The development and evolution of predatory-state institutions and organizations: beliefs, violence, conquest, coercion, and rent seeking

Abstract

The purposes of this presentation are to (1) provide a relatively short coherent picture of predatory states, (2) pull some of North, Wallis and Weingast’s important arguments, particularly from their discussion of “natural states”, into predatory state analysis, including their fundamental elements of “violence, organizations, institutions and beliefs”; and (3) criticize the kinds of assumptions public-interest views rely on by using NWW’s very public-interest and non-public-choice depiction of the “open access order” as a way to reveal some of those assumptions. Even if states provide public goods, the primary focus for politicians appears to be on transferring wealth to themselves and/or to elites and interest groups. Most states also have engaged in aggression to expand their jurisdictions. Predatory-state theories focuses on wealth transfers and aggression. These models explain states’ historical development and many observed state actions. Perhaps surprisingly, they even provide a theoretical explanation of public-good provision. The primary conclusion is that states, including the U.S., are predatory. Consideration of violence, organizations, institutions, and beliefs adds power to this contention. Observed state institutions and organization are consistent with an evolved predatory state. Examination of a number of explicit or implicit institutional and organizational assumptions supporting public-interest views of states further reinforces the contention. These assumptions either do not hold, or hold only in part.

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Fig. 1

Notes

  1. 1.

    Hume (1741–42, pp/189–90) explains that “almost all governments, which exist at present or of which there remains any record in story have been founded either originally on usurpation or conquest, or both, without any pretence of a fair consent, or voluntary subjection of the people.”

  2. 2.

    Samuelsonian public goods are non-excludable and non-rivalrous in consumption, resulting in free riding and underproduction (or non-production) by the private sector (McNutt 2000, pp. 927–928). However, Demsetz (1970) explains that when exclusion is possible non-rivalrous consumption will not prevent efficient private production; Goldin (1977) points out that institutions always are available for exclusion. Benson (1994) adds that free access inevitably leads to crowding/congestion and, therefore, rivalrous consumption. Examinations of many alleged public goods also reject claims of non-rivalrous consumption and/or non-excludability, including lighthouses (Coase 1974); lightships (Candela and Geloso 2018); policing, courts and other social-order organizations (Benson 1994, 1998, 2010; Ekelund and Dorton 2003; Stringham 2015); roads (Benson 1994, 2017; Roth 1996); national defense (Coyne 2015; Vahabi 2016) and other social services (Foldvary 1994). Holcombe (1977) also explains that public-goods theory is best seen as an attempted justification for taxation and state production. Also see subSect. 3.6.

  3. 3.

    See, for example, Lane (1958), Levi (1988), Tilley (1990), Usher (1992), Barzel (2002), Bates (2001) and Moselle and Polak (2001). Relatively explicit public-choice analyses of predatory states include Olson (1993), Benson (1999), Kurrild-Klitgaard and Svendsen (2003), Leeson (2007a), Powell and Stringham (2009), Leeson and Williamson (2009), Vahabi (2016) and Benson and Meehan (2018).

  4. 4.

    NWW page references are from the Kindle electronic volume. North et al. (2012) is an edited companion volume.

  5. 5.

    A natural state manages the problem of violence by forming a dominant coalition that limits access to valuable resources—land, labor, and capital—or access to and control of valuable activities—such as trade, worship, and education – to elite groups. The creation of rents [by] limiting access provides the glue that holds the coalition together, enabling elite groups to make credible commitments to one another to support the regime, perform their functions, and refrain from violence” (NWW 2009, p. 30).

  6. 6.

    It is difficult to define NWW’s open access order succinctly, but they suggest that “perhaps the most central feature of open access orders is the transformation of a society based on elites to one based on a mass citizenry. This transformation also combines beliefs in equality and open access to markets, the institutional apparatus of rule of law, and mass political participation” (NWW 2009, p. 18). Other characteristics are discussed in Sect. 3.

  7. 7.

    Behavioral economics challenges the rationality assumption. Indeed, that assumption often does not explain an individual’s behavior. However, as Brennan and Buchanan (1983) remark, it is important to assume rational self-interest for comparative institutional analysis, since at least some people will take advantage of any institution.

  8. 8.

    NWW (2009, p. 254) suggest that people are “motivated by economic rents” but they do not discuss the behavioral implications systematically, arguing that “A full account of human behavior would begin by asking how the mind deals with the process of change. A necessary preliminary is to understand how the brain interprets signals received by the senses and how the mind structures the result into coherent beliefs” (NWW 2009, pp. 250–251). NWW note that they do not know how signals are transformed into beliefs. Neither do I, but an imperfect model nevertheless can be quite powerful (see note 7).

  9. 9.

    Property rights never are completely defined and secured because of the transaction costs of delineating and enforcing rights to the multiple attributes of most assets. In Barzel’s (1989) terms, “some valued properties will always remain in the public domain.” Individuals have incentives to discover ways to capture such value, but competition for rights goes beyond the discovery process, as individuals also pursue transfers of existing rights.

  10. 10.

    NWW (2009, p. 42) do note that violence can be employed to take property rights, but it is not clear that they consider such takings to be a primary reason for violence, since they suggest that “our genetic makeup predisposes humans to be violent” (NWW 2009, p. 8). They also contend repeatedly that violence is considered, in all societies, to be a “problem” (NWW 2009, pp. 14, 17, 18, 30 and elsewhere). Some societies actually value violence, however. In his examination of Native American plains tribes of the eighteenth and nineteenth centuries, for instance, Hoig (1993, p. 22; also see Lowie 1954, p. 106; and Mishkin 1940, p. 2) explains, “tribal male's innermost self was programmed from birth toward his emergence as a warrior.… Bravery was stressed above all other virtues”.

  11. 11.

    NWW (2009) do not examine choices between taking and trading, but see Bastiat (1845, 1850), Oppenheimer (1908), Skaperdas (1992), Rider (1993), Anderson and McChesney (1994) and Benson (1999, 2006, 2007).

  12. 12.

    Two types of institutions develop. Behavioral rules apply to interpersonal interactions and governance rules support behavioral rules. As noted above, rules establishing adjudication arise, but so do rules encouraging individuals to recognize and follow behavioral rules (and adjudication rulings). In a dynamic setting, rules establishing procedures for creating/changing behavioral rules also arise. See Benson (1999).

  13. 13.

    NWW (2009) do not go into much detail regarding foraging social orders, so, for instance, the rest of this subsection does not reflect their analysis, but it facilitates the discussion of predatory-state formation.

  14. 14.

    Creating private property rights is costly but occurs as the benefits of doing so increase or costs fall (Demsetz 1967).

  15. 15.

    NWW (2009) do not consider the issues in this and the next paragraph but they are key to understanding state development.

  16. 16.

    At least two types of beliefs can be distinguished in this context. One “subset of beliefs [is] causal beliefs, which concern the causal connections between actions and outcomes in the world around us” (NWW 2009, p. 27). Causal beliefs often are “positive beliefs”. Normative beliefs, or moral beliefs, are about how people, including decision makers, should behave. NWW (2009, p. 262) also consider ideology, which often is inaccurate. Ideology can be formulated intentionally and spread to legitimize certain organizations and practices. For instance, NWW (2009, pp. 54, 56–57) explain that

    Aztecs held that the sun god daily battled his way across the sky against his brothers the stars and his sister the moon. In order to triumph in this battle, the sun … required chalchihuatl, the precious liquid, the blood of man. Failure to nourish the sun would result in the destruction of the earth. The expanding use of human sacrifice fueled the expansionary military goals of the Aztecs, and it provided an ideological framework that justified the labor of the masses….

    NWW (2009. p. 28) also suggest that beliefs can be adopted or changed by education, but given the points just made, organized education can influence normative beliefs and ideology as well as causal beliefs.

  17. 17.

    Nobles had access to royal court to resolve disputes, and obligations to give counsel to the king when called upon.

  18. 18.

    Nobles and gentry (about 0.5–1.0% of England’s population) controlled around 45% of England’s land in 1436 (NWW 2009, p. 93), while the King held about 5% and the church controlled about 20%.

  19. 19.

    Freeholders held land on feudal or seignorial tenures whereby a direct relationship existed with the landlord. They had access to royal courts so they could seek protection against landlords. Villeins held unfree tenure, were bound to their lord’s service, and did not have access to royal courts for several centuries. Unfree laborers also were bound to their lord’s service with no royal court access.

  20. 20.

    The remainder of this subsection does not reflect points emphasized by NWW (2009) for reasons noted below.

  21. 21.

    Predatory systems generally have "parallel", predominately cooperative institutional systems dominating many and even most interactions (de Soto 1989).

  22. 22.

    Groups outside the conquerors’ jurisdiction also pose threats as roaming bandits or aspiring stationary bandits.

  23. 23.

    Other institutional changes also helped undermine the system (Benson 1998).

  24. 24.

    Also see the discussion of changes in public finance in subsection 3.5.

  25. 25.

    Strong bureaus may facilitate the transfer process, but they also can pursue objectives that reduce potential wealth transfers. Their pursuit of larger budgets and power can lead to excess bureaucratic production and increase incentives for resistance. Also see Sects. 3.3 and 3.4.

  26. 26.

    Further reductions in sheriffs’ power were instituted between 1232 and 1237, when sheriffs became appointees of the exchequer, another expanding bureaucracy.

  27. 27.

    Conceivably, the winner’s gains could exceed the loser’s losses (see note 31), but then bargaining should make both better off if transaction costs are not prohibitively high.

  28. 28.

    The claim may be true, if outsiders have short time horizons because they are not sure that they can maintain control over a distant jurisdiction. Note that a number of such services exist beyond those discussed here. The provision of transportation infrastructure may in fact benefit many people, for instance, although the primary purpose may be to facilitate movement of military and policing personnel (see note 23 and Sect. 3).

  29. 29.

    The fifth characteristic is challenged in subsection 3.4. The first four appear to apply, at least to most of Western Europe, North America, Australia and New Zealand. The question here is, what generated these characteristics, development of OAOs, or something else, such as predatory state development of parliaments, governments that recognize the potential for large takings if economies are strong?.

  30. 30.

    The list reflects my perception of the institutions and organizations NWW (2009) stress. The page citations in this paragraph are very incomplete as each argument appears numerous time elsewhere. Note that I include doorstep conditions 2 and 3 in the list, but see doorstep 1 becoming more inclusive.

  31. 31.

    This rebellion occurred when the federal government imposed its first selective tax on a product, distilled spirits.

  32. 32.

    The United States was involved in an undeclared naval war with France, the so-called Quasi-War (1798–1800), because of default on war debt to the French and trade with Great Britain (France was at war with the British). In July 1798, Congress imposed $2 million in new taxes on dwellings, lands and slaves to fund military expansions. Fries’s Rebellion (1789–1800) resulted from that taxation.

  33. 33.

    Between 1800 and 1850, in addition to the military actions discussed in the text, the United States sent troops, naval ships, or both, repeatedly in some cases, to Tripoli, Algeria, the Barbary states, Greece, the Ivory Coast, the Gulf of Mexico and the Caribbean, including Cuba, Puerto Rico, Santo Domingo and the Yucatan, in pursuit of pirates. Military action to protect US citizens or interests, or to punish groups who harmed or killed them also occurred in the Marquesas Islands, the Falkland Islands, Canada, Sumatra, Argentina, Peru, Fiji, McKean Island in the Gilbert Islands, Samoa and Smyrna (Izmir, Turkey).

  34. 34.

    As noted above, the country was at war with the Cherokees when it was formed. The Posey War (1923) often is cited as the last of the Indian wars.

  35. 35.

    Tribes (in many cases coalitions of tribes, such as Tecumseh’s Confederacy) against which the United States went to war after 1800 include the Creek, Seminole (three wars between 1817 and 1858), Comanche (lasting about 40 years), Arikara, Ho-Chunk, Potawatoni, Cayuse, Ute (spread over almost 75 years), Paiute, Navaho, Apache (spread over 75 years), Yuma, Mohave, Cocopah, Cahulla, Cupeno, Sioux (over 35 years), Klickitat, Cascade, Nisqually, Muckleshoot, Puyallup, Haidi, Tingit, Yakama, Yokut, Yuki, Whkut, Chilula, Hupa, Chimariko, Lassik, Matolle, Nongaltl, Sinkyone, Tsnungwe, Wallaki, Mohave, Walalai, Shoshone, Bannock, Yavapai, Kawaiisu, Tubatulabal, Cheyenne, Arapaho, Snake, Hualapai, Yavapai, Havasupai, Modoc, Nez Perce, and Crow.

  36. 36.

    It did much more, of course, but the issue here is the effect on control of land.

  37. 37.

    Between 1850 and 1900, US military forces also were sent into the Ottoman Empire, Johanna Island, China, Nicaragua, Fiji Islands, Uruguay, Panama, Granada, Paraguay, Angola, Mexico, Formosa, Columbia, Korea, Hawaii, Egypt, Haiti, Samoa, Argentina and Chile some multiple times, as well as numerous incursions into Mexico in pursuit of outlaws, and the Bering Sea against foreign seal hunters.

  38. 38.

    Cultural arguments have been raised (Gillespie 2012, p. 19), as well as media bias (Gillespie 2012, pp. 19–21), control of participation in television debates (Gillespie 2012, pp. 30-32), and Constitutional issues, including single-member districts for legislative elections and the Electoral College process for presidential elections (Gillespie 2012, pp. 21–25).

  39. 39.

    Various laws also have made certain alternative parties illegal (particularly communists), as well as particular activities associated with some alternative parties (e.g., anti-war and anti-military actions) (Gillespie 2012, pp. 33–36).

  40. 40.

    The citations to this publication are to one of its 14 sections because my Kindle version does not have page numbers. Congressman X revealed that he is a current Democratic congressman, but beyond that, he demanded that the publisher safeguard his identity: “I don’t have the fortitude or desire to soil my legacy. I also don’t want to embarrass my family or congressional colleagues I have worked with over the years. Nor do I want to subject myself to a barrage of incoming crap from the hard-nosed progressives in my party”.

  41. 41.

    Congressman X asserts that deceit by Members of Congress is “well-meaning”. Virtually every action can be rationalized as being in the public interest by pointing to some alleged consequence, even if the legislation is structured to benefit narrow interests (Meehan and Benson 2015). Congressman X (2016, p. 7) confesses that “Rationalizing lies is part of our [Congress’s] DNA…. Is it a lie if I truly believe what I’m saying?”.

  42. 42.

    NWW never refer to the rent-seeking literature except to criticize it (NWW 2009, pp. 24, 140).

  43. 43.

    It is conceivable that actual rent creation could occur if a valuable use of an unowned asset is discovered and the benefits of creating rights to the asset exceed the costs (e.g., recall note 10’s point that property rights never are fully assigned, so value remains to be captured). The state does not need to create the rights (Ellickson 1991, 1993; Benson 1999), however. The likelihood of true net rent creation through state action must be very small relative to the likelihood of rent-creation through property rights transfers.

  44. 44.

    $3.15 billion was spent on lobbying at the federal level in 2016, a year when 11,168 lobbyists were registered (https://www.opensecrets.org/lobby/). Many lobbyists represent multiple clients. For more details, see https://www.opensecrets.org/lobby/.

  45. 45.

    See note 2.

  46. 46.

    Butler (2007) provides a long list of parks and the railroads associated with them.

  47. 47.

    Market organizations are more likely to sustain impersonal categories such as “customers” and then treat everyone in that category alike. First, they generally ration by price, so excess demand is unlikely. In addition, if a market is competitive, discrimination is not profitable. Third, customer abuse can lead to tort litigation, and firms are generally liable for the actions of their employees. It is much more difficult to sue the state or its employees successfully.

  48. 48.

    On November 29, 1864, the Colorado militia attacked a Cheyenne encampment on Sand Creek. The targets were followers of Black Kettle, one of the tribal leaders who wanted to maintain peace and agreed to move to a reservation. Even though the encampment flew a flag of truce, 150– 200 persons, mostly Cheyenne women and children, were killed.

  49. 49.

    Police are supposed to be consolidated too (NWW 2009, pp. 21–22), but that has never been the case in the United States.

  50. 50.

    See Note 2.

  51. 51.

    Such goods generate substantial rivalrous private benefits (rents), as do many other alleged public goods. When private benefactors are businesses or labor unions (i.e., complementary to some market), they are likely to be the interest to which legislators respond. In addition, bureaucratic interests appear to be a much more likely source of demand than are the masses (Benson and Meehan 2018). Also see Note 2.

  52. 52.

    Predation on future generations is reinforced when voter ignorance in competitive elections with limited term lengths requiring repeated reelection, means that legislators have limited time horizons (Lee and Buchanan 1982). Congressman X (2016, p. 5) puts it more bluntly:

    Nobody here [in Congress] gives a rat’s ass about the future and who’s going to pay for all this stuff we vote for. That’s the next generation problem. It’s all about immediate publicity, getting credit now, lookin’ good for the upcoming election.

  53. 53.

    A related predatory-state hypothesis from Tilly (1990; also see Bates 2001) is that military competition drove state formation and growth in Europe: when a state adopted new expensive military technologies, other states had to follow suit, so all states grew. To do so, they had to develop new financial institutions.

  54. 54.

    See NWW’s (2009, p. 183) informative discussion of the development of an external financial market for England’s naval debt, for instance.

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Correspondence to Bruce L. Benson.

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This paper was prepared at the invitation of Mehrdad Vahabi, Professor in Economics, University Paris 13, Sorbonne-Nord, for a special issue of Public Choice on the “Predatory state”. An early version was presented at Texas Tech University’s Free Market Institute Seminar series, and the current version is substantial better because of the excellent suggestion and penetrating questions from seminar participants. The two referees for the paper also provided very valuable comments and suggestions.

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Benson, B.L. The development and evolution of predatory-state institutions and organizations: beliefs, violence, conquest, coercion, and rent seeking. Public Choice 182, 303–329 (2020). https://doi.org/10.1007/s11127-019-00667-7

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Keywords

  • Predatory state
  • Violence
  • Organizations
  • Institutions
  • Beliefs
  • Social order