Introduction

Why have some countries become so much richer than others over the course of the last two hundred years? This unique phenomenon in human history, to which some refer as the “era of modern economic growth,” the “Great Divergence,” or the “rise of the West,” has provoked many highly regarded social scientists to come up with alternative explanations, and there is no sign that their supply will abate in the nearer future.1 More recently, academia has widely acknowledged the outstanding role of institutions in determining an economy’s fortune during this particular period (Acemoglu, Johnson, & Robinson, 2005; Hodgson, 2009; Rodrik, Subramanian, & Trebbi, 2004).2 There are also several recent scholarly attempts to combine these fundamental insights within a single consistent framework. Douglass North, John Wallis, and Barry Weingast (NWW) present their contribution, what will be called the “theory of social orders” (TSO), to a larger academic audience in their joint book entitled Violence and Social Orders (2009). This study uses their ambitious concept as a major point of reference in order to evaluate whether new institutional economics (NIE) can finally provide conclusive answers to the above-stated question.