Lex mercatoria, or the “Law Merchant,” refers to the privately produced, privately adjudicated, and privately enforced body of customary law that governed virtually every aspect of commercial transactions by the end of the 11th century. Thus, the Law Merchant provides libertarians with an important example of effective law without coercive state authority.

Rapid expansion in agricultural productivity during the 11th and 12th centuries meant that less labor was needed to produce sufficient food and clothing for Europe's population. The effect of this increase in production was that individuals were able to specialize in particular crafts and population began to move into towns, many of which rapidly became cities. Specialization effectively functions only with trade and the class of professional merchants expanded to facilitate such trade. These ...