Rules, organizations, and the institutional origins of the great productivity revolution

Abstract

Human productivity began increasing in the mid-19th century in a group of societies whose institutional structures simultaneously transformed. This paper develops a general way of thinking about institutional structures and identifies how specific institutional changes that occurred in the mid-19th century could have caused an increase in productivity across many of the organizations in a society. External rules enforced by one organization but used by other organizations, are central to the argument, as is the emergence of impersonal rules that apply equally to all citizens. The productivity revolution of the late 19th century occurred in an era when a few societies adopted impersonal rules on a broad scale for the first time in human history.