Polycentric Sovereignty: The Medieval Constitution, Governance Quality, and the Wealth of Nations

Abstract

It is widely accepted that good institutions caused the massive increase in living standards enjoyed by ordinary people over the past two hundred years. But what caused good institutions? Scholars once pointed to the polycentric governance structures of medieval Europe, but this explanation has been replaced by arguments favoring state capacity. Here we revitalize the ‘polycentric Europe’ hypothesis and argue it is a complement to state capacity explanations. We develop a new institutional theory, based on political property rights and what we call polycentric sovereignty, which explains how the medieval patrimony resulted in the requisite background conditions for good governance, and hence widespread social wealth creation.

Keywords: Estates system, medieval Europe, political property rights, polycentricity, residual claimancy, sovereignty

JEL Classification: H11, H77, P16, P5