Revisiting the Maghribi Traders (again): a Social Network and Relational Contracting Perspective

Lisa Bernstein (University of Chicago Law School)

Abstract: Avner Greif’s study of trade among the Maghribi Jewish merchants across the Islamic Mediterranean in the Eleventh Centaury is a seminal work in the literature on Private Ordering. Yet in recent years his study has come under attack from other historians of the Geniza who point to facts that they view as undermining his theory of coalition-based reputation-governed trade. This essay suggests that the work-a-day actions of merchants captured by the formal multilateral governance forces at work in Greif’s model can also be understood through the lens of social network analysis. Viewing the Maghribi coalition as a bridge and cluster network, and incorporating insights from relational contract theory, suggests that the facts identified by Greif’s critics do not undermine his central insight, namely that a reputation-based community enforcement system played a core role in supporting trade. More broadly, the network perspective provided here enriches Grief’s model by highlighting a somewhat relaxed set of preconditions that can also effectively support multilateral reputation-based trade. Identifying these preconditions may be helpful to scholars and policy makers interested in drawing on Greif’s work and other case studies of private contractual ordering to better understand the promise of private rules, norms, and institutions to support trade in developing or transition economies as well as in countries with well-functioning legal systems.