Introduction

While profit opportunities from institutional reorganization are not limited to the four types described in Chapter I, each of those has played an important role in the institutional history of the American economy and thus had a significant impact on the shape and pace of the nation's development. That is, they were part of the process of improving productivity and output in the society. There is, however, yet another type of profit that can be captured by arrangemental innovation, although that profit comes not from an increase in the total but from someone else's share of the existing income. It is, of course, the profits inherent in any scheme that leads to a redistribution of income. Since successful capture means a loss to someone, the probabilities that such capture can be effected without reliance on some governmental coercive power are very small. In these cases it is very likely that only a governmental (or partly governmental) arrangement can successfully capture the profits, although it is possible that it might be done by a nongovernmental arrangement if an exogenous political event has effected some change in the rules of the ‘political game’ that govern economic behavior. In either case, however, some understanding of the political process is necessary if we are to predict successfully the course of arrangemental innovation leading toward income redistribution. Without such knowledge it would, for example, be very difficult to incorporate into any analytical history of American institutional development the widespread intervention of government in colonial America, the relative decline in the participation of government into the economy of the nineteenth century, and its resurgence again in the twentieth.