in 1310, and there was a steady growth in domestic
coercion, undoubtedly as a way of solidifying the new
political order.
Having implemented a political Serrata , the Great
Council then moved to adopt an economic Serrata . The
switch toward extractive political institutions was now being
followed by a move toward extractive economic institutions.
Most important, they banned the use of commenda
contracts, one of the great institutional innovations that had
made Venice rich. This shouldn’t be a surprise: the
commenda benefited new merchants, and now the
established elite was trying to exclude them. This was just
one step toward more extractive economic institutions.
Another step came when, starting in 1314, the Venetian
state began to take over and nationalize trade. It organized
state galleys to engage in trade and, from 1324 on, began
to charge individuals high levels of taxes if they wanted to
engage in trade. Long-distance trade became the preserve
of the nobility. This was the beginning of the end of
Venetian prosperity. With the main lines of business
monopolized by the increasingly narrow elite, the decline
was under way. Venice appeared to have been on the brink
of becoming the world’s first inclusive society, but it fell to a
coup. Political and economic institutions became more
extractive, and Venice began to experience economic
decline. By 1500 the population had shrunk to one hundred
thousand. Between 1650 and 1800, when the population of
Europe rapidly expanded, that of Venice contracted.
Today the only economy Venice has, apart from a bit of
fishing, is tourism. Instead of pioneering trade routes and
economic institutions, Venetians make pizza and ice
cream and blow colored glass for hordes of foreigners. The
tourists come to see the pre -Serrata wonders of Venice,
such as the Doge’s Palace and the lions of St. Mark’s
Cathedral, which were looted from Byzantium when Venice
ruled the Mediterranean. Venice went from economic
powerhouse to museum.
I N THIS CHAPTER we focus on the historical development of
institutions in different parts of the world and explain why
they evolved in different ways. We saw in chapter 4 how the