Date Added: Jun 2009
Economists draw important lessons for modern development from the medieval Maghribi traders who, it has been argued, enforced contracts collectively through a closed, private-order coalition. The authors show that this view is untenable. Not a single empirical example adduced as evidence of the putative coalition shows that any coalition actually existed. Furthermore, the Maghribis entered business associations with non-Maghribis and used formal enforcement mechanisms. The Maghribi traders cannot be used to argue that the social capital of exclusive, private-order networks will facilitate exchange in developing economies.