The role of institutions in economic growth and development has attracted considerable attention from social scientists in recent years. Law, in particular, and its importance in the assignment of property rights and contract enforcement, has been emphasised in the development economics and legal history literatures. Research on modern-day developing societies has revealed a robust link between the existence of formal legal institutions and the potential for economic growth and development.

But not everyone is convinced. A more sceptical view of the role of institutions has emerged in recent years, particularly among economic historians. According to the sceptics, property rights and contract enforcement existed in many parts of early modern Europe, but not all of these experienced economic growth and development. One of the most extreme articulations of this view is in Gregory Clark’s recent book, A farewell to alms, where he argues that ‘there were preindustrial societies that had most, if not all, of the institutional prerequisites for growth hundreds, and probably thousands, of years before the Industrial Revolution’. Clark points to medieval England as a place with ‘extraordinary institutional stability’ where ‘[m]ost individuals enjoyed great security both of their persons and of their property’. In this view, inhabitants of medieval England enjoyed ‘low tax rates’, security of property, and ‘free markets’ in land, labour, and goods – all the institutional features development economists point to as favourable for economic growth. Yet despite this favourable environment, the industrial revolution did not occur in medieval England. According to Clark, we can only conclude that institutions are of little relevance to questions of growth.

A slightly different version of this debate has taken place among historians, especially with respect to one particular institution: serfdom. In this context, too, the sceptics view institutions as irrelevant to the local economy. Not because markets were free and property secure under serfdom, but because they were not free and property was not secure, yet we know that serfs nonetheless engaged in market transactions, made complex investment decisions, and even, in some cases, achieved a degree of social mobility. The overwhelming evidence for lively rural markets in land, labour, and credit in serf societies from medieval England to eighteenth-century Russia has brought some historians to the conclusion that serfdom could not have been all that constraining.