ABSTRACT
Informal mechanisms lacking state-enacted legal procedures were adequate in China to facilitate tremendous expansion of long-distance trade. A combination of occupational guilds, native place associations and contracts with middleman guarantors made an increasing number of transactions possible without frequent recourse to courts. Modern European state formation was generally about the growing capacities of certain territorial rulers to consolidate their control over a number of smaller polities. This process was, in large measure, achieved through the creation of new bureaucracies and the stipulation of new relationships in the seventeenth and eighteenth centuries between rulers and their elites, who were often organized as corporate groups (aristocracies, urban elites and clerical leaders), and in the nineteenth and twentieth centuries between rulers and a broader range of people who were increasingly conceived of as individual ‘citizens’. Similarly, state-enforced institutional arrangements were important for reducing transaction costs in economic activities; formal property rights regimes were key components of these changes.
