This chapter analyses the community responsibility system the prevailed in Europe before the rise of contract enforcement by the state. It discusses the reasons for the system’s decline and how the nature of the distinct political systems in England and Italy directed the details of the system that replaced the community responsibility system. It argues that although social structures can be used to foster contract enforcement required for promoting development, these can be taken as exogenous to economic processes only in the short- or medium-term. The economic processes brought about by economic development can erode underlying social structures. The economy may be stifled unless it develops contract enforcement institutions that can replace those based on social structure.
Keywords: community responsibility system, Europe, England, Italy, social structure, economic development contract enforcement