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

Abstract

Objective. It is widely accepted that good institutions caused modern economic prosperity. But what caused good institutions? In this article we challenge recent explanations that favor state capacity, pointing instead to the polycentric governance structures of medieval Europe. Methods. We develop a novel theory of constitutions, which we call "polycentric sovereignty," based on political property rights. We use this theory to reinterpret the historical evidence concerning the relationship between the medieval patrimony and good governance. Results. Our analysis suggests the de facto balance of power among the "owners of the realm" in medieval Europe are crucial in explaining the rise of pro-growth institutions, especially those that respect and uphold the rule of law. Conclusion. Medieval institutions set the background conditions for good governance. We cannot understand the bounty of economic modernity without reference to the received political-economic traditions from medieval Europe. disputes the "institutions as the proximate cause of enrichment" thesis. She contends a change in social rhetoric and the prestige attached to the "bourgeois virtues" caused the Great Enrichment. We do not think her arguments preclude an institutional explanation, however. See Young (2017) and Boettke and Candela (2017) for how McCloskey's arguments are, in fact, complementary to institutional explanations of the wealth of nations.

Options to the Realm: A Cost Neutral Proposal to Improve Political Incentives

“…A political property right (Salter ; Salter and Young ) is a claim to the returns, which can be but need not be pecuniary, associated with the exercise of political power. Political property rights specify the payoff to their holders from using resources to advance particular political ends.…”

The fundamental Coase of development: property rights foundations of the effective state

“…Well-aligned political property rights (e.g. Salter and Young, 2018, 2019) give rulers an incentive to act in a manner conducive to broad-based economic prosperity, as well as the information required to do so 10 . The remainder of our argument is organized as follows.…”

Bringing the Church Back In: Ecclesiastical Influences on the Rise of Europe

“…An influential new body of research has turned to the European Middle Ages (500–1500) to identify the roots of the “Rise of Europe” (e.g., Acemoglu, Johnson, and Robinson, 2001; Acemoglu et al 2008; Stasavage 2010; 2011; 2016; Fukuyama 2011; Van Zanden, Buringh, and Bosker, 2012; Blaydes and Chaney 2013; Kokkonen and Sundell 2014; Salter 2015; Abramson and Boix 2017; Dincecco and Onorato 2018; Salter and Young, forthcoming). There is much to praise in this scholarship, which among other things has broken new ground by collecting large-N data that allow quantitative analysis of long-term processes of state-building, economic development, and regime change.…”