[T[oday the most important source of legitimacy is the people. For much of history, however, the most important sources of legitimacy were religious.

Religious authorities such as the Pope provided rulers with legitimacy. In return, rulers enforced religious conformity. It was a quid pro quo. 

A second plank in the political order were identity rules. These are rules that target the social identity of the parties involved i.e. their religion, race, or language.

For example, criminal procedures varied according to social status. In ancient Rome, the testimony of slaves was extracted under torture. In medieval England, commoners guilty of treason were hung, drawn, and quartered, but the nobility were spared such a degrading punishment and simply beheaded. Churchmen enjoyed the benefit of clergy, exempting them from secular punishments for many crimes. Sumptuary laws proscribed dress codes. In Europe, Jews were restricted from particular occupations, prohibited from hiring Christian servants, and sometimes forced to wear badges or hats to distinguish themselves. In the Middle East, both Christians and Jews paid special taxes and proselytizing to Muslims was punished by death.

Why were identity rules so ubiquitous? One reason is that they were a cheap solution to the problem of political disorder. They are cheap to enforce because they leverage preexisting social identities. They do not require a sophisticated bureaucracy to enforce.

An important example were guilds. Guilds regulated economic activity in medieval Europe. As economic historian, Gary Richardson documents, guild membership was closely tied to religious identity. In 14th century Norwich, England, members of the Barbers Guild were devoted to St. John the Baptist, while members of the Artificers Guild prayed to St. Michael.  Individuals who failed to attend church or participate in festivals were fined by their guild. Shared religious identity enforced guild membership.

This had costs and benefits. Reliance on identity rules is a convenient and low cost way of governing. In this case, rather than directly regulating product markets, medieval rulers outsourced regulation to local guilds. Guilds provided assurances of quality and provided training and apprenticeships.

But this also was a source of economic inefficiency. Guilds were local monopolist who restricted entry, raised prices, and discriminated against outsiders. Rules that restricted noblemen from engaging in commerce or prohibited Jews from hiring Christians restricted the division of labor and impeded trade.

Above and beyond these direct economic costs, widespread reliance on identity rules meant treating different individuals differently. Identity rules are at odds with general rules and the principle of equal treatment, which are critical elements of the rule of law, and indeed necessary conditions for religious freedom.

The third plank was a lack of state capacity. In contrast to modern states that collect between one-third to one-half of GDP from citizens in the form of taxes, premodern states were small.  Before 1700, European states seldom took more than 5-10% of GDP as tax revenue. What we think of as public goods such as schools were mostly privately provided. Until the Reformation, welfare provision was the responsibility of the Church.

These planks reinforced one another. The weakness of premodern states encouraged reliance on religion as a source of legitimacy. The states were unable to provide the public goods that would provide an alternative source of legitimacy. Their weakness meant that they lacked the capacity to enforce general rules and hence tended to rely on identity rules to govern. In particular, they lacked the administrative and legal capacity to enforce general rules and legal equality.