European economic history has always been concerned with the grand theme of the rise of the Western World. Sometimes this is put in terms of the transition from feudalism to capitalism and, if a Marxian dialectician is present, eventually to socialism. The literature is essentially the product of historians and as such is particularistic. No consistent theoretical foundation runs through it, except perhaps the Marxian one. The result is a chaotic output for which generalization is difficult, and in which bits and scraps of evidence are proffered for almost every specific explanation. This has helped the Marxist explanation to survive since, despite its evident shortcomings, it does provide a single path through the wilderness of medieval and modern European economic history.
We are indebted to many persons for comments on earlier drafts: to Ted Schultz, John Benton, Stan Engerman, Richard Roehl, Don McCloskey, and the members of the University of Chicago Workshop in Economic History; to our colleagues: Steven N. S. Cheung, Tom E. Borcherding, Mary L. Eysenbach, and Gene Silberberg; and to our students Terry Anderson and Clyde Reed. The research for this article was financed by a grant from the National Science Foundation, and we hereby acknowledge our thanks to this foundation.
We have deliberately omitted extensive bibliographical citation of the historical evidence. The article is essentially concerned with developing a theoretical explanation, and our citations mostly provide background for the theory. In the last section only do we provide some historical citation because legal history will be less familiar to the reader.
1 Buchanan, James M. and Tullock, Gordon, The Calculus of Consent (Ann Arbor: University of Michigan Press, 1967); Downs, Anthony, An Economic Theory of Democracy (New York: Harper and Row, 1957); Baumol, William J., Welfare Economics and the Theory of the State (London: Longmans, Green and Co., 1952); Demsetz, Harold, “Some Aspects of Property Rights,” Journal of Law and Economics, IX (Oct. 1966); Demsetz, Harold, “The Exchange and Enforcement of Property Rights,” Journal of Law and Economics, VII (Oct. 1964).
2 Davis, Lance and North, Douglass C., “Institutional Change and American Economic Growth: A First Step Towards a Theory of Institutional Innovation,” The Journal of Economic History, XXX, 1 (Mar. 1970), 131–49; North, Douglass C. and Thomas, Robert P., “An Economic Theory of the Growth of the Western World,” Economic History Review, 2nd. ser., XXIII, 1 (April 1970).
3 Domar, Evsey, “The Causes of Slavery or Serfdom: A Hypothesis,” THE JOURNAL OF ECONOMIC HISTORY, XXX, 1 (March 1970).
4 A contract is a mutual agreement between parties involved in governing a transaction— usually in the form of a payment for a specified consideration. An essential part of a contract is that it cannot be unilaterally changed by either party.
5 See Fogel, Robert, “The Relative Efficiency of Slavery: A Comparison of Northern and Southern Agriculture in 1860,” Explorations in Economic History, VIII, 3 (Spring 1971).
6 One of the more colorful examples of a peasant obligation, the authors have discovered, was the obligation of one serf annually for his lord's benefit to give “… a leap, a fart, and a jump.”
7 Some students of the Middle Ages may feel that we play loosely with our use of the words feudalism and manorialism. Feudalism is often used to denote the relationships among the nobility and manorialism to denote the relationship between lords and serfs. We view feudalism to have been a fiscal system involving a contractual relationship whereby public goods, such as protection and justice, were provided in exchange in the main for labor obligations. In this paper we concentrate on the relationship between lord and serf—manorialism—but we believe that the same theoretical model can also be applied to explain the larger social framework of feudalism, and we have frequently used the term feudalism interchangeably with manorialism in this article.
8 See the forthcoming book by North and Thomas, The Rise of tlie Western World: A New Economic History.
9 While substantial differences appear between manors at any point in time in terms of the nature and extent of the serf's obligations, a generally accepted view of the direction of change does exist. This view is primarily due to the research of M. M. Postan “The Chronology of Labour Services,” Transactions of the Royal Historical Society, 4th ser., XX, pp. 169–93. (See also Cambridge Economic History of Europe, I, pp. 549–632.) Our article attempts to explain the chronology that Postan describes. The chronology for France and Germany is not so well established, hence is less discussed in this article.
10 Cheung, Steven N. S., The Theory of Tenacy (Chicago: University of Chicago Press, 1969), and Cheung, , “The Structure of a Contract and the Theory of a Non- Exclusive Resource,” The Journal of Law and Economics, XIII (April 1970), 49–70.
11 Cheung, Theory, ch. iv.
12 Fundamental institutional arrangements may be considered general statements of the rules of society, and secondary institutions specific statements dealing with one particular phenomenon. See Davis and North, “Institutional Change and American Economic Growth.…”
13 Every revolution seems to produce a constitution which often requires another revolution for its alteration.
14 Bloch, Marc, Feudal Society, I (Chicago: University of Chicago Press, 1964) p. 63.
15 Collusion between lords could and sometimes did limit competition and, as a result, make exploitation possible. But by its nature such collusion tended to be unstable, since there were obvious advantages to attracting more peasants. A central coercive authority was necessary for sustained exploitation.
16 The obligation on the part of a serf to perform certain labor services for his lord was not, as we have mentioned, his only Lability. Besides labor dues, the. serf of the classic manor was typically required to provide certain minor amounts of goods in kind, firewood being an example. These obligations were clearly in the nature of fixed rent contracts and existed on the manor because, for the goods involved, this contractual arrangement involved the lowest transaction costs. In the case of firewood, the consumption by the lord varied little from year to year. It was cheaper to negotiate once for a fixed amount and then to check the amount on delivery, than to fix a certain number of hours in a day for gathering firewood and then having to supervise each hour of labor.
17 We do not mean to suggest that some exchanges did not take place within the classic manor; clearly, some must have. But the nature of the manor limited specialization and burdened each exchange with high transaction costs, especially for search.
18 The lord at this time sometimes leased or farmed his possessions to another person in exchange for a fixed annual rent. This person probably then operated the manor as if he were the lord. We have been able to find out little in the way of specific information about this arrangement.
19 Farmers, D. L., “Some Grain Price Movements in Thirteenth Century England,” Economic History Review, 2nd ser., X, 2 (Dec. 1957), pp. 207–20.
20 Hilton, A. H., A Medieval Society (London: Weidenfeld and Nicolson, 1966) pp. 135–37.
21 The lord of course during the thirteenth century had the alternative of continuing to commute for a fixed money payment the labor dues owed him and farm his land with wage labor supplied from among the growing number of cottars. He would have done so if the fixed commutation payment was greater than the wage rate. The fact that he chose not to use wage labor suggests that:
Where Pc is the fixed commutation payment; W equals the wage of hired labor, MPPL is the marginal physical product of labor and Pp is the price of agricultural products. Labor obligations would be chosen in preference to wage labor by the lords if, over time, the decline in the marginal physical product of labor was less than the rise in agricultural prices. The inflation of the thirteenth century was therefore a contributing factor in the reintroduction of labor dues during that era.
22 Pollock, Sir Frederick and Maitland, Frederick William, The History of English Law, 2d ed., I (Cambridge: Cambridge University Press, 1968), p. 172
23 In addition to Pollock and Maitland, see Bean, I. M. W., The Decline of English Feudalism (New York: Manchester University Press, 1968); Gray, Charles Montgomery, Copyhold, Equity, and the Common Law (Cambridge, Mass.: Harvard University Press, 1963); Hargreaves, A. D., An Introduction to the Principles of Land Law (Oxford: Clarendon Press, 1927); Jenks, Edward, Modern Land Law (Oxford: Clarendon Press, 1899); Lawler, Gail Gates and John, J., A Short Historical Introduction to the Law of Real Property (New York: Longmans, Green and Co., 1936), pp. 221–81; Simpson, A. W. B., An Introduction to the History of the Land Law (London: Oxford University Press, 1961).
24 Pollock and Maitland, History of English Law, p. 237.
25 We must go to the Statute of Tenures of 1660 to eliminate many of the feudal incidents that included elements of both feudal land law and feudal master-servant relationships; but these hangovers of the past did not prevent “effective” land ownership in fee-simple absolute with the ability to alienate.
26 For an excellent brief account, see Simpson, An Introduction to the History of Land Law—ch. ii, “The Real Actions,” and ch. iii, “The Tenants Interest in the Land.”
27 Ibid., p. 51.
28 The detailed history is covered in I. M. W. Bean, The Decline of English Feudalism.
29 A similar evolutionary change took place in the fourteenth and fifteenth centuries through the employment of uses which was temporarily thwarted in 1536 by the Statute of Uses, but then recognized in 1540 with the Statute of Wills.
30 For a detailed account of this transformation, see C. M. Gray, Copyhold, Equity, and the Common Law.
31 Lest these developments be considered inevitable consequences of population growth, let us remember the fate of modern Asia. There was nothing inevitable about the results analyzed in this paper. The fundamental institutions created in Europe significantly redistributed power, wealth, and income among the groups in society. There were winners and losers. Had the losers been able, they would have forestalled the change. This happened in Spain at a later date, when for centuries the Mesta retained their rights to take herds of sheep across any land without the payment of compensation, thus thwarting the creation of effective private property rights despite a growing population.
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