compulsory military service is also often quoted as a common area in which people from different backgrounds met on an equal footing, and often formed closer bonds. accordingly, the norwegian armed forces have not only helped to protect the country, but also developed norway ’ s social capital, at least that of half the population ( see also langeland, n. r. : “ møtet med krigens and ” [ meeting the spirit of warfare ], morgenbladet, 1 november 2013 ). hermann, richard ( 1992 ) : med skjebnen i handen [ with destiny in their hands ], cappelen, oslo. not everyone agrees on this view of the glorious revolution. see, for example, sussman, n. and y. yafeh ( 2004 ) : “ constitutions and commitments : evidence on the relation between institutions and the cost of capital ”, cepr discussion paper 4404. smith, adam ( 1776 ) : an inquiry into the nature and causes of the wealth of nations, book i : division of labour. sinclair, david ( 2001 ), the pound. a biography. the story of the currency that ruled the world, london : arrow books 2001 pp. 141 – 2. bis central bankers ’ speeches his high turnover of wives. to coin collectors, on the other hand, he is associated with thegreat debasement, whereby the silver content of one coin after another was diluted. 17 neither the turnover among his wives nor the debasement of the coinage was conducive to building confidence. the king could solve a short - term financing problem by issuing debased coins and more notes. however, with ever more coins and notes chasing the same goods, the long - term consequence was rising prices. economists refer to this as an inflation tax. 18 what happens when the powers that be unleash inflation? • first, confidence in money as a store of value disappears. an extreme example is the 1923 hyperinflation in germany, when absolutely everything, including perishable food products, provided better security than money. 19 • second, money disappears as an accounting unit. goods became the new standard. during the napoleonic wars, inflation was also very high in norway, and the local history of the islands of karlsøy and helgøy shows that accounts were kept in silver or goods such as cod liver oil, pollock and flour rather than speciedalers. • finally, money ceases

: “ institutions are the rules of the game of a society and in consequence provide the framework of incentives that shape economic, political, and social organization. institutions are composed of formal rules ( laws, constitutions, rules ), informal constraints ( conventions, codes of conduct, norms of behaviour ), and the effectiveness of their enforcement. enforcement is carried out by third parties ( law enforcement, social ostracism ), by second parties ( retaliation ), or by the first party ( self - imposed codes of conduct ). institutions affect economic performance by determining, together with technology employed, the transaction and transformation ( production ) costs that make up the total costs of production. ” see north, douglass ( 1997 ) in drobak, j. n. ( ed. ) : prologue of frontiers of the new institutional economics, p. 6. economists use a basic and powerful theoretical construct to demonstrate that, at the most fundamental level, production takes place through the use of labour, capital and raw materials as well as through technological progress. lying behind it – and often having a profound effect on it – is how firms and the society in which the firms operate are organised. and organisation is about institutions in the broad sense – everything from society ’ s moral norms to how production is organised in each firm. hernando de soto in the mystery of capital ( 2000 ) argues that a lack of proper land registration in poor countries makes it impossible for the poor to obtain credit. as a result, a large proportion of the population is in effect barred from establishing a business. the arab sociologist and diplomat ibn khaldun analysed the relationship between institutions and economic progress. he published his major work the muqaddimah in 1377. the book was published in norwegian this year on the initiative of nils holme, the former director of the norwegian defence research establishment ( ffi ). in 1759, in his work theory of moral sentiments, adam smith wrote that institutions are the framework bis central bankers ’ speeches however, in and of themselves, institutions are insufficient to ensure progress – the key is whether they are strong or weak. 5 this is also the starting point for daron acemoglu and james robinson ’ s book why nations fail. 6 they introduced the concepts inclusive and extractive institutions. 7 • inclusive institutions do not forget why they exist : they remember that their purpose is to serve the people, as the term “ public servant ” aptly illustrates. a well functioning constitutional state makes