New Institutional Economics (NIE) has become one of the major theoretical approaches in the field of economic history. While fully subscribing to the NIE approach, Trade in the Ancient Mediterranean attempts to think critically about some of the major concepts of the approach and the extent of their applicability to the historical record. It focuses on the link between the enormous expansion of trade activity and the emergence and consolidation of powerful state structures in the course of antiquity. In fact, the peak of trade activity corresponds with the peak of state power under the Roman Empire in the first three centuries CE. As author Taco Terpstra argues in the introductory chapter, the distinction proposed by Douglass North, John Wallis, and Barry Weingast (Violence and Social Orders [2009]) between open-access states, which guarantee the property rights of all citizens, and natural states with special privileges for the members of the dominant coalition, is far too simplistic to account for the complex historical record. Terpstra suggests that we reconceptualize the role of the state in economic activity by making a distinction between adjudication and enforcement. Ancient states had the ability to adjudicate disputes submitted to them, but they hardly ever attempted to enforce those decisions. Since states and their bureaucracies and judicial systems coexisted with private enforcement, we need to understand the mechanisms through which they were intertwined.

The book explores a repertory of institutions that intertwined states and private actors and facilitated adjudication, enforcement, and trade expansion. Chapter 2 explores the institution of the trade diaspora, focusing on the particular example of the Phoenicians. Phoenician trade diasporas are attested from the early first millennium BCE to the first centuries CE, expanding from their homeland in modern Lebanon through the Aegean to Italy and the western Mediterranean. The limits of travel and communication technology made trade diasporas essential for large-scale cross-cultural trade in premodern societies, as their mingling of ethnicity, kinship, religion, and sociality maintained trust and networking. Diasporas had to create a modus vivendi both with state authorities at home and with the states in whose territories they operated. Terpstra shows how Phoenician trade diasporas interacted with Greco-Roman public institutions and ideologies, like the institution of public friendship of Greek cities and the Roman imperial ideology and order, to enforce decisions among their members and facilitate their ability to conduct business.

The third chapter explores the interlinking between state operators, their public duties and private economic activities, and the activities and welfare of state subjects. This is explored through the case study of Apollonius, chief financial administrator of the Ptolemaic monarchy in Egypt in the first half of the third century BCE, who combined his state duties with an extensive business portfolio both in Egypt and in the Ptolemaic empire in Syria. The author uses the concept of the “stationary bandit” to explore how state operators could protect subjects and their activities from overexploitation if they had a long-term stake in the successful economic performance of the areas and activities they supervised.

Chapter 4 is probably the most stimulating contribution of the book. Given that ancient contracts could only be enforced privately, why did ancient actors bother to engage with the legal system and state adjudication? Given that only Roman citizens had the right to use Roman law, and Roman subjects could use their local laws, why did so many Roman subjects employ Roman law for their contracts, which were legally unenforceable? Terpstra argues persuasively that Roman law and the use of socially important witnesses were crucial means for the “public embedding” of contracts, increasing their enforceability and reducing the likelihood of conflict.

Chapter 5 returns to an important aspect of ancient trade diasporas: participation in the particular cults of the homeland was an important means of honest signaling, keeping the community together and maintaining its distinctiveness from the host society. But once the Roman imperial state adopted Christianity and enforced the abolition of pagan cults, trade diasporas lost one of the major features that had maintained their distinctiveness and effectiveness. Terpstra explores a number of episodes involving the destruction of pagan cults in important trade centers such as Gaza, Alexandria, and the temple of the Syrian deities in Rome. He argues that this phenomenon was one of the contributing factors in the decline of trade during late antiquity, but he does not provide any specific evidence that substantiates this claim and assumes wrongly that trade diasporas could not be maintained on the basis of adherence to the local cults and saints of the Christianized homeland. The book's epilogue, which offers a brief and rather scattered overview of various factors that might account for the economic decline of late antiquity, is not focused on trade and does not engage with the themes explored in the rest of the chapters. The author's concluding remarks argue that the Roman imperial order stifled innovation, but the discussion of this new theme is far too brief to be useful.

It is, I think, telling that while the author finds it necessary to discuss, even briefly, the reasons behind the contraction of trade in late antiquity, he does not consider it equally essential to account for the significant increase of trade in the course of antiquity. The general idea that it is connected to state growth is too abstract and not sufficiently explored; furthermore, the book suffers from a lack of explicit attention to the various roles of trade in ancient economic life and from a tendency to assimilate trade and contracts. Even if Terpstra's NIE framework cannot account for the overall history of ancient trade, it offers a stimulating exploration of some major aspects through an excellent and informative use of important case studies; the combination will make this book appealing not only to ancient historians but also to everyone interested in economics and economic history.