In "Structure and Change in Economic History", North argues that the state can play a role in minimizing transactions costs by reducing uncertainty and providing enforcement. Looking at medieval Champagne fairs, Milgrom, North, and Weingast (MNW) show that even in the absence of the state, many of the enforcement problems can be overcome by reputation in repeated interaction. Specifically, merchant associations and private judges can promote trade by recording information on past compliance.
A major problem with MNW's model is that it assumes an unlimited game. That is, it assumes that merchants continue to interact over time (albeit not always with the same individuals). When the game is limited, however, we should expect different equilibrium behavior. In a limited game, merchants will have an incentive to defect in the terminal round since there is a greater payoff for defection and because there will be no subsequent round where they will be punished for their defection. In reality, because all merchants are mortal, every game must be assumed to be limited. What's more, the duration of the game will be unknown. Merchants enter and exit the market at different times, and the specific time of exit (i.e. terminal round) will be unknown to other players. This uncertainty could be expected to have a corrosive effect on these markets.
Historically, one could argue that there are two ways that merchants have overcome the terminal round problem in the absence of the state. First, we often find family businesses. Of course, there are numerous reasons for the existence of family business (passing on specialized skills, incentive to work hard to preserve inheritance, etc…), but it could be also argued that family businesses also "lengthen the shadow of the future" for cooperation by creating inter-generational reputation.
A second way to overcome the terminal round problem is to establish ethnic minority merchant classes. In reality many of the ethnic minority merchant classes were not "established" but arose because they were barred from owning property and/or had access to international diaspora networks. Historical examples of such groups include Jews, Phoenicians/Lebanese, Armenians, South Asians in East Africa, and Chinese in Southeast Asia. Ethnic minorities are better able to trade amongst themselves because they tended to comprise smaller tight knit communities where information was easier to access. Moreover, ethnic minorities can mobilize non-market community punishment against defectors, even after the terminal round. Such punishment mechanisms allowed minorities to trade with their minority brethren, even at great distances. The existence of ethnic groups also facilitated trade with non-ethnics. As explained by Fearon and Laitin, the threat of punishing the entire ethnic group for the defection of one ethnic player creates incentives for ethnic groups to conduct in-group policing.
Reference:
James Fearon and David Laitin, "Explaining Inter-Ethnic Cooperation," American Political Science Review 90, no. 4 (December 1996): 715-735.
Krasner (1984) provides an interesting analysis of the different theories of the State and how these have evolved over time. Like North (1981) he addresses the causes of change and stability in economic history. However Krasners’ theory of ‘punctuated equilibrium’ (Krasner 1984, p 234-5) – self-perpetuating institutions that remain stable except in periods of crisis where they undergo rapid change - is somewhat contradictory to North’s explanation who assumes the ‘inherent instability of the state’ and implies a more evolutionary process (North 1981,p29).
Of the two pieces I felt Krasners was the most compelling, and felt his theories fit well with empirical observations. He draws a clear distinction between the different causes of institutional creation and institutional maintenance, rightly recognizing the difficulty of change and the tendency for institutional inertia in the absence of crisis. I was particularly struck however by his observation that “choices made by leading states at a particular point in time influence not only their future range of options, but also the options of later developing states” (Krasner 1984, 241). Whilst Krasner offers an historic example of the application of British social security systems to less developed Sweden to demonstrate his point, this principle has even more resonance in the developing world. Indeed much of the development policy advocated today by the large multi-lateral agencies continues to be largely driven by the experiences and decisions of leading states. Few would argue that in many places this has lead to less than desirable outcomes. Krasners analysis in fact raises interesting questions for future development interventions suggesting that current policies of ‘incremental change’ may not be viable for institutional reform. On the other hand, he offers some hope, suggesting that external pressures – “the threat of invasion, or the desire to act efficaciously in the international system” – (ideally the latter!) have some power to force state action and initiate needed change (Krasner 1984, 239).
North’s theory of states reveals a dilemma: on the one hand, it is the state that specifies the property rights structure and increases the efficiency of the property rights structure by reducing transaction costs, which leads to economic growth; on the other hand, it is the state that causes man-made economic decline by creating and seeking rents in property right structure (North, 1981). According to North, both of the bright and dark sides of states have been woven into the economic history of human society. Thus many problems arise regarding the variance of states’ role in economic development. In what conditions, the state plays the role of a wealth maximizer for the whole society more than a predator for certain social groups? What factors account for the autonomy and capacity of the state to play a developmental role? How can we interpret the variance of states’ performance in economic development? This week’s readings provide us some clues to contemplate these questions such as the power contention between the state and its rivals in society (Ganev, 2001); the inter-state system and geographic environment that states are embedded in (Tilly, 1990; Herbst, 2000). Other readings of this week imply that answers to these questions depend on the approaches we conceive and define the state: is the state considered as an identical ruler/ruling group (Levy, 1998), or an agency of a certain class as in Marxism, an interest coordinator for the whole society as in Pluralism, or a series of rituals and ceremonies (Geertz, 1980). After reading them, it remains unclear to me where the states’ autonomy comes from. This is beyond the explanation power of Marxism and Pluralism because both of them have excluded the possibility that state has autonomy by assuming that the state is only an agent of certain class or many social groups. For rational choice scholars who assume that the state is self-interested and profit-maximizing, they need to rule out first the potential free-riding problem of state rulers/officials before answering why and how states pursue autonomy. I would argue that the state can be autonomous because of its strategic position standing in between the international community and its domestic constituency. On the one hand, the state, as directly exposed to its international rivals, has clearer perception of external threats than society does. The intense and long-lasting threats reduce the state’s opportunism and alleviate its free-riding problem. On the other hand, the state as a coercive and administrative apparatus is independent above the society, which gives rise to its capacity to provide some jointly public goods such as national security and economic development strategy.
One of the most appealing aspects of North’s analysis of the emergence of the modern state is the prominent role for ideology and legitimacy that he creates. For North, ideology is an indespensible source of legitimacy by which free riding is eliminated, defection is reduced, and economic systems become both stable and viable. For North, ideology fundamentally shapes the beliefs of citizens about what is “fair”, moral, and ethical and, in doing so, is both a contested term with real alternatives and a device for simplifying decision making. The deficiency in this view, however, is the narrow view that there must be a normative- moral or ethical- content in legitimacy on the part of the citizens. This is not quite true. The world is replete with autocratic systems that seem “legitimate”, in that naked coercion is not required to get them to adhere to laws on a regular basis, but whose citizens only adhere to the regime’s norms out of fear. Using North’s criteria, it may be difficult to distinguish these from states where the citizens do believe that their system is ”fair” and “just”, which has analytical consequences.
This is a strong claim, so let me take a step back and make a key distinction between two types of legitimacy- positive and negative- to make the deficiency more plain. A positive legitimacy is one in which the populace believes in the ideology and upholds it because it is the “best” possible choice by some subjective philosophical criterion. The legitimacy that democratic government holds in the US is an excellent example of this. Negative legitimacy, on the other hand, is a form of legitimacy that one ascribes to a regime when costs of changing the system are so high (usually due to implicit coercive threats) that the populace simply can not pay it. In such a circumstance, legitimacy is given out of a generalized fear of coercion. Zbigniew Brzezinski articulates this fear nicely in his description of the Stalinist system by noting that most compliance with the system was achieved out of the mentality that anyone could be purged at any time and the fear this generated. The net result was a system where everyone professed the Communist ideology of the system and behaved as if they were true believers- as if the system were legitimate. Lisa Wedeen goes on to show in the context of Syria that the technique can be applied with vastly lower levels of actual force and coercion to achieve much the same ends. In Syria, the regime “looks” legitimate even though deeper analysis reveals that most of the citizenry don’t believe the ideology they espouse.
Returning to the original point, the concept of negative legitimacy is important and requires us to be careful about how we use the term “legitimacy” because the assumption that all regimes achieve legitimacy in the same way leads to shallow analysis and problematic implications. Shallow analysis in that it encourages a teleology whereby lack of mass protests or strong anti-systemic agitation may be taken as a sign of legitimacy, even though general distaste may be boiling under the popular surface (as occurred in much of the former Soviet Bloc). Problematic implications stem from the fact that failing to recognize negative legitimacy causes one to become even more vulnerable to surprise regime collapse such as occurred in much of the Communist Bloc. Where key economic and geostrategic shifts degraded the ability of the state to enforce its negative legitimacy, forms of government with positive legitimacy became possible and allowed the populace to engage in mass mobilization to overthrow the existing state.
Bibliography Brzezinski, Zbigniew (1956). The Permanent Purge. Cambridge, Harvard UP. Wedeen, Lisa (1999) Ambiguities of Domination: Politics, Rhetoric, and Symbols in Contemporary Syria. Chicago, IL: University of Chicago Press.
One of the most interesting things about the Herbst piece was his discussion of the fact that 'statehood', the organisation of economic and political life in Africa, was a conscious choice by the continent's post-colonial leaders. He contrasts this statehood, which these leaders inherited from their colonisers, with the forms of legality that were indigenous to Africa, with 'multiple sovereignties over porous borders'.
Herbst writes that attempts to create pan-African organizations failed almost completely. What seems to me to be an important topic for further research is not just the conditions under which states develop and secure control over territory and establish the tools of governance, but also the conditions under which states (or their leadership) then cede that authority to regional or international organisations.
It seems useful to me to conceive of the development and persistence of the state, as separate processes. The creation of the national state in Europe, as Tilly argues, was the byproduct of a continent-wide conversion on a model that maximized rulers' war-making abilities. This more functionalist historical development, however, seems unique in comparison with the development of the national state in other parts of the world. In sub-Saharan Africa, for example, states were retained post-indepence in part because of their international recognition (Herbst). Many post-communist states also inherited the strong national states of their previously communist regimes.
These examples hint at a feature of institutions, and especially of states: they are quite persistent. North provides an explanation of this stability even in the face of the state's relative inefficiency: stability is a product of a free-rider problem among a state's constituents that effectively discourages opposition. This explanation seems particularly interesting in light of Ganev's account of the "Dorian Gray effect" in Bulgaria, where the free-rider problem is actually overcome by opponents of the state. Key to his story is the Bulgarian state's proclivity for creating rent-seeking opportunities by involving the state in its economy. In a context where the coercive power of the state is drastically reduced after the fall of communism, the economic elite of the country found it easy to organize to undermine the state.
However, having overcome the free-rider problem does not necessarily mean that the state will be completely undone by its opponents. In fact, this is where Krasner's theoretical insights are particularly useful. If the state itself is an actor (rather than a static and hollow framework of laws), it will adapt to its new environment.
In his book “Coercion, Capital and European States,” Charles Tilly offers a thought-provoking account of the influence that war mobilization had in the formation of European states. But how useful is Tilly’s theory to explaining state formation? By placing so much emphasis on the power of war in shaping statehood, Tilly neglects to examine the influence of other important factors. For instance, what is the role of ideology in state formation? Much if not most of the populace of Europe at the time of state formation were farmers or peasants who had little connection with the capital-rich cities; how then do they play in Tilly’s story and what influence did their activities have in state formaton? Further, what impacts the society’s willingness to pay taxes and to otherwise be bound by the state’s rules; indeed what gave the state legitimacy? In addition to ignoring important variables that may contribute to state formation, Tilly also underspecifies his theory. What is the precise mechanism by which war impacted state formation? In other words, what specific aspects of war had what effects? Is it really war that has the intended effect that Tilly notes or is it something specific in the way in which Europeans waged war during the specific historical time in the period under study that has the effect Tilly notes? Or perhaps there are intervening variables that are underspecified in Tilly’s theory that account for the way in which war can shape state development. Population density could be one such variable. As Herbt notes in his book, European’s high population density made war more frequent than in a place like Africa with low population density. In this way, density has the effect of limiting how capital and coercion operated in effecting state formation. Finally, Tilly’s theory does not provide an account of how change can occur. In particular, what accounts for the expansion (or even contraction) of state capacities such as expansion of the welfare state? In that sense, how can we read Tilly in light of North and Krasnick as to how states persist or change over time?
In his 'war-makes-states' account of European state development, Tilly (1990) argues that "every state’s particular brand of warmaking depended on three closely-related factors: the character of its major rivals, the external interests of its dominant classes, and the logic of the protective activity in which rulers engaged on behalf of their own and dominant classes’ interests" (71). As a consequence of having to extract the means of war from populations and elites constituting several types of land-capital configurations, "rulers willy-nilly started activities and organizations that eventually took on lives of their own: courts, treasuries, stems of taxation, regional administrations, public assemblies, and much more" (75).
His account intersects with North's (1984) 'theory of the state', in which he writes that particular property rights regimes were negotiated by rulers as they sought to maximize wealth/utility under either a 'competitive constraint' or a 'transaction cost constraint' (23-38). In Tilly's account, European rules encountered competitive restraints more often in the early days of states (his account begins in year 990) when expansion into new territory (extraction in secure zones to move out and gain new, wider 'buffer zones') was the name of the game, and broadening transaction restraints as the need to extract more heavily from an increasingly concentrated population in a more secure territory became the primary obstacle to state absolutism. Later, monetarization for ever-more-expensive warmaking produced state debt that led to higher taxes (Tilly 74), leading to further negotiations of rights as the state itself penetrated more sectors of society and economy.
In that sense, it's interesting to look at these accounts alongside Jeff Herbst's, who argues that geography made people, not land, the scarce resource, leading to rather flexible pre-colonial regimes and in part to limited territorial penetration of colonial empires. He takes issue with those who would apply a Tilly-like account to Africa on these grounds (see p. 15)--emphasizing that the lack of powerful cities to act as hubs for capital concentration and flows has hindered African development. But there he seems to compare Africa during the colonial and immediate post-colonial periods to the intermediate/later stages of European state development, stating that the two are very different given population densities and the scarcity of land; he examines directly the kind of fragmented sovereignty structures existing in many current African states post-1975, but misses that they may more strongly echo European structures in _earlier_ centuries. Further, Herbst helpfully discusses the effects of the international state system on post-colonial state development, presenting a marked contrast to the European development account (since African states were expected to be 'states' under the long-established European archtype). But he over-focuses on boundaries and territorial sovereignty, and does not give enough attention to the direct interference of the system on the negotiations between government and population in the consolidation process (through aid, coercive intervention, direct government support, etc). Then again, this is not really the focus of his thesis -- but perhaps it should be.
In Of Rule and Revenue, Margaret Levi argues that the main structural factor of state behavior and institution building is the negotiation of taxes between the “country” leader and the rest of the population. In the examples of France and England, she describes how international wars and internal tensions have played to consolidate a central power. In some ways she confirms what Polanyi describes with the emergence of the Haute Finance in the 19th Century Europe and the consolidation of Nation-States. When it comes to understand state building in Africa, Herbst points out the complex heritage of colonization. In his introduction he describes the geographic uniqueness of the African continent to pose the argument of the cost associated with state building in Africa because of the low population density. Levi does raise a similar point regarding France and the cost and difficulties of reporting to Paris from the French regions and vice versa in the negotiating exercise regarding tax and “national policies”. I found these two accounts extremely interesting and would like to make two comments. My first comment regards History. As Herbst rightly points out, the African continent suffers from a bias understanding of its history as it has been shaped by the European powers. Citing Davidson, he mentions that a “realistic” historical account of the African politics in the pre-colonial period is lost forever. This poses a tremendous problem when we look at Levi’s theory. Indeed, the foundation of her theory regarding state building is this negotiation process that she describes. How can we then expect that such process will ever take place in African countries as the geographical and historical structures stand static? My second comment concerns the urban-rural linkages. Herbst defines the urban areas in opposition to the rural areas. I think this is precisely the problem of the African continent. Posing the cities in opposition to the rural areas is using the framework developed by the colonial authorities. Davidson in the Lost Cities of Africa gives an account of the wealth of African cities that have been completely disregarded and destroyed by colonization. Herbst briefly notes that the colonial powers favored settlement like Bamako instead of the great city of Timbuktu for example. And I don’t think this is a detail. Again when we look at what Levi describes, the urban centers were to be understood as a representation of the rural area (economic structure of a region). If today’s African cities are defined in opposition with the rural area, what do they represent? How is the rural areas been represented in the state building exercise?
Tilly examined the historical formation of the national states in Europe and provided a theoretical framework of the state, with two variables (capital and coercion) and two vectors (concentration and accumulation). Wars and preparation for wars led to the organizational triumph of the “national state,” which was best able to rapidly mobilize the capital and means of coercion. However, as to when concentration and accumulation would take place, he did not give a clear answer and set them as given historical trends. The problem of this setting is that it fails to explain why the 18th century marks the watershed of the nationalization of the state. Tilly did not intend to explain the timing in the first place, and by so doing, he could omit other variables such as technology, demography, religion, simulation, etc. In his words, the point is to “get the main connections right.” He emphasized the possibility of different trajectories of state formation, which indicates that history is full of contingencies. The 18th century presents a historical juncture of state formation in Europe; and yet I would be even more interested to know what had led to the creation of this juncture.
If war and geography are the main variables affecting state capacity, then little can be done to promote it in the developing world. Theories of state formation (and failure) rely too heavily on structural constraints: the process of state making is all a function of “factors of production”: an exogenous mix of land and labor that either builds states (Tilly) or destroys them (Herbst). No one denies the importance of such structural conditions; they are part of the constraints faced by rulers when making decisions. However, the more relevant question is perhaps, given these initial conditions, why do politicians have (or not) incentives to create state capacity? This is a political issue that is largely ignored by some of the literature on state formation. An exception is Levy, who provides a theory of the state by looking at the evolution of taxation (after all, she is right in asserting that “the history of revenue production is the history of the evolution of the state”). In her account, transaction costs, time horizons and bargaining power are the main determinants of revenue production strategies by rulers (and hence, state capacity). Rulers can alter some of these constraints to their advantage. These factors provide for a more political theory of state formation that does not rest exclusively on the exogenous variables discussed above.
Ganev’s analysis of the influence of powerful economic actors on the political development of early post communist states advances the debate on post-communist economic restructuring by considering among other factors endogenous causes of de-industrialization. Ganev’s case study illustrates the strategies employed by “winners” to pursue their interests and the implications for manifestations of “state weakness.” In the context of Krasner’s review, Ganev employs a rather statist approach that focuses predominantly on the extent to which influential economic actors such as Multigroup present an internal challenge to state autonomy, but the question arises as to whether it is possible to treat the “state” or the government as a unified and undifferentiated actor. While Ganev examines in depth the tactics used by Multigroup to advance their interests it is unclear what drives government responses. Why for example did the government become involved only after it had lost control of DZU while its response to the Topenergy Affair was much more immediate? What explains the specific strategies that the “state” employed toward Multigroup? While his analysis is aimed at examining the relationship between both sides the discussion’s focus is predominantly on how Multigroup undermines the institutional capacity of the state. A more pluralist approach might allow for a more differentiated analysis of the interests and preferences driving different actors within the government. To what extent might the process of “state weakening” also be a result of a fragmentation of the interests of individual government officials and bureaucrats? Considering variations in the motivation of individual government actors might be a starting point for understanding variations in state responses to the challenges by Multigroup. Nordlinger’s focus on the causal arrow from the state to society might be a fruitful approach also to Ganev’s analysis and afford greater insight exactly why – in contrast to Nordlinger’s conclusions – state autonomy in post-communist democracies is limited by the influence of powerful economic groups.
Milgrom, North, and Weingast argue that institutions sometimes emerge in situations of imperfect information. They provide people with information on who has cheated, as well as incentives for those who have been cheated to provide evidence of the violation. Milgrom et al briefly point to historical examples of institutions and practices that publicly conveyed violations of norms, such as stocks and pillories, the "scarlet letter", and so on. This section, which blurs a bit the distinctions between practices, norms, and institutions, made me wonder about the relationships between these concepts. How do norms develop in a community? Do norms influence the development and persistence of institutions, or do they change in response to institutions?
“Crises are of central importance.” (Krasner 1984, 234) While crises can foster the environment for reshaping political institutions, disequilibria resulting from imbalances during a crisis are not easily reformed. The “episodic and dramatic” institutional change resulting from times of crisis may in fact have worsening effects leading to institutional backlashes, particularly when imposed exogenously, such as by international actors. Crises can indeed be sources for institutional reforms, as Wantchekon shows in the case of civil wars and how, given the right factors, they can lead to democratization. However, in certain cases, especially those referring to economic reforms, crises can reiterate the lack of credibility in institutions and in political actors. In this scenario, it becomes more difficult for institutions to be implemented from within and spread domestically. The loss of credibility in institutions undermines their effectiveness, while increasing uncertainty. For developing states, this can lead to the strengthening of informal institutions. Krasner does not address the evolution of informal institutions and how they can influence the state, once informal institutions have solidified. The choice of whether or not to incorporate informal institutions into the state in times of uncertainty and political instability should be addressed, as they are also part of the environment which shapes policy outcomes, particularly in times of crises.
In "Structure and Change in Economic History", North argues that the state can play a role in minimizing transactions costs by reducing uncertainty and providing enforcement. Looking at medieval Champagne fairs, Milgrom, North, and Weingast (MNW) show that even in the absence of the state, many of the enforcement problems can be overcome by reputation in repeated interaction. Specifically, merchant associations and private judges can promote trade by recording information on past compliance.
ReplyDeleteA major problem with MNW's model is that it assumes an unlimited game. That is, it assumes that merchants continue to interact over time (albeit not always with the same individuals). When the game is limited, however, we should expect different equilibrium behavior. In a limited game, merchants will have an incentive to defect in the terminal round since there is a greater payoff for defection and because there will be no subsequent round where they will be punished for their defection. In reality, because all merchants are mortal, every game must be assumed to be limited. What's more, the duration of the game will be unknown. Merchants enter and exit the market at different times, and the specific time of exit (i.e. terminal round) will be unknown to other players. This uncertainty could be expected to have a corrosive effect on these markets.
Historically, one could argue that there are two ways that merchants have overcome the terminal round problem in the absence of the state. First, we often find family businesses. Of course, there are numerous reasons for the existence of family business (passing on specialized skills, incentive to work hard to preserve inheritance, etc…), but it could be also argued that family businesses also "lengthen the shadow of the future" for cooperation by creating inter-generational reputation.
A second way to overcome the terminal round problem is to establish ethnic minority merchant classes. In reality many of the ethnic minority merchant classes were not "established" but arose because they were barred from owning property and/or had access to international diaspora networks. Historical examples of such groups include Jews, Phoenicians/Lebanese, Armenians, South Asians in East Africa, and Chinese in Southeast Asia. Ethnic minorities are better able to trade amongst themselves because they tended to comprise smaller tight knit communities where information was easier to access. Moreover, ethnic minorities can mobilize non-market community punishment against defectors, even after the terminal round. Such punishment mechanisms allowed minorities to trade with their minority brethren, even at great distances. The existence of ethnic groups also facilitated trade with non-ethnics. As explained by Fearon and Laitin, the threat of punishing the entire ethnic group for the defection of one ethnic player creates incentives for ethnic groups to conduct in-group policing.
Reference:
James Fearon and David Laitin, "Explaining Inter-Ethnic Cooperation," American Political Science Review 90, no. 4 (December 1996): 715-735.
Krasner (1984) provides an interesting analysis of the different theories of the State and how these have evolved over time. Like North (1981) he addresses the causes of change and stability in economic history. However Krasners’ theory of ‘punctuated equilibrium’ (Krasner 1984, p 234-5) – self-perpetuating institutions that remain stable except in periods of crisis where they undergo rapid change - is somewhat contradictory to North’s explanation who assumes the ‘inherent instability of the state’ and implies a more evolutionary process (North 1981,p29).
ReplyDeleteOf the two pieces I felt Krasners was the most compelling, and felt his theories fit well with empirical observations. He draws a clear distinction between the different causes of institutional creation and institutional maintenance, rightly recognizing the difficulty of change and the tendency for institutional inertia in the absence of crisis. I was particularly struck however by his observation that “choices made by leading states at a particular point in time influence not only their future range of options, but also the options of later developing states” (Krasner 1984, 241). Whilst Krasner offers an historic example of the application of British social security systems to less developed Sweden to demonstrate his point, this principle has even more resonance in the developing world. Indeed much of the development policy advocated today by the large multi-lateral agencies continues to be largely driven by the experiences and decisions of leading states. Few would argue that in many places this has lead to less than desirable outcomes. Krasners analysis in fact raises interesting questions for future development interventions suggesting that current policies of ‘incremental change’ may not be viable for institutional reform. On the other hand, he offers some hope, suggesting that external pressures – “the threat of invasion, or the desire to act efficaciously in the international system” – (ideally the latter!) have some power to force state action and initiate needed change (Krasner 1984, 239).
North’s theory of states reveals a dilemma: on the one hand, it is the state that specifies the property rights structure and increases the efficiency of the property rights structure by reducing transaction costs, which leads to economic growth; on the other hand, it is the state that causes man-made economic decline by creating and seeking rents in property right structure (North, 1981). According to North, both of the bright and dark sides of states have been woven into the economic history of human society. Thus many problems arise regarding the variance of states’ role in economic development. In what conditions, the state plays the role of a wealth maximizer for the whole society more than a predator for certain social groups? What factors account for the autonomy and capacity of the state to play a developmental role? How can we interpret the variance of states’ performance in economic development? This week’s readings provide us some clues to contemplate these questions such as the power contention between the state and its rivals in society (Ganev, 2001); the inter-state system and geographic environment that states are embedded in (Tilly, 1990; Herbst, 2000). Other readings of this week imply that answers to these questions depend on the approaches we conceive and define the state: is the state considered as an identical ruler/ruling group (Levy, 1998), or an agency of a certain class as in Marxism, an interest coordinator for the whole society as in Pluralism, or a series of rituals and ceremonies (Geertz, 1980). After reading them, it remains unclear to me where the states’ autonomy comes from. This is beyond the explanation power of Marxism and Pluralism because both of them have excluded the possibility that state has autonomy by assuming that the state is only an agent of certain class or many social groups. For rational choice scholars who assume that the state is self-interested and profit-maximizing, they need to rule out first the potential free-riding problem of state rulers/officials before answering why and how states pursue autonomy. I would argue that the state can be autonomous because of its strategic position standing in between the international community and its domestic constituency. On the one hand, the state, as directly exposed to its international rivals, has clearer perception of external threats than society does. The intense and long-lasting threats reduce the state’s opportunism and alleviate its free-riding problem. On the other hand, the state as a coercive and administrative apparatus is independent above the society, which gives rise to its capacity to provide some jointly public goods such as national security and economic development strategy.
ReplyDeleteOne of the most appealing aspects of North’s analysis of the emergence of the modern state is the prominent role for ideology and legitimacy that he creates. For North, ideology is an indespensible source of legitimacy by which free riding is eliminated, defection is reduced, and economic systems become both stable and viable. For North, ideology fundamentally shapes the beliefs of citizens about what is “fair”, moral, and ethical and, in doing so, is both a contested term with real alternatives and a device for simplifying decision making. The deficiency in this view, however, is the narrow view that there must be a normative- moral or ethical- content in legitimacy on the part of the citizens. This is not quite true. The world is replete with autocratic systems that seem “legitimate”, in that naked coercion is not required to get them to adhere to laws on a regular basis, but whose citizens only adhere to the regime’s norms out of fear. Using North’s criteria, it may be difficult to distinguish these from states where the citizens do believe that their system is ”fair” and “just”, which has analytical consequences.
ReplyDeleteThis is a strong claim, so let me take a step back and make a key distinction between two types of legitimacy- positive and negative- to make the deficiency more plain. A positive legitimacy is one in which the populace believes in the ideology and upholds it because it is the “best” possible choice by some subjective philosophical criterion. The legitimacy that democratic government holds in the US is an excellent example of this. Negative legitimacy, on the other hand, is a form of legitimacy that one ascribes to a regime when costs of changing the system are so high (usually due to implicit coercive threats) that the populace simply can not pay it. In such a circumstance, legitimacy is given out of a generalized fear of coercion. Zbigniew Brzezinski articulates this fear nicely in his description of the Stalinist system by noting that most compliance with the system was achieved out of the mentality that anyone could be purged at any time and the fear this generated. The net result was a system where everyone professed the Communist ideology of the system and behaved as if they were true believers- as if the system were legitimate. Lisa Wedeen goes on to show in the context of Syria that the technique can be applied with vastly lower levels of actual force and coercion to achieve much the same ends. In Syria, the regime “looks” legitimate even though deeper analysis reveals that most of the citizenry don’t believe the ideology they espouse.
Returning to the original point, the concept of negative legitimacy is important and requires us to be careful about how we use the term “legitimacy” because the assumption that all regimes achieve legitimacy in the same way leads to shallow analysis and problematic implications. Shallow analysis in that it encourages a teleology whereby lack of mass protests or strong anti-systemic agitation may be taken as a sign of legitimacy, even though general distaste may be boiling under the popular surface (as occurred in much of the former Soviet Bloc). Problematic implications stem from the fact that failing to recognize negative legitimacy causes one to become even more vulnerable to surprise regime collapse such as occurred in much of the Communist Bloc. Where key economic and geostrategic shifts degraded the ability of the state to enforce its negative legitimacy, forms of government with positive legitimacy became possible and allowed the populace to engage in mass mobilization to overthrow the existing state.
Bibliography
Brzezinski, Zbigniew (1956). The Permanent Purge. Cambridge, Harvard UP.
Wedeen, Lisa (1999) Ambiguities of Domination: Politics, Rhetoric, and Symbols in Contemporary Syria. Chicago, IL: University of Chicago Press.
One of the most interesting things about the Herbst piece was his discussion of the fact that 'statehood', the organisation of economic and political life in Africa, was a conscious choice by the continent's post-colonial leaders. He contrasts this statehood, which these leaders inherited from their colonisers, with the forms of legality that were indigenous to Africa, with 'multiple sovereignties over porous borders'.
ReplyDeleteHerbst writes that attempts to create pan-African organizations failed almost completely. What seems to me to be an important topic for further research is not just the conditions under which states develop and secure control over territory and establish the tools of governance, but also the conditions under which states (or their leadership) then cede that authority to regional or international organisations.
It seems useful to me to conceive of the development and persistence of the state, as separate processes. The creation of the national state in Europe, as Tilly argues, was the byproduct of a continent-wide conversion on a model that maximized rulers' war-making abilities. This more functionalist historical development, however, seems unique in comparison with the development of the national state in other parts of the world. In sub-Saharan Africa, for example, states were retained post-indepence in part because of their international recognition (Herbst). Many post-communist states also inherited the strong national states of their previously communist regimes.
ReplyDeleteThese examples hint at a feature of institutions, and especially of states: they are quite persistent. North provides an explanation of this stability even in the face of the state's relative inefficiency: stability is a product of a free-rider problem among a state's constituents that effectively discourages opposition. This explanation seems particularly interesting in light of Ganev's account of the "Dorian Gray effect" in Bulgaria, where the free-rider problem is actually overcome by opponents of the state. Key to his story is the Bulgarian state's proclivity for creating rent-seeking opportunities by involving the state in its economy. In a context where the coercive power of the state is drastically reduced after the fall of communism, the economic elite of the country found it easy to organize to undermine the state.
However, having overcome the free-rider problem does not necessarily mean that the state will be completely undone by its opponents. In fact, this is where Krasner's theoretical insights are particularly useful. If the state itself is an actor (rather than a static and hollow framework of laws), it will adapt to its new environment.
In his book “Coercion, Capital and European States,” Charles Tilly offers a thought-provoking account of the influence that war mobilization had in the formation of European states. But how useful is Tilly’s theory to explaining state formation? By placing so much emphasis on the power of war in shaping statehood, Tilly neglects to examine the influence of other important factors. For instance, what is the role of ideology in state formation? Much if not most of the populace of Europe at the time of state formation were farmers or peasants who had little connection with the capital-rich cities; how then do they play in Tilly’s story and what influence did their activities have in state formaton? Further, what impacts the society’s willingness to pay taxes and to otherwise be bound by the state’s rules; indeed what gave the state legitimacy? In addition to ignoring important variables that may contribute to state formation, Tilly also underspecifies his theory. What is the precise mechanism by which war impacted state formation? In other words, what specific aspects of war had what effects? Is it really war that has the intended effect that Tilly notes or is it something specific in the way in which Europeans waged war during the specific historical time in the period under study that has the effect Tilly notes? Or perhaps there are intervening variables that are underspecified in Tilly’s theory that account for the way in which war can shape state development. Population density could be one such variable. As Herbt notes in his book, European’s high population density made war more frequent than in a place like Africa with low population density. In this way, density has the effect of limiting how capital and coercion operated in effecting state formation. Finally, Tilly’s theory does not provide an account of how change can occur. In particular, what accounts for the expansion (or even contraction) of state capacities such as expansion of the welfare state? In that sense, how can we read Tilly in light of North and Krasnick as to how states persist or change over time?
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I've posted my response paper on courseworks
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ReplyDeleteIn his 'war-makes-states' account of European state development, Tilly (1990) argues that "every state’s particular brand of warmaking depended on three closely-related factors: the character of its major rivals, the external interests of its dominant classes, and the logic of the protective activity in which rulers engaged on behalf of their own and dominant classes’ interests" (71). As a consequence of having to extract the means of war from populations and elites constituting several types of land-capital configurations, "rulers willy-nilly started activities and organizations that eventually took on lives of their own: courts, treasuries, stems of taxation, regional administrations, public assemblies, and much more" (75).
ReplyDeleteHis account intersects with North's (1984) 'theory of the state', in which he writes that particular property rights regimes were negotiated by rulers as they sought to maximize wealth/utility under either a 'competitive constraint' or a 'transaction cost constraint' (23-38). In Tilly's account, European rules encountered competitive restraints more often in the early days of states (his account begins in year 990) when expansion into new territory (extraction in secure zones to move out and gain new, wider 'buffer zones') was the name of the game, and broadening transaction restraints as the need to extract more heavily from an increasingly concentrated population in a more secure territory became the primary obstacle to state absolutism. Later, monetarization for ever-more-expensive warmaking produced state debt that led to higher taxes (Tilly 74), leading to further negotiations of rights as the state itself penetrated more sectors of society and economy.
In that sense, it's interesting to look at these accounts alongside Jeff Herbst's, who argues that geography made people, not land, the scarce resource, leading to rather flexible pre-colonial regimes and in part to limited territorial penetration of colonial empires. He takes issue with those who would apply a Tilly-like account to Africa on these grounds (see p. 15)--emphasizing that the lack of powerful cities to act as hubs for capital concentration and flows has hindered African development. But there he seems to compare Africa during the colonial and immediate post-colonial periods to the intermediate/later stages of European state development, stating that the two are very different given population densities and the scarcity of land; he examines directly the kind of fragmented sovereignty structures existing in many current African states post-1975, but misses that they may more strongly echo European structures in _earlier_ centuries. Further, Herbst helpfully discusses the effects of the international state system on post-colonial state development, presenting a marked contrast to the European development account (since African states were expected to be 'states' under the long-established European archtype). But he over-focuses on boundaries and territorial sovereignty, and does not give enough attention to the direct interference of the system on the negotiations between government and population in the consolidation process (through aid, coercive intervention, direct government support, etc). Then again, this is not really the focus of his thesis -- but perhaps it should be.
Julie Touber – Comment Week 9
ReplyDeleteIn Of Rule and Revenue, Margaret Levi argues that the main structural factor of state behavior and institution building is the negotiation of taxes between the “country” leader and the rest of the population. In the examples of France and England, she describes how international wars and internal tensions have played to consolidate a central power. In some ways she confirms what Polanyi describes with the emergence of the Haute Finance in the 19th Century Europe and the consolidation of Nation-States.
When it comes to understand state building in Africa, Herbst points out the complex heritage of colonization. In his introduction he describes the geographic uniqueness of the African continent to pose the argument of the cost associated with state building in Africa because of the low population density. Levi does raise a similar point regarding France and the cost and difficulties of reporting to Paris from the French regions and vice versa in the negotiating exercise regarding tax and “national policies”. I found these two accounts extremely interesting and would like to make two comments.
My first comment regards History. As Herbst rightly points out, the African continent suffers from a bias understanding of its history as it has been shaped by the European powers. Citing Davidson, he mentions that a “realistic” historical account of the African politics in the pre-colonial period is lost forever. This poses a tremendous problem when we look at Levi’s theory. Indeed, the foundation of her theory regarding state building is this negotiation process that she describes. How can we then expect that such process will ever take place in African countries as the geographical and historical structures stand static?
My second comment concerns the urban-rural linkages. Herbst defines the urban areas in opposition to the rural areas. I think this is precisely the problem of the African continent. Posing the cities in opposition to the rural areas is using the framework developed by the colonial authorities. Davidson in the Lost Cities of Africa gives an account of the wealth of African cities that have been completely disregarded and destroyed by colonization. Herbst briefly notes that the colonial powers favored settlement like Bamako instead of the great city of Timbuktu for example. And I don’t think this is a detail. Again when we look at what Levi describes, the urban centers were to be understood as a representation of the rural area (economic structure of a region). If today’s African cities are defined in opposition with the rural area, what do they represent? How is the rural areas been represented in the state building exercise?
Tilly examined the historical formation of the national states in Europe and provided a theoretical framework of the state, with two variables (capital and coercion) and two vectors (concentration and accumulation). Wars and preparation for wars led to the organizational triumph of the “national state,” which was best able to rapidly mobilize the capital and means of coercion. However, as to when concentration and accumulation would take place, he did not give a clear answer and set them as given historical trends. The problem of this setting is that it fails to explain why the 18th century marks the watershed of the nationalization of the state.
ReplyDeleteTilly did not intend to explain the timing in the first place, and by so doing, he could omit other variables such as technology, demography, religion, simulation, etc. In his words, the point is to “get the main connections right.” He emphasized the possibility of different trajectories of state formation, which indicates that history is full of contingencies. The 18th century presents a historical juncture of state formation in Europe; and yet I would be even more interested to know what had led to the creation of this juncture.
If war and geography are the main variables affecting state capacity, then little can be done to promote it in the developing world. Theories of state formation (and failure) rely too heavily on structural constraints: the process of state making is all a function of “factors of production”: an exogenous mix of land and labor that either builds states (Tilly) or destroys them (Herbst). No one denies the importance of such structural conditions; they are part of the constraints faced by rulers when making decisions. However, the more relevant question is perhaps, given these initial conditions, why do politicians have (or not) incentives to create state capacity? This is a political issue that is largely ignored by some of the literature on state formation. An exception is Levy, who provides a theory of the state by looking at the evolution of taxation (after all, she is right in asserting that “the history of revenue production is the history of the evolution of the state”). In her account, transaction costs, time horizons and bargaining power are the main determinants of revenue production strategies by rulers (and hence, state capacity). Rulers can alter some of these constraints to their advantage. These factors provide for a more political theory of state formation that does not rest exclusively on the exogenous variables discussed above.
ReplyDeleteGanev’s analysis of the influence of powerful economic actors on the political development of early post communist states advances the debate on post-communist economic restructuring by considering among other factors endogenous causes of de-industrialization. Ganev’s case study illustrates the strategies employed by “winners” to pursue their interests and the implications for manifestations of “state weakness.” In the context of Krasner’s review, Ganev employs a rather statist approach that focuses predominantly on the extent to which influential economic actors such as Multigroup present an internal challenge to state autonomy, but the question arises as to whether it is possible to treat the “state” or the government as a unified and undifferentiated actor. While Ganev examines in depth the tactics used by Multigroup to advance their interests it is unclear what drives government responses. Why for example did the government become involved only after it had lost control of DZU while its response to the Topenergy Affair was much more immediate? What explains the specific strategies that the “state” employed toward Multigroup? While his analysis is aimed at examining the relationship between both sides the discussion’s focus is predominantly on how Multigroup undermines the institutional capacity of the state. A more pluralist approach might allow for a more differentiated analysis of the interests and preferences driving different actors within the government. To what extent might the process of “state weakening” also be a result of a fragmentation of the interests of individual government officials and bureaucrats? Considering variations in the motivation of individual government actors might be a starting point for understanding variations in state responses to the challenges by Multigroup. Nordlinger’s focus on the causal arrow from the state to society might be a fruitful approach also to Ganev’s analysis and afford greater insight exactly why – in contrast to Nordlinger’s conclusions – state autonomy in post-communist democracies is limited by the influence of powerful economic groups.
ReplyDeleteMilgrom, North, and Weingast argue that institutions sometimes emerge in situations of imperfect information. They provide people with information on who has cheated, as well as incentives for those who have been cheated to provide evidence of the violation. Milgrom et al briefly point to historical examples of institutions and practices that publicly conveyed violations of norms, such as stocks and pillories, the "scarlet letter", and so on. This section, which blurs a bit the distinctions between practices, norms, and institutions, made me wonder about the relationships between these concepts. How do norms develop in a community? Do norms influence the development and persistence of institutions, or do they change in response to institutions?
ReplyDeleteI posted a short paper on courseworks.
ReplyDelete“Crises are of central importance.” (Krasner 1984, 234) While crises can foster the environment for reshaping political institutions, disequilibria resulting from imbalances during a crisis are not easily reformed. The “episodic and dramatic” institutional change resulting from times of crisis may in fact have worsening effects leading to institutional backlashes, particularly when imposed exogenously, such as by international actors. Crises can indeed be sources for institutional reforms, as Wantchekon shows in the case of civil wars and how, given the right factors, they can lead to democratization. However, in certain cases, especially those referring to economic reforms, crises can reiterate the lack of credibility in institutions and in political actors. In this scenario, it becomes more difficult for institutions to be implemented from within and spread domestically. The loss of credibility in institutions undermines their effectiveness, while increasing uncertainty. For developing states, this can lead to the strengthening of informal institutions. Krasner does not address the evolution of informal institutions and how they can influence the state, once informal institutions have solidified. The choice of whether or not to incorporate informal institutions into the state in times of uncertainty and political instability should be addressed, as they are also part of the environment which shapes policy outcomes, particularly in times of crises.
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