This chapter illustrates the merit of interactive, theoretically informed, context-specific analysis by examining a central question in economic history and development economics. This question concerns the institutional evolution that enabled increasingly more impersonal exchange in some economies but not in others (see North 1990; Greif 1994a, 1997a, 1998b, 2000, 2004b, 2004c; Rodrik 2003; Shirley 2004). We often assert that such institutional evolution facilitates specialization, efficiency, and growth. Yet we know little about the historical development of the institutional foundations of impersonal exchange.

This historical development is the focus of the chapter. It examines the nature and dynamics of institutions that supported impersonal exchange characterized by separation between the quid and the quo across jurisdictional boundaries in premodern Europe. Commerce expanded particularly during the three hundred years prior to the mid-fourteenth century even though there were no impartial courts with geographically extensive judicial powers to support exchange among traders from various corners of Europe. What were the institutions, if any, that supported interjurisdictional exchange characterized by separation between the quid and the quo over time and space? Specifically, were there institutions that enabled such exchange that was also impersonal, in the sense that transacting did not depend on expectations of future gains from interactions among the current exchange partners, or on knowledge of past conduct, or on the ability to report misconduct to future trading partners?