concepts are at the heart of the rule of law. Institutions supporting impersonality allow open access orders to sustain rights for all citizens rather than just privileges for elites. Without perpetually lived public organizations, new coalitions and governments are able to alter institutions and rights, including dismantling those that support impersonality. The inability of natural state governments to provide benefits on an impersonal basis fundamentally hinders their ability to provide both the rule of law and basic public goods, including the social insurance programs so essential to modern open access orders.

7.4 A New Approach to the Social Sciences: Development and Democracy

We have used historical examples to illustrate the conceptual framework rather than testing detailed hypotheses. More systematic evidence awaits future studies. We have not attempted statistical analyses because no straightforward measures of our concepts exist. We believe that our concepts can be operationalized, but the concepts of limited and open access in both economics and politics are subtle and multidimensional.1 Putting them into practice will require serious effort that is beyond the scope of this study. We value and encourage this effort.2

The current state of empirical investigation into the determinants of development illustrates the difficulty of explaining complex social phenomena with a few unidimensional variables. It is nothing new to say that development is a complex problem. Recent experience has shown that development is not simply a matter of adding more capital or grafting onto a society the right institutions, such as democracy, property rights, markets, or the rule of law. Nor does it simply involve providing the right mix of public goods, such as social insurance or education. Proponents of a traditional economic approach to development advice face a paradox: Why do so many developing countries fail to choose policies that economists argue

1In his comments about this project, James Robinson has suggested an intriguing possibility of distinguishing between natural states and open access orders using event studies to investigate the effect of leadership turnover. Because individuals matter far less in the impersonal and perpetual open access orders, surprise changes in the prospects of leaders should have a much smaller impact in open access orders than in natural states. Consistent with this idea, Fisman’s (2001) study of Suharto’s health shows a dramatic effect on assets.

2Meisel and Ould Aoudia (2008) did a quantitative study that explores cross-country economic performance and relates to some of our ideas. Khan (2005, 2006) also examines quantitative evidence that relates to some measures of access and rent-creation across countries.

are Pareto improving, when all members of the society can be better off from the advice? Something must be fundamentally wrong with the advice.

Development policy has been based on the institutions, policies, organizations, and beliefs essential to the open access order’s success. The logic of the natural state enables us to see why open access policies and institutions directly threaten the stability of the natural state. Economists typically conclude that natural states suffer from too much market intervention, laws fostering monopolies and other rent-creating privileges, inadequate property rights, ineffective public goods provision, and incomplete markets. All this is true. The economists’ natural prescription is to suggest that a country introduce reform, that it should systematically adopt policies that mimic those in open access orders: easier entry by firms, less regulatory control, reduction of monopolies, more secure property rights, improved public goods provision such as education, and more complete markets. Until societies are at least on the doorstep of a transition to opening access, however, transplanting these institutions and policies cannot produce economic development in natural states.

The economists’ approach fails because it ignores the logic underlying natural states: natural states implement limited access policies address the problem of violence by giving individuals and groups with access to violence an incentive to cooperate, they are not intended simply to maximize the incomes of the ruling elite. Policies from open access orders – universal, impersonal rights and rule of law; open access to markets; and greater political freedoms – reduce the natural state’s ability to control violence. These changes therefore threaten to make people worse off, not better off. Modern economics implicitly adopts the Weberian assumption that the state has a monopoly on violence and will not use it to exploit citizens, and so economics fails to understand the basic problem of development because it assumes the problem of violence away.

The framework suggests that two development problems exist. The first is development within the natural state and the second is the transition from limited to open access social orders. In effect, most development advice attempts to induce a transition. The relevant dynamics of social change for developing countries, however, lie in the logic of the natural state, not in the logic of open access orders. With few exceptions, most developing countries today do not meet the doorstep conditions. They are not in a position where elites can credibly deal with others through impersonal relationships in critical matters of economic and political interactions, so advice that suggests they undertake elements of the transition is misplaced. The establishment of well-defined elite rights is not sustainable under such conditions. The

by impersonal and observable characteristics; education can be delivered to all citizens; drivers’ licenses can be given to everyone who meets an age requirement and passes a competency test; unemployment insurance is available to everyone who has contributed to the system and meets the impersonal requirements for being unemployed.

The ability to provide impersonal public services works to enhance open access. If public goods are provided impersonally, it is much easier for voters to evaluate the provision of the services and discipline governments that do not deliver the goods. If public goods are provided on a personal and discretionary rather than an impersonal basis, governments are able to use the threat of withdrawal of valued public goods and services as a means of forcing citizens to support the incumbents rather than exercise choice. Personal provision of public goods becomes a way for governments to discipline citizens rather than to respond to citizen interests. Elections under these circumstances are a means of manipulating citizens rather than the exercise of citizen choice. Open access orders limit this type of threat by delivering policies impersonally, not subject to manipulation based on political criteria.

Impersonal and credible delivery of public goods has another important implication for democracy. The logic of a median voter model suggests that widening the suffrage in a democracy to include more low-income voters will likely result in populism and other forms of zeroor negative-sum redistributive politics emphasized by Meltzer and Richard (1981). If the median voter makes less than the average income, it is in his or her interest to transfer income from rich to poor people. Such an analysis, however, ignores the incentives for redistribution that exist if the government is able to deliver redistribution impersonally. As Lindert (2004) shows, the social costs of redistribution create incentives for the poor and rich to redistribute in ways that have the least negative effects on society as a whole. They create strong incentives to redistribute opportunity to poor individuals through the provision of education, public health, and public services rather than strictly cash. When public goods enhance human capital, the ability to provide impersonal policies allows open access orders to respond to citizens in ways that complement markets rather than undermine them. In this way, open access orders sustain democracy as a positive-sum game. Of course, if the government cannot credibly deliver impersonal public services, then the poor have every incentive to use their votes to transfer cash now and are susceptible to populist appeals from factional leaders. This is the dark side of democracy, a side often visible in natural states.

Open access supports an effective opposition and competitive electoral process. It supports a rich civil society, fostering a wide range of economic, political, and social groups that can mobilize interests and help constrain democratic policymaking. Schumpeterian competition constantly produces new interests and groups. Widespread access to organizations makes it difficult for public officials to manipulate economic interests in support of the regime. In contrast, most natural states inhibit or compromise electoral competition, including limits on citizen organization, on the opposition’s ability to compete, and on the free press.

Open access orders support the rule of law, including a judicial system relatively free of corruption. An important, if little recognized, consequence is that rule-of-law courts allow the legislative branch to write legislation detailing impersonal rules of policy distribution and to enforce those rules through the courts. In contrast, legislators in natural states with corrupt courts have little ability to implement such constraints because the courts cannot or will not enforce them. The absence of rule-of-law courts limits public good provision and limits the ability of the legislature to serve as a check on the executive. Natural states exhibit far more executive dominance regardless of the nominal constitutional system of checks and balances.

Open access orders limit the stakes of politics through perpetually lived institutions and credible commitments that place checks and balances on political officials. These limits lower the incidence of coups and violence. Elections in open access orders are therefore more stable, and these societies are less subject to dramatic changes in policy. In natural states, coups and other forms of instability alter the competitive process. They prevent parties from becoming perpetually lived organizations, and the threat of regime change means that, even if it is legal to compete today, a party official may be thrown in jail tomorrow.

Taken together, these differences show that elections differ under limited as against open access. Elections in open access orders implement the democratic ideals of citizen expression and control over political officials in ways that elections simply cannot in natural states. Elections alone are insufficient to effectively constrain political officials, especially the executive. Open access limits the stakes of power, creates perpetual institutions that survive crises and partisan turnover, allows a wider range of groups to form and mobilize, allows more effective competition for office, and allows the provision of public goods and services. In sum, many mature natural states sustain elections, but they are not the same as elections in open access orders and they do not come close to meeting the ideals of democracy.