The Institutions of Impersonal Exchange

People prosper when investors feel secure and are therefore willing to invest in productive activities. But they prosper even more if they can trade beyond their personal circles of known people, as producers invest and specialize more when they can sell their production in a larger market. Good institutions facilitate these two key factors for development, as they not only make investors feel secure in their investments but also enable everybody to trade impersonally, thus creating wealth. The analysis in this article builds a theory of public registries according to which registries make it possible to ground contract enforcement directly on assets, in such a way that transacting parties need no personal information about each other and can therefore trade impersonally.