because Smithsonian society is a society that is based on interpersonal relations, on knowledge of the other and thus on trust. In this society, elites enjoy privileges and hold power, which they generally use to defend these privileges. In this sense, elites are less willing to respect contracts because they can only be effectively forced to do so by those above them in society. These are top-down relationships in which the higher up you are, the more difficult it is to have someone above you to hold you to your word. Such societies are more prone to wider and more frequent crises, as breaches of contracts can trigger situations of breakdown within the elites themselves that impede business relations between elite members. With the lower strata of society such relations will not exist since they lack the capacity to enforce the satisfaction of contracts and will therefore refrain from engaging economically with social levels higher than their own. Modern societies, on the other hand, are better adapted to crisis situations because the relationships are impersonal and thus take place between all levels of society. This eliminates the possibility of a breakdown of elites leading to a crisis for all as a consequence of the changes and uncertainties affecting those elites. Here the elites can no longer use the laws to their advantage and are thus obliged to honour the contracts they have signed. Ruptures do not occur and thus the amount and intensity of crises are reduced.
The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio González, are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of the authors.
The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio J. González, are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.
