Institutional Capital Theory
An Economic Theory of Institutional Assets, State Capacity and Public Value
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English
ISBN 979-8-9977454-0-0 -
Théorie du capital institutionnel
ISBN 979-8-9977454-1-7 -
Teoria del capitale istituzionale
ISBN 979-8-9977454-2-4
Two countries can spend the same money strengthening their governments, pass similar laws, and score about the same on the usual governance indexes. Ten years later, one has a public apparatus that works and the other does not.
Spending, legislation and index scores do not explain the gap, because none of them tracks what actually accumulated in the interval. This book names what did: institutional capital. A defined subset of institutional capability should be treated as capital, built through investment, held as a stock, maintained, depreciated and financed. That move makes two things visible. Silent decay becomes depreciation with a rate. And the terms on which a state can borrow become a determinant of what it can build, a constraint no reform programme reaches.
Six axioms, eleven propositions and eleven testable hypotheses make the theory contestable. Cases from five regions show it applied. An empirical protocol, fixed in advance, shows how it could fail.
Review record
The manuscript was read by an independent panel of economists and social scientists, which returned a written report and a verdict of acceptance subject to moderate revision. The panel raised no objection to the central thesis. Its reservations concerned how the thesis was established, referenced and summarised, and it verified the book's figures against primary sources.
The report made ten recommendations. All ten were implemented before publication. Among the substantive consequences:
- the general theorem was requalified as a general proposition, and the claim of derivation from axioms was redefined as dependence;
- a redescription rule was written, fixing three cumulative conditions under which an external shock counts as an internal channel of depreciation rather than a confounder. The rule removed one of the book's own cases;
- the free multipliers were audited and reduced from six to four, each bounded and sign-restricted in advance, with a rule fixing which observations permit which coefficient to be invoked;
- the bibliography was extended from seventeen works to sixty-one numbered references;
- the case selection rule was written out, including the admission that it was reconstructed after the fact.
A second panel, constituted independently of the first and not informed of it, subsequently received the complete manuscript in both the French and English editions.