'Whatever is, is right'? Economic institutions in pre-industrial Europe

Institutions-the structure of rules and norm governing economic transactions-are widely assigned a central role in economic development. Yet economic history is still dominated by the belief that institutions arise and survive because they are economically efficient. This article shows that alternative explanations of institutins, particularity those incorporating distributional effects, are consistent with economic theory and supported by empirical findings. Distributional conflicts provide a better explanation than efficiency for the core economic institutions of pre-industrial Europea: serfdom, the community, the craft guild, and the merchant guild. The article concludes by proposing four desiderate for any economic theory of institutions.