Using historical analysis as a tool to shed light on modern issues of economic and political development raises an interesting issue: is there an ‘ideal’ (generalizable) model of development from which we should look for deviation, or are there many possible paths? A fundamental question of development theory, Bates, Nef, and Gerschenkron all address this issue in their work to some extent.1 Quite clear from these texts is the fact that economics and politics are deeply intertwined; less obvious is the degree to which we can extrapolate their findings to aid currently flailing states or make predictions for the future. Most importantly, their historical analyses seem to suggest an unintuitive conclusion - that economics substantially influences the shape of politics, rather than the other way around.
Bates seeks a longitudinal explanation for variance in the development levels of modern societies. In spite of their strikingly similar pre-industrial situations and early polices aimed at industrializing, Third World countries have not enjoyed the same sort of growth as the early-industrializing European countries. Employing a historical narrative to articulate a process of development, he identifies historical period as the critical variable in this asymmetry of development.
His central argument is that critical institutions in European states were forged by war – it is the absence of this threat that prevents the new, juridical states from developing parallel institutions. The road to prosperity requires a shift from subsistence agriculture and kin-based mechanisms of enforcement to specialization within urban city centers. Rulers – whom Bates calls “specialists in violence” - replace kin networks as the source for the threat of violence (necessary to ensure security of person, property and contracts). These monarchs exchange their enforcement services for tax revenues, which they devote to increasing their military power relative to other heads of state. Ironically, the ability to credibly threaten violence that makes a ruler desirable also depresses growth, since a monarch strong enough to provide a credible threat is strong enough to extract wealth from the populace by force.
In need of substantial amounts of capital to make war, monarchs will be unable to raise large enough sums by forcible extraction, and will find that the most efficient way to maximize their payoffs is to bind their hands by endowing assemblies with power. In this way rulers not only make themselves attractive to private creditors, but also encourage their subjects to invest in capital (safe in the knowledge that their investments will be protected) which spurs economic growth – and, therefore, tax revenue.
According to Bates, states emerging under the modern system have neither the martial imperative nor the problems securing loans that proved so vital to the development of these growth-promoting institutions. The geopolitical strategies of the great powers during the Cold War not only suppressed warfare – protecting states from threats from their neighbors – but provided a ‘gravy train’ of loans from external sources. Relieved of the need to raise large amounts of capital domestically, rulers in these new states had no incentives to enforce contracts or bind their hands to provide a guarantee against predation. The citizenry, meanwhile, had disincentives to invest in capital – which could be appropriated – and sometimes reverted to (or continued to rely on) familial ties as mechanisms for enforcement.2
Thus, Bates is arguing for generalizable mechanisms by which specific types of economic pressures and incentives lead to the creation of political structures that are conducive to growth. Related to this argument is a corollary: where external forces (such as intervention by foreign powers or international bodies) disrupt this process, development may be stunted or slowed.
Although Nef also seeks to explain the differential in development between countries, he examines asymmetries in industrialization within Bates’ category of early, unencumbered developers. Specifically, Nef looks at the relationship between industrial might and political institutions during a period (1540-1640) in which a politically de-centralized Britain caught and then outpaced a highly centralized France in the race to industrialize. Although at first glance the differences between the two countries would seem to point to a potential problem in Bates’ theory of a developmental process, Nef’s treatment actually supports Bates’ conclusions.
Nef concludes that the sovereigns of each country had a similar desire to enforce their wills by regulating industry, creating crown monopolies, and exercising monarchical rights to materials like minerals and saltpeter on private land. The important difference between the crowns lay in the French monarch’s substantially greater ability to impose his desires on the kingdom. Since the British monarchs did not enjoy the support of judges and administrators, who – unlike French judges – began to have substantial private interest in the expansion and rapid evolution of industry, the Crown in England was largely unable to enforce its edicts.
Taking as a hypothesis the link between Britain’s superior development during this period and the lesser degree to which its monarchs were able to ‘meddle’ with industry, Nef looks a different historical period to see if the idea ‘travels.’ As he points out, a later period of industrialization (1595-1620) saw an even more substantial difference in the policies of the two governments, with the French crown substantially increasing its influence on industry while the “the halfhearted efforts of the [British] king to revive a few of the royal monopolies met with no success,” and the government essentially ceased its regulatory activities (Nef: 146). During this time, however, rather than the expected result (an even larger industrial asymmetry, with Britain outpacing her earlier rate of growth), Nef finds that Britain grew substantially more slowly during this period than it had previously, while France experienced robust gains (Nef 146).
Like Bates, Nef argues that industrial factors seem to have had a much more substantial effect on politics than did government policies on the expansion of industry. Citing the conflicts of interest that industrialization created between the Crown and the wealthy in Britain, Nef argues that it was the friction between the monarch’s desire to regulate industry and the elites’ desires to make money from its development that caused reform in Britain. Moreover, he extrapolates, if France had experienced enough of an increase in heavy industries to induce her nobles to turn to industry as an investment, then a coalition of merchant and landed interests might have succeeded in pushing through a constitutional government. To buttress this point he cites the tremendous expansion of heavy industry in the half-century before the French revolution – resembling, he notes, the industrial revolution that had occurred across the channel 200 years previously – which pitted the interests of the wealthy merchants against those of the crown. According to Nef, this tension “played a part in the French revolution somewhat like that played by a similar conflict between wealth and the royal prerogative in the English civil war.” (Nef: 157)
In spite of Nef’s support, these arguments for a ‘standard’ process of development should be tested in a more comprehensive manner. There are a few problems with Bates’ work from this perspective - for instance, it is not entirely clear how one would specify his dependent variable (dichotomously? continuously?). If a credible threat of war is the catalyst, should we see variance in the dependent variable according to the reasonable expectation of war? Should we expect to see a ‘trigger’ with the advent of a new threat (e.g. the Spanish Armada)?
Finally, with apparently little variance within Bates’ periods, how does this argument stand up in light of Gerschenkron’s assertion that while industrialization does influence political outcomes, these outcomes are essentially inextricable from their temporal periods?3 Using Russia as a model, Gerschenkron argues that the communist revolution was in large part the result of peasant discontent at the country’s “delayed” industrial revolution. The more delayed the industrialization, he writes, the more “explosive” the process, and the more likely a country is to come under “some organized direction” from groups including the state.(Gerschenkron: 44).
Gerschenkron’s great insight is the extent to which transitions are influenced by those that precede them. According to this logic, then, countries cannot simply follow the path of development left by previous states, since they desire to ameliorate their backward position as quickly as possible – and may attempt this accelerated development in novel ways.
This influence argument is not directly harmful to the Bates/Nef theory of generalizable development, since the latter refer to successful development – a term that does not easily jibe with the Soviet experience. His argument does, however, pose an additional corollary for Bates’ discussion of the obstacles to development: in addition to a lack of war and easily available capital, domestic and geopolitical pressure may narrow the options available to a country, thereby accelerating the process in such a way that the necessary institutional groundwork is not laid. Although investigation of this issue is beyond the scope of this paper (and raises questions about mechanisms of diffusion, predictive value, and similarities to Huntingtonian calls for institutionalization), it may be significant in terms of public policy – after all, to what degree can developed nations in a modern world tell less developed countries that they will need to experience war and social strife in order to acquire the building blocks for long-term prosperity?
1 Robert H. Bates Prosperity & Violence (New York: 2001)
Alexander Gerschenkron Economic Backwardness in Historical Perspective (Cambridge, MA: 1962)
John U. Nef Industry and Government in France and England, 1540-1640 (Ithaca, NY: 1957)
2 The situation in Somalia is a good example of this type of reversion and the accompanying spiral of violence (as clans seek vengeance for perceived wrong-doing).
3 Bates does cite a few examples within the modern developing category – Japan, Turkey, Korea, China, and Taiwan, which he notes honed their economies like “weapons” under a credible threat of war (Bates: 103).