What do economists think of institutions?
"We economists have tried to work like physicists - an enormous overestimation of ourselves"
PWP: Professor Richter, it has now been thirty years since the wall came down. You grew up in Leipzig. How do you see East Germany today and the integration of the so-called new states into the German economy?
Judge: German reunification was one of the largest and most fascinating experiments in politics and economics at all. Converting a formerly communist economy into a market economy is no small matter. It was important that the privatization took place quickly so that there could be a realignment of the companies and investments. And it did: of the more than 12,000 state-owned companies that existed in 1990, most had been sold by the end of 1994. But at the same time it was necessary to bring the infrastructure into shape and to make people employable through training and retraining.
PWP: In the meantime, productivity in eastern Germany has reached 80 percent of the western level. That can definitely be seen as a success. But the question still arises: Why is catching up so tedious?
Judge: Basically, that's not unusual. All experience shows that poor regions are not able to catch up with richer regions faster than by 2 to 3 percent annually. You need a lot of patience - and above all, the right framework conditions. As for the deeper reason why this process is taking so long, I have to go back a bit. You have to know that East Germany was once an industrially highly developed area. What was once called Central Germany was once one of the most productive parts of Germany. Bavaria, for example, which is now considered economically very successful in the West, was far behind in comparison. It is therefore hardly surprising that the East has lagged behind the West, not because of a technological lag since the division of Germany and to this day, if not quite as drastically. It wasn't the knowledge. The physicists and engineers in the East, for example, were no less intelligent than in the West. In the east their problem was that there was no material; that you couldn't import what you couldn't produce yourself; that the political constraints were crippling. It was all just a makeshift. As a rule, Germans are good at helping themselves and improvising.
Judge: Economic life depends heavily on informal things, on customs on the one hand, and networks on the other. The problem in East Germany was the networks. The networks that were necessary for economic life in the GDR differed significantly from the earlier networks in the German Reich and also from those in the Federal Republic. Some of them copied political clans and were not economically productive. And the problem is, once a network is destroyed, it takes a long time to get it back on track.
PWP: What do you mean by networks exactly?
Judge: Above all, I mean the spontaneously developed, loose association of business friends who build and share knowledge, experience, relationships with suppliers and customers with one another. To this end, the work of Mark Granovetter is of the greatest importance. Business friends play a major role in practical business life. Of course, these are not always really personal friends; sometimes they are even really gross to you. But we know each other; you know who to trust. The Second World War already tore many holes in this material of business relations in East Germany. The war "only" lasted six years and the entire Hitler era just 12 years, but the GDR existed from 1949 to 1990, so a good 40 years. A lot of damage can be done in such a long time and it takes a long time to heal. Therefore, after reunification, it was not so easy to build on earlier connections, simply because the former business partners were no longer alive or because other generations were at the helm. You just have to consider that when you complain that the East is still struggling economically today. Ideologies also play a role. Like religions, ideologies are very entrenched. The long isolation of the East continues to this day.
PWP: What did the missing networks mean in concrete terms?
Judge: In a nutshell: In the East they had a lot of technological knowledge and a good entrepreneurial mentality, but you couldn't do that much because you were locked up. Take the example of the automotive industry. The fact that German cars are good was already known all over the world in the interwar period. But the Trabi, which then saw the light of day in the GDR - it wasn't a Mercedes. The Trabi - that was the old DKW ("the little miracle"), only that it stank terribly due to the lack of normal petrol. This Trabi could not succeed on the world market; not even the Wartburg.
PWP: Is there anything that should have been done politically differently on the basis of this finding after the fall of the Wall?
Judge: I think we should definitely have approached reunification in a less naive way and not indulge in so many illusions that investors are already queuing up for East Germany. For example, nobody seemed to really be aware of how outdated the machinery was. Most of it came from the twenties and thirties. Incidentally, my typewriter, which my father had given me, came from this time, an old, heavy "Orga" that I dragged myself to the West. There was nothing here before the currency reform. In any case, the organization thundered terribly; my landlady could not fall asleep when I wrote my doctoral thesis on it at night.
PWP: Allow us to ask again: What exactly was the mistake in the political way in which the attempt was made to integrate the new countries economically?
Judge: This is difficult. Today we are faced with the same kind of problem again in relation to the southern Member States of Europe: the same currency, enormous differences in productivity. A country like Greece cannot possibly compete on an equal footing in the world market for manufactured goods. The concept of the common market in Europe was originally not thought to be that comprehensive. First and foremost, it was about promoting agriculture. There was hunger after the war; so you had to do something. The requirements are completely different for the entire breadth of macroeconomic production, especially industrial production. If you will, you could perhaps say: in the case of European monetary union, just as in connection with German reunification, politicians did far too little beforehand to adjust the widely divergent levels of productivity. East Germany should have kept the East Mark for a while longer. The 1: 1 conversion rate was also a mistake.
PWP: What would you advise, what should be done today with those East German regions in which industry is no longer present because the existing facilities have been completely overtaken by technical progress and politics after German unification did not succeed in doing anything there To settle new? In the end only passive renovation? And if so, aren't you afraid that it would be too socially risky and therefore politically unwise?
Judge: The United States is the best example of how to deal with technological progress and the structural change that it brings about. Look at California, at Silicon Valley. It was once a purely agricultural landscape, a fruit-growing area. There had been a university there for some time, Stanford University, founded by the railroad magnate Leland Stanford in 1891 on the model of Humboldt. But the university - today the most beautiful and best equipped university I know - wasn't really a magnet at the time. The decisive factor in creating a Silicon Valley with global appeal was the economic freedom. It was crucial that an innovative development was allowed, that new ideas could find their way. A policy that is as restrictive and hostile to the economy as the current environmental and climate policy here in Germany in particular stands in the way of this. That puts a strain on the east.
PWP: Do you think the current environmental and climate policy is wrong?
Judge: In connection with the environment and climate, Garrett Hardin often speaks of the "tragedy of the commons", that is, the fatal overuse of common goods. However, it is not inevitable. You just have to react to overuse by regulating access, and in such cases of global importance only the state can do that. But is there really an overexploitation of natural resources? Personally, I don't know, but you have to ask yourself this question. It is one of the discoveries of scientific methodology that one must be aware that one can never find conclusive truths. That is why one should not take any assertions from the outset for such truths, but rather doubt everything. It is not verified, but falsified. That's what Karl Popper taught us.
PWP: While we are in doubt - let's turn to the topic of money and currency, which for a long time was the focus of your research. At the beginning of the nineties, you and a good 60 other people signed a memorandum entitled “The EC monetary union leads to the ultimate test”. Would you say today that monetary union should have been abandoned?
Judge: No not that. It was the price of German unification. No German politician could and would have prevented it. From an economic point of view, nobody needed monetary union. A free trade zone works best with different currencies. But the French made it very important that the D-Mark should not become the dominant currency. Today it is the euro that is giving Germany back economic leadership, and Germany should see to it that the institution that was created to keep it under control does not fall apart. There is a good irony of fate in that.
PWP: You recently wrote in an essay that the Maastricht Treaty on European Union is, in institutional economics terms, an incomplete relational treaty in the guise of a complete treaty. It cannot be used word for word. How so?
Judge: The difficulty is that you don't know the future. This is true almost everywhere in life and, of course, especially in a political context. And just in connection with a monetary union. Not only is there a lack of experience, but it is in the nature of things that new problems arise that cannot be foreseen with the best will in the world. This means that future problems cannot be linked to a mathematical probability in advance and taken into account. We live in a non-ergodic world. You don't even know the stochastic variables and the possible characteristics that they can take on at some point. This is what constitutes the fundamental uncertainty, more precisely: the uncertainty that Frank Knight spoke of as early as the 1920s and, a little later, John Maynard Keynes in a masterly manner. And that's why there are no full contracts; you just have to make do with incomplete contracts. Something always remains open. However, everyone agrees that if problems arise, they should sit down again and try to solve them. There is only agreement in principle, but not on the details. And that also applies to the European Union and the monetary union: that is their purpose, so to speak. You have to and you should come to an agreement again and again. In terms of institutional economics, this means: Instead of continuing to conclude transactions in markets, you found a company. That is the background.
PWP: And what is the “garb of a complete contract” that doesn't actually fit?
Judge: The Maastricht Treaty is extremely complex and complicated. Personally, I would never have completed it! In order to make it as complete as it can be, it has precisely recorded what happens if a country does not comply with the stability criteria: an application of the time-state-preference model by Arrow and Debreu. Even the criteria are very precisely quantified. If a country goes into debt beyond the agreed level, not only is there a new round of negotiations with its partners, but it is already clearly spelled out that it has to pay a fine, and even exactly how much. I have to pay money to get into debt! And in the end I have to go into debt so that I can pay the debt! This can only be thought up by someone who is used to thinking in rigid centralized rules. The difference between economics and politics is that the politicians rule and whoever does not parry is punished - but the economists negotiate. It's a completely different way of thinking. It would have been better if the automatic market discipline had been retained. In any case, the Maastricht Treaty seems to be completeness that cannot be given in this political area in particular. It is therefore quite inevitable that the European Central Bank will have to exceed its mandate to ensure price stability again and again.
PWP: Indeed, the European Central Bank's job is to ensure that price increases stay close to 2 percent over the year. You are critical of this limit anyway, don't you?
Judge: Yes, someone slept there. In particular the Deutsche Bundesbank. You agree on price stability, and then the Central Bank Council comes along and defines this price stability in such a broad sense that nobody wanted it. It was never intended that way. I did the math: I've now lost a quarter of my pension payments in purchasing power. That's the result. Why have we actually banned indexing in Germany?
PWP: Yes, what for?
Judge: The indexation ban goes back to our friendly occupying power, which made the D-Mark possible for us at the time, for the purpose of the central bank making a real effort to keep the price level stable. But as I said, stability is now understood to mean a price increase of around 2 percent. This is not nothing! The reason is then put forward, including by the former head of the Federal Reserve Bank, Ben Bernanke, that one must keep a distance from price developments that run the risk of leading to deflation. But that's pure fantasy! This is not empirical at all and to that extent is dubious in its purest form.
PWP: One reason for an inflation target of more than zero is usually that there are so-called price adjustment costs or “menu costs”, as Greg Mankiw put it: You need a bit of inflation because the downward prices are rigid and otherwise the relative prices will not be right in the end. And if you look at the history of the Federal Republic of Germany, with the Bundesbank: we rarely had zero percent inflation there either.
Judge: Yes, but not because the Bundesbank wanted it that way. And this story with the “menu costs” is nonsense. It's just hair-raising.
PWP: What does this mean? And what follows from that?
Judge: It follows that the central banks have to keep money tight above all. The problem is that we have a paper standard, an international paper standard. Knut Wicksell wanted that too at the time, even before the First World War, in which everyone killed each other. He knew that negotiation would be necessary to get an international paper standard, but he saw it as something positive, absolutely good, when nations have to negotiate with one another rather than wage wars. That was his approach. But what do we have now? The dollar is a reserve currency that allows the Americans to determine what happens to interest rates here on the basis of any deficit economic theories. The whole of the last financial crisis in the United States was a single oath of revelation from economics. That was about the worst that could happen.
PWP: For the economy, for the country?
Judge: Yes, both, but right now I'm mainly referring to the subject. What was not imagined there? We economists have tried to work like physicists - an enormous overconfidence. In this subject, we deal with very difficult questions with a fantastic ease that is completely inappropriate.
PWP: In what way?
Judge: Many representatives of our field did not take the fundamental uncertainty seriously, i.e. the fact that I have already mentioned several times that you don't even know what you don't know. If you do not take this fact into account, you can construct high-quality models, but you have not understood anything about reality. And then it can happen that no one suspects that a major crisis is approaching us - which the British Queen afterwards quite rightly commented critically. What were the economists stammering about!
PWP: That brings us to the question of how economists should actually work.
Judge: I think we need a healthy mix of the various approaches in our discipline. We are far too prone to polarization and mutual exclusion, also in science. On the one hand there are the neoclassics, who have also included representatives of various Keynesian approaches since Paul Samuelson's neoclassical synthesis, and on the other hand the vehement anti-neoclassics. The neoclassical with its Walrasian systems and the mathematical marginal calculus may fall short in some applications, but it is important, you just have to use it correctly and not put everything on it. It is wrong to position one against the other. But honestly, I myself had to come a very long way to get this well-balanced knowledge. I've always been very drawn to the natural sciences and that's where I came to economics. I've always considered myself a mathematical economist. I found Walras' idea of developing a theory of economic life using the same mathematical means that Newton used for his celestial mechanics extremely attractive. The thesis of my inaugural lecture at Saarland University came down to the fact that economics actually has to be practiced as an application of physics to economic questions. But the hope that this could be useful and provide new insights has now been completely shattered for me.
PWP: So economists don't have to calculate as much as is normal today?
Judge: But. There is no other way. Economy always has to do with arithmetic. At least on a small scale. On the whole, it becomes difficult with arithmetic.
PWP: How would you briefly summarize what kind of subject economics is?
Judge: Economics is about the prosperity of nations, its causes and its distribution among individuals. It is therefore a science that deals with the material interests of individuals and their inner dynamics - a theoretical problem of complex dynamic adaptability, which can at best be illustrated by suitable computer-aided calculation examples or can be backed up with historical experience, but which cannot be addressed by the Solve the results of econometrically based dynamic models. Ultimately, we have no solid evidence of consistency and stability in an economy. In this respect, economic theory stands on ideologically unsteady ground.
PWP: What do you mean by that?
Judge: Those who represent the subject have to show their ideological colors: According to my liberal understanding, economic theory is the explanatory part of economics - a real science that deals with the disposition of individuals in a free society over scarce goods and their exchange via open and free markets. Keynes and the 'Keynesians' also think in this style. What they doubt (and I doubted earlier too) is that full employment can be achieved without government intervention. Regardless of this, economics is an eminently political subject, because the economic happiness or unhappiness of the individual always depends to a large extent on the decisions of those who somehow influence the social framework of the national economies. These are the politicians and intellectual leaders of all nations.
PWP: In the eighties you turned very clearly to institutional economics, where not quite as much is calculated, initially with a clear focus on monetary theory. Is the impression correct that, on the other hand, you did not show so much interest in German order theory that it perhaps even seemed too ideological to you?
Judge: I changed my mind then. In my opinion, the theory of order in the form of the Freiburg School builds on the findings of David Hume, who knew that humanity is too poorly equipped by nature to be able to assert itself against the uncertainty of life. That is why people need rules. And these rules include things like the protection of private property, freedom of contract and the principle of liability. However, in my case it was and should also apply to many other people that the theory of order can only be properly understood when one has absorbed the very clearly structured conceptual world of institutional economics. Read Eucken! That’s a lot of gossip. You can't do anything with that.
PWP: And to what extent is that better in New Institutional Economics?
Judge: It also gives us a rational justification for the order of a free market economy. But methodically there are still a few things reminiscent of Walras and his system. Ronald Coase, for example, who was the first economist to give the overly simplistic basic assumptions of the neoclassical, such as the absence of transaction costs, complete rationality and perfect foresight, the critical attention they deserve, shows in one of his famous essays why there are markets for some transactions and why other economic processes are instead carried out within a company. I referred to this approach earlier in connection with monetary union. He allows Coase to explain the existence of companies; a question to which neoclassical economics, of all things, had not had a correct answer until then. But Coase remains within the neoclassical paradigm. He does not leave this level, but he expands and supplements it. I am deeply convinced of the analytical benefits of the new style of thinking that Coase shaped and that I discovered for myself around the end of the 1970s.
PWP: What is the problem with a neoclassical approach that is not expanded in this way?
Judge: Nothing per se. But if you are practicing neoclassical music in a very strict, narrow, not expanded sense, then you always have to maximize. For example, you can only maximize a production function if you know whether you can actually sell the stuff you produce. You have to be able to see into the future. If you assume that the future is not just uncertain but uncertain, that there is real uncertainty, when you absolutely have no idea what is going to happen, then you are there for now. You can of course make assumptions. But strictly speaking, you can't. Because you don't know anything. You need to be aware of this. Still, it's interesting to work like this. But one has to be aware of the limitations of this approach. Basically it is just an auxiliary construction. But that's okay too. Auxiliary constructions are used everywhere.
PWP: What is the significance of the Coase‘ approach for you? Only in explaining why there are companies?
Judge: No, of course not, it is much more than that. As I said, it is a completely different style of thinking that, against the background of fundamental uncertainty, radically abandons the idea that one can do economics like a physicist. And it is not only Coase who broadened our view, but we also owe a great deal to Douglass C. North and Oliver Williamson, among others, for their reference to the importance of institutions and governance structures, of historical path dependencies, of contractual arrangements, of culture, mentalities and beliefs. For example, consider why there are no futures markets for many goods. They do not exist for toothbrushes, gloves and similar consumer goods. They don't even exist for automobiles. They are actually only available for a few mass-produced products such as grain, for example wheat. Why? Because of the uncertainty. It's because I don't know what can happen. And if I want to close appointments, I have to specify what should apply when. I have to use time-state thinking in the Arrow's sense. But that is not possible. And if that is not possible, what then? Then I start a company and hire someone who has a personal idea of what the future might bring. Enterprises are institutions created for speculating.
PWP: To speculate?
Judge: But yes. To speculate on the future. In addition, companies are able to operate “corriger la fortune”. A company can use advertising to try to turn luck in its favor. This is forbidden in horse racing, for example, but it is allowed in business life. The venture is a fantastic thing. It is the institution that allows one to cope with uncertainty. If you adopt this institutional economic way of thinking, you will quickly understand why some companies sometimes offer such high salaries to the people they hire in management positions. These salaries are not indecently high. And I don't need tournament theories eitherto justify their amount. Rather, they are simply speculative salaries. One speculates on the success of a strategy that someone claims will succeed. It is nothing else. In part, these are fantasy amounts. This has nothing to do with productivity in the narrower sense of the word, like the farrier using a hammer to drive a nail into the horse's shoe. But it has a lot to do with the use of resources in activities with uncertain results.
PWP: You have made a great contribution to the dissemination of institutional economics in Germany. How did you come up with the great idea of organizing a summer school for institutional economics - the first summer school of its kind?
Judge: I copied that from the physicists. With this, I primarily wanted to do something for the modernization and internationalization of economic theory in the direction of institutional economics in Germany. A secondary purpose was to find good young people who could contribute or review articles to the Journal of Institutional and Theoretical Economics (JITE), for which I was the editor. The symposia I organized on the Saarbrücker Halberg and later the so-called Wallerfangen conferences served to take a closer look at what the new institutional economics was all about. But I needed the summer school, in addition to all the professional interest and concern about the academic connectivity of the German universities, simply to get a team together for the magazine. Most of these young people later became university teachers themselves. They were really good and we had very intellectually enriching moments together.
The interview was conducted by Justus Haucap and Karen Horn. Rudolf Richter was photographed by Wonge Bergmann, Karen Horn by Beatríz Barragán.
Growth, money and institutions
He had actually wanted to study medicine. But the Second World War thwarted the plans of the man born in 1926 from a Leipzig entrepreneurial family who ran the "House of Hats" in various cities in Saxony, a specialty shop for the manufacture and sale of hats for women and children. After the collapse, the most important thing was to get the family back on their feet, and that meant that Rudolf Richter should start studying straight away, with which he would earn decent money as soon as possible. But that was what many young people wanted back then; ten to twelve war returnees competed for scarce university places. In addition, medical studies usually lasted four semesters longer than other courses. And because medical students were exempted from service for a long time during the war, the medical market of all things was disproportionately well stocked and the professional prospects were therefore not very promising. Richter, who had illegally crossed the border to the west from Leipzig together with some friends in the winter of 1945 via Friedland, pragmatically took hold of the University of Frankfurt / Main, where he was able to get hold of a place to study business administration.
In addition to the subjects in his curriculum, he attended lectures in other subjects, including philosophy with Hans-Georg Gadamer, Max Horkheimer and Theodor Adorno. In the field of economics, he was particularly influenced by Heinz Sauermann, who is considered to be the most important pioneer of game theory and experimental economic research in Germany and whose efforts to make the subject more scientific through the use of mathematics met Richter's formal talents. For his business administration degree, he was able to exchange an economic topic for the diploma thesis from a fellow student: "The importance of minimum reserve rates for monetary policy". After graduating, he wrote his doctoral thesis with Sauermann, with the approval and financial support of his father in the east - within a year. The topic was "The distribution of net investments in the consumer goods and production equipment industries" - which he used to create an original link between Spiethoff’s theory of production stages and Clark’s acceleration principle. To
After completing his doctoral thesis, which sparked a considerable scientific controversy, Richter, who wanted to earn money quickly, worked for six months at AEG. But then he decided to do his habilitation with Sauermann, who knew how to lure him to the United States with the possibility of a Rockefeller scholarship. For his work he again chose a completely different topic, this time in the field of competition: “The competition problem in the oligopoly”.
After obtaining the Venia legendi in 1953, the dream of America came true. With the Rockefeller Fellowship in his pocket, Richter traveled to New York to undertake an empirical study on his habilitation subject with George Stigler. But, as he admits in his memoirs, it was a shocking experience: "My gaps in the areas of mathematics and statistics turned out to be far too big to be easily closed, over the weekend, so to speak." The Rockefeller Foundation released him from his project and instead enabled him to study two in-depth semesters at the University of Michigan, Harvard University and MIT. Richter attended lectures by greats such as Wassily Leontief, Gottfried Haberler, Lawrence Klein, Edward Chamberlin, Kenneth Arrow, Paul Samuelson and Leonid Hurwicz - with the effect that he “got serious fire for theoretical work in the field of economics”. Although he returned to Germany, the connection with the United States never broke and has influenced the thematic and methodological orientation of his work to this day.
In the academic year 1956/57 Richter was a visiting assistant professor at the University of Michigan; In 1959 he became an adjunct professor at the University of Frankfurt. In 1961 he was offered a professorship at the University of Kiel; two years later his first microeconomic textbook came out, on price theory. In the autumn of 1964 he went to Saarbrücken, to the University of Saarland, where he was given a chair for political economy, especially economic theory. The campus in the Saarbrücken city forest, a former barracks, became his permanent academic home; Not far from there he still lives with his wife in a small housing estate on the mountain. Richter refused a call to the Free University of Berlin; he initially accepted a call at the University of Regensburg, but wound it up again after disputes over local university politics; he did not listen to the University of Mannheim either. Further on in Saarbrücken, he said he enjoyed writing a textbook on macroeconomics in the style of neoclassical synthesis together with Ulrich Schlieper and Willy Friedmann; it came out in 1973 and saw several new editions.
Richter regularly escaped from Saarbrücken to America for guest stays; in the early summer of 1973 he spent three months at Harvard University at the invitation of Richard Musgrave. There he collected material for the next textbook, in which he dealt with monetary theory. The subject had always interested him in his macroeconomic research, but now, after the collapse of the Bretton Woods system, the debate about a necessary reorientation of monetary policy was fully underway and more exciting than ever. "Milton Friedman's criticism of the Keynesian teachings made sense to me," says Richter, "I had to learn a lot". He was ready and relearned with verve.The book was finally finished in 1987, and it clearly indicated where Richter's intellectual journey would continue in the following: to New Institutional Economics (NIÖ), the then still unorthodox and very fruitful sub-discipline that took account of transaction costs and a number of traditions the neoclassical scooped up or at least allowed to be thoroughly scrutinized. Inspired by his longstanding American sparring partners, Richter recognized that the background to monetary theory also includes an understanding of the institutional framework of the money and financial markets.
So again it was a matter of relearning, and Richter threw himself into the adventure with infectious enthusiasm - and so he became a pioneer of the new institutional economics in Germany. Here he developed a remarkable effect, which is partly due to his permanent network with the academic world in America. He was already cultivating this at a time when German economic science was more or less left behind internationally, and he helped to bridge the gap. In any case, in order to take part in the “radical change of direction in economic theory”, as he felt the emergence of the new institutional economics, Richter read from then on everything that appeared and fell into his hands. He thought, he discussed, he wrote, he kept traveling to America and lecturing at prestigious universities - his productivity was impressive. At his chair he created a “Center for the Study of New Institutional Economics”. In addition, the theoretician, with entrepreneurial drive and organizational talent, established a close partnership with the University of Michigan for the University of Saarland, from which a good 150 Saarbrücken students benefited.
With the help of the German Research Foundation (DFG), Richter was able to regularly invite foreign scientists to the Saarland to give guest lectures, including Ronald Coase, Douglass C. North, James M. Buchanan, Kenneth Arrow, Oliver Williamson, Jean Tirole, Hal R. Varian, Ken Binmore, Wolfgang Stolper and Jan Kmenta. Soon a breath of the big, wide world of science wafted over the Saarbrücken campus with its once important, but at the time already tiny and then at the end of the nineties completely downgraded to the service of business administration. However, anyone who sat in the seminar library at the heyday of institutional economic activities and crammed for exams (like Richter's two interviewees in the above interview) did not have to be surprised when the neat "plop-plop" came in through the open window future American Nobel Prize winner like Williamson produced on the tennis court next door with Richter's colleague Dieter Schmidtchen, a passionate NIÖ colleague.
The international "Wallerfangen Meetings" (1984-1995) and the "Summerschool on New Institutional Economics" (1988-1994) for European doctoral students, organized by Richter, became an important forum for this new field of research. He also converted the “Journal for the Entire Political Science”, which Richter took over from his teacher Heinz Sauermann in 1978, into an important institutional economic journal in English, which he renamed in 1986 as the “Journal of Institutional and Theoretical Economics (JITE)” . And while his one-chapter explanations on institutional economics in his monetary theory book still seemed a bit foreign, Richter soon found the opportunity for a comprehensive synopsis of the field, which he wrote with his friend Eirik Furubotn from Texas A&M University: the first international textbook “New Institutional Economics”. The tome published in 1996, which grew to almost 700 pages with each new edition, was translated into other languages several times in both the German and English versions of the standard work. It has shaped generations of students. (orn.)
© 2019 Walter de Gruyter GmbH, Berlin / Boston
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