IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/20636.html
   My bibliography  Save this paper

Adam Smith's "Tolerable Administration of Justice" and the Wealth of Nations

Author

Listed:
  • Douglas A. Irwin

Abstract

In the Wealth of Nations, Adam Smith argues that a country's national income depends on its labor productivity, which in turn hinges on the division of labor. But why are some countries able to take advantage of the division of labor and become rich, while others fail to do so and remain poor? Smith's answer, in an important but neglected theme of his work, is the security of property rights that enable individuals to "secure the fruits of their own labor" and allow the division of labor to occur. Countries that can establish a "tolerable administration of justice" to secure property rights and allow investment and exchange to take place will see economic progress take place. Smith's emphasis on a country's "institutions" in determining its relative income has been supported by recent empirical work on economic development.

Suggested Citation

  • Douglas A. Irwin, 2014. "Adam Smith's "Tolerable Administration of Justice" and the Wealth of Nations," NBER Working Papers 20636, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20636
    Note: DAE DEV LE POL
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w20636.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4525-4595, Elsevier.
    2. Timothy Besley & Torsten Persson, 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics," American Economic Review, American Economic Association, vol. 99(4), pages 1218-1244, September.
    3. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    4. Voigt, Stefan & Gutmann, Jerg, 2013. "Turning cheap talk into economic growth: On the relationship between property rights and judicial independence," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 66-73.
    5. De Long, J Bradford & Shleifer, Andrei, 1993. "Princes and Merchants: European City Growth before the Industrial Revolution," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 671-702, October.
    6. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    7. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    8. Ryan Bubb, 2013. "The Evolution of Property Rights: State Law or Informal Norms?," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 555-594.
    9. Scully, Gerald W, 1988. "The Institutional Framework and Economic Development," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 652-662, June.
    10. Sebastian Galiani & Ernesto Schargrodsky, 2011. "Land Property Rights and Resource Allocation," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 329-345.
    11. Mahoney, Paul G, 2001. "The Common Law and Economic Growth: Hayek Might Be Right," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 503-525, Part I Ju.
    12. Claudia R. Williamson & Carrie B. Kerekes, 2011. "Securing Private Property: Formal versus Informal Institutions," Journal of Law and Economics, University of Chicago Press, vol. 54(3), pages 537-572.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bruno Schönfelder, 2016. "The evolution of law under communism and post-communism: a system-theory analysis in the spirit of Luhmann," Financial Theory and Practice, Institute of Public Finance, vol. 40(3), pages 293-318.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Douglas A. Irwin, 2020. "Adam Smith's “tolerable administration of justice” and the Wealth of Nations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(3), pages 231-247, July.
    2. Katja Kalkschmied, 2020. "Rebundling Institutions," Graz Economics Papers 2020-03, University of Graz, Department of Economics.
    3. Kalkschmied, Katja, 2023. "Rebundling Institutions: How property rights and contracting institutions combine for growth," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 477-500.
    4. Rok Spruk & Mitja Kovac, 2018. "Inefficient Growth," Review of Economics and Institutions, Università di Perugia, vol. 9(2).
    5. Harris,Colin & Cai,Meina & Murtazashvili,Ilia & Murtazashvili,Jennifer Brick, 2020. "The Origins and Consequences of Property Rights," Cambridge Books, Cambridge University Press, number 9781108969055, January.
    6. Arthur Silve, 2012. "Complementarity and the resource curse," PSE Working Papers halshs-00728703, HAL.
    7. Braunfels, Elias, 2016. "Further Unbundling Institutions," Discussion Paper Series in Economics 13/2016, Norwegian School of Economics, Department of Economics.
    8. Méon, Pierre-Guillaume & Sekkat, Khalid, 2022. "A time to throw stones, a time to reap: how long does it take for democratic transitions to improve institutional outcomes?," Journal of Institutional Economics, Cambridge University Press, vol. 18(3), pages 429-443, June.
    9. Van Noort, S., 2017. "Causes and Effects of Private Property Rights Security," Cambridge Working Papers in Economics 1746, Faculty of Economics, University of Cambridge.
    10. Hall, Stephen G & Ahmad, Mahyudin, 2013. "Can Trust Explain Social Capital Effect on Property Rights and Growth?," MPRA Paper 48440, University Library of Munich, Germany.
    11. Abdoul’ Mijiyawa, 2013. "Determinants of property rights institutions: survey of literature and new evidence," Economics of Governance, Springer, vol. 14(2), pages 127-183, May.
    12. Mendoza, Ronald U. & Canare, Tristan A. & Ang, Alvin, 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Research Paper Series DP 2015-37, Philippine Institute for Development Studies.
    13. Arthur Silve, 2018. "Asset Complementarity, Resource Shocks, and the Political Economy of Property Rights," Journal of Conflict Resolution, Peace Science Society (International), vol. 62(7), pages 1489-1516, August.
    14. Wunnava, Phanindra V. & Mitra, Aniruddha & Prasch, Robert E., 2012. "Globalization, Institutions, and the Ethnic Divide: Recent Longitudinal Evidence," IZA Discussion Papers 6459, Institute of Labor Economics (IZA).
    15. Iván Higuera-Mendieta, 2016. "Persistencias históricas y discontinuidades espaciales: territorios comunitarios en el Pacífico colombiano," Documentos de Trabajo Sobre Economía Regional y Urbana 14635, Banco de la República, Economía Regional.
    16. Christian Bjørnskov, 2015. "Constitutional property rights protection and economic growth: evidence from the post-communist transition," Constitutional Political Economy, Springer, vol. 26(3), pages 247-280, September.
    17. John W. Dawson, 2007. "The Empirical Institutions-Growth Literature: Is Something Amiss at the Top?," Econ Journal Watch, Econ Journal Watch, vol. 4(2), pages 184-196, May.
    18. Wolfgang Keller & Carol H. Shiue, 2016. "Market Integration as a Mechanism of Growth," CESifo Working Paper Series 6070, CESifo.
    19. Thomas Gall & Paolo Masella, 2012. "Markets and jungles," Journal of Economic Growth, Springer, vol. 17(2), pages 103-141, June.
    20. Gurvich, Evsey, 2016. "Institutional constraints and economic development," Russian Journal of Economics, Elsevier, vol. 2(4), pages 349-374.

    More about this item

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • K2 - Law and Economics - - Regulation and Business Law
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:20636. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.