Source: Ludwig von Mises Institute
by Vladyslav Manzyuk
“A state works when its formal institutions align with and reinforce the informal order beneath it. It fails when it overrides that order. Yugoslavia assembled populations whose informal institutions — Austro-Hungarian civil law in Slovenia and Croatia, historically distinct legal traditions further east, shaped by Ottoman frameworks, distinct religious frameworks governing commercial obligation — had long created high transaction costs across the same lines the state tried to erase. Iraq assembled three distinct Ottoman administrative provinces. Borders do not erase gradients. These are not failures of tolerance or political will — and it is worth noting that no amount of well-intentioned, constitution-drafting has ever repealed an institutional gradient. They are the predictable outcome of a constructed order imposed on an incompatible spontaneous one, which pushes back through informal markets, parallel institutions, and eventually political fragmentation.” (06/06/26)
https://mises.org/mises-wire/civilizations-are-transaction-costs