Wednesday, April 24, 2013

Does the Evolution of Open Access Societies Show Moral Progress in History?

Looking over the deep evolutionary history of human social order, we can see two great social revolutions.  The First Social Revolution was the Neolithic revolution 10,000 to 5,000 years ago, when our human ancestors for the first time adopted agricultural production as their primary source of food--cultivating domesticated plants and herding domesticated animals rather than gathering wild plants and hunting wild animals.  Eventually, this led to the sedentary life of villages and towns and finally the first bureaucratic states in Mesopotamia, Egypt, China, the Indus river valley, Mesoamerica, and South America (the Incas).  The Second Social Revolution was the modern revolution that began about 250 years ago that led to industrialized liberal commercial democracies, beginning in Great Britain, the United States, and France.

The First Social Revolution brought a decline in violence and an increase in prosperity and population.  The Second Social Revolution brought an even greater decline in violence and an even greater increase in prosperity and population.

Explaining how and why these social revolutions occurred is one of the fundamental projects for the social sciences.  More than that, explaining these social revolutions has deep implications for how we interpret the meaning of human life on earth.  Has life been getting better in ways that suggest that human history is generally progressive?  Does this include moral progress?  Or is the pattern of history better understood as one of decline?  Or is it neither progressive nor declining but cyclical or random?  Is history purposeful?  Or is it foolish to see any purposeful pattern in history?  If there is any pattern in human history, does that show some divine or cosmic intelligence at work?  Or can any historical pattern be explained by purely human factors?

Douglass C. North, John Joseph Wallis, and Barry Weingast have written one of the most instructive books for thinking about such questions--Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge University Press, 2009).  They argue that the two great social revolutions can be understood by asking two questions.  How does a society manage the problem of violence?  And how does a society support and control access to organizations?  In answering those questions, one can distinguish three distinct social orders: the foraging order, the limited access order (also called "the natural state"), and the open access order.

All societies face the problem of how to control violence.  In the foraging order of hunter-gatherers, which was the social order for most of human evolutionary history, violence was controlled through personal knowledge and personal interaction.  Those who initiated violence provoked violent retaliation.  Conflict was mediated through customary norms.  Although violence could be limited in foraging groups, the threat of violence was ever present both within and between small bands and larger tribal units.  Such foraging bands were small--perhaps 25 or so individuals--although they could be occasionally brought together into tribal communities of hundreds of individuals.  The primary organizational form was the family and kinship groups.  The level of violence within and between foraging groups can be very high.

With the development of agriculture in the First Social Revolution, there arose the first large sedentary groups with tens of thousands of individuals, which allowed for the emergence of the first states and of what North, Wallis, and Weingast call limited access orders.  These states were ruled by elites--a small group of powerful individuals exercising political, economic, religious, and social authority over a much larger group of subordinate individuals.  There was a decline in violence because the state provided third-party enforcement of agreements and relationships between individuals and organizations. 

But to assume the Weberian definition of the state as holding a monopoly on the legitimate exercise of violence is mistaken, because this assumes away the problem of violence:  when many powerful individuals can exercise violence, how can they commit themselves to an agreement to stop fighting?  Even if a single individual is designated as the king, he cannot rule without the support of a coalition of powerful individuals leading organizations.  To control violence, a limited access order must form a dominant coalition of powerful individuals who agree not to fight one another, and they agree to this because membership in the coalition gives them special privileges--most importantly, the privileged access to organizations supported by the state that give them entry to valued resources (such as land, labor, and capital) and valued activities (like religion and education).

The economic benefits of these privileges are what economists today call "rents":  a rent is the excess payment for an economic resource over the amount necessary to keep that resource in its current use.  So, for example, if someone is paid $15 an hour for work he would be willing to do for $10 an hour, then the extra $5 an hour is rent.  Political restrictions on who may enter a field of economic activity can create an artificial scarcity of entrants in the field, which secures excess returns or rents for those with the privilege access.  The practice of doing this is called "rent-seeking" activity.

From the emergence of the first states about 5,000 years ago to the beginning of the 19th century, almost all states were what North, Wallis, and Weingast call limited access orders, because the privilege of forming political, economic, and social organizations that the state would support was limited to elites in the dominant coalition.  There is a great variety in the kinds of regimes that can be recognized as limited access orders--from ancient Mesopotamia to Tudor England to Putin's Russia.

North, Wallis, and Weingast distinguish three levels of development among limited access orders--fragile, basic, and mature.  A fragile limited access order can barely preserve any peaceful order from collapsing into violence, because the dominant coalition is unstable and constantly shifting with the changing fortunes of individual members.  Contemporary examples would be Iraq, Afghanistan, and Somalia.

A basic limited access order can preserve a stable organizational structure based on the dominant coalition of elites.  Recent examples would be the Soviet Union, Saudi Arabia, and Mexico from the 1940s to the 1980s.

A mature limited access order can sustain durable institutional structures for the state while also supporting some elite organizations outside the state.  Recent examples would be Mexico since the 1990s, Brazil, India, and China.

According to North, Wallis, and Weingast, the transition from mature limited access orders to open access orders began for the first time in the first half of the 19th century--in the United States, Great Britain, and France.  The open access order is distinctive in how it handles the problem of violence and in how it handles access to organizations. 

First, it handles violence by fulfilling the Weberian condition for the state in that the government holds a monopoly on the legitimate use of violence, and there are social and political controls on the use of violence by the military and the police.

Second, an open access order allows most citizens to have open access to political, economic, or social organizations that the state will support.  These organisations are free to compete with one another in peaceful ways.

The opening of access to economic and political organizations is clearly seen in the 1840s and 1850s in the United States and Great Britain.  In both countries, there were general laws of incorporation that allowed citizens to form corporations with legally stipulated rights and duties through procedures for registration and minimal conditions impersonally applied.  Previously, corporations had been formed by governments as special privileges for influential elites.  Each corporate charter was separately created, and there was no open access to incorporation.  But with the general laws of incorporation, what previously was an elite privilege was openly available based on impersonal standards for registration as a corporation.  As a consequence, there was a huge increase in the number of corporations in the United States and Great Britain.  And this was correlated with modern growth rates.  The most prosperous societies tend to be those with large numbers of economic organizations.

At the same time, in the United States and Great Britain, the first party systems emerged, in which ever larger numbers of citizens were free to register as voters identified as members of a political party.  Organizational entry to political competition became as open as organizational entry to economic competition.  Never before in history had people been free to form new economic and political organizations at will.

Although North, Wallis, and Weingast emphasize open entry to economic and political organizations, they suggest that open entry to social organizations was also important for the open access order.  Social organizations would include religious groups, educational institutions, and all kinds of voluntary associations.  One of the crucial manifestations of more open access to social organizations in the 19th century, in the U.S. and England, was the extension of religious toleration to allow for a free competition of religious groups.  Thus, the principle of open access was extended to the polity, the economy, and the society.

North, Wallis, and Weingast draw their fundamental insight about the open access order from Joseph Schumpeter's Capitalism, Socialism, and Democracy (1942)--particularly, his  conception of the process of "creative destruction" through free competition.  Open access orders allow creative political, economic, and social destruction through competition, in which successful enterprises proliferate and failed enterprises are eliminated.  Society secures open access to organizations as vehicles for political, economic, and social entrepreneurs to compete in implementing their ideas.  Such free competition in political, economic, and social experimentation allows a social order to achieve adaptive efficiency responding to new and unpredictable challenges.

North, Wallis, and Weingast estimate that as many as twenty-five countries have made the transition to the open access order, and that these countries constitute about fifteen or twenty percent of the population of the world today.  These are the most prosperous and generally the most developed countries in the world.  The rest of the world is still dominated by limited access orders that are less prosperous and less developed.  And yet even these countries with limited access orders benefit from trading with and learning from the countries with open access orders.

The argument of North, Wallis, and Weingast has deep implications for international development policy--as indicated in a new book that they have edited: In the Shadow of Violence: Politics, Economics, and the Problems of Development (Cambridge University Press, 2013).  If they are right, the policies of the World Bank and other international development agencies have failed, because in promoting the adoption of free markets and democratic elections in developing countries, these policies will destabilise the elite coalitions in limited access orders and promote violence rather than economic and political development.  Elections and markets don't work as well in limited access orders as they do in open access orders, and achieving a successful transition from limited access to open access is very hard.  This explains the failures of development policy in countries like Iraq and Afghanistan.

The advice of North, Wallis, and Weingast to agencies like the World Bank is to find ways to promote the movement of fragile and basic limited access orders to mature limited access orders, which provide the doorstep conditions for an eventual transition to open access--conditions such as the rule of law for elites, stable elite organizations inside and outside the framework of the state, and centralized control of the military.

But what about my original question?  Does this movement from foraging orders to limited access orders to open access orders show progress in history--moral, political, and economic progress?

In Violence and Social Orders, North, Wallis, and Weingast deny that there is any historical teleology in their work: "There is no teleology built into the framework: it is a dynamic explanation of social change, not of social progress" (xii).  And they imply that as empirical social scientists who assume the fact/value dichotomy, they cannot scientifically make moral judgments.

And yet they repeatedly use language that indicates not just social change, but social progress.  After all, the very idea of "development" and of distinguishing "developing" and "developed" countries implies a moral teleology.  Similarly, the idea of "mature" forms of limited access orders carries the same implication.

They speak of how "good political institutions" promote prosperity (3).  They speak of how sometimes mature forms of limited access orders can "regress" to basic forms (49).  They also argue that open access orders are "better at constructing effective responses to novel problems," because they have "a greater degree of adaptive efficiency" in promoting experimentation such that "successful adaptations remain while failures tend to disappear" (133, 252).  They conclude that "open access produces enough output to make everyone, elite and non-elite, better off" (188).

Clearly, there is no teleology here if by that one means an inevitably determined movement in one direction towards one final end.  There can be "regression" in the history of limited access orders, falling back from mature forms to basic and fragile forms.  And while no country that has made the transition to an open access order has fallen back into a limited access order, there is no reason to think this could never happen.

And yet there is a teleology here if by that one means that there are better and worse forms of social order, and that recent history has brought better social orders into existence--the orders that provide open access to political, economic, and social competition.

But what's our standard of better and worse?  North, Wallis, and Weingast are vague about this, as when they speak of how "open access produces enough output to make everyone, elite and non-elite, better off."  By "output" they seem to mean material prosperity, and the progress in that respect is clearly and easily measurable.  Gregory Clark's A Farewell to Alms and Matt Ridley's Rational Optimist survey the evidence for the amazing improvement in the material standard of living brought by open access societies.  And Steven Pinker's Better Angels of Our Nature shows the evidence for the equally amazing decline in violence across human history and particularly in the last few centuries.

I would argue for an even broader standard in measuring how open access societies have made us "better off."  As I have often maintained on this blog, there are at least 20 natural desires that constitute the evolved generic goods of life.  An open access order--with its open polity, open economy, and open society--provides the political, economic, and social liberties that constitute the conditions for the fullest satisfaction of those natural desires over a whole life.

This supports the case for Darwinian liberalism--for the idea that open competition of ideas and practices in political, economic, and social life promotes "adaptive efficiency" in pursuing the human goods of life.

It is remarkable that North, Wallis, and Weingast don't follow the logic of open competition in politics to what might seem to be its final end--eliminating the governmental monopoly in violence through a free competition of governments for consumers of security.  That's the conclusion drawn by liberal anti-statists, beginning with Gustave de Molinari, a Belgian-born writer who became one of the leading French liberal economists in the 19th century.  In 1849, in his essay on "The Production of Security," Molinari argued that if free markets can and should provide goods and services at the least cost through free competition, then free markets should likewise provide the services of protection through the free competition of governments.  This would eliminate the present monopoly in the legitimate exercise of violence claimed by the modern state, and thus eliminate the exploitation that such monopoly power conveys to those elite groups that exercise governmental power.  Molinari's argument was debated in 1849 at a meeting of the Societe d'Economie Politique, where Charles Dunoyer criticized Moliari's proposal as unrealistic and claimed that governmental exploitation could be minimized through the open competition of political parties in an electoral system of democratic representation. 

North, Wallis, and Weingast embrace Dunoyer's position, although they seem to be unaware of this debate among the French liberals over Molinari's argument.  The problem, however, is that party competition in a democracy does not eliminate governmental rent-seeking.  In fact, North, Wallis, and Weingast admit this, but they insist that, at least, rent-seeking that benefits only a narrow interest is "much less likely to occur in an open access society than in a natural state" (24, 141).  And yet they also indicate that an open access society tends to promote more growth in the size of government than is the case in a limited access society (122-25).  They defend the growth in the modern welfare state as a way of redistributing wealth that does not disrupt markets.  But if this growth in governmental intervention in the economy and society is unlimited, how can this not disrupt markets and threaten liberty?  If monopolies are necessarily inefficient and exploitative, then won't a government with a Weberian monopoly in the legitimate exercise of coercive violence be inefficient and exploitative?

Douglass North's summary of his book in a lecture can be found here.  Barry Weingast's PowerPoint outline of the book can be found here.

My posts on Deirdre McCloskey's criticism of North's institutionalism for failing to see how the ethical ideas of bourgeois equality and dignity brought the Great Enrichment can be found here.

A post on the theory of "minimum winning coalitions" can be found here.

A post on how "private governance" can replace governance by the state can be found here.


Kent Guida said...

Very interesting. Having read the North summary, I'll have to read the book.

Your question puts one in mind of Hegel, a name which does not appear in the book's index. Is man's moral progress a kind of spontaneous order arising out of actions undertaken for the immediate benefits to particular people? Is this the way that reason rules the world?

As North says in his summary, economics is good at examining the spontaneous order of the moment, but not so good at understanding how it works over time -- the problem Hegel claims to have solved.

One is encouraged by North's insight that instutions are based on the society's 'belief system' --one of Hegel's main points -- and that one has to start by studying them before suggesting ways to tinker with the institutions.

He also raises the question of whether and how open access societys might revert to a limited access society -- the Tocqueville question.

Thanks for bringing this work to our attention. Look forward to your further discussion.

Anonymous said...

On the first revolution, Cochran and Harpending's book is about the best thing I've ever read:,000_Year_Explosion

Tomás said...

"Open societies" (what an ideological term, my God) are clearly dying of openness. Their founding populations are being wiped out. That's a mathematical fact.

Anything and everything in the universe is, at the end of the day, a problem of unstable equilibria. Some classical liberals are childish by forgetting this über-aristotelian theme. As it seems, some of they will keep on denying observable reality till there is not more people like themselves out there, pushing for dysgenic nanny states and an ethnically maladaptive "excess of openness" in the process (see Salter). It's obviously suicidal, but they're so fascinated with their powerful intellects...

They simply can't think out of the box. Everything they say ends being just an ideological act of support for the current political, social and economic arrangements.

jstrate said...

These authors raise a lot of big questions but I'd say still unanswered. How does one go about answering them except through gathering the data and testing hypotheses. I've long thought that inter-group competition and conflict was the "prime mover" in human evolution but only a necessary, and not sufficient cause of the various transitions in human history discussed above. At their worst, political communities (usually chiefdoms and states) are protection/extraction rackets (van den Berghe). Under some circumstances, however, rulers find it to their advantage to furnish public goods of various kinds (internal security is one, but gets far too much emphasis) in exchange for so called "rents." Open societies have more efficient economies, their rulers may be more popular or at least not despotic, and these may confer a variety of advantages, not the least enhancing military power.

Instant Karma said...

I just recently stumbled upon this site, and it is already one of my favorite places on the Internet. I read this book twice and agree completely with Larry's summary. Indeed, this summary of the book is superior to my own notes.