Imperfect Institutions. Possibilities and Limits of Reform (2005). Thráinn Eggertsson, University of Michigan. Comments on two subjects
This review is limited to the discussion of fisheries in Iceland.
The first part of the review concerns the question why fisheries in Iceland remained stagnant for centuries. The author of Imperfect Institutions maintains that the fisheries could have developed much earlier than was the case by better policy. In this he relies to some extent on Monopoly trade and economic stagnation. Studies in the foreign trade of Iceland 1602-1787 (1983) by Gisli Gunnarsson. The author leaves out of consideration criticisms of analysis in this book presented in the periodicals Skírnir and Saga, as will be explained here.
Here two separate matters the author maintains have hindered development of Icelandic fisheries will be considered. The one is a resolution from 1490 that was in force as a law, prohibiting those who had means that did not at least equal the value of two cows and six ewes permanent residence at the seaside. This resolution, therefore, did not limit the right of those who were in a possession of only a small holding at the seaside to recruit people in fishing. This was explained in Saga in 1990.
The author furthermore maintains that the establishment of permanent settlements (villages, towns) at the seaside was impeded by a resolution which ordered those not in possession of a holding to stay in a household in the countryside. This was not the case. According to the resolution people had to belong to a household. Whether that household was in a village on the coast or at a farm on the countryside was irrelevant. This was explained in Skírnir in 1986.
The second part of this review concerns a part of the book´s conclusion (pp. 191-202) on Icelandic fishery policy in the last decades of the twentieth century. The author presents the Iceland´s fishery policy becoming examplary. Two articles on fishery economics concerning fishing in commons are referred to, i.e. one by Gordon (1954) and another by Scott (1955). The reader can understand that finally, at the time when the book was written, Icelandic fishery policy was based on Gordon´s and Scott´s theory on the exploitation of a common resource, but this is indeed not the case. During recent decades Icelandic fishery policy has been based on catch control, whereas Gordon and Scott advocated regulation of input.
When Iceland in 1975 got the control of the fisheries within 200 miles it became the goal for the government to maximize the catch in the long run through proper administration. 30 years later, however, when the book was published, the cod catch was just half the catch before 1975. Cod is here taken as an example, as cod catch generates the most value and is rather stable. The author applies his knowledge in organizational theory on the system for passing out catch rights and the transferring of them, but not on the steady poor total catch. As a matter of fact it has been well-known that people entitled to give an opinion maintain that the policy includes a system defect; the first time this was affirmed was at a symposium held by Icelandic Biological Society in January 1984. It is an urgent institutional study whether the steady poor catch is due to a system defect, and if so, what can be done about it.—A final remark: in the decade since the publication of Imperfect Institutions cod catch has remained on the same poor level.