Political Economics: Formation of the State

This essay is taken nearly verbatim from notes on the subject taken during a seminar at Boston College and later compiled into essay form. All information was presented by Dr. Fukuyama with additional content and context provided by me.

Fukuyama is perhaps best known for his influential textbook, The End of History and the Last Man (1992), which describes the evolution of political culture through both time as well as in cultural dynamics. As a political economist, he has focused extensively on the evolution and development of the State as a natural result of cultural orientation.

In order to lay down the foundation for this political development narrative, we need to first be introduced to Samuel Huntington, an influential sociologist and political economist, who has certainly impacted Fukuyama’s ideas. Huntington sees the present political conception of Modernization Theory as terribly flawed. As a product of the latter half of the 20th century, Political Modernization Theory claims that with progress in one area, progress in others follows suit; therefore, the best solution to the problems of political instability or social turmoil is through economic advancement. Political Modernization Theory is favored in capitalist circles where itemized improvements in economic output produces a cascade of social ‘good’. Huntington takes the opposite stance by claiming that “In modernizing, not all good things follow,” and for a case in point consider the ‘nation-building’ focus of US foreign policy in the last 3 decades.

American foreign policy became highly active and focused on nation and state building during the 80’s and 90’s in the hope of building modern, capitalist societies and markets around the world in order to fight the spread of communism. The goal of this progress was to “get to Denmark”: a developed country where democracy was authentic, capitalism secure, and the people happy (political, economic and social aspects). Ironically, political economists of the day had no idea just how Denmark came to be a democracy and therefore set up to completely miss the mark. Political theorists had completely neglected to consider how difficult it was for western Europe to become democratic in the first place. This difficulty is now mirrored and exemplified in recent revolutions such as with the Arab Springs – perhaps a straight transition to a western democracy is overly rash and even unfeasible.

Fukuyama identifies three sets of institutions which are necessary for modern political development. Theses are State institutions, the Rule of Law, and Institutions of Accountability. Together the three provide the basal resources for an advancing society to modernize effectively.

The state, at least in our present context, is defined as a “legitimate force which exhibits a monopoly over a territory”. This definition precludes the inclusion of some ‘traditional’ states which can be identified through the use of familial or personal consideration in government, and in fact some political economists would like include these proto-states in their definition. Fukuyama particularly distinguishes between these ‘traditional’, familial states and ‘modern’ states which strip all familial consideration within government to yield an impersonal–and therefore impartial–government. States, in order to progress, should not show favoritism which is found in so called traditional states; but instead, they should strive to become an impersonal vehicle of the governing body. The state is therefore the artific of the government which aims to maximize governmental power.

The second set of institutions required for the modernization and evolution of the state is a set of institutions that provide the “rule of law” to all citizens. The Rule of Law is more than just a set of legislation but in practice needs to transcend the rules and to “express the agreed upon rules which the community develops and which bind all.” The Rule of Law must impact the state’s chiefs and leaders as much as any other citizen; for without such universal ligature, the Rule of Law cannot fulfill a required role in limiting the power of the state over its citizens.

The last set of institutions are pivotal in providing accountability. Accountability defines and creates three of Plato’s six forms of government. Plato sees government as the rule of one over many, the few over many, or the many over all. Each of these simple schemas are bifurcated by the presence of lack of accountability in the aforementioned government. Consider, per exemplar, the distinction between tyranny and monarchy. The defining difference is the level of accountability that the government has to its citizens. This distinction was seen in 17th century England when the monarchy enjoyed the consent of the governed through the parliament.

The limits to the power of the state imposed by both the rule of law and the institutions of accountability helped to legitimize the state.

Now the path that we must take to build our theory of state evolution relies on one more assumption, an assumption of what drives human sociopolitical behavior. Economists run on the assumption that humans are inherently greedy and selfish, and that it is only through the incentives of the market economy that people come together at all. This Hobbesian view of the individual is terribly depressing, and perhaps it even eliminates the possibility of development in toto.

Fukuyama and many social scientists adhere to the Aristotelian view of man as a social animal. The varied sciences such as psychology, ecology and sociology all provide lines of evidence for this perspective. Biologists suggest, as evidence, that individuals will be reciprocal in proportion to the number of gene shared between them [The Selfish Gene]. To extend altruism past the familial barrier that’s seen in nature, reciprocal altruism is defined. This is the altruism which is extended in the hope of mutual return at some later date. One way to think of this would be to consider the concept of friends and family. Friends exist for reciprocal altruism and family for biological altruism. The combination and a dynamic of these two form the natural or default social structure. This is the form that the earliest social structures take when children start interacting on the playground; and as Fukuyama sees it, this is natural state of humanity [and not what Hobbs would describe].

It is reassuring that this would be the default for society if incentives were to suddenly dissolved. Rather than suddenly finding ourselves in a bloodbath of chaos, we would instead see kin-groups and high social structures materialize immediately (or those structures, already present in society, would simply rise in priority).

So, which was the first modern state, in Fukuyama’s terms?

By the 3rd century BCE, China had emerged from the Warring States period as an impressively modern state. The Qin dynasty consisted of all three classes of institutions. The state held a monopoly of legitimate power, Laws were firm and binding to all, and Accountability was ensured through the civil-service examination and the ability to check power.

The Qin dynasty was the ultimate conclusion of a period of condensation of small poleis through a period of sustained warring. Starting around 1000 BCE, the then 12k or so small poleis entered into frequent states of war for ~700 yrs which lead to a consolidation to approximately 16 by the 5th century and only 7 by the end of the Warring States period. Finally the Qin rose to dominate all of these and China was unified under one centralized state. Why war lead to the formation of states requires a brief explanation. The power of generals and military leaders draws all sorts of aristocracy to covet the positions, and during a time of peace this is readily done. But once war breakout, it quickly becomes apparent [to the sharp minded] that there is a want for talent in these positions. This combined with the transition to infantry from mounted cavalry (i.e. from aristocracy to peasants), leads to a mass conversion to a pay-army. An expensive army requires an efficient tax system, which in turn requires a bureaucracy. This creates a state.

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