Contract Enforcement, Institutions and Social Capital: The Maghribi Traders Reappraised

54 Pages Posted: 19 Mar 2008  

Jeremy Edwards

University of Cambridge - Faculty of Economics and Politics; CESifo (Center for Economic Studies and Ifo Institute)

Sheilagh Ogilvie

University of Cambridge - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: March 2008

Abstract

Economists draw important lessons for modern development from the medieval Maghribi traders who, according to Greif, enforced contracts multilaterally through a closed, private-order 'coalition'. We show that this view is untenable. The Maghribis used formal legal mechanisms and entered business associations with non-Maghribis. Not a single empirical example adduced by Greif shows that any 'coalition' actually existed. The Maghribis cannot be used to argue that the social capital of exclusive networks will facilitate exchange in developing economies. Nor do they provide any support for the cultural theories of economic development and institutional change for which they have been mobilised.

Keywords: contract enforcement, reputation, legal system, social network

JEL Classification: O17

Suggested Citation

Edwards, Jeremy and Ogilvie, Sheilagh, Contract Enforcement, Institutions and Social Capital: The Maghribi Traders Reappraised (March 2008). CESifo Working Paper Series No. 2254. Available at SSRN: https://ssrn.com/abstract=1107801

Jeremy Edwards (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute)

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University of Cambridge - Faculty of Economics and Politics ( email )

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Sheilagh Ogilvie

University of Cambridge - Faculty of Economics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
44-1223-335200 (Phone)
44-1223-335475 (Fax)

HOME PAGE: http://www.econ.cam.ac.uk/faculty/ogilvie/index.htm

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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