“If you don’t know who the sucker is at the table, it’s probably you,” runs an old poker saying. At the poker table of the current financial crisis, “We are the suckers.” Professor Russ Roberts writes his paper Gambling with Other People’s Money, “And most of us didn’t even know we were sitting at the table.”

This paper argues that 18th-century merchant sailors who confronted the problems of collective action devised a novel institution to facilitate maritime revolution and assist them in overthrowing abusive captains. This institution was called a “Round Robin.”

India ousted its British colonial rulers in 1947, after decades of struggle led principally by the revered Mohandas Gandhi. Indian economic policies would now be chosen in New Delhi rather than in London. British colonial policies had linked India‘s foreign trade to monopoly privileges and forced transfers of wealth from India toward Britain. In sharp contrast to Adam Smith, who had recommended ending such transfers by instituting free trade between former British colonies and Britain, Gandhi called for ending trade. He favored a form of national self sufficiency for India bordering on autarky. India‘s new government moved away from market-friendly policies. The growth of the Indian economy under Nehru‘s socialism, as we will see, was disappointing. More vigorous growth awaited the liberalization of the economy that began in the 1980s.

The Second World War left Germany’s cities, factories, and railroads in ruins, but by 1958, West Germany’s per capita output had risen three-fold. The country outgrew France and the United Kingdom despite receiving much less Marshall Plan aid. It left East Germany in the dust. This was the era of the Wirtschaftswunder or “wonder economy”. The Ordoliberals focused on finding appropriate “rules of the game” for the market order, asking: what constitutional structure and legal framework best preserves a free society and economy?

This paper is Peter J. Boettke's speech at the twelfth Sir Ronald Trotter Lecture in New Zealand. Sir Ronald Trotter was the first chairman of the New Zealand Business Roundtable, who was knighted in 1985 for services to business. The Sir Ronald Trotter Lecture was instituted in 1995 by the New Zealand Business Roundtable to mark Sir Ronald Trotter’s many contributions to public affairs in New Zealand. It is given annually by a distinguished international speaker on a major topic of public policy.

On October 19, 2004, Mercatus Center Senior Fellow Frederic Sautet delivered a presentation on institutions and entrepreneurship to the New Zealand Business Roundtable (NZBR). This talk was part of the NZBR's ongoing relationship with scholars from around the world. In the presentation Dr. Sautet explained the importance of institutions in fostering entrepreneurial activity.