This essay is based on the working paper “The Economic Origins of Government” by Robert C. Allen, Mattia C. Bertazzini, and Leander Heldring.
Governments play a key role in the differences in prosperity between the richest and the poorest. Governments can protect property rights, guarantee a level playing field, and provide incentives for investment and entrepreneurship. There is no guarantee that this will happen. History is littered with examples of abuse of power, corruption, and repression. The government is therefore central to our understanding of economic growth and development.
This centrality has motivated a long series of thinkers, going back to Plato, Thomas Hobbes, and John Locke to ask where government comes from. Their theories, as well as the theories of their intellectual successors, fall into two broad categories.
Two clusters of theories of the origins of the state
Many early theories of government, such as those of Hobbes and Locke, emphasized what citizens stood to gain from a government, relative to a fictitious “state of nature.” The main things they thought government could provide were peace (for Hobbes) or dispute resolution (for Locke). This type of view is the core view among economists (but not all social scientists) today.
Economists view the appropriate scope of government intervention to lie with those activities that communities or the market cannot provide themselves, such as defense, property rights protection, and other public goods.
A second influential cluster of theories views the state as an organization tasked with extraction on behalf of an elite. This view is popular in political science and anthropology, and fundamentally it goes back to Karl Marx. Government is fundamentally extractive, and policy should therefore focus on constraining government intervention.
Naturally, at different times, modern governments have overreached as well as been productive. The role government has to play in explaining the differences between poor and rich countries lies in the balance between the two.
In a recent paper, Bob Allen, Mattia Bertazzini, and I combine data on the first states in Iraq with shifting rivers as a source of variation in the degree to which individuals stand to gain from government intervention to study whether the first states in this context were primarily cooperative or primarily extractive.
Mesopotamia and shifting rivers
The setting of our study is the formation of the first states in history in southern Iraq. Key to testing our hypothesis is the fact that between 5000 BCE and today, Iraq's main rivers, the Euphrates and the Tigris, shifted into their current courses in six sudden shifts. The figure below on the right maps southern Iraq, our study area, as well as the sample.
We study the first river shift in history—which happened around 2850 BCE—as a way to differentiate cooperative and extractive theories of government. Imagine a farmer farming next to the river. The river breaks through its bed upstream and finds a new flow, which is now away from the farmer. The farmer is not alone, of course, in this predicament. The farmer can pick up and move, or he can organize and build a canal back through the desert to farm.
This trade-off is at the core of our natural experiment. We posit that if state formation is primarily cooperative, we expect states to form where the river shifted away. Extractive state formation, instead, should occur where there is the most to gain from extraction, which is next to an unchanged stretch of river or a location that is now, after the shift, closer to the river rather than farther away.
How to test this idea
The challenge studying early states is that the state is often the organization that collects data on its own functioning—or, in the case of repressive government, other states or international organizations collect data. For the first states, this data does not exist.
In order to remedy this, we turned to archaeology. This part of the world has been extensively covered by archaeologists. The fact that archaeologists carried out “sweep” surveys—meaning that they fully survey an area rather than searching where they expect to find something—meant we could put together a dataset of river shifts and states. In addition, we collected data on what the government did. We collect data on where canals are built and where administrative buildings appear.
The origins of government
Our main findings are that, when a river shifts away, states form where the river shifted, rather than elsewhere. This main result is best illustrated with the two maps below.
Note how between the two figures, the river system changes (e.g., north of Adab or south-east of Esnunna). In red and black we plot villages and cities, and in gray we indicate cities that had some form of government before the shift (in the left figure), and states in the right figure. The main conclusion from comparing these figures is that states form where the river shifted (both in the north and south) and where there was previous occupation, in the south. Notably, Adab, Umma, Nippur, Larsa, and Abu Salabikh all form as new states.
This effect is even clearer if we plot the next quadrant of figures, where we just study the river shift step by step. In the first figure below we indicate, in gray, areas where the river will shift. In the second figure, we indicate, in red, which of these are populated. We also add the cities from the previous figure. Note that this is what Mesopotamia looked like before the river shifted.
In the bottom left panel, we plot the location of the river after it had shifted. We still plot the locations that used to be able to use the river, but now can’t. These are now away from the river. On the bottom right, we overlay the new states over the locations that were affected, which are now again indicated with a maroon dot if they were inhabited. Note that states form in affected places that were inhabited. This is the main conclusion of the paper. States form where cooperation is needed, not where the returns to extraction are highest.
We then explore what governments do, and we find that governments construct irrigation canals back to where the river shifted, exactly as we hypothesized when setting up the study around shifting rivers. The newly formed states also build administrative infrastructure in cities, provide defense, and start administrating economic affairs. In the final part of the study, we provide evidence of how exactly the first governments did this.
We find that the primary tasks of these first states were not in coercion or war, but in coordination and dispute resolution. Before the formation of the first states, extended kinship groups, called “lineages,” would adjudicate disputes, coordinate through assemblies, and provide public goods locally. These functions continued to be performed within individual lineages after the formation of states, but the newly formed governments extended these functions between lineages. The internal structure of the government mimicked lineage organization with a chief—lugal—acting as the lineage head of the state. The first states were in essence clever adaptations of existing social structures to cope with changing circumstances.
To round our results we provide evidence that, gradually, these states accumulated power, and we enter more familiar territory where states are capable to provide public good as well as to repress.
Modern government is our most complex institution and is a key factor in poverty and prosperity. We show that, in its origins, government was cooperative. We hope that this analysis inspires and guides further research into the origins of government but also into what realms of human social and economic activity should naturally be under the purview of states and government.
Read the full working paper here.
Leander Heldring is an Assistant Professor at Kellogg School of management at Northwestern University.
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