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

24 Pages Posted: 21 Apr 2012

See all articles by Jeremy Edwards

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)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2012

Abstract

Social scientists draw important lessons for modern development from the medieval Maghribi traders who, it has been argued, lacked effective legal mechanisms for contract enforcement and instead relied on informal sanctions based on collective ostracism within an exclusive coalition. We show that this claim is untenable. Not a single empirical example adduced as evidence of the putative coalition shows that a coalition actually existed. The Maghribi traders made use of the formal legal system in order to enforce agency agreements in long‐distance trade. A subset of the traders did form a web of trusted business associates that contributed to informal contract enforcement, but this was very different from the hypothesized coalition, in neither being exclusive nor having a clearly defined membership. The Maghribi traders combined reputation‐based sanctions with legal mechanisms, in ways that resemble the practices of medieval European merchants. We find no evidence that the Maghribi traders had more ‘collectivist’ cultural beliefs than their European counterparts.

Suggested Citation

Edwards, Jeremy and Ogilvie, Sheilagh, Contract Enforcement, Institutions, and Social Capital: The Maghribi Traders Reappraised (May 2012). The Economic History Review, Vol. 65, Issue 2, pp. 421-444, 2012. Available at SSRN: https://ssrn.com/abstract=2043420 or http://dx.doi.org/10.1111/j.1468-0289.2011.00635.x

Jeremy Edwards

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

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
++44 1223 335232 (Phone)
++44 1223 335475 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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/people/faculty/sco2

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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