7.5 Toward a Theory of the State

We have ducked the problem of defining the state in part because it is a difficult problem, but also because it did not make sense to grapple with the definition of the state until the framework was fully described. We begin with two requirements: a theory of politics should explain the distribution and use of power, violence, and coercion within a society, and a theory of government should explain both the structure of governments and the behavior of political officials and employees of the government. A theory of the state should encompass a theory of politics and a theory of government.

In natural states, power, violence, and coercion reside in the dominant coalition. The dominant coalition depends on the threat of violence to maintain balance among elites, and thus dispersed control of violence is a general characteristic of the coalition structure. Therefore, the formal structure of the government rarely contains consolidated control of the military. As a result, the state contains much more than the formal structure of government in limited access orders. Powerful actors with power over violence and coercion are not identified with the formal government.

An immediate implication of acknowledging the difference between the state and the government concerns efforts to promote good governance. In many natural states where power, violence, and coercion lay outside the control of government, attempts to affect the incentives of government actors are likely to result in a lack of political will to implement the goals the incentives were designed to further. The levers that move powerful individuals are not all in the hands of the government. In situations like this, it is not surprising that external actors who come into a natural state, like foreign governments, international donors, and nongovernmental organizations, may find it in their interest to strengthen one faction within the dominant coalition in order to create a partner to deal with. These interventions reconfigure relationships within the dominant coalition and may destabilize long-term relationships within the coalition. When the external actor withdraws, the configuration of the state will change again, perhaps returning to its former configuration. In few cases will foreign manipulation of incentives within a natural state permanently alter the structure of the state unless the foreign intervention continues indefinitely.

Accepting that the state, however defined, differs from the formal government does not produce an adequate theory of the state, but it does indicate that such a theory must come to grips with the close interrelationship between economics and politics in limited access orders. This invalidates a basic assumption of modern social science, whose dominant paradigm

separates political and economic actors into distinct, well-defined spheres. The most advanced economics and political science scholarship studies the developed world: where the operation of markets and the operation of democratic institutions are seemingly independent. Both disciplines have produced sophisticated theories that generate a wide range of insights into the operation of markets and democratic institutions in open access orders. Yet both disciplines have failed to produce a theory explaining why markets and democratic institutions can be sustained only under some circumstances and have failed to explain or disentangle the intimate connection between the historic development of markets and democracy.

The seeming independence of economic and political systems in open access societies has deceived modern social science. In natural states, all big economic organizations are necessarily also political ones. In open access orders, big economic organizations typically concentrate far more on markets and are only tangentially involved in politics. The ability of firms in open access orders to concentrate on economics produces the seeming independence of markets and democracy. This seeming independence has allowed both economists and political scientists to study their respective domains while holding the other constant. The seeming independence of the economic and political systems on the surface is apparent, not real. In fact, these systems are deeply intertwined.

We emphasize the importance of a much more closely integrated political economy. We are not the first to argue for this integration, and the recent literature on political economy is exploding with new and exciting work on this important frontier.4 However, our approach does provide new insights, the most important of which can be summed up in the phrase, “Natural states are not sick.” Natural states have their own logic; they are not dysfunctional. Although they are less robust to shocks than open access orders, they generate internal forces that provide for two of the basic tasks of all societies: stability and order. Natural states may appear to be corrupt according to the norms and values of open access orders, but that corruption is an inherent part of the operation of the social order. Failure to understand how the much more visible and direct connections among political, economic, religious, and military privileges are integral to the social order is a major impediment to a better development policy and better social science history. This also suggests that an adequate theory of the state applied to limited

4To name just a few: Acemoglu and Robinson (2006), Bates (2001), Greif (2006), Haber et al. (2003), North (1981, 1990), Persson and Tabellini (2000). Roland (2000), Spiller and Tommasi (2007), and Stein and Tommasi (2006).

access orders must acknowledge and explain the close interaction of politics and economics; it cannot be just a theory of government.

Most theories of the state take the existence of a formally identified leader or ruler as a given. Barzel (2001, Bueno de Mesquita et al. (2003), Levi (1988), Myerson (2006), North (1981, Ch. 3), and Olson (1993) all assume the state is a single actor with a monopoly on violence and study its behavior.5 This approach is fundamentally flawed. It assumes the separation and specialization of politics and economics that are so crucial to the transition process. The monopoly of violence possessed by all open access governments is a modern phenomenon and reflects the logic of the doorstep conditions and of open access orders, which does create consolidated – and, yes, monopoly – control over violence. Viewing the natural state as a solution to the problem of violence causes us to think differently about these states.

We do not provide a coherent and well-integrated theory of the state. Instead of a monopoly on violence, we suggest that the governance structures of societies can be described in terms of organizational sophistication. The progression from less to more complex exhibits no teleology, and nothing compels societies to more complex organizations; many societies move forward and backward. Organizational complexity occurs over multiple dimensions. We add violence to these considerations by labeling three types of natural states: fragile, basic, and mature. We adopted these terms for convenience; we do not propose a stage theory of development within the limited access orders.

Nonetheless, the range of internal structures does differ across societies in predictable ways. The key feature of development within the natural states is the coevolution of institutional supports for organizations inside and outside the formal structure of the government. Fragile societies are able to secure more order through the proliferation of public organizations. These organizations need institutions to support and protect them and their flow of goods and services from opportunism. Similarly, the range of sustainable private organizations is linked to institutions that provide services to these organizations – such as contract enforcement – but also that provide credible commitments by the state not to expropriate the value created by the organizations. Public and private organizations develop in parallel and connected ways.

Political scientists have never had an adequate definition of political development, let alone one that mirrors the consensus surrounding the economists’ notions of economic development. We suggest a new way of

5Haber’s (2006) study of the launching organizations that support different types of authoritarian regimes is an exception.

thinking about political development that involves increasing state capacity to support complex and specialized organizations, create impersonality, sustain a perpetually lived state, and control the dispersion and use of violence in society. Each of these elements of state capacity is necessary for the transition from a natural state to an open access order.

7.6 Violence and Social Orders: The Way Ahead

If the foregoing analysis has merit, it suggests a new approach to social science research. The existing body of knowledge in social science can be transformed by a new conceptual framework that changes the way we think about traditional problems in economics, political science, sociology, anthropology, and history that result from an explicit consideration of the role violence plays in shaping social orders, institutions, and organizations and their development over time. Our recommendations for new research entail an in-depth understanding of violence, institutions, organizations, and beliefs in the natural state that we do not currently possess.

We have come some distance in our understanding of institutions and organizations but we have a way to go in understanding the polity in natural states and the interconnections of institutions and organizations in both the natural state and open access societies that undergird each social order. In addition, we still are some distance from a deeper comprehension of the interaction of formal rules, informal norms, and enforcement characteristics that together determine the performance of the overall institutional framework.

Every society evolves in unique ways, so that a deep understanding of change must go beyond broad generalizations to a specific understanding of the cultural heritage of that particular society. The paths and policies that created open access in the Western world cannot be indiscriminately applied to foster the transition among today’s limited access orders.6 The world constantly changes, and our ideas about how societies function are constantly being made obsolete by new developments and changes. The world we are creating today is like no other that has ever existed. Can we prepare ourselves to comprehend and deal with it? We can do better if we are self-conscious about the limitations of human understanding and stand ready to maintain institutions that will encourage adaptive efficiency.

6The idea that Western institutions cannot simply be transferred to developing countries is hardly a new insight, see Rodrik (2007), but the reason why the dynamics of natural states resist or transform open access institutions is new.

Those limits apply to the conceptual framework we have laid out in this book, already made obsolete by the onward press of events. However, it is time to reevaluate the accumulated experience of the last two hundred years; it is time to acknowledge that open access societies are not just modestly improved versions of the societies that preceded them. Whereas the origins of the transition in the Western world lay in the eighteenth century and earlier, the events that transformed those societies and produced a new social order with a fundamentally different logic occurred in the midnineteenth century. Since then a relatively small number of societies and a small percentage of the world’s population have made the transition to open access. The development of an open access society has not only enabled societies to achieve a world of plenty but has also created efficient institutions and organizations that make violence more efficient. Focusing on the complex interaction of beliefs, institutions, and organizations should open the door to serious research on the underlying sources of violence. A clearer vision of the two social orders, where we have been and where we are now, is a necessary element in understanding where we are headed. That is the challenge of the future.