Ever since the days of Adam Smith, it has been recognized that an enhanced ability to exchange promotes economic growth. Yet we know surprisingly little about how distinct institutional systems, each conformed by a plurality of elements, such as beliefs, values, rules and organizations, can theoretically and did historically govern the fundamental problem of exchange — one will not enter into an objectively profitable exchange relationship unless the other party can credibly commit ex-ante not to breach his contractual obligations ex-post. Furthermore, we are equally ignorant about how these distinct institutional systems, each with different efficiency and distributional implications, emerged and evolved reflecting broader social, political and cultural processes of which they were an integral part.

This session will explore the nature and the dynamics of the various institutions for contract enforcement that supported trade expansion before industrialization. Rooted on a comparative and historical analysis, it seeks to understand institutional diversity and change. It aims to examine empirically how and to what degree of effectiveness diverse institutional systems and elements (public and private, formal and informal, legal and extra-legal) mitigated opportunism and information asymmetry across regions and over time. It also aims to explore how past institutions shaped a society’s rate and direction of change, and hence historically explain the diversity in economic development we observe on a global scale.

We will have short presentations, and leave more time for the discussion of the pre-circulated papers. The order of presentation will be decided closer to the event.