Main Argument: N&W demonstrate the relationship between institutions and the behaviour of the government and interpret the institutional changes on the basis of the goals of the winners ability to secure property rights, protect their wealth, and the eliminate confiscatory government. They argue that the new institutions allowed the government to commit credibly to upholding property rights. They explain the evolution of political institutions in seventeenth-century England, focusing on the fundamental institutions of representative government emerging out of the Glorious Revolution of 1688-a Parliament with a central role alongside the Crown and a judiciary independent of the Crown. The credible commitment by the government to honour its financial agreements was part of a larger commitment to secure private rights. The institutions leading to the growth of a stable market for public debt provided a large and positive externality for the parallel development of a market for private debt.
== Notes ==
– This article focuses on the political factors underpinning economic growth and the development of markets-not simply the rules governing economic exchange, but also the institutions governing how these rules are enforced and how they may be changed
– The more likely it is that the sovereign will alter property rights for his or her own benefit, the lower the expected returns from investment and the lower in turn the incentive to invest
– For economic growth to occur the sovereign or government must establish a relevant set of rights, and must make a credible commitment to them
New arrangements were self-enforcing because:
a) credible threat of removal limited the Crown’s ability to ignore the new arrangements
b) parliamentary interests agreed to put the government on a sound financial footing
*As a consequence of these institutional changes, private rights became fundamentally more secure
* The principal lesson of thisarticle is that the fundamental institutions of representative government – an explicit set of multiple veto points along with the primacy of the common law courts over economic affairs – are intimately related to the struggle for control over governmental power.