The Administrative Foundations of Constitutionalism: litigation, regulation, and limited government in Venice, 1050-1350

This paper explores the interactions between the Venetian legal and regulatory system for contract enforcement and the emergence of a limited government, a coercion-constraining institution that motivated judges and regulators to use their coercive power for protecting rather than abusing contract and property rights. Venice’s administrative structures reduced each office holder’s space of strategies in a way that curbed his ability to use the state power in his own interest at the expense of the rest of the society, while a vigilant oversight supported a system of punishments and rewards that made each office holder’s best strategy not to abuse his (limited) power or shirk from his duty. Litigation and regulation thus conjointly supported impersonal markets for overseas trade and ensured a wide distribution of trading profits among the Venetians. This motivated them to cooperate in rendering the polity of Venice supportive to trade and to resist anyone’s attempt to gain political control over the City and its economic resources, which in turn reduced anyone’s incentives to challenge the prevailing institutional system. Venice’s institutions for contract enforcement thus generated the political support they needed to perpetuate.