Inheritance Rights in the Formation and Evolution of Institutional Matrices

Abstract

This study assesses the impact of inheritance rights on the formation and transformation of institutional matrices with dominant market (Y type) or redistributive (Х type) institutions. It shows that the implementation of primogeniture in Western Europe strengthened market institutions, namely, fostered the establishment of private property rights and the accumulation of capital, stimulated the growth of cities as centers of capitalist development, and led to the establishment of a new middle class which became involved in local self-administration. Among the main implications of primogeniture is the emergence of a subsidiary mindset—a basic sociocultural market institution. The evolution of inheritance rights in societies with a Y type institutional matrix is due to capital substituting land as the primary income source over the course of time. The study reveals that the presence of a mobilizing communal natural environment and a frontier location conditioned the formation of social systems with an X type institutional matrix, characterized by a highly centralized state regulating all social relations, including those of property. The fundamental legal principle of inheritance limited inheritance rights to the mere transfer of the title and privileges to heirs. In such societies, the fragmentation of inheritance recurs in each generation, which atomizes property and diminishes the economic (and thereby, political) power of its holders. This reinforces redistributive institutions, for instance, centralized governance and an egalitarian outlook. We find that the evolution of inheritance rights in societies with an X type institutional matrix is due to either institutional diffusion or political attempts at economic regulation. Yet, in the former case, the inheritance law implemented from the alternative institutional matrix is modified by the state so as to balance the dominant redistributive and the compensatory market institutions.