“Neither economics nor political science can explain the process of modern social development. The fact that developed societies always have developed economies and developed polities suggests that the connection between economics and politics must be a fundamental part of the development process. This paper develops an integrated theory of economics and politics. We show how, beginning 10,000 years ago, limited access social orders developed that were able to control violence, provide order, and allow greater production through specialization and exchange. Limited access orders provide order by using the political system to limit economic entry to create rents, and then using the rents to stabilize the political system and limit violence. We call this type of political economy arrangement a natural state. It appears to be the natural way that human societies are organized, even in most of the contemporary world. In contrast, a handful of developed societies have developed open access social orders. In these societies, open access and entry into economic and political organizations sustains economic and political competition. Social order is sustained by competition rather than rent-creation. The key to understanding modern social development is understanding the transition from limited to open access social orders, which only a handful of countries have managed since WWII.”
More excerpts from the conclusion;
“The process of economic development is instead the movement from a limited access order to an open access order. This process is very difficult to engineer. Despite the massive attention to economic development by international donor agencies, only eight countries have made this transformation since WWII. Our approach implies that development requires a transformation in society from a limited access to an open access basis. This transformation takes place through what we have called creating the doorstep conditions, which represent a radical change in both the state and society: rule of law for elites; perpetual life for organizations, including the state; and political control of the military. Each of these changes increases the gains from specialization and exchange; they also create mechanisms that underpin impersonal exchange. For this reason, natural state on the doorstep are wealthier. Moreover, the doorstep conditions create incentives to make incremental increases in open access that can transform a natural state on the doorstep into an open access state.
We are only beginning to understand how politics and economics interact in either limited or open access social orders. Moreover, we know even less about the transition from one social order to the other: the process of economic and political development. Until we understand the fundamental nature of social orders, we have no chance of explaining how states transition from one to the other.
Social science is the study of how human beings interact to produce the complicated social structures we all live in. It follows that our primary focus must be on organizations, how groups of people organize their relationships in durable, and eventually, perpetual forms of interaction. Organizations are the key to understanding how societies perform, and institutions are the key to understanding how organizations form and behave. Competitive economic and political societies are impossible without open access to organizational forms. Understanding how societies have managed to sustain open access to organizational forms is the heart of understanding modern development.”
Via Arnold Kling. I thought I should highlight comment made by Hasan Jafri on their blog;
“The UAE and Qatar both are stable, affluent states. They are ruled like corporations by authoritarian business-educated sheiks with the help of trained managers. As for China and Vietnam, they already are viewed by developing nations as economic success models to replicate.”
Yes, I wonder why when a lot of small states could be run successfully like corporations, they often fail to do so.
Related;
An initiative on Fragile States headed by a ex World Bankers at CGD.
Did the West Aid Niyazov's Destruction of Turkmenistan?
A New Beginning For Turkmenistan
“The United States is spending billions of dollars trying to turn Afghanistan and Iraq -- both deep in the throes of civil war -- into democratic nations while all but abandoning their peaceful post-Soviet neighbors to the north. Turkmenistan is ready for a new beginning, and the West must finally step up to the plate. To do otherwise would waste a historic opportunity and allow yet another case of popular discontent with an illegitimate government to become an anti-Western lost cause”
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