Bringing Politics Back In: Violence, Finance, and the State

The hypothesis of this paper is that a detailed history of a specific location and period is more effective for isolating the important characteristics of institutions than studies which span multiple millennia across the globe. To illustrate this hypothesis, I examine three Italian city-states in the period between eleventh and sixteenth centuries. This was a time when the "commercial revolution" was underway in these city-states. As a result, there were institutional innovations in settlement patterns, work organization, and self-governing institutions to help provide for mutual defense and for the internalization of gains from long-distance trade. I contrast this case study with the methodology and findings employed by Douglass C. North, John J. Wallis, and Barry R. Weingast (2009) in Violence and Social Orders. Rather than analyze the importance of beliefs and the protection of property rights as in prior work of theirs, the authors here focus on the "Schumpeterian competition" between impersonal organizations as an effective institutional form to control violence. Moreover, the timeframe of their book extends to "all recorded human history." In contrast to North, Wallis, and Weingast's approach, I concentrate on Genoa, Florence, and Venice in an effort to explain more effectively the emergence of the public/private divide and the relationship between politics and economics in modern industrial society. Experimentation in medieval Italy in mediating conflict between newly emerging classes, innovating in public finance to support the military, and focusing on broad civic participation in the political process had a lasting impact on the development of the state as an institution.