Russia's Natural State of Corruption. Vladimir Putin holds his country back. Ronald Bailey

Until the 19th century, all societies were natural states run by elites that controlled access to political power and economic resources. In natural states the politics that matter takes place among members of this elite as they jockey for position among themselves. Access to all organizations is limited to members of the elite and no significant organizations—religious, economic, or political—exist outside of the state. Natural states are characterized by patron-client networks in which people (traders, producers, priests, educators, etc.) personally ally themselves with specific militarily potent individuals. The patrons offer protection and channel resources to clients in exchange for their loyalty and support should intra-elite violence break out. While the authors assert that natural states are a fundamental way of organizing society, they also acknowledge that not all natural states are exactly alike. “Mesopotamia in the third millennium B.C.E., Britain under the Tudors, and modern Russia under Putin were all natural states, but very different societies,” they note. We’ll be coming back to Putin below.

But how to get from natural states to the open access orders? The transition has to be consistent with the interests of the dominant elite. If the members of the elite do not think they will be better off by economic and social changes that lead to open access, the transition will not occur. The authors identify three “doorstep conditions” that enable the development of open access orders: (1) Rule of law for elites; (2) Perpetually lived forms of public and private elite organizations, including the state itself; and (3) Consolidated political control of the military. 

Economic and political competition sparked by open access orders produces innovation that creates wealth. Innovation essentially becomes the way to create economic rents, i.e., profits above the normal rate of return. The authors note that before 1840, long run economic growth was essentially zero. Since open access orders evolved, economic growth has been steady at around 1.5 percent per year.

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Source: Francisco Capella.