Rationality and institutions: reflections on Douglass North

Douglass North questions the assumptions of ergodicity and economic rationality which came to dominate economics; this paper places the emergence of these notions in historical context. North stresses the role of institutions in dealing with a shift from uncertainties in the physical environment to uncertainties in the complex human environment of impersonal exchange. The paper explores the difficulties and weaknesses of his account of this change, focussing in particular on the case of Britain, and the themes of property rights, state structures and warfare.