A Dog that Did Not Bark: Limited Liability and Enterprise Form in Pre-Industrial Tuscany
The NIEH holds that secure property rights are a necessary condition for the rise of impersonal markets. But are they a sufficient condition? Limited partnerships offer an apt test-case. As an enterprise form that curbed investors’ risks and, in theory, helped entrepreneurs raise capital from beyond their kith and kin, they are often described as an essential feature in the development of European business organization. However, to this day, we lack empirical studies of who utilized limited partnerships, when, and for what purposes in pre-industrial Europe. This paper addresses this topic on the basis of what is most likely the largest surviving series of limited partnership contracts from the period. In 1408, the city-state of Florence issued a law recognizing limited partnerships as an enterprise form and ordering the central registration of all such firms (regardless of where they operated) in the city’s merchant court. A systematic study of nearly 5,000 summary contracts dating from 1445 to 1808 reveals that limited partnerships were not the preferred way of organizing private business in pre-industrial Tuscany and that these firms’ characteristics (e.g. duration and number of partners) did not differ significantly from those of general partnerships. These preliminary results demonstrate that property rights were well protected in Southern Europe but cannot be studied in isolation from the many other elements that affected credit markets in order to understand both entrepreneurs’ and investors’ choices.
Date: 13 October 2020, 17:00 (Tuesday, 1st week, Michaelmas 2020)
Venue: Held on Zoom
Speaker: Francesca Trivellato (Institute for Advanced Study, Princeton)
Organising department: Department of Economics
Part of: Economic and Social History Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Clark