Abstract
Social scientists generally accept a Hobbesian conception of government as a coercive rule enforcer. This paper challenges the idea that the essential feature of government is its ability to coerce, and argues instead that the essential feature of government is its ability to coordinate. Governments are defined as organizations that publicly signify agreements. The utility of the new perspective is demonstrated by reconsidering how societies acquire the ability to create and enforce impersonal rules, rules that treat everyone the same, as the process of modern political and economic development gets under way.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
“It is impossible to understand the nature of a formal organization without investigating the networks of informal relations and the unofficial norms as the formal hierarchy of authority and the official body of rules, since the formally instituted and the informal emerging patterns are inextricably intertwined.” (Blau and Scott 1962, p. 6).
So, for example, the charter of a corporation typically specifies a decision structure in which the right to make certain decisions are ultimately lodged with different groups, shareholders, managers, etc.
The idea that a coalition of just two members will be able to overawe either of the two groups is unrealistic. But beginning with a coalition of just two members is easier to describe and visualize. An actual coalition would need to include enough members to coerce each of the member’s groups. Burkett et al. (2014) are working towards a formal model of coalitions and violence.
The comparative advantage in violence that the coalition enjoys vis a vis the unorganized general population is a function of the organization of the coalition, not of the violence capacities of the coalition members.
Granovetter’s (1985) notion of the embeddedness of economic actions in social structure is the notion of identity relationships. As Greif explains, the community responsibility system began breaking down when it became difficult to identify specific merchants with city guilds.
As Margaret Levi (1988) puts it “What is clear from Hobbes to modern day anthropologists, political sociologists, and economic historians, is that the first step in the process of state creation is to build a monopoly of organized violence.” (p. 42) “Hobbes’s solution was an initial contract to establish a central coercive mechanism, the state, to create and enforce property rights, including compliance to the original contract. To be sure, the formulation has its limitations. It is hard to theoretically, let alone empirically, credit the assertion that the initial social contract was the consequence of unanimity… Even so and despite attempts by Talcott Parsons (1937), Karl Polanyi (1957) and others to debunk the choice approach to social order, no satisfying alternative has yet been found.” (p. 199)
A neo-classical political economy model of society in which there are zero rents at the margin will not describe a natural state.
Bobbio (1993) is particularly clear about Hobbes’s fear of civil war as the motivating force in his theory.
The example is too simple. In many agreements, there are many unobservable dimensions of the relationship that cannot be enforced by a court even if the court wanted to. I will give an example in a few paragraphs.
In European legal history this is traditionally represented by the idea that the king is “above the law.”
There are a wealth of examples of this kind of contractual arrangements in the theory of the firm literature. Giving the promissory note follows the logic of hostage giving, it follows the logic of how asset specific investments can be used to secure relationships in Williamson (1985), or how non-salvageable assets can be used to secure the delivery of higher quality goods in Klein and Leffler (1981).
See Levy 2012, for a nice description of the institutional and legal changes accompanying the rise of life insurance and risk management more generally.
References
Aghion, P., & Tirole, J. (1997). Formal and real authority in organizations. Journal of Political Economy, 105(1), 1–29.
Ayres, I., & Gertner, R. (1989). Filling gaps in incomplete contracts: an economic theory of default rules. The Yale Law Journal, 99(1), 87–130.
Ayres, I., & Gertner, R. (1992). Strategic contractual inefficiency and the optimal choice of legal rules. The Yale Law Journal, 101(4), 729–773.
Burkett, J., Steckel, R.H., & Wallis, J.J. (2014). “Stones, Bones, Cities, and States.” Manucript.
Granovetter, M. (1985). Economic action and social structure: the problem of embeddedness. American Journal of Sociology, 91(3), 481–510.
Greif, A. (2006). Institutions and the path to the modern economy. New York: Cambridge University Press.
Hobbes, T. (1994). Leviathan. Indianapolis: Hackett Publishing Co.
Klein, B., & Leffler, K. B. (1981). The role of market forces in assuring contractual performance. The Journal of Political Economy, 89(4), 615–641.
Levi, M. (1988). Of rules and revenue. Los Angeles: University of California Press.
Levy, J. (2012). Freaks of fortune: the emerging world of capitalism and risk in America. Cambridge: Harvard University Press.
North, D. C. (1981). Structure and change in economic history. New York: Norton.
North, D. C. (1990). Institutions, institutional change, and economic performance. New York: Cambridge University Press.
North, D. C., Wallis, J. J., & Weingast, B. R. (2009). Violence and social orders: a conceptual framework for interpreting recorded human history. New York: Cambridge University Press.
North, D. C., Wallis, J. J., Webb, S. B., & Weingast, B. R. (2013). In the shadow of violence: politics, economics, and the problems of development. New York: Cambridge University Press.
Tilly, C. (1993). Coercion, Capital, and European States: 990–1992. Blackwell Publishing.
Wallis, J. J. (2005). Constitutions, corporations, and corruption: American states and constitutional change, 1842 to 1852. Journal of Economic History, 65(1), 211–256.
Wallis, J.J. (2011). “Institutions, Organizations, Impersonality, and Interests: The Dynamics of Institutions.” Journal of Economic Behavior and Organizations.
Wallis, J. J., & Goldin and Glaeser. (2006). The concept of systematic corruption in American economic and political history. In Corruption and reform. Chicago: University of Chicago Press.
Weingast, B.R. (1995). “The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development.” Journal of Law, Economics, and.
Williamson, O. E. (1985). The economic institutions of capitalism. New York: The Free Press.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Wallis, J.J. Rules, Organizations, and Governments. Atl Econ J 43, 69–86 (2015). https://doi.org/10.1007/s11293-015-9450-x
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11293-015-9450-x