Near synonymous with natural state/limited access order
Vestiges of feudalism remain today
Why was feudalism such a stable equilibrium for about 1,000 years?
How, when, and why did countries transition out of this equilibrium?
Fall of Roman Empire and its dependencies by invasions of Germanic, Central Asian, later Scandinavian tribes
Lots of sources of violence: invaders, bandits, local disputes/feuds without central authority
Olsonian roving bandits: little incentive to produce or invest
Patronage: weaker individuals pledge themselves to strongmen (lords) who protect them from violence, dispense justice, resolve disputes, etc
Most powerful warlords own large tracts of land that they can control
Olsonian "stationary bandits"?
Feudalism: most people who who occupy but don't own land hold it as tenants from sovereign in exchange for military (or other) service
Wealth and power determined almost entirely by land-ownership
Lords own manors or estates
Landowning elite have military power
Crystalized into a very formal and ritualized system of oaths of fealty to lords
Reputation and honor are extremely valuable and depreciable assets
Person would pledge homage to their superior, to literally "become his man" (homme)
Lord would provide protection and justice in exchange for knight-service
A political-military hierarchy that matched the landowner-tenant ownership hierarchy
Lesser lords were vassals to their liege lord to whom they owe loyalty and service, all the way up to the monarch
In addition to oathes of fealty, other more "practical" incentives enforce peace, particularly among rival lords
Hostages taken from rebellions
Common for children of one aristocratic family to be "sired" by other aristocratic families
Politically-arranged marriages
Williamson, Oliver E. (1983), "Credible Commitments: Using Hostages to Support Exchange," American Economic Review 73(4): 519-540
Nearly the entirety of Medieval life took place on the lord's manor or fief
Subsistence agriculture by sharecropping tenants
Tenants pay feudal dues to their lord
No separation between political, economic, social, religious spheres of life
Lord of the manor is boss, political ruler, judge, policeman, godfather, sometimes religious leader3
All institutions are personal and partial, no separate existence of organizations from person
Farmer wants to farm the landowner's land and generate some surplus
Farmer and Landowner must write a contract to agree on how to divide the surplus
One extreme solution:
Farmer pays a fixed fee up front, once paid, the farmer keeps all surplus
Would have to be high enough to be worthwhile to the landlord
Problems with this solution:
A risk-sharing agreement: worker pays a smaller (or no) upfront fee, and surplus output is shared between parties somehow
Risk of a bad harvest is shared by the farmer and the landowner
Farmer has an incentive to underreport to landlord how much surplus they produce, effectively "stealing" more than their share
Farmer is effectively taxed (50%, in this example) on their output
A tradeoff between risk-sharing and tax on effort/incentives to shirk
Most real world sharecropping today is a mixture of fixed and variable components
Strong disparity in wealth and power between peasants and landowning lords
Lords had military power, patronage networks, peasants were often dependent
Freemen might become a serf on a lord's manor to escape brigands, violence, bad harvests
"By the Lord before whom this sanctuary is holy, I will to [NAME] be true and faithful, and love all which he loves and shun all which he shuns, according to the laws of God and the order of the world. Nor will I ever with will or action, through word or deed, do anything which is unpleasing to him, on condition that he will hold to me as I shall deserve it, and that he will perform everything as it was in our agreement when I submitted myself to him and chose his will." - 7th Century Anglo-Saxon "Oath of Fealty"
How coercive? Certainly unequal barganing power
Feudal rents and prices were extremely sticky and unflexible (held by custom)
Serfs gain protection and security in exchange for service or rent
Serfs' children were bonded into serfdom
But serfs, unlike pure slaves, had some legal and property rights
James C. Scott
1936-
“A good part of the politics of measurement sprang from what a contemporary economist might call the "stickiness" of feudal rents. Noble and clerical claimants often found it difficult to increase feudal dues directly; the levels set for various charges were the result of long struggle, and even a small increase above the customary level was viewed as a threatening breach of tradition. Adjusting the measure, however, represented a roundabout way of achieving the same end.”
James C. Scott
1936-
“The local lord might, for example, lend grain to peasants in smaller baskets and insist on repayment in larger baskets. He might surreptitiously or even boldly enlarge the size of the grain sacks accepted for milling (a monopoly of the domain lord) and reduce the size of the sacks used for measuring out flour; he might also collect feudal dues in larger baskets and pay wages in kind in smaller baskets. While the formal custom governing feudal dues and wages would thus remain intact (requiring, for example, the same number of sacks of wheat from the harvest of a given holding), the actual transaction might increasingly favor the lord. The results of such fiddling were far from trivial. Kula estimates that the size of the bushel (boisseau) used to collect the main feudal rent (taille) increased by one-third between 1674 and 1716 as part of what was called the reaction feodale.”
Scott, James C, (1999), Seeing Like a State
Serfs and freemen "worked for all" while a knight or baron "fought for all" and a churchman "prayed for all"; thus everyone had a place
Forged in the crucible of a breakdown of empires and constant threat of violence and invasion
Feudalism is primarily about stability and custom, preserving the social order, minimizing violence
The last thing it's okay with is innovation, competition, experimentation, and rocking the boat
The one thing everyone shares is religion
Catholic Church is dominant, both in Medieval ethics and politics, the only "international" institution
All actions, exchanges, social and political power are justified as moral (Christian), legitimate, and upholding ancient privileges and customs
"[T]he medieval way of determining the terms of exchange was by custom, usage, and law, not by negotiation between traders. The division of labor was well developed by the Middle Ages, and there was a corollary exchange of products and services among specialized workers. But the use of custom and law to set the terms of trade was as fundamental to the medieval economy as the unity of its political and economic institutions," (p.38).
Rosenberg, Nathan and L.E. Birdzell, Jr, (1986) How the West Grew Rich: The Economic Transformation of the Industrial World
"Exchange was also usually compulsory, in that the great majority of artisans and agricultural workers were obligated to supply their products and services on terms dictated by custom or law. Agricultural workers were bound to the land in a system of serfdom, a hereditary status assumed at birth, and they had no right to select a more attractive occupation. Townspeople were not given much more choice of occupation, for having a trade...depended on an apprenticeship, usually arranged by one's father...A member of the guild had to work and sell on the guild terms; there was no right to decline business at the fixed rates," (p.38).
Rosenberg, Nathan and L.E. Birdzell, Jr, (1986) How the West Grew Rich: The Economic Transformation of the Industrial World
"The ideology of the system was epitomized in the phrases "just price" and "just wage." Prices and wages expressed a moral judgment of worth. Supply and demand were morally irrelevant...it was mainly in time of famine or siege that prices forced their way into [equating supply and demand]," (p.38).
Rosenberg, Nathan and L.E. Birdzell, Jr, (1986) How the West Grew Rich: The Economic Transformation of the Industrial World
Virginia Postrel
"[I]f every voluntary experiment must answer the question, 'Are you going to affect the way I live?' with a no, there can be no experiments, no new communities, no realized dreams. A city, an economy, or a culture is, despite the best efforts of stasists, fundamentally a 'natural' system. As a whole, it is beyond anyone’s control. Any individual effort at improvement changes not just the particular target but the broader system. In the process, there may be progress, but there will also be disruptions, adjustments, and losers," (p.204).
Postrel, Virginia, (1998) The Future and Its Enemies
Virginia Postrel
"Stasist institutions shift the burden of proof from the people who want to block new ideas to those who want to experiment. Such institutions seek not simply to compensate for or mitigate extreme side effects but, rather, to treat any change as suspect," (p.204).
Postrel, Virginia, (1998) The Future and Its Enemies
Daron Acemoglu and James Robinson
"We argue that the effect of economic change on political power is a key factor in determining whether technological advances and beneficial economic changes will be blocked. In other words, we propose a "political-loser hypothesis." We argue that it is groups whose political power (not economic rents) is eroded who will block technological advances. If agents are economic losers but have no political power, they cannot impede technological progress. If they have and maintain political power (i.e., are not political losers), then they have no incentive to block progress. It is therefore agents who have political power and fear losing it who will have incentives to block. Our analysis suggests that we should look more to the nature of political institutions and the determinants of the distribution of political power if we want to understand technological backwardness," (pp.126-127).
Acemoglu, Daron and James A. Robinson, 2000, "Political Losers as a Barrier to Economic Development," American Economic Review 90(2): 126-130
"There is a story, repeated by a number of Roman writers, that a man - characteristically unnamed - invented un-breakable glass and demonstrated it to Tiberius in anticipation of a great reward. The emperor asked the inventor whether anyone shared his secret and was assured that there was no one else; whereupon his head was promptly removed, lest, said Tiberius, gold be reduced to the value of mud," (147).
Finley, Moses I, (1965), "Technical Innovation and Economic Progress in the Ancient World," Economic History Review 18: 29–45
"Thou aimest high, master Lee. Consider thou what the invention could do to my poor subjects. It would assuredly bring to them ruin by depriving them of employment, thus making them beggars," (pp. 182-183).
Acemoglu, Daron and James Robinson, 2012, Why Nations Fail
Nobility are the large landowners, clergy, strongest military factions and patronage networks
Various titles: barons, earls, dukes, lords, etc.
Born into land-owning aristocracy, would inherit lands or join church
Lords and ladies lived off of the revenues of their manors (farmed by tenants)
Nobles more interested in hunting, tournaments, and warfare
The lord's problem:
Choose: < a tax rate >
In order to maximize: < own revenue >
Subject to: < staying in power >
Peasants are subsistence-farmers, have little incentive to innovate or produce surplus (see below)
Variation in production across manors:
So how else to increase your Manor's revenue?
Got take over other manors!
Comparative advantage in violence
Many fight for monarch in war, turn to brigandage in peace
War something of a "gentlemanly" sport between nobles (goal is to capture nobility for ransom)
Incentives to reduce violence, especially if it increases their revenues
Strategic marriage, hostages, as a credible commitment bridging rival families
Inheritance -- heirs of marriage can inherit lands of both families
Failing to produce an heir means family will lose title to land!
How do we go from roving bandits to one stationary bandit?
Where is the King to keep his barons in check?
Kings/Queens not all powerful -- "primus inter pares"
Germanic tradition: for centuries, kings were elected by nobility
Primogeniture and rules of royal succession are not crystallized until 13-14th centuries
Again: Kings are more rulers of people and patronage networks than territory
Anglo-Saxon king with his witan
Monarch might nominally rule all land in country (as in post-Conquest England) and grant fiefs to lords
Often Monarch is just one ruler with his/her own land
Barons, earls, dukes, etc. have their own realms and sources of power, nominally loyal to the monarch
"France" in 1477
NWW's Proportionality principle: for a stable political system, rents must be allocated in proportion to groups' capacity for violence
Rational elites will revolt if they believe their relative strength is greater than the rents they are earning
Dynamics: if distribution of wealth and power changes, the allocation of rents must change!
Elites are loyal to the king as a person, not as an office!
Loyalty depends on king's ability to distribute booty and rents to elites
"King" or "Warlord" does not control territory, controls vassals based on social networks and bundle of privileges
Monarch is head of many patronage networks, often from the most powerful/wealthiest family
Has siblings and many blood relations that expect patronage or else they might challenge claim to throne
Monarch must redistribute as patronage (land, titles, marriages, inheritances) to loyal supporters to maintain support
After 1066 conquest, William I the Conquerer claims all land in England
Nobody owns land in their own right, all land is property of the King
Monarchs often reclaim ("escheat") land from nobles who break fealty, commit treason, or die without heirs
Rents from royal lands and forests
Feudal dues owed from lords and knights (or scutage)
Monarchs dispensed justice at royal courts (for fees)
Borrow money (if monarch's credit was good - which was almost never)
Some taxes that could collect some revenue
Medieval warfare is primarily siege and countersiege
Few pitched battles
Warfare favors the defender
Very easy for rebellious lords to raise their banners, sit in their castles, and outlast the King's army (or vice versa)
Pre-artillery, pre-gunpowder
Most peasants not freeholders - tied to the land of their lord
A two-way feudal obligation: peasants must stay and work for lord, but lord has a duty to protect peasant; cannot evict or replace peasant without legal cause
Illegal for peasants to leave one manor for another (or a town), but lords unable to extradite
Vagrancy laws, suspicion of outsiders and foreigners, the "undeserving poor"
Peasants outnumber king and lords \(>20:1\), why not revolt?
Mass revolution is a collective action problem
Very high coordination costs: peasant "class" is scattered across thousands of manors (their whole social world), different families, tribes, etc.
General peasant revolts do happen a few times
Proto-capitalist havens
Genuine division of labor and specialization
Clusters of merchants, major international trading centers
"Stadluft macht frei"
An escape for freemen to leave manors and increase their opportunities
Late Medieval Ages and "bastard feudalism" (see below)
Revival of international trade through towns and trade fairs
Production for subsistence \(\rightarrow\) production for exchange
Growing demand for food and labor from countryside in growing towns
More wealth \(\implies\) use of money to "buy out of" feudal dues ("scutage")
Towns became a countervailing force between the monarch and the nobles
Kings increasingly ally with towns to give them special privileges
In exchange: Kings get tax revenue from towns' growing wealth
Free Imperial Cities in the Holy Roman Empire (1648)
Charter issued by Emperor Frederick II granting "Imperial immediacy" to the City of Lubeck (1226)
Rise of commercial institutions from wealth generated by trade
Rise of powerful trade-based city-states in Northern Italy
Some city-states form leagues to foster and standardize international trade
Hanseatic League ("Hansa") of Northern German, Baltic, and North Sea city-states
Greif, Avner, Paul Milgrom, and Barry R Weingast, (1994), "Coordination, Commitment, and Enforcement: The Case of the Merchant Guild," Journal of Political Economy 102(4): 745-776
Towns are dominated by urban craft guilds
Another feudal group with major economic and political power
Essentially cartels that restrict entry into trades
Alliance with monarchs (exclusive privileges in exchange for tax revenues)
Ogilvie, Sheilagh, (2014), "The Economics of Guilds," Journal of Economic Perspectives 28(4): 169-192
Greif, Avner, (1989), "Reputation and Coalitions in Medieval Trade: Evidence on Maghribi Traders," Journal of Economic History 49(4): 857-882.
Greif, Avner, Paul Milgrom, and Barry R Weingast, (1994), "Coordination, Commitment, and Enforcement: The Case of the Merchant Guild," Journal of Political Economy 102(4): 745-776
"Commercial Revolution" of 1100s-1200s
International merchants can't depend on weak and biased States to enforce international contracts!
Merchants adopted their own "laws" and best practices to minimize transaction costs
For-profit merchant courts emerge to settle disputes and enforce international contracts
Developed contract law and advanced legal instruments - debt, credit, loans, equity contracts
This is a major basis of international commercial law today!
Benson, Bruce, 1989. "The Spontaneous Evolution of Commercial Law," Southern Economic Journal 55(3): 644-661
Milgrom, Paul R, Douglass C North, and Barry R Weingast, (1990), "The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs," (Economics and Politics*2(1): 1-23
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Near synonymous with natural state/limited access order
Vestiges of feudalism remain today
Why was feudalism such a stable equilibrium for about 1,000 years?
How, when, and why did countries transition out of this equilibrium?
Fall of Roman Empire and its dependencies by invasions of Germanic, Central Asian, later Scandinavian tribes
Lots of sources of violence: invaders, bandits, local disputes/feuds without central authority
Olsonian roving bandits: little incentive to produce or invest
Patronage: weaker individuals pledge themselves to strongmen (lords) who protect them from violence, dispense justice, resolve disputes, etc
Most powerful warlords own large tracts of land that they can control
Olsonian "stationary bandits"?
Feudalism: most people who who occupy but don't own land hold it as tenants from sovereign in exchange for military (or other) service
Wealth and power determined almost entirely by land-ownership
Lords own manors or estates
Landowning elite have military power
Crystalized into a very formal and ritualized system of oaths of fealty to lords
Reputation and honor are extremely valuable and depreciable assets
Person would pledge homage to their superior, to literally "become his man" (homme)
Lord would provide protection and justice in exchange for knight-service
A political-military hierarchy that matched the landowner-tenant ownership hierarchy
Lesser lords were vassals to their liege lord to whom they owe loyalty and service, all the way up to the monarch
In addition to oathes of fealty, other more "practical" incentives enforce peace, particularly among rival lords
Hostages taken from rebellions
Common for children of one aristocratic family to be "sired" by other aristocratic families
Politically-arranged marriages
Williamson, Oliver E. (1983), "Credible Commitments: Using Hostages to Support Exchange," American Economic Review 73(4): 519-540
Nearly the entirety of Medieval life took place on the lord's manor or fief
Subsistence agriculture by sharecropping tenants
Tenants pay feudal dues to their lord
No separation between political, economic, social, religious spheres of life
Lord of the manor is boss, political ruler, judge, policeman, godfather, sometimes religious leader3
All institutions are personal and partial, no separate existence of organizations from person
Farmer wants to farm the landowner's land and generate some surplus
Farmer and Landowner must write a contract to agree on how to divide the surplus
One extreme solution:
Farmer pays a fixed fee up front, once paid, the farmer keeps all surplus
Would have to be high enough to be worthwhile to the landlord
Problems with this solution:
A risk-sharing agreement: worker pays a smaller (or no) upfront fee, and surplus output is shared between parties somehow
Risk of a bad harvest is shared by the farmer and the landowner
Farmer has an incentive to underreport to landlord how much surplus they produce, effectively "stealing" more than their share
Farmer is effectively taxed (50%, in this example) on their output
A tradeoff between risk-sharing and tax on effort/incentives to shirk
Most real world sharecropping today is a mixture of fixed and variable components
Strong disparity in wealth and power between peasants and landowning lords
Lords had military power, patronage networks, peasants were often dependent
Freemen might become a serf on a lord's manor to escape brigands, violence, bad harvests
"By the Lord before whom this sanctuary is holy, I will to [NAME] be true and faithful, and love all which he loves and shun all which he shuns, according to the laws of God and the order of the world. Nor will I ever with will or action, through word or deed, do anything which is unpleasing to him, on condition that he will hold to me as I shall deserve it, and that he will perform everything as it was in our agreement when I submitted myself to him and chose his will." - 7th Century Anglo-Saxon "Oath of Fealty"
How coercive? Certainly unequal barganing power
Feudal rents and prices were extremely sticky and unflexible (held by custom)
Serfs gain protection and security in exchange for service or rent
Serfs' children were bonded into serfdom
But serfs, unlike pure slaves, had some legal and property rights
James C. Scott
1936-
“A good part of the politics of measurement sprang from what a contemporary economist might call the "stickiness" of feudal rents. Noble and clerical claimants often found it difficult to increase feudal dues directly; the levels set for various charges were the result of long struggle, and even a small increase above the customary level was viewed as a threatening breach of tradition. Adjusting the measure, however, represented a roundabout way of achieving the same end.”
James C. Scott
1936-
“The local lord might, for example, lend grain to peasants in smaller baskets and insist on repayment in larger baskets. He might surreptitiously or even boldly enlarge the size of the grain sacks accepted for milling (a monopoly of the domain lord) and reduce the size of the sacks used for measuring out flour; he might also collect feudal dues in larger baskets and pay wages in kind in smaller baskets. While the formal custom governing feudal dues and wages would thus remain intact (requiring, for example, the same number of sacks of wheat from the harvest of a given holding), the actual transaction might increasingly favor the lord. The results of such fiddling were far from trivial. Kula estimates that the size of the bushel (boisseau) used to collect the main feudal rent (taille) increased by one-third between 1674 and 1716 as part of what was called the reaction feodale.”
Scott, James C, (1999), Seeing Like a State
Serfs and freemen "worked for all" while a knight or baron "fought for all" and a churchman "prayed for all"; thus everyone had a place
Forged in the crucible of a breakdown of empires and constant threat of violence and invasion
Feudalism is primarily about stability and custom, preserving the social order, minimizing violence
The last thing it's okay with is innovation, competition, experimentation, and rocking the boat
The one thing everyone shares is religion
Catholic Church is dominant, both in Medieval ethics and politics, the only "international" institution
All actions, exchanges, social and political power are justified as moral (Christian), legitimate, and upholding ancient privileges and customs
"[T]he medieval way of determining the terms of exchange was by custom, usage, and law, not by negotiation between traders. The division of labor was well developed by the Middle Ages, and there was a corollary exchange of products and services among specialized workers. But the use of custom and law to set the terms of trade was as fundamental to the medieval economy as the unity of its political and economic institutions," (p.38).
Rosenberg, Nathan and L.E. Birdzell, Jr, (1986) How the West Grew Rich: The Economic Transformation of the Industrial World
"Exchange was also usually compulsory, in that the great majority of artisans and agricultural workers were obligated to supply their products and services on terms dictated by custom or law. Agricultural workers were bound to the land in a system of serfdom, a hereditary status assumed at birth, and they had no right to select a more attractive occupation. Townspeople were not given much more choice of occupation, for having a trade...depended on an apprenticeship, usually arranged by one's father...A member of the guild had to work and sell on the guild terms; there was no right to decline business at the fixed rates," (p.38).
Rosenberg, Nathan and L.E. Birdzell, Jr, (1986) How the West Grew Rich: The Economic Transformation of the Industrial World
"The ideology of the system was epitomized in the phrases "just price" and "just wage." Prices and wages expressed a moral judgment of worth. Supply and demand were morally irrelevant...it was mainly in time of famine or siege that prices forced their way into [equating supply and demand]," (p.38).
Rosenberg, Nathan and L.E. Birdzell, Jr, (1986) How the West Grew Rich: The Economic Transformation of the Industrial World
Virginia Postrel
"[I]f every voluntary experiment must answer the question, 'Are you going to affect the way I live?' with a no, there can be no experiments, no new communities, no realized dreams. A city, an economy, or a culture is, despite the best efforts of stasists, fundamentally a 'natural' system. As a whole, it is beyond anyone’s control. Any individual effort at improvement changes not just the particular target but the broader system. In the process, there may be progress, but there will also be disruptions, adjustments, and losers," (p.204).
Postrel, Virginia, (1998) The Future and Its Enemies
Virginia Postrel
"Stasist institutions shift the burden of proof from the people who want to block new ideas to those who want to experiment. Such institutions seek not simply to compensate for or mitigate extreme side effects but, rather, to treat any change as suspect," (p.204).
Postrel, Virginia, (1998) The Future and Its Enemies
Daron Acemoglu and James Robinson
"We argue that the effect of economic change on political power is a key factor in determining whether technological advances and beneficial economic changes will be blocked. In other words, we propose a "political-loser hypothesis." We argue that it is groups whose political power (not economic rents) is eroded who will block technological advances. If agents are economic losers but have no political power, they cannot impede technological progress. If they have and maintain political power (i.e., are not political losers), then they have no incentive to block progress. It is therefore agents who have political power and fear losing it who will have incentives to block. Our analysis suggests that we should look more to the nature of political institutions and the determinants of the distribution of political power if we want to understand technological backwardness," (pp.126-127).
Acemoglu, Daron and James A. Robinson, 2000, "Political Losers as a Barrier to Economic Development," American Economic Review 90(2): 126-130
"There is a story, repeated by a number of Roman writers, that a man - characteristically unnamed - invented un-breakable glass and demonstrated it to Tiberius in anticipation of a great reward. The emperor asked the inventor whether anyone shared his secret and was assured that there was no one else; whereupon his head was promptly removed, lest, said Tiberius, gold be reduced to the value of mud," (147).
Finley, Moses I, (1965), "Technical Innovation and Economic Progress in the Ancient World," Economic History Review 18: 29–45
"Thou aimest high, master Lee. Consider thou what the invention could do to my poor subjects. It would assuredly bring to them ruin by depriving them of employment, thus making them beggars," (pp. 182-183).
Acemoglu, Daron and James Robinson, 2012, Why Nations Fail
Nobility are the large landowners, clergy, strongest military factions and patronage networks
Various titles: barons, earls, dukes, lords, etc.
Born into land-owning aristocracy, would inherit lands or join church
Lords and ladies lived off of the revenues of their manors (farmed by tenants)
Nobles more interested in hunting, tournaments, and warfare
The lord's problem:
Choose: < a tax rate >
In order to maximize: < own revenue >
Subject to: < staying in power >
Peasants are subsistence-farmers, have little incentive to innovate or produce surplus (see below)
Variation in production across manors:
So how else to increase your Manor's revenue?
Got take over other manors!
Comparative advantage in violence
Many fight for monarch in war, turn to brigandage in peace
War something of a "gentlemanly" sport between nobles (goal is to capture nobility for ransom)
Incentives to reduce violence, especially if it increases their revenues
Strategic marriage, hostages, as a credible commitment bridging rival families
Inheritance -- heirs of marriage can inherit lands of both families
Failing to produce an heir means family will lose title to land!
How do we go from roving bandits to one stationary bandit?
Where is the King to keep his barons in check?
Kings/Queens not all powerful -- "primus inter pares"
Germanic tradition: for centuries, kings were elected by nobility
Primogeniture and rules of royal succession are not crystallized until 13-14th centuries
Again: Kings are more rulers of people and patronage networks than territory
Anglo-Saxon king with his witan
Monarch might nominally rule all land in country (as in post-Conquest England) and grant fiefs to lords
Often Monarch is just one ruler with his/her own land
Barons, earls, dukes, etc. have their own realms and sources of power, nominally loyal to the monarch
"France" in 1477
NWW's Proportionality principle: for a stable political system, rents must be allocated in proportion to groups' capacity for violence
Rational elites will revolt if they believe their relative strength is greater than the rents they are earning
Dynamics: if distribution of wealth and power changes, the allocation of rents must change!
Elites are loyal to the king as a person, not as an office!
Loyalty depends on king's ability to distribute booty and rents to elites
"King" or "Warlord" does not control territory, controls vassals based on social networks and bundle of privileges
Monarch is head of many patronage networks, often from the most powerful/wealthiest family
Has siblings and many blood relations that expect patronage or else they might challenge claim to throne
Monarch must redistribute as patronage (land, titles, marriages, inheritances) to loyal supporters to maintain support
After 1066 conquest, William I the Conquerer claims all land in England
Nobody owns land in their own right, all land is property of the King
Monarchs often reclaim ("escheat") land from nobles who break fealty, commit treason, or die without heirs
Rents from royal lands and forests
Feudal dues owed from lords and knights (or scutage)
Monarchs dispensed justice at royal courts (for fees)
Borrow money (if monarch's credit was good - which was almost never)
Some taxes that could collect some revenue
Medieval warfare is primarily siege and countersiege
Few pitched battles
Warfare favors the defender
Very easy for rebellious lords to raise their banners, sit in their castles, and outlast the King's army (or vice versa)
Pre-artillery, pre-gunpowder
Most peasants not freeholders - tied to the land of their lord
A two-way feudal obligation: peasants must stay and work for lord, but lord has a duty to protect peasant; cannot evict or replace peasant without legal cause
Illegal for peasants to leave one manor for another (or a town), but lords unable to extradite
Vagrancy laws, suspicion of outsiders and foreigners, the "undeserving poor"
Peasants outnumber king and lords \(>20:1\), why not revolt?
Mass revolution is a collective action problem
Very high coordination costs: peasant "class" is scattered across thousands of manors (their whole social world), different families, tribes, etc.
General peasant revolts do happen a few times
Proto-capitalist havens
Genuine division of labor and specialization
Clusters of merchants, major international trading centers
"Stadluft macht frei"
An escape for freemen to leave manors and increase their opportunities
Late Medieval Ages and "bastard feudalism" (see below)
Revival of international trade through towns and trade fairs
Production for subsistence \(\rightarrow\) production for exchange
Growing demand for food and labor from countryside in growing towns
More wealth \(\implies\) use of money to "buy out of" feudal dues ("scutage")
Towns became a countervailing force between the monarch and the nobles
Kings increasingly ally with towns to give them special privileges
In exchange: Kings get tax revenue from towns' growing wealth
Free Imperial Cities in the Holy Roman Empire (1648)
Charter issued by Emperor Frederick II granting "Imperial immediacy" to the City of Lubeck (1226)
Rise of commercial institutions from wealth generated by trade
Rise of powerful trade-based city-states in Northern Italy
Some city-states form leagues to foster and standardize international trade
Hanseatic League ("Hansa") of Northern German, Baltic, and North Sea city-states
Greif, Avner, Paul Milgrom, and Barry R Weingast, (1994), "Coordination, Commitment, and Enforcement: The Case of the Merchant Guild," Journal of Political Economy 102(4): 745-776
Towns are dominated by urban craft guilds
Another feudal group with major economic and political power
Essentially cartels that restrict entry into trades
Alliance with monarchs (exclusive privileges in exchange for tax revenues)
Ogilvie, Sheilagh, (2014), "The Economics of Guilds," Journal of Economic Perspectives 28(4): 169-192
Greif, Avner, (1989), "Reputation and Coalitions in Medieval Trade: Evidence on Maghribi Traders," Journal of Economic History 49(4): 857-882.
Greif, Avner, Paul Milgrom, and Barry R Weingast, (1994), "Coordination, Commitment, and Enforcement: The Case of the Merchant Guild," Journal of Political Economy 102(4): 745-776
"Commercial Revolution" of 1100s-1200s
International merchants can't depend on weak and biased States to enforce international contracts!
Merchants adopted their own "laws" and best practices to minimize transaction costs
For-profit merchant courts emerge to settle disputes and enforce international contracts
Developed contract law and advanced legal instruments - debt, credit, loans, equity contracts
This is a major basis of international commercial law today!
Benson, Bruce, 1989. "The Spontaneous Evolution of Commercial Law," Southern Economic Journal 55(3): 644-661
Milgrom, Paul R, Douglass C North, and Barry R Weingast, (1990), "The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs," (Economics and Politics*2(1): 1-23