Popular economics or few words about modern feudalism


Nobel Prize winner Douglass North defines two types of social order.  The first one is the open access order, which stands on principles of openness and fair competition.  The second one is the limited access order, which relies on selectiveness and privileges thus restricting both political and economic competition.  In the first case the open system brings to success the most competitive players (those who can produce the best quality and the cheapest products and services).  In case of limited access order the success depends only on how someone is close to the clan, family or caste.  Ukraine, apparently, is a country with the limited access order.  And it needs fundamental changes to pass to the openness.  However, political elites as well as business elites face conflict of interests when it comes too close to real reforms since fundamental changes threaten their own rent-seeking schemes.  In that case the only way (though a thorny one) is to build demand for real changes from “below”.

For more details, please, see comix-presentation Popular economics or few words about modern feudalism

February 25, 2012