1. In the following pages I sometimes denote “sovereign territorial state” with either the term “territorial state” or “sovereign state.” These terms all refer to a particular form of government wherein authority claims internal hierarchy and recognizes no higher authority beyond its borders. For this definition see Benn, Stanley, “Sovereignty,” in The Encyclopedia of Philosophy (New York: Macmillan, 1967), pp. 501–5Google Scholar.

2. The term “international” semantically prejudges the issue, since it is an anachronism for this period.

3. For an argument that these three institutional arrangements had run their course by 1300, see Tilly, Charles, ed., The Formation of National States in Western Europe (Princeton, N.J.: Princeton University Press, 1975), p. 26Google Scholar.

4. For a discussion of the various meanings of the term “state,” see Nettl, J. P., “The State as a Conceptual Variable,” World Politics 20 (Summer 1968), pp. 559–92CrossRefGoogle Scholar.

5. The literature on emergent capitalism ranges in perspective from a neo-Marxist one to a liberal economic one, focusing on property rights and individual incentives. For an example of the former perspective, see Anderson, Perry, Lineages of the Absolutist State (London: Verso, 1974)Google Scholar; and Wallerstein, Immanuel, The Modern World System, vol. 1 (New York: Academic Press, 1974)Google Scholar. For the public choice approach, see North, Douglass and Thomas, Robert, The Rise of the Western World (Cambridge: Cambridge University Press, 1973)CrossRefGoogle Scholar; North, Douglass, Structure and Change in Economic History (New York: W. W. Norton, 1981)Google Scholar; and Levi, Margaret, Of Rule and Revenue (Berkeley: University of California Press, 1988)Google Scholar.

6. I define transaction costs as the costs of arranging a contract ex ante and monitoring and enforcing it ex post. See Eggertson, Thrain, Economic Behavior and Institutions (New York: Cambridge University Press, 1990), p. 14CrossRefGoogle Scholar.

7. This lies in contrast to Waltz's view of international systems. His argument is that such systems vary only by ordering principle and capabilities. See Waltz, Kenneth, Theory of International Politics (New York: Random House, 1979), pp. 82ffGoogle Scholar. While both ordering principle and capability remain critical elements in any understanding of international affairs, they alone do not determine structure. In other realist understandings, the most fundamental type of change in the international system is that of unit change. See Gilpin, Robert, War and Change in World Politics (Cambridge: Cambridge University Press, 1981), pp. 39–42CrossRefGoogle Scholar.

8. See Thelen, Kathleen and Steinmo, Sven, “Historical Institutionalism in Comparative Politics,” in Steinmo, Sven, Thelen, Kathleen, and Longstreth, Frank, eds., Structuring Politics (New York: Cambridge University Press, 1992), pp. 1–32Google Scholar; and Caporaso, James, “Microeconomics and International Political Economy: The Neoclassical Approach to Institutions,” in Czempiel, Ernst-Otto and Rosenau, James, eds., Global Changes and Theoretical Challenges (Lexington, Mass.: D. C. Heath, 1989), pp. 135–59Google Scholar.

9. For excellent overviews of the literature, see Moe, Terry, “New Economics of Organization,” American Journal of Political Science 28 (11 1984), pp. 739–77CrossRefGoogle Scholar; and Yarborough, Beth and Yarborough, Robert, “International Institutions and the New Economics of Organization,” International Organization 44 (Spring 1990), pp. 235–59CrossRefGoogle Scholar.

10. See, for example, the discussion on reneging by Yarborough, Beth and Yarborough, Robert, Cooperation and Governance in International Trade (Princeton, N.J.: Princeton University Press, 1992), pp. 14ffGoogle Scholar. For an example of how actors seek to devise institutions to limit ex post reneging in foreign investments, see Lipson, Charles, Standing Guard (Berkeley: University of California Press, 1985)Google Scholar.

11. For one account that uses such “entrepreneurial logic” see Friedman, David, “A Theory of the Size and Shape of Nations,” Journal of Political Economy, vol. 85, no. 1, 1977, pp. 59–77CrossRefGoogle Scholar.

12. See Williamson, Oliver, Markets and Hierarchies (New York: The Free Press, 1975)Google Scholar; and Williamson, Oliver, Economic Organization (New York: New York University Press, 1986)Google Scholar.

13. For an expansion of this logic to the integration of states, see Beth Yarborough and Robert Yarborough, “International Contracting and Territorial Control: The Boundary Question,” Journal of Theoretical and Institutional Economics, forthcoming.

14. The standard argument is by Olson, Mancur, The Logic of Collective Action (Cambridge, Mass.: Harvard University Press, 1965)Google Scholar. See also Hardin, Russell, Collective Action (Washington, D.C.: Resources for the Future, 1982)Google Scholar.

15. For a brief discussion of some of the issues involved, see Williamson, , Markets and Hierarchies, pp. 20 and 48Google Scholar.

16. Moe, , “New Economics of Organization,” p. 761Google Scholar.

17. For example, Margaret Levi suggests that political associations are based on security motives; see Levi, Of Rule and Revenue. See also Bean, Richard, “War and the Birth of the Nation State,” Journal of Economic History 33 (03 1973), pp. 203–21CrossRefGoogle Scholar; and Ames, Edward and Rapp, Richard, “The Birth and Death of Taxes: A Hypothesis,” Journal of Economic History 37 (03 1977), pp. 161–78CrossRefGoogle Scholar.

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19. For brief and insightful critiques of functionalist explanations, see Keohane, Robert, After Hegemony (Princeton, N.J.: Princeton University Press, 1984), pp. 80–83Google Scholar; Barry, Brian, Sociologists, Economists, and Democracy (Chicago: University of Chicago Press, 1978), p. 169Google Scholar; and Yarborough, and Yarborough, , “International Institutions and the New Economics of Organization,” pp. 252–55Google Scholar.

20. Many of these points are also raised in Thelen and Steinmo, “Historical Institutionalism in Comparative Politics.”

21. For a discussion of focal points in enhancing cooperation, see Schelling, Thomas, The Strategy of Conflict (Cambridge, Mass.: Harvard University Press, 1980)Google Scholar. In my usage, however, I do not associate it with tacit communication.

22. See the discussion of how such actors can overtake the elements in an entire set in Axelrod, Robert, “The Emergence of Cooperation Among Egoists,” American Political Science Review 75 (06 1981), pp. 306–19CrossRefGoogle Scholar. For a discussion of the prerequisites of iteration, see Oye, Kenneth, Cooperation Under Anarchy (Princeton, N.J.: Princeton University Press, 1986)Google Scholar, chap. 1.

23. Unger, Roberto, Plasticity into Power (New York: Cambridge University Press, 1987), p. 113Google Scholar. Unger places such modern empires as the twentieth-century German and Japanese programs in this category.

24. Giddens, Anthony, The Nation-State and Violence (Berkeley: University of California Press, 1987), p. 80Google Scholar.

25. Wallerstein, , The Modern World System, p. 15Google Scholar.

26. On this point, see Kratochwil, Friedrich, “Of Systems, Boundaries, and Territoriality: An Inquiry into the Formation of the State System,” World Politics 39 (10 1986), pp. 27–52CrossRefGoogle Scholar.

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28. See Doyle, Michael, Empires (Ithaca, N.Y.: Cornell University Press, 1986)Google Scholar; and Snyder, Jack, Myths of Empire (Ithaca, N.Y.: Cornell University Press, 1991)Google Scholar.

29. As Abu-Lughod notes, many economic zones, and world systems, did not fall under political unification. She also notes, however, that unification can sometimes reduce uncertainty and protection costs. See Abu-Lughod, Janet, Before European Hegemony (New York: Oxford University Press, 1989), pp. 208–9Google Scholar.

30. Snyder, , Myths of Empire, p. 6Google Scholar.

31. See Curtin's discussion of trade diasporas in Curtin, Philip D., Cross-Cultural Trade in World History (Cambridge: Cambridge University Press, 1984)CrossRefGoogle Scholar.

32. See Landa, Janet, “A Theory of the Ethnically Homogeneous Middleman Group: An Institutional Alternative to Contract Law,” Journal of Legal Studies 10 (06 1981), pp. 349–62CrossRefGoogle Scholar; Schmidt-Trenz, Hans-Jörg, “Private International Trade in the Shadow of the Territoriality of Law: Why Does It Work,” Southern Economic Journal 58 (10 1991), pp. 329–38CrossRefGoogle Scholar; and Carr, Jack and Landa, Janet, “The Economics of Symbols, Clan Names, and Religion,” Journal of Legal Studies 12 (01 1983), pp. 135–56CrossRefGoogle Scholar.

33. One might object that this expansion should not be perceived as a contract between ruler and ruled. However, if one assumes that at least a minimum of quasi-compliance is necessary for a trading system to continue, then a purely extortionist government will destroy its own basis of revenue should it tax its merchants to the point that there are no incentives to continue to engage in commercial activity.

34. The characteristic features of feudalism are the subjects of long-standing disputes. Strayer's description is widely accepted, and that is the one I use here. See Strayer, Joseph, Feudalism (New York: Van Nostrand Reinhold, 1965), p. 13Google Scholar.

35. Saltman, Michael, “Feudal Relationships and the Law: A Comparative Inquiry,” Comparative Studies in Society and History 29 (07 1987), pp. 514–32CrossRefGoogle Scholar. See also Bloch, Marc, Feudal Society (Chicago: University of Chicago Press, 1961), pp. 115–16Google Scholar.

36. Thus, Polanyi defined feudalism as an in-kind economy. See Polanyi, Karl, “Primitive Feudalism and the Feudalism of Decay,” in Dalton, George, ed., Economic Development and Social Change (New York: Natural History Press, 1971), pp. 141–47 and p. 142Google Scholar in particular. An indicator of this local consumption was the itinerancy of kings. Kings traveled to locations to claim lodgings and food, to which they were entitled by the gîte, the claim to hospitality from their vassals.

37. Genicot, Leopold, “La Noblesse au Moyen Age Dans L'Ancienne ‘Francie’: Continuité, Rupture ou Evolution?” (Medieval nobility in ancient France: Continuity, break, or evolution?) Comparative Studies in Society and History, vol. 5, no. 1, 1962, pp. 52–59CrossRefGoogle Scholar.

38. For a good account of the local diversity of law, see Reynolds, Susan, Kingdoms and Communities in Western Europe 900–1300 (Oxford: Clarendon Press, 1984), chaps. 1 and 2Google Scholar. See also Berman, Harold, Law and Revolution (Cambridge, Mass.: Harvard University Press, 1983)Google Scholar, particularly chap. 13.

39. For a discussion of these rights of local lords, see Duby, Georges, Rural Economy and Country Life in the Medieval West (Columbia: University of South Carolina Press, 1968), p. 181Google Scholar.

40. Dunbabin, Jean, France in the Making 843–1180 (Oxford: Oxford University Press, 1985), p. 277Google Scholar.

41. Zupko, Ronald, “Weights and Measures, Western European,” in Strayer, Joseph, ed., Dictionary of the Middle Ages, vol. 12 (New York: Charles Scribner, 1989), p. 582Google Scholar; Kula, Witold, Measures and Men (Princeton, N.J.: Princeton University Press, 1986)CrossRefGoogle Scholar, provides a fascinating account of the variety of weights and measures and of their regulation as an issue of contention. For a classic discussion of the variation in weights and measures and coinage throughout the Mediterranean, see Lopez, Robert and Raymond, Irving, Medieval Trade in the Mediterranean World (New York: W. W. Norton, 1967), pp. llffGoogle Scholar.

42. Heaton, Herbert, Economic History of Europe (New York: Harper and Row, 1948), p. 175Google Scholar.

43. Bloch describes this period as the second feudal period. See Bloch, , Feudal Society, p. 69Google Scholar. The economic growth is well-documented in Cipolla, Carlo, Before the Industrial Revolution (New York: W. W. Norton, 1980)Google Scholar; Duby, Georges, The Early Growth of the European Economy (Ithaca, N.Y.: Cornell University Press, 1974)Google Scholar; and Le Goff, Jacques, Medieval Civilization (New York: Basil Blackwell, 1988)Google Scholar.

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47. Duby, , The Early Growth of the European Economy, p. 252Google Scholar. For a similar view, see Morrall, John, Political Thought in Medieval Times (Toronto: University of Toronto Press, 1980), p. 42Google Scholar.

48. For an assessment that these three institutional arrangements indeed had come to the end of their primacy by 1300, see Tilly, , The Formation of National States in Western Europe, p. 26Google Scholar; and Morrall, Political Thought in Medieval Times.

49. Merchant law is discussed by Berman, Law and Revolution, chap. 11. For a new institutionalist view of merchant law, see Milgrom, Paul, North, Douglass, and Weingast, Barry, “The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs,” Economics and Politics 2 (03 1990), pp. 1–23CrossRefGoogle Scholar; Greif, Avner, “Institutions and International Trade: Lessons from the Commercial Revolution,” American Economic Review 82 (05 1992), pp. 128–33Google Scholar; and Benson, Bruce, “The Spontaneous Evolution of Commercial Law,” Southern Economic Journal 55 (01 1989), pp. 644–61CrossRefGoogle Scholar.

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51. Duby, , The Early Growth of the European Economy, p. 249Google Scholar.

52. For French royal efforts in this regard, see Fawtier, Robert, The Capetian Kings of France (New York: St. Martin's Press, 1960), pp. 188–91CrossRefGoogle Scholar. In general, all royal authorities tried to standardize and rationalize the legal process and bring more certitude to economic transactions. See Berman, , Law and Revolution, pp. 466–77Google Scholar; Spufford, Peter, “Coinage and Currency,” The Cambridge Economic History of Europe, vol. 2 (Cambridge: Cambridge University Press, 1987), p. 812Google Scholar; and Myers, Henry, Medieval Kingship (Chicago: Nelson-Hall, 1982), p. 319Google Scholar.

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54. Cipolla, Carlo, “Currency Depreciation in Medieval Europe,” Economic History Review, vol. 15, no. 3, 1963, pp. 413–22CrossRefGoogle Scholar. For the stability of English coinage, see Duby, , The Early Growth of the European Economy, p. 251Google Scholar.

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56. Zupko, Ronald, British Weights and Measures (Madison: University of Wisconsin Press, 1977), p. 74Google Scholar. For another discussion of English success at centralization, see Rörig, , Medieval Town, pp. 65ffGoogle Scholar.

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67. On the lack of success in standardizing measures and weights, see Held, Otto, “Hansische Einheitsbestrebungen im Mass und Gewichtswesen bis zum Jahre 1500” (Hanseatic attempts at unity in measures and weights until the year 1500), Hansische Geschichtsblätter 45 (1918), pp. 127–67Google Scholar.

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83. Structuration theorists might frame this in terms of the system empowering only like actors. See, for example, Giddens, , The Nation State and Violence, p. 282Google Scholar. Rephrased this implies that actors recognize other units only on their terms—they admit only other states as legitimate actors in international relations.

84. In other words, they exercised exit rather than loyalty. See Hirschman, Albert, Exit, Voice, and Loyalty (Cambridge, Mass.: Harvard University Press, 1970)Google Scholar.

85. For this institutional mimicry, see Barraclough, , Origins of Modern Germany, pp. 279 and 342–52Google Scholar; and Holborn, . A History of Modern Germany, pp. 34–36 and 57Google Scholar.

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87. For the early history of these communes, see Waley, Daniel, The Italian City-Republics (New York: McGraw-Hill, 1969)Google Scholar.

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110. This notion of international empowerment also explains why African states have persisted despite tribal and irredentist movements. For that argument, see Jackson, Robert, “Quasi-States, Dual Regimes, and Neo-classical Theory: International Jurisprudence and the Third World,” International Organization 41 (Autumn 1987), pp. 519–49CrossRefGoogle Scholar.

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112. For the latter use of transaction costs, see Dudley, “Structural Change in Interdependent Bureaucracies”; and Levi, Of Rule and Revenue.

113. For a comparison between the competitive state system and non-European autarkic empires, see Hall, , Powers and Liberties; and Hall, John, ed., States in History (Oxford: Basil Blackwell, 1986)Google Scholar.

114. See Parker, David, The Making of French Absolutism (New York: St. Martin's Press, 1983)Google Scholar, for the argument that French absolutism was paradoxically quite weak vis-à-vis the multitude of social actors. Robin Briggs notes how monarchs were constrained in the level of debasement, as this would weaken their “international position.” See Briggs, Robin, Early Modern France 1560–1715 (New York: Oxford University Press, 1977), p. 44Google Scholar.

115. As John Hall points out, that argument already had been made by Hall, Gibbon, Powers and Liberties, p. 14Google Scholar.

116. For a discussion of the Dutch case, see Boxer, C. R., The Dutch Seaborne Empire 1600–1800 (London: Penguin, 1965), pp. 119 and 328Google Scholar; and Holton, R. J., Cities, Capitalism, and Civilization (London: Allen and Unwin, 1986), p. 108Google Scholar.

117. For the difference, see Held, David, Political Theory and the Modern State (Stanford, Calif.: Stanford University Press, 1989)Google Scholar, chap. 8.

118. For different views about the compatibility of Islam and statehood, see Piscatori, James, Islam in a World of Nation-States (New York: Cambridge University Press, 1986)Google Scholar.

119. The early independence literature in emphasizing transnational relations below the state level can be read as describing the tension between sovereign territorial rule and the nonspatial character of the global economy. See Keohane, Robert and Nye, Joseph, Power and Interdependence (Boston: Little Brown and Company, 1977)Google Scholar. See also Reich, Robert, The Work of Nations (New York: Alfred Knopf, 1991)Google Scholar. Porter argues that the state is still relevant, but only in terms of an aggregation of sectors. See Porter, Michael, The Competitive Advantage of Nations (New York: Free Press, 1990)CrossRefGoogle Scholar. For the development toward truly transnational organization, see Bartlett, Christopher and Ghoshal, Sumantra, Managing Across Borders (Boston: Harvard University Press, 1989)Google Scholar.

120. This issue is raised explicitly in Ruggie, John, “Territoriality and Beyond: Problematizing Modernity in International Relations,” International Organization 47 (Winter 1993), pp. 139–74CrossRefGoogle Scholar.

121. This issue has been well-described by Kratochwil, “Of Systems, Boundaries, and Territoriality”; Holzgrefe, J. L., “The Origins of Modern International Relations Theory,” Review of International Studies 15 (01 1989), pp. 11–26CrossRefGoogle Scholar; and Ruggie, John, “Continuity and Transformation in the World Polity,” in Keohane, Robert, ed., Neorealism and Its Critics (New York: Columbia University Press, 1986), pp. 131–157Google Scholar.

122. For example, Wright cites Arnold Brecht's view that the anarchy of the state system is the primary cause of armed conflict: “There is a cause of wars between sovereign states that stands above all others—the fact that there are sovereign states, and a very great many of them.” See Wright, Quincy, A Study of War, vol. 2 (Chicago: University of Chicago Press, 1942), p. 896Google Scholar.

123. Bull, Hedley, The Anarchical Society (New York: Columbia University Press, 1977)CrossRefGoogle Scholar.

124. Realists such as Robert Gilpin have suggested that the most fundamental type of system change is change in the type of units, but there has been little research on what the effects of such change are. See Gilpin, , War and Change in World Politics, pp. 41–42Google Scholar; and Katzenstein, Peter, “International Relations Theory and the Analysis of Change,” in Czempiel, and Rosenau, , Global Changes and Theoretical Challenges, pp. 291–304Google Scholar.

125. This corresponds with what Ruggie describes as the mode of individuation between units. See Ruggie, “Territoriality and Beyond.”

126. Wendt, Alexander E., “The Agent-Structure Problem in International Relations Theory,” International Organization 41 (Summer 1987), pp. 335–70 and p. 342 in particularCrossRefGoogle Scholar. Ashley makes a similar point from a poststructural perspective. See Ashley, Richard, “The Poverty of Neorealism,” in Keohane, , Neorealism and Its Critics, pp. 255–300Google Scholar.

127. See Thomson, Janice, “Sovereignty in Historical Perspective: The Evolution of State Control over Extraterritorial Violence,” in Caporaso, James, ed., The Elusive State (Newbury Park, Calif.: Sage, 1989), pp. 227–54Google Scholar. See also Ritchie's account of Kidd, Captain in Ritchie, Robert, Captain Kidd and the War Against the Pirates (Cambridge, Mass.: Harvard University Press, 1986)Google Scholar.

128. Thomson, Janice, “State Practices, International Norms, and the Decline of Mercenarism,” International Studies Quarterly 34 (03 1990), pp. 23–48CrossRefGoogle Scholar.