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Taming Leviathan, part 1

May 1, 2012

In a previous post, I discussed my mental model for society. Basically, there are two groups – the soldiers and the workers, who represent coercive and exchange relationships. Human nature is such that both of these relationship types will always exist to some extent. Soldiers are needed to protect the workers from other soldiers (“roving bandits”) and establish order and property rights. Unfortunately, across the history of humanity, the majority of rulers have used their power to oppress and impoverish their subjects. Hence, if people want to live a decent life, constraints must be placed on the holders of coercive power.

The Right Stuff
“Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority, still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it.”
– Lord Acton

The vast majority of political effort is expended within the system: trying to find the right people and get them into power and trying to find the right policies and implementing them. Such an approach gets fairly quickly dismissed by social scientists – it is unfalsifiable, uncomplicated, tautological (for some statements), and smacks of unsophisticated cultural egocentrism. But cultural and virtue are the stuff of which society is made of. In some sense, everything boils down to individual actions, and thus the cultural and moral values which shape those actions will have a profound impact on society. Any system designed to prevent the abuse of one group by another will have to rely, even if only indirectly, on the virtue of the more powerful group. As Acton notes, leaders are only rarely virtuous. If you aren’t willing to do anything for power, you’ll lose to the guy who is.

Deirdre McCloskey focuses her research on the virtues which underpin various societies and their impact on economic and social outcomes, and I find her work quite persuasive. It basically states that societies where commercial (Bourgeois) virtues are upheld grow rich by supporting and encouraging a merchant class, and those who do not are held back by extractive institutions. This line of thinking can be very powerful, but if one is not careful, can fall into either tautology or cultural imperialism.

Democracy/Large Winning Coalitions
“The best argument against democracy is a five-minute conversation with the average voter.”
– Winston Churchill

In every society, policies are influenced by many individuals, although the size of this influential group varies widely between societies. In dictatorships, it may only consist of a few top generals who use the military to cow the populace into submission. Since the support of only a few are necessary, leaders rely on corruption and private payoffs to stay in power. In democracies, the influential group consists of a large group of voters. Within the influential group, there is the actual group that controls policy, the winning coalition. Because a government supported by a large winning coalition must appeal to a large group of people to win power, they will spend a large fraction of revenues on public goods and popular programs.

But democracy, at least as a sole constraint on leaders, is fundamentally flawed in many ways. First, voters are profoundly ignorant of the vast workings of government, which policies would be optimal, and of their representatives. How can a society function properly when the primary decision makers have so little knowledge of what they are deciding on? Even in democracy, voters have only a limited control over who is in power. Gerrymandering, periodic elections, the incumbent advantage, and insider access to money from corporations can all lead to a powerful bias in favor of those already in power. Politicians can often get away with horrible behavior and still maintain their grasp on power. When there are only two similar parties to chose from, voters have almost no say in policy. Even when politicians are controlled by the masses, the masses may not want what is right. Democracies are just as capable of mass killings, unjustified war, slavery, oppression of minorities, and other abuses of power, so long as those abuses of power are popular. Finally, even in a democracy, there are large disparities in access to political influence, and thus ability to steer policy to one’s advantage. Much of the political rewards handed out by a mature democracy go to groups who can overcome the collective action problem themselves and are wealthy and powerful.

In part two, I will discuss Constitutionalism, Competitive Governance and my conclusions.

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3 Comments leave one →
  1. Locke permalink
    May 1, 2012 2:29 pm

    In part two, I want you to solve this riddle:

    “In a room sit three great men: a king, a priest, and a rch man with his gold. Between them stands a sellsword, a little man of common birth and no great mind. Each of the great ones bids him slay the other two. ‘Do it,’ says the king, ‘for I am your lawful ruler.’ ‘Do it,’ says the priest, ‘for I command you in the name of God.’ ‘Do it,’ says the rich man, ‘and all this gold shall be yours.’ So tell me- who lives and who dies?”

    • May 1, 2012 2:36 pm

      That is the eternal story of politics. There is no single answer, but I think that’s what you’re getting at.

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  1. Taming Leviathan, Part 2 « azmytheconomics

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