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Institutions and the Path to the Modern Economy
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It is widely believed that current disparities in economic, political, and social outcomes reflect distinct institutions. Institutions are invoked to explain why some countries are rich and others poor, some democratic and others dictatorial. But arguments of this sort gloss over the question of what institutions are, how they come about, and why they persist. This book seeks to overcome these problems, which have exercised economists, sociologists, political scientists, and a host of other researchers who use the social sciences to study history, law, and business administration.


Part I. Preliminaries: 1. Introduction; 2. Institutions and transactions; Part II. Institutions as Systems in Equilibria: 3. Private-order contract enforcement institutions: the Maghribi traders coalition; 4. The organizational underpinnings of credible commitment by the state: the Merchant Guild; 5. Endogenous institutions and game-theoretic analysis; Part III. Institutional Dynamics as a Historical Process: 6. A theory of endogenous institutional change; 7. Institutional trajectories: how past institutions affect current ones; 8. Building a state: Genoa's Rise and Fall; 9. Cultural beliefs and the organization of society; Part IV. The Empirical Method of Comparative and Historical Institutional Analysis: 10. The institutional foundations of impersonal exchange; 11. Interactive, context-specific analysis; Part V. Concluding Comments: 12. Institutions, history, and development.

Prize Winner

Winner, 2007 Gyorgi Ranki Biennial Book Prize of the Economic History Association (EHA)

Winner, 2007 Veblen Prize of the American Association for an Evolutionary Economy and the European Association for an Evolutionary Economy (AAFE-EAEE)


"Greif strips economic transactions down to their elements. He focuses on the core question: who (or what) were the watchdogs that allowed the merchants to trust one another and to bear with the princes who could confiscate the fruits of all their efforts? And who (or what) were the watchdogs' watchdogs? Greif repeatedly and carefully relates these questions to economic theory. He illustrates them with real transactions of medieval merchants. He takes the right approach to economic development, and thereby achieves an original and important new perspective on its causes. Institutions and the Path to the Modern Economy is a seminal work in economics and in history. It should be read by all social scientists."
-George A. Akerlof, 2001 Nobel Laureate in Economics and University of California, Berkeley

"If economic theory is worth anything at all, it should illuminate economic history. The most usual attempts to interpret history in terms of mainstream economic theory have tended to leave out the specifics and, in particular, the influence of past events and structures on later ones. Avner Greif's work demonstrates the power of using economic theory, especially game theory, to illuminate both structural patterns and change, while still respecting historical specificity. The evolution of medieval trade is used as a case to show how the problems raised by economic theorists (e.g., the need for enforcement of contracts ) are resolved by the creation of institutions which are constrained to be self-enforcing equilibria. I believe Greif's approach will lead to a revolution in the study of other eras and even the changes in present regimes."
-Kenneth Arrow, 1972 Nobel Laureate in Economics, and Professor Emeritus, Stanford University

"In Institutions and the Path to the Modern Economy, Avner Greif explores the cultures that prevailed in the European and Islamic portions of the Mediterranean in the Medieval period and the implication of their differences for the modern world. To tackle so grand a theme, Greif rearranges the intellectual furniture. Embedding game theory within the behavioral sciences, blurring the boundaries between deductive reasoning and empirical research and qualitative and quantitative methods, Greif teaches us not only about history but also about the place of history in causal explanation. Greifas book will shape future work in history, the study of development, and the social sciences."
-Robert H. Bates, Harvard University

"Avner Greif's study is a major landmark on the road to increasing our understanding of institutions and the role that they play in economic performance."
-Douglass C. North, 1993 Nobel Laureate in Economics

"[B]y creating new tools for studying institutions, [this book] is likely to inspire research for years to come. By all rights it deserves to do so, in economics, in sociology, in political science, in law, and (to the extent that historians in history departments pay attention to the social sciences) in history too. Economic historians obviously have special reason to prize the book, since it takes up some of the biggest issues in the field and makes a vigorous case for economic history within the larger discipline of economics. But other social scientists will highly value it too, and it will be no surprise if it ends up becoming -- and rightfully so -- a classic."
-Philip T. Hoffman, Division of Humanities and Social Sciences, California Institute of Technology, EH.NET

“Greif displays not only a masterful command of game theory and relevant historical detail, but also admirable and insightful integration of work by sociologists and political scientists on organizational and institutional change…The book provides a cogent demonstration of how game theory, careful attention to historical detail and interdisciplinary analysis can illuminate each other. Highly recommended.”

-Clyde G. Reed, Simon Fraser University

"Greif has addressed the great issues in economic expansion: emergence of markets, organization of trade, and how the medieval world provides the first encounter with the dynamic conditions that lat behind modernity."
-Susan Mosher Stuard, Haverford College (Emerita), Journal of Medieval Studies

"Greif's comparative approach, and his provocative conclusions regarding the centrality of institutions, are worth serious consideration."
-George Duncan, Saint Michael's College, Journal of Interdisciplinary History

"...[this] book is among the two or three most important to emerge during the past two decades on the historical development of economic institutions."
Perspectives on Politics, Rogers Hollingsworth, University of Wisconsin

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