4.5 Control of Violence in Open Access Orders

national political ones as citizens increasingly sought national action. The national government responded by producing the first two major national regulatory laws, the Interstate Commerce Act of 1887 regulating railroads and the Sherman Antitrust Act of 1890 providing for a national antitrust law.

4.5 Control of Violence in Open Access Orders

The logic of controlling violence in open access orders runs counter to the logic of the natural state. In a natural state, dispersed control over violence leads to the formation of a dominant coalition that manipulates access in the economy and society to sustain political arrangements within the coalition. Access to violence is open to anyone strong enough and well organized enough to use it. The natural state coordinates these individuals and groups through an interlocking set of rent-creating arrangements that limit access throughout the rest of society.

Open access societies strictly limit access to violence while ensuring open access to political and economic activities. Because the political system in an open access order does not limit economic access, it appears that the economy exists independent of the political system. As the neoclassical economic fiction holds, markets exist and then politics intervenes. This seeming independence of politics and economics in an open access society overlays a much deeper and fundamental connection. It is here that impersonality occupies center stage. Political control of a specialized military and police force involves formal institutions and agreements about how and when violence can legitimately be used. The resulting rules governing the use of violence in open access orders must be impersonal; that is, the agreements must be independent of the identity of the individual member of the military or police force and, equally important, independent of the identity of the political officials.6 If the rules do not apply impersonally, the society is a natural state.7 Citizens defend these rules by withdrawing support from

6The case of the American commander during the Korean War, General Douglas MacArthur, illustrates the role of impersonality and political control of the military. MacArthur sought greater autonomy and authority during the Korean War, forcing a confrontation with President Harry Truman. The confrontation ended when Truman removed him.

7Consolidated political control of the military in a mature natural state also involves formal agreements, but the agreements are not sustained by open access. Nonetheless, a mature natural state with consolidated control of the military often meets at least one of the doorstep conditions and is potentially in a position to make a transition to open access, as we discuss in the following chapters.

bad times. All these programs require substantial budgetary outlays and expansion of government.

Impersonality is a second factor underpinning the growth of government in open access orders. People in all states desire a range of public goods and services. Yet in most natural states, the political system is both less responsive and less capable of meeting these demands. The biggest difference, however, is a supply-side effect. Because open access orders can deliver policy benefits on an impersonal basis, they can provide a far wider range of public goods and services than natural states. The result is big government in the sense of a wide range of policies and in government spending as a portion of GDP.

Another feature of the growth of government is more subtle and involves what is sometimes called state-building. These states require a series of public goods and services that the government must provide to sustain open access, including the five characteristics listed in Section 4.2. All of these elements require an institutionally complex government capable of delivering policies in particular ways without deteriorating into corruption or the personalized natural state politics. They also imply the strong limits on government – the limit condition (Weingast, 2006a). Each of the conditions listed in Section 4.2 requires limits on the government that lower the stakes of power and that help make the society more stable and less subject to coups by incumbents who cannot stay in power by the ballot box and so set aside democracy. Institutions that limit the stakes of power also lower support for coups: they make democracy – especially the costs of losing elections – less costly.

Open access orders must therefore have a far more articulated institutional structure and process than natural states. The explicit process of governing is both more transparent and more elaborate; and open access orders are able to sustain greater numbers of veto players, including a separation of executive, legislative, and judicial functions. The process of creating sovereign commands is unambiguous and common knowledge: everyone knows how laws and regulations are produced, and these laws are impersonal rules that apply to everyone. All these institutions are protected by credible commitments, including the consensus condition protecting the basic rules of the political and economic systems.

The growth of government in all open access orders reflects the policies necessary to maintain the social order through sharing the gains of longterm economic growth. Creating and maintaining an open access order require that the society incorporate the mass of citizens and elections without so much redistribution that it cripples the economy. Because the masses

participate, some form of redistribution is inevitable, and an important aspect of an open access order is incorporating the mass of citizens with low dead-weight cost. The set of programs listed earlier – public goods and social insurance programs – all share the gains of the market and help to prevent more massive redistribution. Many of these programs complement the market rather than interfere with it, notably, education, infrastructure provision, and social insurance that increases labor’s investment in human capital. Both Iversen (2005) and Mares (2003) suggest another feature of this complementarity. Because social insurance programs reduce labor’s risk from market vicissitudes, they induce labor to make industryand firm-specific investments that improve productivity in these industries.

To illustrate this view, consider the small trading states among the open access orders of Europe, including Austria, Belgium, Ireland, Italy, the Netherlands, the Nordic countries, and Switzerland (Katzenstein, 1985; Rogowski, 1989). Each of these countries has a relatively small trading sector compared to its economy, which generates economic returns on the international market through specialization and comparative advantage. Domestic political arrangements in these states embody an exchange: political stability, moderation of labor’s wage demands, and rules favorable to the international sector in combination with significant taxes that share the benefits of economic success, not through cash payments but through high levels of social insurance programs. The exchange is made credible by various political institutions – such as proportional representation and coalition governments – that protect the status quo bargain and hence the relevant investments from expropriation (Rogowski, 1987). Consistent with our argument in Section 4.3, the economy also constrains politics: because the trading sector must compete on international markets, expropriation or draconian taxes risk the international sector’s competitiveness and have immediate feedback effects.

Another advantage of open access orders over natural states is that they can endow bargains and compromises that solve major problems with credibility. In corporatist countries of Europe, national wage bargaining allows compromises to solve budget problems: for example, labor defers wage demands in exchange for higher taxes on firms (Garrett 1998). In the antebellum United States, several compromises between the non-slaveholding or free North and the slaveholding South helped keep the country together. The balance rule afforded each region a veto over national policy through equal representation in the Senate. The veto allowed slaveholders to prevent antislavery policies. This veto gave Northerners incentives to cooperate in other areas of mutual gain, notably the economy (Weingast, 1998).