Avner Greif

Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies

Lacking an appropriate theoretical framework, economists and economic historians have paid little attention to the relations between culture and institutional structure. This limits the ability to address a question that seems to be at the heart of developmental failures: Why do societies fail to adopt the institutional structure of more economically successful ones? This paper integrates game-theoretical and sociological concepts to conduct a comparative historical analysis of the relations between culture and institutional structure. It examines cultural factors that have led two premodern societies--one from the Muslim world and the other from the Latin world--to evolve along distinct trajectories of institutional structure. It indicates the theoretical importance of culture in determining institutional structures, in leading to their path dependence, and in forestalling successful intersociety adoption of institutions. Since the distinct institutional structures found in the late medieval period resemble those differentiating contemporary developing and developed economies, the paper suggests the historical importance of distinct cultures in economic development.

Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders

This article examines the economic institution utilized during the eleventh century to facilitate complex trade characterized by asymmetric information and limited legal contract enforceability. The geniza documents are employed to present the “coalition†, an economic institution based upon a reputation mechanism utilized by Mediterranean traders to confront the organizational problem associated with the exchange relations between merchants and their overseas agents. The the oretical framework explains many trade-related phenomena, especially why traders utilized specific forms of business association, and indicates the interrelations between social and economic institutions.

A Theory of Endogenous Institutional Change

This paper asks (a) why and how institutions change, (b) how an institution persists in a changing environment, and (c) how processes that it unleashes lead to its own demise. The paper shows that the game-theoretic notion of self-enforcing equilibrium and the historical institutionalist focus on process are both inadequate to answer these questions. Building on a game-theoretic foundation, but responding to the critique of it by historical institutionalists, the paper introduces the concepts of quasi-parameters and self reinforcement. With these concepts, and building on repeated game theory, a dynamic approach to institutions is offered, one that can account for endogenous change (and stability) of institutions. Contextual accounts of formal governing institutions in early modern Europe and the informal institution of cleavage structure in the contemporary world provide illustrations of the approach.

Commitment, Coercion, and Markets: The Nature and Dynamics of Institutions Supporting Exchange

This paper examines, theoretically and historically the factors determining market expansion, that is, the extent to which impersonal exchange among more individuals in more transactions over time and space is potentially welfare enhancing. Social and cultural factors determine the exchange possible based on private order institutions that, in particular, do not depend on enforcement provided by the state. Private-order institutions thereby determine the potential gain from impersonal exchange supported by third-party (i.e., enforcement provided by the state, organized crime network, religious authorities, etc.). Economic agents, however, would not submit themselves to a third-party with the ability to punish them unless it can commit to refrain from abusing its power. Coercion constraining institutions based on such factors as reputation, administrative structure, and limited information enables such commitment. In short the effective supply of third-party enforcement depends on the institutions enabling it to commit. Both the demands for and the effective supply of third-party contract enforcement institutions determines the extent of impersonal markets.

The fundamental problem of exchange: A research agenda in Historical Institutional Analysis

For individuals to enter mutually beneficial exchange relationships they have to recognise them as such and they have to be able to commit to fulfil their contractual obligations. The ways in which a societys institutions mitigate this fundamental problem of exchange determine its efficiency and distribution. This article calls attention to the need, ability, and promise of studying the historical evolution of institutions that mitigated the fundamental problem of exchange. It elaborates on the essence of this problem and the related institutions, and demonstrates the ability and importance of studying them by drawing on various studies of historical institutions. Our understanding of the different economic performances and evolutions of various societies over time can be greatly enhanced by studying how they mitigated the fundamental problem of exchange.

Self-Enforcing Political System and Economic Growth: Late Medieval Genoa

November 5, 1997 This paper presents a micro-level historical and theoretical analysis of Genoas economic and political history during the twelfth and thirteenth century by examining the factors influencing the extent to which its political system was self-enforcing and their change over time. It combines narrative and theoretical analysis to resolve questions that can not be resolved by either narrative or theory alone. Although the Genoese Commune was voluntarily established in the hope to gain from economic and political cooperation, sustaining its self-enforcing nature constrained such cooperation. Cooperation was thus determined by the magnitude of factors, such as external military threat that relaxed this constraint. It took a century before learning and the increasing cost of non-cooperation induced organizational innovation that enhanced economic growth and political order by fostering the extent to which Genoa was a self-enforcing political system irrespectively of external threat.

Cultural and Institutional Bifurcation: China and Europe Compared

How to sustain cooperation is a key challenge for any society. Different social organizations have evolved in the course of history to cope with this challenge by relying on different combinations of external (formal and informal) enforcement institutions and intrinsic motivation. Some societies rely more on informal enforcement and moral obligations within their constituting groups. Others rely more on formal enforcement and general moral obligations towards society at large. How do culture and institutions interact in generating different evolutionary trajectories of societal organizations? Do contemporary attitudes, institutions and behavior reflect distinct pre-modern trajectories?

Institutions and Impersonal Exchange: From Communal to Individual Responsibility

This paper utilizes historical evidence and game theory to examine institutions that fostered intercommunity impersonal exchange during the late medieval period. It presents the community responsibility system that functioned throughout Europe and supported impersonal exchange despite the lack of impartial legal enforcement provided by a third party. At its center was the use of intracommunity contract enforcement institutions to provide the enforcement required for inter-community impersonal exchange. Atransition toward individual legal responsibility during the late thirteenth century reflects the systems contributions to its own decline. The processes that it fostered reduced its economic efficiency and (intra-community) political viability.

On the Political Foundations of the Late Medieval Commercial Revolution: Genoa During the Twelfth and Thirteenth Centuries

Although the late medieval Commercial Revolution is considered to be a watershed in the economic history of Europe, the analysis of the interrelationship between political and economic systems in bringing about this period of economic growth has been neglected. This article conducts such an analysis with respect to the city of Genoa during the twelfth and thirteenth centuries. Viewing political institutions as self-enforcing agreements rather than as exogenous rules, I present and analyze the nature and evolution of Genoas political systems and the relations between these systems and economic growth.

The Analytic Narrative Project

In Analytic Narratives, we attempt to address several issues. First, many of us are engaged in in-depth case studies, but we also seek to contribute to, and to make use of, theory. How might we best proceed? Second, the historian, the anthropologist, and the area specialist possess knowledge of a place and time. They have an understanding of the particular. How might they best employ such data to create and test theories that may apply more generally? Third, what is the contribution of formal theory? What benefits are, or can be, secured by formalizing verbal accounts? In recent years, King, Keohane, and Verba (1994) and Green and Shapiro (1994) have provoked debate over these and related issues. In Analytic Narratives, we join in the methodological discussions spawned by their contributions.