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violence, growth and liberalism

Paul Collier argues in War, Guns and Votes that when a country has a per capita income per year of $2,700 or less ($7 per person per day), democracy actually increases the odds of internal violence compared to autocracy. Once above that threshold, democracy stabilizes a society as you’d expect.

While compelling in its own right, I am interested in how this finding may further our historical understanding of societies.  For instance, since virtually all societies before the 1600-1800s (pick a date) were beneath this threshold, would this imply that democracy was the wrong answer at the time? The fact that there were only a few fleeting instances of democracy – marked by internal violence and instability – appears to support this admittedly speculative hypothesis. (Rome is the exception, though not a clear-cut counter-example.)

So what allowed human society to move past this autocratic condition?

It is [economy of scale] that makes violence distinctive. Other economic activities had to wait until the industrial revolution before scale became important. A thousand-person farm was no more productive per person than a one-person farm; a thousand-person firm of cobblers was no more productive per person than a solo cobbler. But a thousand-person army could kill, one by one, a thousand solo fighters: large groups of professionals tend to defeat small groups of professionals.

This rings true to me initially, though I’m still not entirely comfortable with it. Staying with it for now, it was industrialization and the ensuing wealth creation that allowed for the shift to democratic pluralism. This narrative would align well with Arnold Kling’s belief that pre-industrial societies were plunder-based economies. I still think Kling’s theory creates an unnecessarily binary distinction between plunder-based and modern-trade economies (which existed to some extent for thousands of years), but there’s something useful there.

From my understanding, plundering and rents extracted from the conquered made Rome a great city and fed Romans. On the other hand, finance and trade made the Dutch Republic great, and proceeded to infect the UK and most of the western world. Rome had trade and the DR had a navy, but I’m focusing on the primary driver of growth.

Was it olive oil and and pottery that built the Parthenon and made Athens the class of Greece? Or was it the rents they extracted from Greek states in “offering” their protection against Persia? (This is an open question that might be up for empirical analysis – I simply have not seen it.)

Along with Kling’s comments, I’ll add a snippet from Douglas North himself:

Limited access orders provide order by using the political system to limit economic entry to create rents, and then using the rents to stabilize the political system and limit violence. We call this type of political economy arrangement a natural state. It appears to be the natural way that human societies are organized, even in most of the contemporary world.

In contrast, a handful of developed societies have developed open access social orders. In these societies, open access and entry into economic and political organizations sustains economic and political competition. Social order is sustained by competition rather than rent-creation. The key to understanding modern social development is understanding the transition from limited to open access social orders, which only a handful of countries have managed since WWII.

Piecing it all together, up until the past 100-400 years – I’d argue it was a transition that may have its roots with the Medici’s in 14th century Florence – human societies were confined to an economically-stunted, volatile existence that was too poor to support stabile democracy, and could only advance beyond a relatively low income through extracting rents. Thankfully, financial and technological innovations arrived to generate a greater abundance of goods and trade allowed for the new goods to find demand outside the immediate community. While this was in the interest of the competitive strength of the closed-order societies, it diffused sufficient wealth to those outside-the-order to provide for stabile democracy.

This perspective on historical development shines some light on how to view the poorest societies of today. While the end goal might be a democratic, liberal, open-order society, that might not be a wise next step.

As Kling states:

In the absence of all of the conditions for an open-access order, peace is achieved through a limited-access order, or a natural state. Groups with the potential for violence form a stable coalition based on limiting the access to economic and political power. Political and economic power are combined, which we call corruption. However, if you were to impose a separation of political and economic power, you would undermine the value of staying in the coalition, leading to instability and violence.

This needs to be evaluated in light of Violence and Social Orders by North, Wallis, and Weingast. A society with relatively little corruption is what NWW call an open-access order, which is a highly advanced state that only emerges under the right conditions. In an open-access order, competition is very free and open to all in both the economic and political spheres. Moreover, there is a great deal of separation between economics and politics, which is what we mean by low corruption.

So what implications does this have for our foreign policy?


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One Response

  1. […] option value of peace Post-conflict situations are fragile; in the past around 40 percent of them have reverted to violence within a decade, accounting for around half of all the world’s civil wars. (See earlier Collier book byte: Violence, Growth and Liberalism.) […]

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