The Emergence of English Commercial Law
5 November 2008 at 10:52 am Peter G. Klein 1 comment
The English system of commercial law or the lex mercatoria has been described as an example of “spontaneous order,” a set of rules that emerged without central direction and yet provided remarkable stability and favorable institutional environment for trade. Harold Berman and Bruce Benson, among others, have written extensively on this. Here’s an interesting paper by Daniel Klerman on the early history of English commercial law, framed as a comparison of the English and Ottoman systems:
Thirteenth-century England was a commercial backwater whose trade was dominated by foreigners. To accommodate and encourage foreign merchants, England modified its legal system by creating legal institutions which were available to both domestic and foreign traders. Among the most important of these institutions were streamlined debt collection procedures and mixed juries composed of both Englishmen and foreigners. By introducing institutions which treated locals and foreigners equally, England created a level playing field which enabled English merchants to become increasingly prominent in the later Middle Ages. England’s ability to modernize its law was facilitated by the secular nature of English law, the representation of merchants in Parliament, and legal pluralism. Medieval England contrasts sharply with the early modern Ottoman Empire. The latter created special institutions for foreign merchants, which eventually put Ottoman Muslims at a competitive disadvantage.
Entry filed under: - Klein -, Evolutionary Economics, Institutions, Law and Economics, New Institutional Economics.
Organizations and Markets 
1.
matthew mueller | 5 November 2008 at 11:05 am
This research program has taken over Austrian economics, and most of the brightest PhD students in Austrian programs make these concerns central to their research.
Just some thoughts. Most researchers in this field give the impression that these “market” and “commercial” activities emerged out of nothing, and independently of centralized authority. But this doesn’t quite tell the whole story. The Roman Empire first ruled over places like England and Rome, and then was destroyed for whatever reason (and there are many!). It would seem to me to be more accurate to argue that these systems of commerical law actually “revived” this old Roman legal traidition. A set of laws were previously established in these regions, and I just think that after centralized authorty (Rome) fell, these smaller units simply replaced Roman authority with their own. And we can see this today. Civilizations built from the ruins and rules of Rome. This is a question of history, and I am no historian.
But it just seems to me that political ideology has guided this research, and Austrians have tended to neglect contrary evidence in favor of research that favors their political commitments (i.e. libertarianism and anarcho-capitalism).
Douglass North is the source to consult on this. He has always argued that the existence of the state is a prerequisite to economic growth, even though it also represents the greatest threat to sustained economic growth.