Book Review | Political Economy

Photo by Steve Carrera on Unsplash
Photo by Steve Carrera on Unsplash

Economy

The Narrow Corridor - finding balance between the state and society

The state pursues orderliness while society seeks liberty. When both push their way for too much of it, one turns repressive, the other becomes unsustainable. Daron Acemoglu and James A. Robinson, authors of the highly influential Why Nations Fail?, ask how do we find balance in tussle between the two forces - state versus society? A book review:

By Ashraya Dixit |

COVID-19 has introduced crises across all countries on many fronts, including in Nepal. One challenge emerges with respect to individual freedom and liberty. What will be the future for governments and societies around the world after COVID-19? Governments’ ability to implement lockdowns has given some a renewed taste for consolidated power. For others, the pandemic has laid bare their inadequacies and weakened them further. At the same time accelerated technology adoption has expanded the power of those controlling digital platforms to seek ever more ingenious ways to surveil and control individual decision-making. COVID-19’s impact may take years to fully deconstruct. It was for this reason I started reading The Narrow Corridor.  

To help us better understand the conditions that allow a country and its citizens to develop more freedom, Daren Acemoglu and James A. Robinson - professors at MIT and the University of Chicago respectively who also jointly wrote Why Nations Fail – have come out with their new book – The Narrow Corridor. 

The book’s framework could help us think through the global turbulence since the outbreak of COVID-19 and ongoing political changes. Will countries become liberal democracies like the US/UK, digital dictatorships such as China, or anarchic as in some regions of the Middle East, Africa, and Asia? 

Fig 1: The Evolution of Despotic, Shackled, and Absent LeviathanThe Narrow Corridor is about the evolving relationship between individual humans that want liberty and a leviathan state that seeks to oppress. The authors refer to John Locke to define liberty: it is a condition where an individual has the “perfect freedom to order their actions and dispose of their possessions and persons, as they think fit, within the bounds of the law of nature, without asking leave, or depending upon the will of any other man.”

The authors define a leviathan as articulated by Thomas Hobbes during the English Civil War of the 1640s: it is the depiction of a common power (State or Common-Wealth) – a centralized authority that can make men/women fear one entity rather than every other person and allow a country to come out of a state of anarchy. The authors’ central thesis is that liberty depends on the type of leviathan that emerges and evolves. It may be Absent, Despotic, or Shackled.

I share a quick summary of the book’s framework – the different leviathan society needs to put up with – and try to apply the framework to Nepal.

Absent Leviathan
How do individual humans’ function without a centralized form of power to broker relationships and transactions? Without a leviathan, a society might fall into Warre, a state of anarchy. For example, large parts of the Democratic Republic of Congo today are controlled by rebel groups, while murder, theft, extortion, and intimidation are commonplace. The Congolese have a running joke of a make-believe article in the constitution: ‘Dèbrouillez-vous’, or ‘fend for yourself’. Lagos, Nigeria, in the 1990s, was also in a state of chaos then. Conflict was resolved in favor of the stronger, better armed party and individuals had to fend for themselves against gangs that preyed on people and businessmen. Killings, lootings, and pillaging were the norm. Warre is one outcome from an Absent Leviathan. 

Warre is not the only outcome. Widespread violence can be minimized even without a strong central state. Tribal groups – such as the Mbuti Pygmies of the Congo rainforests, the Akan people of modern Ghana and Côte d’Ivoire, or 15th century mountain-dwelling Albanians that practiced Kanun – have extensive societal norms to constrain individual behavior, regulate conflicts, and prevent destabilization. Ingrained customs, rituals, and patterns of behavior have evolved over generations to allow for community decision-making and in exacting punishment. 

Yet, this cage of norms that regulates life in the absence of a leviathan can tighten itself and impose a terrible form of dominance over individuals. Such dominance can be along gender lines, as in Saudi Arabia or along the lines of caste, as in India - both countries that historically did not have strong leviathans. Norms can also cage the economy. Nigeria’s Tiv society norms were such that anyone accumulating power to exert authority over others were pulled back by accusations of witchcraft. 

Despotic Leviathan
A state’s capabilities depend on the capacity of its institutional bodies, primarily the bureaucracy. The bureaucracy may be adept, but its goals may differ from that of the broader society. In Nazi Germany in the 1930s, efficient bureaucratic bodies did not just focus on resolving disputes, providing service, and preventing anarchy, but on dispossessing and murdering Jews. Such dominance of the state against its citizens with violence is another face of the leviathan. Hobbes had depicted the leviathan as having the ability to protect its citizens, provide public services, and prevent Warre; yet he failed to highlight that the leviathan can be two-faced. The Chinese State during its Great Leap forward is another example of a Despotic Leviathan.

A Despotic Leviathan does have interest to incentivize production and trade. It wants to enforce some laws and have predictability, so that it can raise taxes. A despotic Leviathan can even provide public services and infrastructure to stimulate ‘despotic growth’. Prophet Muhammad’s ability to enforce laws and resolve disputes in Medina during the early days of the Islamic state allowed commerce and trade to flourish. Warring clans had dominated Medina beforehand, and the emerging state prevented disputes from escalating further and allowed commerce to flourish. However, later Caliphates – the latter years of Abbasid and Ubaydid-Fatimid rule - were characterized by overburdening taxes, eventually leading to lower productivity and lower tax collection and the disintegration of public service and infrastructure. 

Any form of leviathan, even a despotic one, can allow society and the economy some stability compared to a country in Warre or captured by a cage of norms. Yet, a despotic leviathan is fragile and limited. So, this leviathan is tempted to extract more and more resources from society and the economy, stifling economic growth. Yes, it can stimulate some productivity, but it can prevent more productive activities that typically come through investment, innovation, and experimentation. 

Shackled Leviathan
The citizenry must build strength to shackle the leviathan and the elites who seek to influence the leviathan. The statesman Solon from Athens in 600 B.C. allowed Athenians to do this with legislation that, among others, banned debt peonage and allowed broad citizen participation in Athens’ lower house. He curbed behavior of humiliation and intimidation, even against slaves, with his Hubris Law. 

Solon’s laws mitigated the dominance of elites among the citizens and increased the capacity of the state to serve people. This is the essence of a Shackled Leviathan. If the state becomes powerful along with the elite who benefit from that concentration of power but without the broader society building strength simultaneously, the state becomes despotic. If the state falls behind compared to its citizens in building capacity, we get an absent leviathan. The state and society both need to progress and move together, where neither gets the upper hand. 

The phenomenon of a Shackled Leviathan arises through the Red Queen Effect (referring to the Red Queen in Lewis Carrol’s books, and used in evolutionary biology). It is an equilibrium situation where the power of the state and society must increase together just to maintain the status quo. The state and society both need to keep evolving and growing, so that both maintain balance with one another, push the capabilities of one another, and allow liberty to strengthen. 

Like Solon’s laws, the Magna Carta charter in the 12th century constrained the English King from collecting taxation without consent and protected the non-free people. Though the charter was negotiated by rebellious barons, it became the foundation of England’s political institutions; the monitoring body of 25 barons remains today in the form of the British parliament and other similar structures across Europe. 

Paper Leviathan
A paper Leviathan – where the state exists with laws and some power but is extremely weak – is another outcome for a state. Lebanon is one such example. Representation in the parliament is frozen according to religious and clan lines based on the censuses from the 1930s. The government is always in gridlock, and state institutions are extremely weak. As a result, power rests with divided community groups. Some argue Beirut’s 2020 explosion from stored ammonium nitrate was a result of a weak state, as were the massive trash pileups in the country in the last decade. The state is weak by design, and religious communities and their leaders provide security and public services. 

Another example is the Argentinian State, which is arbitrary, creates uncertainty, and disempowers people. Power flows through strong personal ties, with the bureaucracy dominated by gnocchi. Gnocchi in Italian is dumplings, but, in Argentina, refers to ghost-workers in the bureaucracy – people with political ties who receive paychecks but never show up to work. The Argentinian state looks and acts like a state but does not work like one. An old Ghanaian saying sums up the situation: “For my friends, everything; for my enemies, the law.” 

Leviathan, liberty, and Nepal
Achieving durable liberty, the authors say, is about moving into the narrow corridor and forging a balance between the state and citizens for building a Shackled Leviathan. After the fall of the despotic apartheid regime in 1994, South Africa built a coalition between the ANC (Nelson Mandela’s political party), middle-class black South Africans, and white industrialists to expand broad economic opportunities and protect individual rights. 

When Bola Ahmed Tinubu inherited an extremely weak public office after being elected governor of Lagos in 1999, he appointed qualified people instead of political allies to key political positions and rebuilt the bureaucracy. He vastly expanded tax collection and funded a citizen registry, trash collection, traffic, security, new infrastructure, and more. 

Fig 2: Doorways into the CorridorIn general, to move into and stay within the corridor, there is a need to expand the capacity of the state if the state is Absent (Path 2 in Figure 6). If the state is Despotic, there is a need to increase society’s power (Path 1). And if the state only exists on Paper Leviathan, there is a need to increase power of the state and society simultaneously (Path 3).

The Nepali state and society have undergone many upheavals and changes since the 1950s. The concentration, use, and contest for power has changed and morphed countless times, and it is extremely difficult to characterize the Nepali state as Absent, Despotic or Shackled. Growing up as a student in the late 90s, I heard the state did not even exist outside Kathmandu, particularly during the civil war. Nepal’s many ethnic groups, in the mid and upper hills and the plains, relied on their rituals and customs adapted over centuries to manage political, social, and environmental relations. The leviathan seemed absent, and different ‘cage of norms’ seemed to keep isolated societies somewhat intact. Yet, preceding this period, during the days of the Panchayat, the state had stronger control over many activities in the country, particularly those that were economically relevant. The leviathan seemed despotic. 

In the present time, even with the new constitution, the Nepali state seems sometimes despotic, sometimes shackled, and sometimes existing only on paper. Organs of the state at times, seem adamant on flexing their muscles, while other times Nepal’s civil society seems able to push back. With the onset of more provincial legislation and administration, paper leviathans seem to be in the making. It may, therefore, take several more years or decades for scholars to appropriately characterize and deconstruct Nepal’s leviathan. Applying the authors’ framework on Nepal during COVID-19 is indeed a tough task. 

The Narrow Corridor brings examples from history of societies living with different leviathans and is an excellent read for amateur political economists. It may have been built with mathematical precision, yet it is the absence of much mathematics in the book that makes it readable. The book suggests there is no universal way for countries to seek liberty. The path to end up with a Shackled Leviathan is different depending on its starting point - an Absent, Despotic, or Paper Leviathan - and where rebalancing efforts are needed to enter and stay in the narrow corridor of liberty.

The Narrow Corridor: States, Societies, and the Fate of Liberty
Daren Acemoglu and James A. Robinson
Penguin Press 2019, 560 pages
 

Ashraya Dixit is a Senior Fellow at Nepal Economic Forum (NEF).

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