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Greif: Self-enforcing political systems and economic growth

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Greif. 1998. Self-enforcing political systems and economic growth: Late Medieval Genoa. In Analytic Narratives, eds. Bates and Levi et al, pp. 25-64.

From handout:

Periods and Results:

  1. 1099 to 1154: Political foundations.
  • Suboptimal, but peaceful period with low economic development. No civil war or major violent political confrontations. Some cooperation between two clans.
  • Peaceful because each clan invested in military strength to deter other clan from becoming controlling clan. Fewer resources available for economic cooperation abroad because clans investing in their own military strength. (Note: shows historically that longer term economic growth for Italian maritime cities depended on commercial expansion created by political exchange in which overseas possessions were acquired. Political units provided one another with possessions in return for alliances guaranteeing military protection or neutrality. Thus, Genoa residents had to cooperate in order to mobilize their own resources).
  1. 1154-1164: From pirates to traders.
  • Outside threat made clans spend less on military strength to deter one another and thus freed up resources for economic cooperation.
  • Greif sees this period as "optimal" because the outside threat will attack if and only if there is interclan warfare and believes clans are weak. Because the clans know that if they attack one another they will be attacked by this outside force, they do not attack each other and the need to build up their military strength to fight one another decreases. As a result, they can spend their resources on economic cooperation.
  1. 1164-1194: In the absence of a self-enforcing political system from order to disorder.
  • By 1164, external threat had subsided and did not provide foundation for self-enforcing political system or economy.
  • Semi-permanent inter-clan warfare.
  1. 1194-1350: Self-enforcing political system based on political rules.
  • Genoese created new political system by introducing the podesta, a system in which Genoa was governed by an outside city manager.
  • This arrangement brought about "spectacular economic performance" because the clans could afford to disarm.
  • The arrangement prevented interclan warfare and created cooperation.
  • Greif uses "two games" to describe strategic interaction between the podesta and the two clans.
    • Collusion game: One clan and the podesta fight against the other clan.
    • Podesteria game: First clan has the choice between challenging and not challenging the second. If the second clan is challenged, it can choose to fight or not fight. If the second clan is challenged the podesta can collude with the first clan, prevent the first clan from taking control or do nothing.

Conclusion: Greif describes podesteria as a path dependent process that "constrained Genoa's political rules from evolving significantly away from the forms and functions shaped by their historical origins." (p. 59). Podesteria worked because it provided impartial political and legal system and did not alter, but built on "existing factional structures."