Interlocking complementarities and institutional change

Ugo Pagano

Journal of Institutional Economics, 2011, vol. 7, issue 3, 373-392

Abstract: In biology, the laws that regulate the structuring and change of complex organisms, characterised by interlocking complementarities, are different from those that shape the evolution of simple organisms. Only the latter share mechanisms of competitive selection of the fittest analogous to those envisaged by the standard neoclassical model in economics. The biological counterparts of protectionism, subsidies and conflicts enable complex organisms to exit from long periods of stasis and to increase their capacity to adapt efficiently to the environment. Because of their interlocking complementarities, most institutions share the laws governing the structure and change of complex organisms. We concentrate on the complementarities between technology and property rights and consider historical cases in which organisational stasis has been overcome by mechanisms different from (and sometimes acting in spite of) competitive pressure. The evolution of institutions cannot be taken for granted; but even when institutions seem frozen forever by their interlocking complementarities, their potential for change can be discovered by analysis of those interactions.

Date: 2011
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