|Economic exchange can only prosper when it is protected against opportunistic behavior. In the globalized economy of the 21st century, cross-border transactions are usually not protected by national courts but rather by “private ordering” and intrafirm hierarchies – i.e. by personal dependencies. Thus, global markets show a strong parallel to pre-industrial markets which were stabilized by personal dependencies within the feudal society. This working paper scrutinizes how the codification and nationalization of private law was a necessary condition for the development of modern competitive market structures on a national level by enabling individuals to organize transactions with anonymous transaction partners. Supported by historic contributions to the codification discourse, this paper shows how the constitutive function of a state-based private law system was already articulated in the 19th century – although in a rudimentary sense only. This way the paper lays a foundation for the recent question if power imbalances and concentrated market structures in the globalized economy of the 21st century are – at least to a limited extent – a consequence of deficient state-based private law systems.
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