Violence and Social Orders, by North, Weingast, and Wallis. A major theme is that there are natural states, or limited-access orders, in which only a minority of the population enjoys political rights and economic opportunity. One quote:
One of the principal institutional issues that emerged in this chapter concerned the problems of constraining personality: putting the king under the law. At the level of societies, the head of the dominant coalition–whether the pope or the Catholic Church, the emperor of Rome, or the king of a European state–reflects the realities of these natural states: the ruler is often above the law. This allows him or her to adjust the rules, privileges, rights, and laws to suit the needs of the coalition as the fortunes of various elites rise and fall. Elites gaining power must be granted more privileges and rents while those losing power also lose privileges and rents. The rules is not free to make these decisions at his discretion, but must instead attempt to maintain a coalition to support the natural state. Failure to do so risks coups, civil war, and other forms of disorder.
In an open-access order, where essentially all adults have political rights and economic opportunity, the challenge of bringing the head of state under the law has presumably been met. Sometimes, I am not so sure.
Also, consider another quote:
Party competition forces parties to compromise and to moderate interest group and constituency demands. Rent-creation cannot be the primary product of party competition in open-access orders. . .Because parties need to gain the support of many interests, they must temper the (rent-creating) demands of each, lest the associated extreme positions hinder the party’s electoral prospects.
If the authors are not careful, they will seem to have explained why the sugar lobby and the real estate lobby are ineffective in the U.S. and why the teachers’ union is ineffective in Maryland. They will have explained why we have such a simple tax code, and why it is so easy for unlicensed health care providers and unaccredited schools to gain traction.
. . .the interests active on any issue are endogenous. If a group attempts to extract too much, then other groups who are not normally active on an issue are likely to begin paying attention and become active. . .The endogenous approach suggests that a few open access order markets might be cartelized and protected, such as agriculture, and certain markets regulated to produce rents, such as airlines in mid-century United States. However, these markets are the exception, not the rule.
They wish to claim that rent-preservation is the essence of limited-access orders, but it is incidental and held in check under open-access orders. Perhaps they could cite Uber’s so-far successful breakthrough into the transportation market as an example in which the open-access order was able to activate enough support for Uber to prevent its destruction by incumbent taxi companies.
However, reading these passages, I found myself inclined to disagree with the authors. I tend to give more credit to the power of interest groups and less credit to the ability of the open-access order to confine rent-seeking. I think of the sugar lobby, the housing lobby, the teachers’ union in Maryland, occupational licensing in health care, . . .But to the authors’ point, the size of these rents probably is dwarfed by the size of entitlements, which are policies directed at the broader public. And yes, they will make a frontal assault on the Olson-Downs view that special interests always win.
To some of your comments, consider:
Open Access has been shrinking and has developed many constraints in our society (and Western Civilization).
There is no assurance, that once established, Open Access will be preserved or self-sustaining in any particular degree – or at all.
I think there’s a difference in scale. In the US, sugar producers are successful rent seekers, but all that means is they’ve managed to drive prices marginally higher by getting import quotas enacted.
On the other hand, you could think of European history and the various chartered companies that were granted various types of monopolies, which turned out to be enormously profitable. For a contemporary example, you could look at Egypt, where a handful of military leaders have acquired significant control over large commercial ventures:
The industries owned by the military have always been a powerful force in the country’s economy, though their profits and scope have never been disclosed to the public. In the years before the 2011 revolution, the military and its businesses sometimes competed for economic policymaking power with the family of ousted autocrat Hosni Mubarak and a handful of oligarchs.
Now, experts say, the Egyptian economy is increasingly shaped by the opaque desires of the ruling generals. And the military’s business activities appear to be expanding – from the manufacture of basic items such as bottled water and furniture into mega-infrastructure, energy and technology projects, analysts say.
“We’re dealing with a brand new economy that’s now run by ‘Military Inc’,” said Joshua Stacher, an Egypt expert at Kent State University in Ohio who has studied the military economy. Three years after Mubarak was toppled during massive demonstrations, Egypt’s endemic corruption hasn’t changed, Stacher said – just the order of who you do business with if you want to succeed in the Arab world’s largest state.
http://www.theguardian.com/world/2014/mar/18/egypt-military-economy-power-elections
Those guys are playing a different game than American business interests when it comes to rent-seeking.
The open-access versus closed-access division has never seemed like an analytically useful model to me. Acemoglu and Robinson had a book called “Why Nations Fail” trying to prove that closed-access orders were the root of political failure. Yet no one seems to be able to define the distinction in a way that makes sense. Acemoglu calls 18th century Britain an open-access order, but 1900’s Germany closed order. Yet Germany had meaningful universal suffrage elections. Is 2015 America really open order, when it is administered by a civil service bureaucracy that is outside of the control of elected officials? When the structure of the political system incentivizes voters to elect the same guy over and over again, so your district has seniority and can get more pork? Without a clear definition of terms, we cannot answer these questions, and analysis is impossible.
Regardless, it is clear to me from history that most of the worst tyranny comes from distributed tyranny. That is, a large swath of the population buys into some form of holy madness, and takes it upon themself to further the cause. There is only so much damage that a lone dictator can do, without the backing of the mob. The French Revolution, the slaughters of communism, the excesses of Maoism, the enforcement of Jim Crow, etc, all follow this pattern. Read this post on Maoist China for a clear example of how this works in practice. Also read the book Holy Madness: Romantics, Patriots and Revolutionaries, 1776-1871.
These theories about open-access orders are completely out of touch with the way real world politics plays out. Take for instance: “Party competition forces parties to compromise and to moderate interest group and constituency demands.” Well in the real world, voting is not a rational action, since the cost outweighs direct gains. The only way to get political action is to rouse up people’s passions, to get them agitated, to get them to view the other team as an unjust enemy. Power flows from passion. So the reality of party competition is much messier and nastier than a simple model based on rational interest.
Suggestion:
NBER Working Paper 12795, December 2006
I cannot imagine a free society void of special interests. I have numerous concerns that I wish to prevail in the political arena and favour special interests apt to defend my political preferences. Thus, I wish Big Oil were a more effective special interest than the green movement.
As long as robust conditions of liberty prevail, i.e. as long as meaningful political competition is possible, it is inevitable and quite legitimate that special interest of a certain kind (including those we detest) prevail over special interests of another kind.
It is the price we pay for freedom, indeed her demand, that our political enemies prevail on so many occasions. Freedom invites us to challenge our political opponents, encourages us to act as special interests confronting other special interests.
Wishing away political competition (especially its outcomes unpalatable to oneself) is not a worthy strategy for those conscious of liberty; the proper response is rather to engage in politics and seek what all our competitors are after: namely, becoming an effective special interest.
This right for everyone to become a special interest and enter open political competition is what constitutes the difference between an open access society and a closed access society.
I think the appropriate reference is more open vs more limited access. No state is an ideal example of either, and the defects you list in our current state seem more like deviations to the ideal than defects in the model.
The teachers union and sugar cartels and taxi medallions are privileged access interest groups.
No, the only thing that has kept the head of state under the law is the Common law system and the ancient liberties of the Anglosphere. Even then, the status waxed and waned and several times required taking the king’s head as a lesson to those that followed. It remains to be seen whether the civil culture of the English-speaking people continues to predominate, even in the Anglosphere. The culture seems to be waning of recent in Britain with their embrace of the EU’s regulatory regime and in the US under regulators and the current administration’s simple dare to be held to the law of the land.
You overlook the role of religious ideologies as one aspect of control.
The need for revenues as another.
There have been limitations even where there has been no code of law other than local customs.
Read the history of the Manchu conquest & dynasty.