In comparative historical research, a widely debated issue has been the origin of capitalism and how and why the capitalist mode of production succeeded in becoming global from its origins in small city-states in Western Europe. As Karl Marx, Max Weber, Immanuel Wallerstein, Fernand Braudel, and many others have written widely on this subject, one might wonder if new books would provide much cognitive value-added. However, these two books on the rise of the West are far from superfluous. They offer new perspectives by stressing the importance of the medieval period—and even earlier—for understanding the capitalist takeoff dating from approximately 1100.

The books offer divergent strategies for doing comparative research. Eric H. Mielants's book uses narrative, inductive, and evidence-based research, relying on many kinds of historical materials and employing a rigorous qualitative historical methodology. It relies somewhat heavily on an implicit theory of economic development. Avner Greif's strategy, more recent in origin, is theory driven and deductive, relying on formal models and game theory. Using medieval materials, Greif attempts to subject his models to comparative historical testing. With the Mielants book, one observes the rich complexity of the world, while Greif presents a more simplified version of history. At the same time, these two methodologies and perspectives nicely complement each other.

In The Origins of Capitalism and the “Rise of the West” Mielants addresses a long-standing problem: why capitalism developed in the West and not elsewhere. Most scholars tackling this problem have focused on the period after 1600. In contrast, Mielants argues that the origins of capitalism occurred between the eleventh century and 1500. While limited aspects of capitalism emerged in many regions in the Middle Ages, it was only in the West that myriad phenomena coalesced into a unique set of conditions for the full development of a capitalist economy.

This is a very good book but would have been even better without the long—though very scholarly—digression in the first chapter on orthodox Marxism, modernization theory, and the works of Robert Brenner and Immanuel Wallerstein, which distracts from the central argument. Mielants's main concern is why the West became the dominant center of capitalism, rather than China, southern India, or the North African city-states, each of which he studies with considerable skill and erudition. His documentation is extremely impressive (more than 73 pages of sources in more than a half-dozen languages).

While Mielants's analysis of the political economies of the four regions is rich in detail, his fundamental argument is straightforward. By the twelfth century, China was the most developed of the four areas—politically, militarily, and socioeconomically. Its economy was far more advanced than any in Europe, it had the world's most advanced financial system, and the Chinese emperor could mobilize a million soldiers. However, capitalism eventually became dominant in that part of the world where merchants were so autonomous that they were able to dominate an existing state or facilitate the development of a state they were able to control. Despite China's flourishing merchant class, it remained subordinate to the state. Elsewhere in Asia, merchants often existed in plentiful numbers and had extensive trading systems, but they, too, could not dominate the state system. The merchants of North African trading areas were never able to develop a state sufficiently powerful to protect and advance their interests. Only in Europe were merchants able to dominate the state and use it for their purposes. In short, the emergence of capitalism was a very contingent phenomenon, taking place only in those areas where states were neither too strong nor too weak.

Many scholars write about capitalism as though it is the elephant in the room, never giving it a rigorous definition. For Mielants, by the twelfth century, the urban centers of medieval Western Europe already had a thriving capitalist system defined by wage labor, specialization of numerous industries, a complex division of labor, class struggles, a complex financial system, and the early development of regional economic centers comparable to the way that major powers would later exploit far-away centers. Because of its dynamic nature, the core center of such systems constantly expanded: First the Portuguese and later the Dutch were able to capture crucial locations throughout the Indian Ocean, and the Spanish in parts of the Americas. By the seventeenth century, the central government of England had come under the dominance of the mercantile elite. The author argues retrospectively that the most successful European states were those governed with, and in the interests of, the merchant class (p. 69, n. 55).

Mielants's study will be very useful for those who have an interest in understanding the variation in long-term path dependencies of the socio-political-economic configurations of capitalist societies.

Institutions and the Path to the Modern Economy focuses heavily on two historical episodes in the development of early forms of international trade: the Jewish Maghribi traders' coalition and that of Genoa, Venice, and Florence, which eventually became some of the wealthiest city-states of Europe. Embedded in Greif's historical accounts are theoretical and developmental accounts of institutions and models of their overall dynamics.

The author argues that the Maghribi was a tight-knit society in which all inhabitants strongly internalized the same norms and values. Hence, a handshake or giving one's word was sufficient to bond a contracted economic transaction. A society in which everyone internalized the same norms and beliefs was very conservative, and as a result did not provide the dynamism for a capitalist economy to flourish. In contrast, the Italian city-states became so inegalitarian, hierarchical, and internally differentiated in terms of norms and values that a different form of governance was necessary for the enforcement of contractual transactions, both internally and in long-term trading.

Greif is interested in how such divergent paths developed. In his view, it was the non-Maghribi path that provided the basis for the development of the institutions necessary for capitalist economies. While extensive trade and inegalitarian and hierarchical structures became characteristic of capitalist societies, there was considerable variation among early Italian city-states—for example, the Florentines, Genovese, Pisans, and Venetians. In order to analyze how various actors in each of these societies solved social dilemmas, he relies on game theory.

Greif's theory of economic institutions is heavily dependent on previous economic institutionalists, such as Douglass North, Ronald Coase, and Oliver Williamson. At the same time, the author is one of the world's most unusual and interesting economists. And while his book comes with high praise from several Nobel laureates, his analysis is eclectic and interdisciplinary. Based heavily on a number of papers produced over the past two decades, the book employs techniques and methods from game theory, sociology, political science, law, and history—including archival research—for an understanding of the origins and dynamics of medieval institutions.

Grief's main theoretical argument is that the development of long-distance trade led to changes in the structure of Italian city-states and the development of new institutional governance arrangements to enforce transactional contracts. However, were the development of long-term trade arrangements and changes in the internal structure of Italian city-states causally related, or did they just occur simultaneously? Historians within the last two decades have offered alternative explanations as to why new institutional arrangements were necessary for the governance of Italian city-states. They place their emphasis on changing demographic structures and complex technological changes. Yet Grief does not entertain alternative explanations, nor does he even suggest any methodological strategy for evaluating such alternative explanations—even if any were posed. This oversight is unfortunate. Yet despite these limitations, his book is among the two or three most important to emerge during the past two decades on the historical development of economic institutions.

The cross-disciplinary breadth and range of geographical knowledge of both authors are quite remarkable. Both books are highly recommended for scholars interested in the most recent explanations for the development of Western capitalism.