Summary: Argues that the question of causal primacy is an inaccurately posed one. Institutions and development are mutually endogenous and the most we can hope for is to identify their reciprocal impacts. Argues against the new institutionalism (which is founded on two propositions: (1) institutions matter, (2) institutions are endogenous), which has as its central claim that institutions are a “deeper,” “primary” cause of economic development. The problem is that since institutions are endogenous, if endogeneity is sufficiently strong, institutions cannot have causal efficacy of their own.
Important Insight: Questions of whether institutions or material conditions are “deeper” or “primary” are incorrectly posed. Everything, and thus nothing, is “primary”. The only motor of history is endogeneity – which has the implication that testing alternative theories of development is difficult.