Actually in a long lost version of Alfred Nobel’s will it says:

Three Prizes for the Science-kings under the sky,
One for the Word-lords in their halls of stone,
Two for Peaceful and Healthy Men doomed to die,
One for the Dark Lords on their dark throne
In the Land of Ikan where the Shadows lie.
One Prize to rule them all, One Prize to find them,
One Prize to bring them all and in the darkness bind them
In the Land of Ikan where the Shadows lie.

However:
a) institutions that are extremely inefficient will not survive long (because they won’t produce enough food to keep the population alive).
b) institutions that are less efficient than their neighbours will have less resources to devote to warfare, increasing their odds of being militarily defeated.
c) Institutions that make people better off will tend to attract people towards them, to the extent that people are capable of moving.

One of the things that baffles me about the Indian caste system paper, apart from the lack of empirical testing, is that the author never seemed to address why castes rather than guilds.

The paper’s maths imply that every country, or every country without an effective legal system, can only be efficient by using castes and a purity hierarchy, but we know that isn’t so. Clans and guilds can provide bargaining advantages as well.

Note, I am using efficiency here as something approximating the physics concept of output/input. I am not using it in the sense of pareto-efficient. I am well aware that calculating economic output/inputs is far harder than calculating say the heat efficiency of a gas furnance.

I haven’t read through the whole thing so perhaps I’m mistaken, but it seems to model the caste system as an institution which permits coordination on the “good outcome” in a Prisoner’s Dilemma. Since the “bad outcome” in a PD is not Pareto Efficient, this paper at least does seem to be about PE. You’re probably right about the larger HR NI literature.

Barry, you’re perfectly right.

I gotta go cook dinner.

The first obvious question is – did ‘it’ persist for such a length of time. Or were there varying systems, with much of the history looking at them through the viewpoint of the present and near-past?

And that is surely what we arguing about here. The castes piece isn’t really about PE - in it, ‘efficiency’ seems to mean something like ‘maximizing trade and productive activity.’ More efficient arrangements have more exchange and production, less efficient ones have less. There is no good theoretical reason to suppose that arrangements that are not efficient in this broad sense of the word won’t persist for very long periods of time, if they are in the distributional interests of actors powerful enough to keep them in place. To put it another way – powerful actors aren’t interested in maximizing collective benefits except when that maximizes their private gains. They will, if they are self interested rational actors, prefer institutional arrangements that give them a larger overall slice of a smaller pie, to arrangements that give them a smaller overall slice of a larger pie. In particular, they will disfavor proposed new institutional arrangements that might increase overall productivity but challenge their own privileged position. And shocks aren’t likely to change this – unless the shocks in question are ones that reduce their bargaining power (which gets back to what Jim and Jack and I have argued and are arguing).

It depends whether it’s a stable or unstable and unique equilibrium. The thinking on this goes that when a shock occurs which opens up an opportunity of institutional change then better institutions might come about. Given a long enough time and a lot of those “mights” eventually, they will come about. So inefficient institutions might persist for a hundred, two hundred, maybe even five hundred years. But three thousand + is a really really long time.

But as I said over at MR, if you a Greg Clark style Malthusian then the only institutions that matter are those related to fertility and mortality. Everything else – including anything which affects productivity – gets eaten up by Malthusian forces. So, with the two caveats above, there’s no really anything like “inefficient” and “efficient” institutions. Standard of living is just proportional to mortality divided by fertility.

Also, anyone who thinks that inefficient institutions cannot survive knows nothing, and I mean nothing, about human history. Or human nature. It is highly unlikely that people who do well under the current system will risk what they currently have for some hypothetical future efficiency gain.

An institutional arrangement typically comes into being as a by-product of distributional conflict among differentially endowed actors. And it might persist due to, say, the inability of those disadvantaged by the way it operates to coordinate their opposition to it (due to simple collective action problems). Likewise, whether those who are advantaged by the operation of some institution might obtain even greater benefits by some other equilibrium institutions is insufficient to move away from an existing to a (for them) ‘superior’ arrangement for similar reasons. The problem with most economics of institutions thinking is the tacit assumption that there is some underlying mechanism driving institutional emergence and change in efficient ways. Smells Hegelian to me.