Failure, and its possibility, plays a key role in modern market economies. An inefficient or unprofitable firm will eventually fail, and its assets get released to be put to other, and presumably better, uses. Failure embodies market discipline, and reflects hard budget constraints. Its absence was notable in the command economies of Eastern and Central Europe before 1989, and the suspension of its application to insolvent financial institutions prompts energetic public debate about “too big to fail” banks and the dangers of moral hazard. Such variation reminds us that economic failure is a contingent feature whose architecture and functioning depends on legal and economic institutions. There are many ways to fail. And whatever collective virtues failure possesses in engineering market exit, purging the weak, and extinguishing poor performers, it frequently stigmatizes those who fail. The moral valence of failure, and the potential culpability of those who have failed, continue to shape public perceptions. Bankruptcy is also, inter alia, a distributional exercise. An insolvent debtor's losses must be shared among the various claimants on the firm's assets, and more for one means less for the others. Whether and how to prioritize creditors is one of the key questions that a bankruptcy procedure answers.

Thomas Max Safley's valuable book shows that many of these tradeoffs and constraints were apparent long before the emergence of contemporary capitalism. Early modern bankruptcy was mostly for merchants and bankers, i.e., those who traded or invested with other people's money. Thus the use of credit, rather than cash, for transactions, and the growing complexity of debtor-creditor relations, set the stage for bankruptcy. Indeed, as Natacha Coquery points out, in a cash-scarce economy, credit was unavoidable. Credit, in turn, rested upon the bonds of trust that a borrower's reputation helped to establish. Questions of personal honor and integrity weren't only the concern of aristocrats. Expanding credit networks also created the possibility of financial contagion, in which cascading failures could pull down solvent but illiquid firms.

Safley's edited book contains 14 richly-detailed historical essays that explore different aspects of failure in early modern Europe. While they are all deeply connected by their evidence to specific times and places, some authors are content to describe the particularity of their chosen topic while others cast their analytical nets more broadly. There is methodological variety as well as some chapters contain individual case studies while others analyze larger data sets, and Brennan's chapter even provides some particularly intriguing network analyses and diagrams. Some focus on formal legal rules, while others stress commercial practice. Business failures often left behind a measurable legal trace, which is convenient for historians in search of documents. But it also tempts researchers to study the process of failure without systematically comparing firms that failed with those that didn't.

In his introduction, Safley raises a number of general issues that cut across many of the essays. He points out the fundamental difference between insolvency and bankruptcy. The former is an economic condition (e.g., a firm's total assets are worth less than its total liabilities) whereas the latter is a legal process intended to deal with the former. Practice often preceded statutory law. That is, the business community would develop practical ways of dealing with insolvency and some or all of these would later be enshrined in formal bankruptcy law. But it was not uncommon for law on the books to be out of sync with practice. Finally, he notes that trust was a key issue in early modern economies, and that firms overwhelmingly were family firms. Aligning commercial relations with kinship ties was one way to solve trust problems, but it also meant that commercial failure could devastate an entire extended family and undermine their familial solidarity (an issue that also comes up in Häberlein's paper). Furthermore, it gave a social significance to otherwise economic relationships (as Nyberg and Jacobsson point out), and was one reason for insolvent debtors to favor some creditors over others (which was an important issue for Scots Law, as MacLeod shows).

The last essay, by Jérôme Sgard, uses a comparison between England and France to address similarly general issues. He uses a contrast between ex ante and ex post bankruptcy to mark the difference between bankruptcy systems where inflexible rules are set beforehand to inflict swift and predictable consequences on those who fail to meet their obligations, and those bankruptcy systems that allow bargaining and renegotiation of loan terms among interested parties after the debtor has defaulted. Early modern England settled on ex ante rules, while France embraced the ex post version. Thus, to go into bankruptcy in early modern England could only mean liquidation. By contrast, French law offered possibilities for reorganization and rehabilitation. Sgard also provides a useful historical sketch on the development of bankruptcy law in Europe, and touches on the important process of legal transplants. Laws can move from one jurisdiction to another, and frequently the process of legal innovation simply involves emulation of some other city or state. Governments can and do learn from each other, and a practical bankruptcy statute can diffuse (Fischer also makes this point in his paper on Germany).

Between these two bookends lie the rest of the papers, too numerous to summarize and generally taking a narrower focus. However, De ruyssher's paper deserves particular mention in part because developments in Antwerp were so revealing. Antwerp law and culture in the late fifteenth century focused on debt repayment rather than renegotiation, and so insolvent debtors were simply imprisoned. Bankruptcy was a vehicle for debt repayment, and deployed coercion to force debtors to repay. But the growing use of negotiable instruments for credit decreased the attraction of debtor imprisonment for creditors, and conflicts among the creditors, rather than just between them and the debtor, started to come to the fore. In the early sixteenth century, Antwerp law also began to distinguish insolvent debtors who had been unlucky from those who were dishonest, and to spare the unlucky from the harshest measures.

Safley's book will be of value to early modern specialists. But it will also interest those who are concerned with the institutional underpinnings of market economies, and who view comparison as a useful intellectual device. Every economy needs an exit strategy, a way to refashion or terminate arrangements for production and distribution that no longer work. Under capitalism, that function is largely performed via bankruptcy.