Monday, April 28, 2008

Natural State

In a recent post Arnold King links to his article which summarizes Douglass C. North (and colloborators)'s ideas about Natural State and applies to them to Iraq. Some excerpts:
"NWW claim that there are three types of societies. Primitive orders are small bands of hunter-gatherers, and they are of little concern here. Limited-access orders are societies that provide meaningful political and economic rights only to narrow elites. Open-access orders are capitalist democracies that give political and economic rights to most citizens. NWW argue that limited-access orders are the "natural state:" they are stable, they resist economic progress, and they only rarely make the transition to open-access orders.

For NWW, these three types of order are like the three chemical phases of solid, liquid, and gas. That is, they are clearly distinct from one another, and transitions between different forms of order take place only under special conditions.
......
A key insight of NWW is that the rulers of a limited-access order must restrict the rights of the masses. If everyone has economic and political rights, then the rulers have nothing special to offer to pacify would-be usurpers. Potential political competitors can only be bought off if they receive rights that are exclusive. But giving exclusive rights to one group necessarily entails restricting the rights of other groups. To say to the rulers of a limited-access order, "We insist that you get rid of corruption" is to ask them to commit political suicide.""

"The limited access order is a social equilibrium. The equilibria share common characteristics:

1) Control of violence through elite privileges.
2) Limits on access to trade.
3) Relatively strong property right protection for elites and relatively weak property right protection for non-elites. To the extent a natural state is characterized by the rule of law, it is for elites.
4) Restrictions on entry into and exit from economic, political, religious, educational, and military organizations.

Accordingly, the transition from a limited-access order to an open-access order is quite problematic."

"NWW argue that three conditions are necessary before a transition from a limited-access order to an open-access order is even conceivable. These three "doorstep conditions" are:

1. rule of law for elites
2. perpetual life for organizations
3. political control of the military

In a country where even elites depend on personal relationships for personal and economic security, the first "doorstep condition" is not met. Think of Russia today, where even members of the wealthy oligarchy can be summarily stripped of rights by the head of state. On the other hand, in Great Britain in the period just prior to the full advent of democracy, elites developed an expectation that due process of law would apply to them.

Perpetual life for organizations means that there exist corporations or other institutions that can be expected to outlive their key members. If there are no such organizations, then that means that every organization is held together by personal loyalty. Once people see an organization as living beyond its current leaders, they begin to support contractual relationships with that organization. When the government starts to provide a legal framework to protect contractual relationships, a key element of open-access orders is in place. NWW argue that in order for any organization within a state to have perpetual life, the state itself must have perpetual life. If all of a ruler's legal rulings are subject to nullification when the ruler dies, then that condition is not satisfied.

Political control of the military requires that there be no independent organizations with a capacity for large-scale violence. Lebanon, where Hezbollah is an independent military force, clearly does not enjoy political control of the military. On the other hand, if a single faction takes control of the military, that is not NWW's definition of political control of the military. Instead, such a regime is a military dictatorship."
All this looks plausible but what is not dicussed is the role of various states in the transition of other states and the possibilty of reverting from open access state to a limited access state. The application to Iraq seems strange to me. But it is worth a read.

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