Liberal democracy (not capitalism) is the only way to corral money to its best social purposes

What kind of government can remain coherent despite the initiative of others? Only a liberal democracy offers sufficient systems of accountability to ensure a balance of social and economic needs.

Money is anarchy

When you hear that someone has the title of “Park Commissioner” do you imagine that they have the kind of world-historical reality-bending power as what Robert Moses acquired?

Somewhere, in their heart of hearts, all urban planners want to be Robert Moses, the master-builder of New York City. A state and municipal official for almost half a century, Moses built several bridges, an underwater tunnel, 416 miles of parkway, 2,567,256 acres of parkland, numerous public housing projects, 17 public swimming pools and 658 playgrounds. At the height of his power, few urban improvements in the city and its suburbs were built without his approval, whether hospitals, schools or sewerage systems.

Moses’s career was the fulfillment of a heroic mindset that sought to replace the clutter of the past with order and efficiency. His New York became the jewel of American cities, a glittering lab for modern design and infrastructure. He became a household name, something no planner had managed since Baron Haussmann in Second Empire Paris. But his schemes came at a severe cost – the demolition of dozens of largely lower-income neighborhoods, sacrificed on the altar of progress. Whether Moses revived or ruined the city remains a point of contention today.

Whether in the private sector or the public sector, this kind sprawling power grabbing happens over and over. Official titles don’t matter. Official responsibilities don’t matter. All that matters is an individual’s ability to get money. To the extent they can get money, and avoid controls on that money, they can invent for themselves any programs that they want. Please note: I am not saying this is bad. To some extent, this adds a beautiful flexibility to USA democracy. But it is also a constant concern, when you, or some leader, wants to push through a law that sets up a new program — it can be difficult to ensure that the program will stay focused on the goals that motivated you to fight for it. Whoever is eventually in charge of the program, perhaps 20 years in the future, once they control the budget for that program, they might spend the money on things you disagree with. Money is anarchy, and so if you are fighting against anarchy (if you are fighting for a specific set of useful programs) then you are also fighting against the slipperiness of money.

This last year I worked at a company that had 27,000 people in 100 countries. It had 202 divisions overseen by 202 Senior Vice Presidents (SVP). Obviously, the SVPs all had the same title. And yet, they had wildly different levels of power. A lot of this came down to personal charisma. One SVP was somewhat grouchy and got on the wrong side of the top leadership, so for the whole year I was there, the top leadership was shrinking his budget and taking people away from him. Another SVP was a brilliant woman who managed to combine exactly the right amount of aggression with charm — she would alternate between charming the top leadership and then attacking them, and then charming them again. So for the whole year her responsibilities expanded, and she got more money, and she hired more people and grew her team.

Public sector or private sector, the same dynamic plays out, if people can get money they can do almost anything. So if we are talking about government, we need to ask, how do we actually limit officials from going off and doing whatever they want? We can put in place a system of audits, but the auditors can be bribed, so we need multiple, redundant, overlapping and circular systems of accountability, with multiple groups watching every other group and doing their best to ensure that everyone stays focused on the responsibilities they were officially assigned. Public criticism helps. Public criticism can summon a wide set of eyes to ensure a higher level of accountability. Empowering people to engage in public criticism helps. Political systems that allow for public criticism therefore have an advantage in ensuring high levels of accountability.

It would only be a small exaggeration to say that up until 1960 the Western nations were uncomfortable with sex but since 1960 they've become comfortable with sex but they've become uncomfortable with violence. This sometimes makes it difficult to think clearly about the differences between a dictatorship and a democracy. All human governments ultimately rely on the threat of violence to maintain control. Democracy does not mean pacifism. Democracy means that the violence is brought under the control of the majority and then “Liberal Democracy” means there are additional constraints on the majority so that the majority is not able to use the violence freely against unpopular minority factions. In a dictatorship, the violence is based on the dictator’s whims, and it is mostly employed so they can remain in power. In a Liberal Democracy, the majority shapes the law, and the law shapes when the violence is allowed to be used, and an independent judiciary oversees the application of the violence and gives people a chance to defend themselves from the violence. But the government is still fundamentally based on the threat of violence. Discomfort with violence sometimes keeps people from seeing the benefits of democracy. A democracy is not a society without violence, but rather, it is a society where that violence has been brought under control, hopefully in ways that are socially beneficial.

But if we agree that in the final analysis all government power rests on the threat of violence, we can also agree that it is best not to use that violence, and so it is very good that the fine-grained, incremental adjustments that are made in a society, where public criticism is robust, allows the system to stay on course without having to resort to any overt use of that violence. And in the long-run, a society with such fine-grained course correction is likely to do much better than a society that relies on some cruder, uglier, more coarse-grained method of course correction.

But accountability is not strictly negative! Accountability is not only about limiting what officials do. Just the opposite. Allowing public discussion of a public official allows the public to express its admiration for that public official, and thus it allows the public official to gather up the legitimacy that they can then use to launch new initiatives. And, again, Robert Moses is an excellent example. He was a hero to millions. He fought to get funding for vast infrastructure projects, which helped the USA recover from the Great Depression. Thousands of workers who’d lost their jobs found new jobs thanks to Robert Moses, and the entire region around New York, all the way out to distant suburbs, saw a program of vast modernization thanks to him. Public discussion of his actions lead to public admiration of his actions which gave him the power to engage in ever more ambitious actions. (In modern times, his reputation has been tarnished by accusations of racism, but it remains true that he played a key role in modernizing the infrastructure over a huge region in New Jersey, New York, and Connecticut.)

Up to a point, the kind of power grabbing that Robert Moses did is actually a good thing — it speaks to the flexibility of the system. There has to be some room for individual initiative. Still, we don’t want officials stealing money or spending the money on completely unauthorized uses, so there needs to be systems of accountability. In the USA, we rely on the courts to ultimately put some limits on what a given agency can do. A liberal democracy, under the rule of law, does a better job of allowing this flexibility without that flexibility becoming a threat to the rule of law. Under other systems of government, the initiatives of officials in the system, when they acquire a dependable source of revenue, often become sources of dangerous instability.

In a world full of conflict, what keeps a society from being torn apart in a million little pieces?

Below I’m going to offer some examples from different countries in different centuries. (Be warned, this will be the longest essay I’ll every write on this weblog.)

Most of these stories are usually summarized as “the central government power was weak” but I’m going to emphasize the opposite: that the peripheral powers were strong. What is notable with human history is how much every region is seething with activity and conflict, all of the time.

Those who belive in conspiracy theories typically believe that there is a small group of people who control the outcomes of history. And often, the conspiracy theories exist outside of time and space. For instance, some people believe that Jews control the world. In reality, Jews have never had much money or power, and like every group embedded inside of history the Jews have had some good centuries and some terrible centuries, but for those who belive in the conspiracy theories about the Jews, then the power of the Jews is eternal, it seems to exist at the same level at all times, and more so, it seems to exist even in nations where the Jews have had no historical presense.

The complete opposite of the conspiracy theories is a model of human history that can be summarized as "seething agency everywhere." That is, everyone is playing a role in shaping history, and in shaping our society: lawyers, doctors, engineers, coal miners, journalists, truck drivers, prostitutes, school teachers, police, waitresses, soldiers, priests, nurses, social workers, drug dealers, bankers, podcasters, actors and actresses, politicians, stay at home moms, children, oil rig workers, lumbermen, veterinarians, and so many more. Everyone has a different level of power, but everyone is playing the game. Everyone shapes tomorrow.

By their individual actions, people constitute an incipient civil society, but when they come together in groups is when they create a true civil society. Those groups might focus on politics or religion or ethnicity or the groups might be for some professional specialty, or the group might be for children or for health or for some artistic purpose. The list of possible groups is long. But the groups do help structure the way the needs of the public are expressed. Millions of voices, shouting simultaneously, might only amount to a cacophony, but groups help funnel those voices towards something more like a symphony. Some liberal dictators (and monarchs) allow civil society to bloom, within some limits, but civil society typically only reaches its maximum flourishing in a liberal democracy.

Even when groups have an aggressive intent, their existence can help lead to greater civil harmony. The groups help structure the way conflicts are resolved among the different factions in a society. When the groups are free to step forward as representatives of some block or faction or tendency then it is easier for the political leadership to resolve a conflict, as the groups gives the leadership someone to negotiate with.

In any human society, there will be multiple levels of conflict. A nation may have conflict with another nation, and within the nation the various social classes might hate each other. The working class might be divided among Protestants and Catholics or, in a different country, the working class might be divided among Malays and Chinese. And the working class might hate the upper class. And within the upper class, there might be a few hundred families, all of whom hate one another. And yet somehow this seething mass of conflicts still continues onwards as a recognizable society, or a recognizable system of societies. And though the groups are constituted by individuals, once the group exists, outside actors can treat the group itself as an entity. And likewise, once trade patterns develop, though they consist only of individual merchants selling goods, still the trade pattern itself becomes an object, once people recognize it as such, and as an object people can fight over it, or work to enhance it.

Here is how the French historian Fernand Braudel describes Venice in the early modern period:

For long periods in the past, the European world-economy appears to have rested on the slender basis of a single city-state, one with perfect or near-perfect freedom of movement, but with few resources outside of itself. In order to compensate for its weaknesses , such a city would frequently play off one region or community against another, taking advantage of the differences between them, and relying heavily on the few dozen towns, or states, or economies which served it, for serve it they did, either in their own interest or because they had no choice.

One cannot help wondering how such far-ranging supremacy can possibly have been established and maintained on such a narrow foundation — particularly since power inside a city-state was always being challenged from within, viewed as it was from the close quarters by a strictly-governed population, often one which had been 'proletarianized'. And all this for the benefit of the handful of families (easily identifiable and thus an obvious target of resentment) who held — but might one day very well lose — the reins of power. These families moreover fought bitter feuds among themselves.

It is true that the world-economy by which such cities were surrounded was itself still a fragile network — though by the same token, if its fabric was torn, the damage could be made good without too much trouble. It was merely a matter of vigilance and the judicious application of force. (Could not the same be said of British policy under Palmerston and Disraeli in a later age?) In order to control the large expanses in question, it was sufficient to hold a few strategic points (Candia, captured by Venice in 1204; Corfu, 1383; Cyprus 1489 — or indeed Gibraltar, which the British took by surprise in 1704, and Malta, which they captured in 1800) and to establish a few convenient monopolies, which then had to be maintained in good working order — as we do machines today. Such monopolies often continued to operate out of a kind of force of inertia, although they were naturally challenged by rivals who could sometimes cause serious problems.

...The merchant cities of the Middle Ages all strained to make profits and were shaped by the strain. Paul Grousset had them in mind when he claimed that "contemporary capitalism has invented nothing." Armando Sapori is even more explicit: "Even today, it is impossible to find anything — income tax for instance — which did not have some precedent in the genius of one of the Italian republics". And it is true that everything seems to have been there in embryo: bills of exchange, credit, minted coins, banks, forward selling, public finance, loans, capitalism, colonialism -- as well as social disturbances, a sophisticated labour force, class struggles, social oppression, political atrocities. By at least the twelfth century in Genoa and Venice, as well as in the towns of the Netherlands, extremely large payments were being made in cash. But credit was quick to follow.

The Perspective Of The World, page 89.

It is impossible to understand democracy unless you first understand history in this way: of individuals in conflicts, and individuals forming groups, and the groups are in conflict, and the individuals have religions, and the religions are in conflict, and the individuals have ethnicities, and the ethnicities are in conflict, and the individuals have nations, and the nations are in conflict, and so on, and so on, there is conflict at every level, at the top and at the bottom, and in-between the top and bottom, and the outcome of history is best understood as the outcome of all of these simultaneous conflicts. Not every conflict has equal importance but every conflict does contribute to the final tally.

Each conflict threatens destroy the participants and the entities they have built. If human government is difficult, it is difficult because the centrifugal forces are tearing apart any large group, tearing it apart into smaller and smaller groups, tearing it apart till all that is left is the individual, with all of their selfishness and ego, unable to organize the resources that could lift up and improve the larger group. Perhaps that’s why most parts of the world did not have strong governments till the 20th Century, when advancing technology made it easier.

By contrast, if Europe after 1492 revealed itself as special, it was special because it already had strong states in an era when there were few technologies that would have made it easy to support a strong state. Indeed, when Christopher Columbus sailed to the New World, why didn’t he simply make himself Emperor of the New World? Communication across the ocean was limited and the ability of Spain to send a large army to punish some other large army was non-existent, at least at first. So why did Columbus eventually go home? And we can ask the same of Herman Cortes or Francisco Pizarro. Why were they loyal to their governments? Why didn’t they simply conquer the New World and make themselves Emperors?

We know that the empire of China actually started the Age Of Exploration before the European powers did, during the 1300s, but the Chinese Emperor was worried his generals would conquer distant territory and set themselves up as rival emperors. We know the princes of India had similar worries — they felt their governments were fragile and they did not want to sponsor rivals. When Hindu merchants arrived in what is now Indonesia, they did in fact sometimes set up Hindu kingdoms, so their princes at home were right to worry about rival powers. No Hindu prince could do what Queen Isabella and King Ferdinand did — give money to an adventurer and send them to the other side of the planet, with the understanding they would bring back treasure.

But what was it that gave Queen Isabella and King Ferdinand the confidence to sponsor Christopher Columbus? I don’t think anyone has a full answer, but obviously a part of the answer was that the Catholic priests who went on the missions had a dual loyalty and they could count on every soldier to also have a dual loyalty, to the crown but also to the church. Some sailors might betray the monarch, and some sailors might betray the church, but few sailors would betray both at the same time, nor would any sailor believe that other sailors would betray both at the same time, and without that belief that others are also willing to betray all of their loyalties, then it is impossible to organize a betrayal. And so if Columbus had tried to betray the crown, the priests could command the soldiers to betray Columbus, and this complex system of interlocking loyalties actually worked to keep people more loyal than a simpler set of loyalties would have. And so we see again why a totalitarian system, such as the empire of China, was weaker than a more pluralistic society.

But why didn’t that pluralism break apart European society? That remains a good question. Even now, 500 years later, Spain is riven with deep fractures and often appears to be on the verge of splitting apart.

Fractured Continent

Europe’s Crises and the Fate of the West

©2017 by William Drozdiak

Page 96-97

Unlike the ethnic nationalism that has inspired other separatist movements, Catalonia’s quest for independence has been largely driven by issues related mainly to politics, economics, language, and culture. It has also been a remarkably peaceful movement, in contrast to the violent terrorism campaign waged by Basque separatists in the past. When Spain joined the European Union, many Catalans believed it was only a matter of time before the nation-state would suffer an erosion of power in favor of greater local control under a “Europe of regions.”

…Catalonia, which represents 7.5 million people located in the northeast corner of Spain, is one of Europe’s most affluent regions and on its own would be the eighth-largest economy in the European Union. Catalonia accounts for about one-fourth of all Spanish exports, yet for each euro that its residents pay in federal taxes, only 57 cents get spent in their region. Unable to draw on its own tax base, Catalonia was further outraged during the financial crisis by having to ask the central government for a bailout. Catalonia’s then-president Artur Mas, whose Convergence party has governed the region for decades, sought financial concessions similar to those received by the Basque region but his demands were rejected.

…But Mas’s repeated appeals for more favorable autonomy measures fell on deaf ears as Rajoy refused to engage in any negotiations involving greater self-rule. During his first four-year term as prime minister, when he enjoyed an absolute majority, Rajoy became convinced that any concessions to Catalonia would open a Pandora’s box of fresh independence demands from the Basque country, followed by other regions such as Galicia, Valencia, and Andalucia that expressed the desire for greater latitude in running their own affairs. He feared any hint of weakness in dealing with potential breakaway regions would exacerbate growing public distrust of the central government, not least because of the unpopular austerity measures he had imposed on his people at the behest of Germany and other EU partners. Rajoy pushed through new measures that fortified the powers of the Constitutional Court in order to repel any possible unilateral moves by Catalonia toward secession.

But what would independence actually mean? Here we see the flip side of multiple loyalties: no one thinks that Catalonia could survive on its own without powerful allies, but the Catalonia leadership assumes an independent Catalonia could join the European Union and perhaps NATO.

We live in a globalized world. No nation has sovereignty in any old classical sense.

The irony here is that it is the growth of international organizations, which in some way infringe on the sovereignty of each individual nation, that is allowing small regions to seek their independence. And surprisingly, one of the loudest advocates for this idea has been a man who seemed to be arguing for the opposite: Boris Johnson, who became Prime Minister of Britain in 2019. In the run up to the Brexit vote in 2016 Johnson promoted Brexit with the slogan “Take back control” and yet he also made the opposite argument to wary voters, insisting that if Britain could not get a good trade deal with the European Union, then “We can always fall back to our WTO treaties.” In other words, the only reason why Brexit was safe was because Britain was protected by the trade standards enforced by the World Trade Organization. But surely these two ideas were in conflict with each other? Surely you cannot both “take back control,” and so become a fully sovereign nation, but also do so only because you are part of an international treaty arrangement that you do not dare question?

I do not mean to pounce on Johnson for being a hypocrite (he was a hypocrite but that is not my focus here). I only mean to point to a few examples so we can at least have some initial hypothesis to get us started. Perhaps simple loyalties are simply broken, perhaps complex loyalties to some larger compound entity arise from having multiple overlapping loyalties to multiple groups or institutions. Where you have multiple loyalties that overlap, ending any one of those loyalties is complicated and ending all of them is impossible. And not just for you, but for everyone who follows you. Christoper Columbus surely knew his crew would kill him if he said “Let’s betray both the monarch and also the church.” And Boris Johnson knew he would lose the Brexit vote if he said “Let’s break every international treaty we have, simultaneously, not just with the European Union, but also with the World Trade Organization.”

The implication of dependency has been increasingly real for decades. In the 1960s and 1970s most African countries gained their independence, but then very quickly they found themselves with national currencies that they could not use for trade because no one trusted their currencies. They could not even trade with each other, because they did not trust each others currencies. Some countries found a way out of that by asking some of the European nations to oversee a currency union for them, for instance, the French franc currency union:

From Wikipedia:

Both CFA francs have a fixed exchange rate (peg) to the euro: €1 = F.CFA 655.957 exactly, and member countries deposited half of their foreign exchange reserves with the French Treasury. The currency has been criticized for restricting the sovereignty of the African member states, effectively putting their monetary policy in the hands of the European Central Bank. Others argue that the CFA "helps stabilize the national currencies of Franc Zone member-countries and greatly facilitates the flow of exports and imports between France and the member-countries".

We live in a globalized world. No nation is truly sovereign, in any old classical sense, but instead, all nations are enmeshed in a dense network of relationships. One of the most difficult issues of our times is that, for most people, their identity remains national and ethnic and religious, whereas the economic reality they rely on is international. And of course, the dense network of international relationships lack the scrutiny and accountability that is applied to national or local relationships. While international forums such as the United Nations exist, they don’t offer the high levels of accountability that democratic elections might offer. Also, there are few international journalistic enterprises, and even fewer that make an effort to represent the viewpoints of many nations, therefore there is a lack of genuinely international debate. (One could argue that social media fills the gap somewhat, but it suffers the problem of being overrun with disinformation.)

All of which raises the question: how can people offer constructive criticism of the dense network of international relationships that we all depend on? If there is no avenue for constructive criticism, we can be sure that any criticism offered will be destructive in nature.

Constructive versus destructive criticism: note that constructive criticism can only exist where there are complex, overlapping loyalties. Whether people loved Robert Moses, or hated Robert Moses, criticism of Robert Moses only makes sense when the good he did is compared to the good that could be expected by all of the many overlapping identities that people regarded him as belonging to: New York, urbanism, the North East, automobiles, the suburbs, the USA. In a totalitarian regime, such as the USSR, there is no room for constructive criticism: either one is loyal to the regime or one is in rebellion against it. But where people have complex loyalties, it’s understood that they can criticize one part of the system while remaining loyal to other parts of the system. One could be loyal to one’s family, one’s church, one’s city, one’s business, and still hate Robert Moses. Or, the other way around, because of one’s loyalty to one’s family, church, city and business, one might love Robert Moses, for all the good he did in stimulating the economy and modernizing the infrastructure. Without multiple, overlapping, complex loyalties it is difficult to build multiple, overlapping, complex systems of accountability. Perhaps this is why every dictatorship is eventually overwhelmed by corruption.

Every independence movement alive in the world today draws some of its strength from the fact that it is not pushing for old-fashioned sovereignty, but instead it is pushing for the modern hybrid sovereignty which balances a finite amount of self-determination against a large number of international treaties and institutions. If Catalonia establishes itself as an independent nation, it will join the European Union, NATO, the World Trade Organization, the United Nations, perhaps the International Criminal Court at the Hague, and a host of other international arrangements. Regions nowadays claim they want independence when really they just want to have direct participation in the international organizations that have become an increasingly central method by which humans organize their affairs on planet Earth.

How to create a government

To create a government you need revenue and an army. Perhaps with revenue you can buy an army? Perhaps with an army you can acquire revenue? What is certain is you do not have a stable government until you have both. But once you have both, then the question arises, how to make the government sustainable over the long-term? Why would the army remain loyal to you? And of those who handle your money for you, why don’t they steal the money? We know that dictatorships typically lack systems of accountability, and so they tend to suffer high levels of corruption, which weakens them, and in the long-run often destroys them. So we need to think what systems of accountability would make the system more sustainable. And I think we will find that democracy, properly constructed, with multiple feedback mechanisms, allows for the strongest forms of accountability.

I’m going to jump from one century to another, and from one country to another, in an effort to gain some perspective on this matter. At the risk of spending too little time on any one nation, and too little time considering what made that nation’s circumstances unique, we will survey a broad terrain, in the hopes of seeing the commonalities.

Having representatives from multiple institutions go on an adventure together is one way to keep them all loyal, and so stay within whatever limits were specified in their remit. So having priests loyal to the Catholic Church might have been what kept Christopher Columbus inbounds. By contrast, a problem that the Roman Republic ran into is that they were sending off generals to war, and without multiple systems of accountability. The generals were allowed to control all the money they gained from their conquests. This money lead to anarchy. The generals found that they were at the head of an army, and they had plenty of money, so they could do whatever they wanted to. An early warning sign, that the Republic was headed for trouble, was when generals were able to start wars without first consulting the Roman Senate. An early case of this was when the Roman general Gnaeus Manlius Vulso felt free to start a major war without asking for permission:

The Galatian War was a war between the Galatian Gauls and the Roman Republic supported by their allies Pergamum in 189 BC. The war was fought in Galatia in central Asia Minor, in present-day Turkey The Romans had just defeated the Seleucids in the Roman-Syrian War and had forced them to thereby sue for peace. Following their recently successful operation in Syria, the Romans then turned their attention towards the Gallic tribes of Galatia who had emigrated to Asia Minor almost 100 years prior to the ensuing military engagement. Gnaeus Manlius Vulso, the consul, excused the invasion by saying that it was in retaliation for the Galatians supplying troops to the Seleucids during the war. Vulso embarked on this campaign without the permission of the Roman Senate. 

This war helped establish the precedent that other generals could then use, and indeed, Julius Caesar was to use this precedent to justify initiating his conquest of Gaul without explicit permission from the Senate.

To repeat, a government needs two things:

1. a source of revenue

2. an army

Any person who has both can potentially set themselves up as a government. But the opposite must also apply: if a government gives up its source of revenue, is it still a government? Or if a government allows someone else to control its revenue, then how long can that government survive? Does the government not become dangerously dependent on whoever controls the source of revenue? This is exactly the problem that the Roman Republic ran into when it decided to give up all taxation and instead rely on overseas conquest to fund its government. Everyone in Rome was happy when taxation ended, because every sane person hates paying taxes. (I personally hate paying taxes.) But the basis of any true republic is citizens paying taxes so they can have the government they want. When citizens give up all taxes, they are also giving up on the concept of real citizenship in a republic.

In the modern era the world is full of dictatorships that rely on money from the sale of oil and gas, and these dictatorships have extremely low taxes. Russia, in 2020, had taxes that were much lower than the USA. But that does not mean the people of Russia were free. Freedom from taxation often means that the government no longer needs the people, and can therefore treat the public as disposable. By contrast, in the republican ideal, citizens pay taxes to buy for themselves the government that they want, and they have a right to shape the government because they have paid the taxes that have created that government.

Once the people of Rome gave up all taxation, they also gave up their ability to control their own destiny. Of course, it can take a century before the terrible consequences of such a decision become apparent.

SPQR

A History of Ancient Rome

By Mary Beard © 2015, 2016

Page 179-180

There was plenty for Romans to celebrate. Some of the cash was ploughed into new civic amenities, from new harbour installations and vast warehouses on the Tiber to new temples lining the streets, commemorating the assistance of the gods in securing the victories that had brought all this wealth. And it is easy to imagine the widespread pleasure when in 167 BCE Rome became a tax-free state: the treasury was so overflowing - thanks, in particular, to the spoils from the recent victory over Macedon - that direct taxation of Roman citizens was suspended except in emergencies, although they remained liable to a range of other levies, such as customs dues or a special tax charged on freeing slaves.

Yet these changes were destabilising too. It was not just that some curmudgeonly Roman moralists worried about the dangerous effects of all this wealth and ‘luxury’ (as they put it). The expansion of Roman power raised big debates and paradoxes about Rome’s place in the world, about what counted as ‘Roman’ when so much of the Mediterranean was under Roman control and about where the boundary between barbarism and civilisation now lay, and which side of that boundary Rome was on. When, for example, at the end of the third century BCE the Roman authorities welcomed the Great Mother goddess from the highlands of what is now Turkey and solemnly installed her in a temple on the Palatine, complete with her retinue of self-castrated, self-flagellating, long-haired priests — how Roman was that?

When it gave up on taxation, Rome had dozens of generals running dozens of campaigns, scattered all over the known world. Their number offered safety to the central power. No one general commanded a huge fortune, and no one general could take on all of the other generals. Coordinating enough generals to build a conspiracy would have been difficult. But as time went on, there were fewer generals controlling more and more territory, with more and more wealth, and more of them were in agreement that some urgent reforms were needed to save Rome, and so the stage was set for the first dictator.

Three more sustained civil wars, or revolutionary uprisings (there is often a hazy boundary between them), followed in quick succession and in a sense added up to an on-and-off single conflict lasting more than twenty years. First, war was declared on Rome in 91 BCE by a coalition of Italian allies, or socii (hence the quaint, and deceptively harmonious, modern title of Social War). Within a couple of years the Romans more or less defeated the allies, and in the process gave most of them full Roman citizenship. Even so, the death toll - among men who had once served side by side in Rome’s wars of expansion - was, according to one Roman estimate, around 300,000. Exaggerated as that figure may be, it still points to casualties on a scale not far from that of the war against Hannibal. Before the Social War was over, one of its commanders, Lucius Cornelius Sulla, a consul in 88 BCE, became the first Roman since the mythical Coriolanus to lead his army against the city of Rome. Sulla was forcing the hand of the senate to give him command in a war in the East, and when he returned from that victorious four years later, he marched on his home town once again and had himself appointed dictator. Before resigning the 79 BCE, he introduced a wholesale conservative reform programme and presided over a reign of terror and the first organised purge of political enemies in Roman history. In these ‘proscriptions’ (that is, ‘notices’, as they were known, in a chilling euphemism), the names of thousands of men, including about a third of all senators, were posted throughout Italy, a generous price on their heads for anyone cruel, greedy or desperate enough to kill them. Finally, the fallout from both these conflicts fuelled Spartacus’ famous slave ‘war’, which began in 73 BCE and remains one of the most glamorised conflicts in the whole of Roman history. Brave as they were, this handful of breakaway slave-gladiators must have been reinforced by many of the disaffected Roman citizens in Italy; they could hardly otherwise have stood up to the legions for almost two years. This was a combination of slave rebellion and civil war.

The consolidation of revenue continued. By the time of the First Triumvirate the Mediterranean world had consolidated to just 3 generals: Caesar, Pompey, and Crassus. By 60 BC the Roman Republic was doomed because it had no revenue of its own, and the money coming in from conquest was held by 3 men who were able to coordinate with each other. And then finally, in 49 BC, Julius Caesar was willing to march to Rome and seize it. If Rome still had taxation, then possibly the Senate could have organized a defense. But without any money they had no way to resist Caesar.

Leaving Gaul in early 49 BCE Caesar famously crossed the river Rubicon, which formed the boundary of Italy, and marched towards Rome. Forty years had made a big difference. When Sulla turned his army on the city, all but one of his senior officers had refused to follow him. When Caesar did the same, all but one stayed with him. It was an apt symbol of how far scruples had eroded in such a short time. The civil war that followed, in which Caesar and Pompey, the one-time allies, were now the rival commanders, spread throughout the Mediterranean world. Rome’s internal conflicts were no longer restricted to Italy. The decisive battle was fought in central Greece, and Pompey ended up murdered on the coast of Egypt, beheaded by some Egyptian double-dealers he had imagined were his allies.

The Empire brought 200 years of peace, though the lack of central bureaucracy meant that the government was a very thin layer at the top of vast society. Unlike China, which built the world’s first big bureaucracy during these years, Roman society continued to rely on the domestic resources of individual wealthy people. As the richest oligarchs grew more wealthy, they were better able to serve as hubs of the state, but what was missing was the idea that the central organs of the state should be entirely separate from the household of the Emperor.

Hand in hand with the expansion of the imperial palace went an expansion of the imperial administration at the central hub of the empire. Little is known in any detail about how the first Augustus’ staff was organised, but it was probably an expanded version of the household of any leading senator of the previous century: large numbers of slaves and ex-slaves, acting in every capacity from cleaners to secretaries, with family and friends as advisors, confidants and sounding boards. ...This looks very much like a modern civil service, but in one important sense it was not. There is no sign of the clearly defined hierarchies below the divisional managers or of the grading of posts, the qualifications and examinations that we now associate with the modern Western or ancient Chinese idea of the civil service. So far as we can tell, it was still based on the structure of the old-fashioned slave household, such as Cicero’s, even if vastly magnified.

As such, the Empire only held together thanks to active internal commerce, and as much as some active Emperor could make make the military promises of the Empire meaningful. To some extent, the Empire got lucky, as its enemies were relatively quiet, or preferred trade to war. But then in the 200s, the whole situation fell apart. External enemies kept the Emperor distracted and every individual general again discovered that when they had both revenue and an army they could declare themselves to be a government. So the 200s are remembered as a time of perpetual crisis and revolt.

For us moderns, the solution seems obvious: build a big bureaucracy that can control the money, and so make sure the generals don’t control the money. It is a mystery why it took the Romans several centuries to figure this out. By contrast, China seems to have understood this from the early Iron Age. Rome’s century of crisis ends only when Diocletian pushes through the needed reforms, during his time as Emperor, 284 until his abdication in 305.

Diocletian separated and enlarged the empire's civil and military services and reorganized the empire's provincial divisions, establishing the largest and most bureaucratic government in the history of the empire. He established new administrative centres in Nicomedia, Mediolanum, Sirmium, and Trevorum, closer to the empire's frontiers than the traditional capital at Rome. Building on third-century trends towards absolutism, he styled himself an autocrat, elevating himself above the empire's masses with imposing forms of court ceremonies and architecture. Bureaucratic and military growth, constant campaigning, and construction projects increased the state's expenditures and necessitated a comprehensive tax reform. From at least 297 on, imperial taxation was standardized, made more equitable, and levied at generally higher rates.

Of course, it is too simple to say “build a bureaucracy.” Having a military does help enforce the rules needed to build a meaningful bureaucracy, but as we just said, there is the risk of the military getting control of the money and then making itself the government. Getting the military under control means building a bureaucracy that is independent of the military. Once in place, such an organization can be self-sustaining. A surprising fact of Chinese history is how rarely the military has been in control. Civilian bureaucrats giving orders to “lowly” generals is a tradition in China that goes back 2,000 years.

The official government and the real government are often two separate things

But there are many situations where it is impossible to establish a centralized bureaucracy in the first place. Lack of population, lack of roads, lack of rivers, lack of communication — there are many reasons why money might accumulate at the center of some small province, but fail to accumulate at some central point that would allow a strong central national government. This applies to modern times as well as the ancient past. Argentina offers an example.

Rumors of War

Civil Conflict in Nineteenth-Century Latin America

Edited by: Rebecca Earle © 2000

Page 29-30

essay by Carlos Malamud

Between 1810 and 1905 Argentina was plagued by revolution. It began with the famous May Revolution, the beginning of the process of Independence, and ended with the last great Radical Party riot, prior to the electoral triumph of Hipólito Yrigoyen in 1916. The tumultuous years which saw the formation of the first national governments were to be marked by numerous confrontations.

Page 33-34

One reason for the recurrence of revolution and other similar movements throughout practically the whole of the nineteenth century was that the political and material cost facing rebels was usually not very high. Thus, a central object of this study is the magnitude of repression, which was determined not only by the strength of the rebels, but also by the size of the national army (or militias) and other forces of repression and by the capacity of the authorities to anticipate these rebellions.

Page 36-39

The low price to be paid for taking up arms is also borne out by the fact that only on rare occasions, and for very well justified reasons, were any of the rebel leaders executed. One of these cases occurred in San Juan after the revolution of 16 November 1860, when the rebels murdered Governor Virasoro in his own house in front of his wife. The victorious Liberal Party named Dr. Antonia Aberastain as the new governor. On 25 November 1860 the national government gave the order for federal intervention and on 11 January 1861 the national forces prevailed over the revolutionaries in a ‘bloody battle’ in Rinconada del Pocito and on the following day shot Aberastain. On this occasion, the execution was not only a clear reply to the assassination perpetrated by the rebels, but also constituted a warning to any who might in the future consider embarking on similar adventures, as it established as doctrine that the national government would not recognise provincial governments that emerged as a result of assassination. At the end of September 1874 General Iwanowski was killed whilst resisting arrest by a rebel group loyal to General Arredondo. Nevertheless, in events of this nature it was unusual for members of the army high command to die. In this, and in other similar cases, it was expedient to establish clearly both the rules of the game and its limits, in order to avoid possible misunderstandings.

…Eduardo Zimmermann has emphasized the enormous extent of the financial crisis and scarcity of human resources experienced by the Argentine judiciary between 1860 and 1880, and the resulting repercussions when they attempted to enforce the law. He has concentrated on the example of the federal judiciary, whose powers related to ‘crimes against the internal security of the nation’. This lack of resources meant not only that there were great difficulties in reaching verdicts, but also that it was equally difficult to apply the sentences and punish the guilty. Thus, the slow pace of justice and the failure to try those accused began to create a climate of impunity and attitudes favourable towards amnesty. To this must be added the fact that prison sentences for those who rose up against the national government were not contemplated in the legislation of the day. Punishment consisted only of enforced exile, the carrying out of military service on the border, or fines.

These revolts were typically organized by business interests who wanted to operate without restrictions on their economic activity, and wanted to manage social relations in ways that best enabled their profits. The Liberal party advocated for a libertarian vision in which the central government would have little power, but instead each business person could freely form associations with other, local business people and together they could run the local province as they saw fit. In modern language (and simplifying a complex situation) the Liberal party most often sought what we might consider “unrestricted capitalism.” But in their local selfishness, they crippled Argentina and kept it from modernizing.

What makes a government real? An ability to enforce laws. But what allows a law to be enforced? You need a few things:

1. Hegemonic control over some area; that is, you cannot be fighting another military force in that area

2. A military or police force to arrest or kill people

3. Revenue to pay for a military or police force

4. Accountants to audit the revenue to make sure it is not stolen

5. Multiple, redundant checks on the accountants, to keep them from stealing

6. Revenue to pay for multiple, redundant checks on the accountants

7. A way to create laws, either a legislature or a dictator, but even in a dictatorship there will often be multiple specialized committees to decide on particular branches of law. And historically, absolutism has been rare, what has been more common is for dictators to share power with religion, and leave religious law to the churches. This includes matters such as divorce and marriage.

8. A way to disseminate knowledge of the law, this is typically done through a system of universities, therefore you need revenue to pay for a system of universities. In a liberal society the universities will typically be free of government interference and they will have their own independent source of revenue.

9. A way to determine guilt or innocence of the accused. This might be a judge or a prosecutor. In a dictatorship it might be a police officer or a military officer.

10. A system of accountability that keeps prosecutors, judges, police, and military officers from accepting bribes. Also, in situations where religious courts hear a matter (over divorce or marriage, for instance) there would have to be a system of accountability to keep the priests from accepting bribes, for the law to be made real. However, this is a frequent point of failure of the law. In places such as Iran, up until the 20th Century, the priests heard all cases of the marriage, separation, and inheritance, and the priests took their payment directly from the applicants, and so the priests were influenced by whoever could pay them the most.

11. A system to impose a punishment. For criminal matters, this might be a system of prisons. There would have be a source of revenue that would pay for the prisons. Without a system of state-funded prisons, it was common to sell people into slavery, which can be thought of as a system of privately funded prisons. For civil matters, there had to be some way to impose a monetary penalty, to collect the money, and then to disburse the money.

12. Sufficient legitimacy that the public does not rebel against this system, mixed with a sufficient threat of state violence that criminals are at least somewhat deterred.

13. Studies show that criminals are less deterred by the severity of the punishment as they are deterred by the consistency of enforcement. Therefore it is crucial to have a police force that is consistent about enforcement. This is rare. No nation has ever fully achieved this, instead nations settle for some mix of partial enforcement, with a consequent rise in crime and loss of legitimacy. Most governments seem to feel it would be an exhausting effort to crack down on the police and so develop a police force with sufficient discipline to live up to this ideal. And using the military for ordinary police enforcement tends to open the door that leads to a coup d'état, therefore even military dictatorships tend to leave police enforcement to the police.

14. Morale must be maintained among everyone involved: the police, the military, the judges, the prosecutors, the jailers, the accountants, etc. There is no system of redundant, overlapping mechanisms of accountability that will fully offset the effect of poor morale. You need some critical mass of the people in the system to believe in the system enough to go on supporting the system. But what exactly that critical mass is, and how to judge its critical tipping point, remains one of the greatest mysteries of both human history and human psychology.

In short, enforcing a law is a complex effort, and therefore running a government is a complex effort. And yet, to start a government you only need revenue and an army. This is, perhaps, why most governments have been terrible, throughout human history: they are easy to start but difficult to get right.

Money is anarchy which induces more anarchy when it flows across international borders

All over the world, the 20th Century brought a big change because advancing technology meant that it was finally easy to set up large bureaucracies. Again, we can admire what Europe did after 1492 precisely because Europe seemed to set up strong governments at a time when there was no technology to enable strong governments. A tiny nation like Portugal could conquer Goa, in India, and hold it for 450 years. By comparison, China seems weak. Despite China’s vast wealth, and its vast centralized bureaucracy, China could never hope to send a military leader to the other side of the planet and expect such a leader to remain loyal to the Emperor. Most of the nations of the world had to wait till the 20th Century before they gained the kind of organizational power that Europe already had in the late 1400s.

And yet, the huge economic surge of the 20th Century also meant that international flows of private money could also undercut the ability of any government to marshal money for some specific purpose. During the boom years there was enough money coming in that the central governments were able to direct national affairs, but when the boom ended, international flows of money were greater than the resources that many nations could find internally, and so the ability of national governments to direct resources to socially useful goals was undercut by selfish private money that had interests that ran counter to what the government wanted and what society needed. Smaller nations, especially in the Third World, were crippled after the Post War Boom ended in 1973.

Senegal is a good example of the change. In the mid 20th Century it had abundant resources to build roads, airports, theaters, museums, universities, and a government bureaucracy to help manage its rapid growth. Above all, it was able to organize the construction of massive housing projects to ensure that its newly urban population had places to live. But after 1973 its economy stalled and international agencies forced upon it an austerity that left its central government too weak to organize what resources were coming into the country. Private citizens who had gone abroad sent home money to their families to build homes, but these private efforts were chaotic and often went unfinished.

Bottleneck

Moving, Building & Belonging in an African City

By Caroline Melly © 2017

Page 83-84

In contrast, government officials often decried migrant-built urban villas as exceedingly lavish, wasteful, and even selfish. Bureaucrats insisted during interviews that these projects diverted money from “productive” and “lasting” development initiatives. APIX administrators worked to find ways to “rechannel” migrant-earned capital away from the housing sector and into investment projects like those I discuss in the following chapter. In a 2007 address, President Wade went so far as to blame the country’s clandestine migration “crisis” on the social pressure - exerted, in particular, he claimed, by mothers - to “construct a beautiful house” (quoted in Bouilly 2008, 16). At the same time, however, many of these same officials acknowledged that transnational migrants fill gaps in housing that the structurally adjusted state is simply unable to address. Moreover, these construction projects have spurred a paradoxical ideological and economic reinvestment of the Senegalese state in the Dakar’s housing sector. During the time of my research, for instance, the ministry that oversees urban housing construction (Ministère du Patrimoine Bâti, de l’Habitat, et de la Construction) partnered with four other state offices, dozens of private sector companies and banks, and five different Spain-based Senegalese migrant associations to run a series of international housing fairs (Salon de l’Habitat du Sénégal) to encourage the Senealese diaspora in Spain to invest in houses in Dakar. One employee of the ministry stressed to me that these kinds of housing construction projects offered the state an opportunity to serve as an intermediary between citizens and the private sector, which he saw as a key element to economic growth. Through this reconfigured rose, then, the state has the potential to achieve public visibility and reassert its relevance as a critical urban actor.

Unfortunately, an unfinished house is in some ways a bigger status symbol than a finished house. An unfinished house, which makes slow incremental progress over many years, means someone it still overseas, perhaps in Europe or the USA, and they are still sending money home, so the project of building the house can continue. But for the government of Senegal, all that matters is how many completed homes exist, that is, how many homes exist that can actually house people. A glut of unfinished homes is a disaster — they take up space but they provide no functionality. Worse, their completion date is unknown, and so the government cannot make accurate plans about when those homes will need electricity or sewage.

Page 87-88

Likewise, in Dakar, urbanites often acknowledged that building efforts and material structures were shaped and constrained by conditions of chronic urban and global uncertainty, but they nonetheless did not tend to cast these projects and structures as failures of an ideal form - whether that form be a finished house, a modern city life, or a neoliberal “investment.” In fact, as my encounter with Atouma helps illustrate, my stubborn focus on the “completed” house seemed wildly out of sync with residents’ own experiences and concerns. Urbanites instead emphasized the importance of building (tabax) itself as a potent and enduring means of engagement with the city, its spaces, and its possibilities. Whereas dwelling in the city referenced a day-to-day relationship with an assumedly already-built (or at least habitable) structure, building involved ongoing collaborations with a constellation of actors, materials, expectations, designs, streams of capital, expert knowledges, and physical spaces. More specifically, from the perspective of most urbanites, to build in Dakar testified to a family’s productive and enduring relationship with the diaspora. Urban residents would frequently point to unfinished étages, for instance, as seemingly indisputable evidence of continued transnational ties. It was thus through building that the abstractions and invisibilities of transnational migration were made present, tangible, and measurable to those who did not migrate abroad and that transnational migration was produced as a transformative way of being urban. In contrast to much of the literature on the topic, I contend that transnational migrants and their families were not the only or central actors in house-making; in fact, they sometimes had little control over the process and structures it produced. Their products, moreover, were not always “dwellings” in the strict sense of the word. Instead, the inside-out houses were hyperpublic territories inhabited not by individuals or families but by the city itself. These structures thus indexed the insufficiency of dwelling itself as a mode of being; by engaging in continual construction projects, urban residents make important future-focused claims on the city.

A few people will read this essay and think that “the free market” is the best way to organize private spending to help with social goods, but the example of Senegal offers a good example of where “the free market” fails. Private citizens, each working at some slow and uncertain pace towards the construction of a home, have goals that do not overlap with the needs of society.

Libertarians often quote Adam Smith, who suggested that a “spontaneous order” sometimes arises when everyone pursues their own interests:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

…By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

That is clearly not the case in places like Senegal, where the government had previously been able to organize and fund the large-scale construction of the housing that the nation needed, but in its weakened condition, the government is left staring in horror as the city fills up with slums full of half finished houses, with every house waiting on the next remittance sent by whatever family member was lucky enough to get into Europe or America. If the government could get control over even a part of those overseas remittances then it might regain the ability to build what Senegal needs, in an organized fashion. However, the IMF has pushed Senegal in the other direction, towards loosening anything that might resemble capital controls and so thereby making Senegal more open for these uncontrolled, unstructured flows of overseas money. But money is anarchy, and it inflicts an especially cruel form of anarchy in places such as Senegal.

While there is no easy solution for the sad reality of a nation running out of money, it’s also true that all nations have resources that can yet be tapped, should a government align enough political support. Senegal could rally the nation to better oppose the policies inflicted on it by the International Monetary Fund (IMF). Or Senegal could build a political coalition willing to push through taxes on property, to get the wealthy to pay more to fund the government. Or Senegal could unite the citizens in a program of worker empowerment, especially those workers who work for foreign firms. Or Senegal could build the political coalition necessary to crack down on all forms of corruption, and thus free up some extra resources that are being stolen away. But in every one of these scenarios, the solution comes from mobilizing the public towards a necessary social goal, which is to say, the solution comes from the political process, not from the workings of the so-called “free market.” In Senegal the free-market is the problem, whereas rebuilding the power of the government is the only possible solution.

Good government often means local control

Though some central organizing power is essential to a well-run society, it’s also true that the best implementation of a good idea often means that a new program is put under local control. To put that differently, just because the central government initially organizes some program it does not follow that the central government should be in charge of the program. Often a local government will have a better understanding of what the local area needs, and also raising taxes locally often means that 100% of the money is spent on local needs, rather than being wasted in some central bureaucracy. But even in these cases, where taxes are local and the administration of a program is local, it is still often the central government that initiates such programs, because the local region lacks the strategic thinking to create such a program.

Since we are discussing different nations in different centuries, we should note that the word “local” actually means different things in different contexts:

1. a feudal context where there is no strong central government

2. a modern nation state where there is a strong central government

In country after country the transition from feudalism to industrialism was marked by environmental catastrophes as old traditions were destroyed but new modern laws were slow to form. The evolution of forest laws in Japan and Korea offers a good example. The history of this evolution followed this pattern:

1. local feudal control, even in the distant periphery, because there was no central bureaucracy

2. a central bureaucracy that allowed vast damage to occur in the distant periphery because it lacked the resources to police the distant periphery

3. local control, even in the distant periphery, through Forest Associations, set up by the central bureaucracy but under local control and paid for with local taxes

Seeds of Control: Japan’s Empire of Forestry in Colonial Korea

By David Fedman © 2020

Pg. 27-28

Early Meiji forestry was beset by another problem as well: toothless enforcement. Lines on a map do not a boundary make. Lacking the resources to police newly enclosed private and state forests, local officials could only watch in frustration as farming households continued to glean fuel and fertilizer from newly enclosed state woodlands. A string of edicts over the 1870s attempted to shore up woodland boundaries and respond to the material needs of farming communities through ad hoc licensing schemes, but irreparable damage to land-use arrangements was already done. In effect the Meiji state’s “assault on the commons,” to borrow Margaret McKean’s phrase, precipitated a policy collapse of the state’s own design. By pressing for the swift nationalization of the commons, government officials undermined the very elements of Tokugawa forestry that enabled it to function so well – the village autonomy, provincial variation, and compound authority that had historically diminished the need for a strong state forestry apparatus. The plasticity that had long allowed hamlets to tailor land-use patterns to local needs abruptly ran aground the governing impulses and fiscal priorities of the nation-state. With little incentive to comply with edicts from the center and with no small measure of antipathy injected into rural perceptions of the city-dwelling ruling class, farming households suddenly had less cause to think long term.

So it was that, as one Bureau of Forestry report later put it, “the political revolution in the beginning of the Meiji Era produced a disastrous effect upon the preservation of the forests”. “The forests throughout the country were mercilessly cut down so that there appeared in all quarters of Japan hills and mountains deprived of trees. The consequence was that not only was the forest's economy jeopardized but the economic order of the people at large was deranged, dealing heavy blows upon the productive industry of the people by giving rise to annual inundations which devastated many parts of the country.” Perhaps the forestry bureaucrat Takahashi Takuya best captured the frustrations of his colleagues when he described the immediate aftermath of the Meiji Restoration as a time marked by the “total erosion of the institutions of forest control and protection.”

For villagers, these shifts represented more than a policy failure, they were a betrayal of the very spirit of Tokugawa forestry: the notion that its benefits should be shared equally between the government and the people. Farming households were not going to sit idly by as profit-hungry corporations and bureaucrats cordoned off local woodlands. Many took matters into their own hands. According to one official estimate, no fewer than two million trees were illicitly felled and five million lost to arson between 1878 and 1887. Statistics of this sort were used in turn by Meiji foresters to assign blame for deforestation to upland communities when the reality was that new lumbering technologies and improving modes of transport were accelerating timber harvests across Japan. Whatever the cause, there is no question that the first two decades of the Meiji period witnessed considerable deforestation – a fact perhaps best evidenced by the appearance of “bald mountains (hageyuma) in some of the more densely populated regions of the archipelago.

…Yet, for reasons both financial and political, a forest law was slow to materialize. It was not, in fact, until the 1880s that a broad coalition of interests, stirred to action by a series of catastrophic floods, finally rallied behind its promulgation. The result was the Forest Law (Shinrinhō) of 1897, the capstone of the Meiji state’s effort to assert control over Japan’s woodlands. Although the legal framework would see substantial modifications over the coming decade, it established, among other things, a criminal code for forestry and a complex web of land-use regulations. Arguably its most important provisions, however, were those governing Forest Owners Associations (Shinrin kumiai): local institutions of forest management that would, lawmakers hoped, operate as ground level units of policy coordination and community surveillance.

…Chastened by the realities of governing remote upland communities from their offices in Tokyo, foresters had by the early 1880s begun to insist on the participation of the broader public in the cultivation of a new conservationist spirit alongside the forest itself. Such was precisely the charge placed before the Japan Forestry Association (Dai Nippon Sanrinkai), a civic institution established in January 1882 for the purpose of stimulating the “mutual support of the government and the people” in all matters related to forestry. Comprised of a wide range of intellectuals and civil servants – from scientists to lawyers to educators – it rose to prominence as the premier institution for public outreach and the popularization of forestry research. What started as a group of 343 had by 1910 grown to more than 4,000 members, many of whom would become vigorous contributors to forestry work in Korea through the association’s affiliate group on the peninsula. Through lecture circuits, demonstrations, and youth group activities, this organization and its local chapters brought the agenda of metropolitan bureaucrats to the doorsteps of farming households.

This is a happy example of a strong central government setting up local governments with local taxes to control a program that delivers benefits to the each locality, and through them, to the whole nation. But of course, we are, in a sense, zoomed out from the details: we are looking at the entire Forest Owners Associations program as it existed over many decades. If we zoomed in and examined every Forest Owners Association we could probably find one or two that went off-mission and did strange things. Because, again, money is anarchy. If, in the USA, we zoomed out and studied the generic concept of “Park Commissioner” as they have existed in all USA cities over the last century then no doubt the existence of “Park Commissioner” is a positive thing, but as we already saw, there are a few folks like Robert Moses who went off-mission and built bureaucratic empires. Still, at a high level, we can summarize this and say that the Forest Owners Associations were a positive development which helped protect the environment in both Japan and then also Korea.

Pg. 149-150

Forest Owners Associations, in other words, were quickly designated the optimal instruments for the project of civic forestry: the state-led effort to mold hamlets into self-sufficient sites of agricultural production, households into woodland watchdogs, and individuals into keepers of the emperor’s realm. Forest Owners Associations were hardly the only collective forestry institutions born of these objectives. Charcoal production associations, erosion control associations, and forest-love mutual-aid societies, among others, all proliferated during the colonial period. At the center of it all was the Korean Forestry Association (Chōson Sanrinkai, hereafter KFA), an umbrella organization that orchestrated an impressive array of forestry activities through the peninsula. Underlying each of these arrangements was a desire on the part of the colonial government to compel rather than coerce forest management. Whereas Forest Management Bureau employees were relatively unconstrained in their management of the national forestlands discussed in Chapter 5, the oversight of privately owned forestland (minyūrin) required a softer touch. It necessitated a union of what, in the context of urban Japan, Sheldon Garon has called “moral suasion” with what, in the context of rural Korea, Gi-Wook Shin and Do-Hyun Han have called “colonial corporatism”: the creation of “new, semiofficial, semi-voluntary, intermediary associations for colonial control and mobilization.” Seeking to shape the routines of agrarian life, officials turned to semi-official institutions to promote behaviors conducive to prolonged forest conservation: industriousness, frugality, civic-mindedness, and so on.

Local control funded with local taxes is often the best way to make sure that an important social goal is hit, if that social goal is something that manifests in every region of a country. And having some central oversight helps the program from going too far off course. After all, if there was no top level oversight, not only would someone like Robert Moses emerge, and use local funds to pursue their own ambitions, but there would be no accountability to ensure the original goal was met. With some central oversight, or at least the concept of central oversight, then there are at least two ways of ensuring oversight: from the executive branch or from the judiciary. Imperial Japan was somewhat autocratic and so what guidance came from the central authority was always in the form of executive leadership, whether offered as a suggestion or a command. By contrast, in the USA, putting limits on some errant official is often done by the judiciary. No doubt each approach has its own strengths and weaknesses, which we will analyze in a different essay.

A final observation on the Forest Associations: Imperial Japan was not a liberal democracy. For awhile it had a limited and somewhat oligarchic form of democracy which offered a higher level of public accountability than Japan had ever known before, but it was still vulnerable to autocratic sabotage, and indeed, in the 1930s Japan was taken over by militarists who then sabotaged the Forest Associations, stripping them of their power to manage the long-term health of forests and instead pushing towards maximum production so as to maximize industrialization and militarization. The forests were devastated. A broader commitment to liberal democracy would have protected this, and many other, good programs that had previously helped with the long-term economic development of Japan. But all of that was sacrificed to short-term growth and military adventures that ended in disaster.

Money is anarchy that often leads to further anarchy

Without strong systems of accountability, not only is money anarchy but it is often used to weaken whatever accountability exists and so it leads to even more anarchy. This is one reason why oligarchs are traditionally a threat to democracy: the oligarchs will push for policies that allow them to grow more powerful until such time as they are powerful enough to challenge the government. More so, the oligarchs often see oligarchy as the best way of organizing human societies — they see oligarchy as rational and logical whereas they see democracy as emotional and chaotic. Out of loyalty to the ideal of oligarchy, they often feel more comfortable making alliances with each other, even across national boundaries, than with their fellow citizens. This observation has been made since the beginning of Western Civilization, going all the way back to the earliest attempts at democracy in Athens. As that example reminds us, democracy is in an endless struggle with oligarchs, who are forever hoping to kill democracy and replace it with a more autocratic oligarchy:

In 594 BCE, Solon, premier archon at the time, issued reforms that defined citizenship in a way that gave each free resident of Attica a political function: Athenian citizens had the right to participate in assembly meetings. By granting the formerly aristocratic role to every free citizen of Athens who owned property, Solon reshaped the social framework of the city-state. Under these reforms, a council of 400 members, called the boule, ran daily affairs and set the political agenda.

However, democracy was threatened by tyranny, as several political factions began to vie for control of the Athenian polis. Peisistratos launched a populist coup and seized the reigns of government in Athens, declaring himself Tyrant. Upon his death, Peisistratos was succeeded to the tyranny by his sons Hippias and Hipparchus, the latter of which was murdered by the tyrannicides Harmodius and Aristogeiton. Hippias executed the tyrannicides and it was said that he became a bitter and cruel ruler, executing a large number of citizens and imposing harsh taxes on the Athenian populace…

In 510 BCE Cleomenes I of Sparta successfully invaded Athens and trapped Hippias on the Acropolis. ...With the tyrant ousted, the Spartan king installed Isagoras at the head of an oligarchy, made up of Athenian aristocrats that were loyal or sympathetic to Sparta. He found himself opposed by the majority of Athens, particularly the middle and lower classes, who desired a return to democracy.

Cleisthenes, of the pro-democracy Alcmaeonidae clan, was expelled from Athens by the Spartan-backed oligarchs, leaving Isagoras unrivalled in power within the city. Isagoras set about dispossessing hundreds of Athenians of their homes and exiling them on the pretext that they too were cursed by the Alcmaeonidae miasma. He also attempted to dissolve the Boule. However, the council resisted, and the Athenian people declared their support for the council and revolted against the oligarchy. Cleomenes, Isagoras and their supporters were forced by regular citizens to flee to the Acropolis, where they were besieged by Athens' populace for two days. On the third day the Athenians made a truce, allowed Cleomenes and Isagoras to escape, and executed 300 of Isagoras' supporters. Cleisthenes was subsequently recalled, along with hundreds of exiles, and he was elected the first archon of a democratic Athens.

Democracy is under attack, everywhere and at all times. See what we wrote in Freedom Is An Endless Battle. In the modern era, we are lucky to live when the Western democracies are wealthy and powerful and much of the public is committed to maintaining a democratic way of life. Such a moment as this is a miracle, a rare moment in human history where freedom seems to be better armed than tyranny. In the past, democracy was surrounded and outnumbered. Against Athens, both Western oligarchs and Eastern autocrats combined their powers to undermine democracy, which they correctly saw as a threat to their way of living:

The Spartans thought that a free and democratic Athens would be dangerous to Spartan power, and attempted to recall Hippias from Persia and re-establish the tyranny. Democratic Athens sent an embassy to Artaphernes, brother of Darius I, looking for Persian assistance in order to resist the threats from Sparta. Artaphernes asked the Athenians for a symbol of submission. The Athenians ambassadors apparently complied with this request, but then Artaphernes advised the Athenians that they should receive back Hippias, threatening to attack Athens if they did not accept him as their tyrant once more. Nevertheless, the Athenians preferred to remain democratic despite the danger from the Achaemenid Empire, and the ambassadors were disavowed and censured upon their return to Athens.

Over and over again, for centuries, Athenian oligarchs launched attack after attack in an effort to kill democracy. And often, with the help of Sparta or Persia, they succeeded. In retrospect, we can say that democracy in Athens was a 250 year revolt against the oligarchs and the autocrats, a democratic revolt which was finally defeated. The autocrats won.

In the wake of Athens' disastrous defeat in the Sicilian expedition in 413 BCE, a group of aristocrats took steps to limit the radical democracy they thought was leading the city to ruin. Their efforts, initially conducted through constitutional channels, culminated in the establishment of an oligarchy, the Council of 400, in the Athenian coup of 411 BCE. The oligarchy endured for only four months before it was replaced by an even more democratic government. Democratic regimes governed until Athens surrendered to Sparta in 404 BCE, when the government was placed in the hands of the so-called Thirty Tyrants, who were pro-Spartan oligarchs. After a year pro-democracy elements regained control, and democratic forms persisted until the Macedonian army of Phillip II conquered Athens in 338 BCE.

Even today, we see alliances spring up between oligarchs and oligarchies, across all international boundaries. Many of the wealthiest people in the West hate the West because the West is democratic. They look to Russia, the most oligarchic nation in the world right now, and they are filled with envy. Such people end up advocating for Russia. Take someone such as David Sacks, who became extremely wealthy during the tech boom of the 1990s. He represents a certain kind of Silicon Valley opinion — the wealthy tech oligarchs who voluntarily shill for Russia and its interests. They undercut any nation that tries to be free and democratic. They criticize any attempt that Western nations make to defend freedom. People like Sacks are oligarchs who make an alliance with oligarchy, in the same way the Athenian oligarchs made an alliance with Sparta.

David Sacks, in particular, is known to repeat whatever happens to be the current line from the Kremlin. When the Kremlin wants to convince the West that Ukraine should surrender, Sacks goes to work and does all he can to get Western audiences to accept the propaganda put out by Russia. And so we see a modern example of how Athenian oligarchs worked to undermine opinion in Athens, to destroy Athenian independence. With the help of Sparta, the Athenian oligarchs were frequently able to subvert democracy. And nowadays they are trying the same thing. And we should expect to see such attempts in any era when wealth is concentrating and the middle class is shrinking.

One of the many problems with oligarchy is that the oligarchs, having vast properties, can engage in deals that violate the spirit of the law, without violating the letter of the law. For instance, in the USA we have laws that limit political campaign contributions. But these laws are easily circumvented when one oligarch wants to funnel money to another oligarch, because one of them can simply buy the other’s property, for some inflated price. For instance:

Everyone knows that Truth Social is not worth $3 billion dollars. But Jeffery Yass is happy to bribe Donald Trump, to buy his loyalty so that Trump will defend the Chinese-owned TikTok, in which Yass has a $30 billion investment. This exchange is another example of money as anarchy: when the oligarchs aggregate unto themselves enough wealth, they gain the power to easily circumvent the law.

This is why a democratic society will tend to be a middle-class society: people in the middle-class don’t have enough money to defy the law as private individuals, using their personal power to hold the government at bay. While people of the middle-class often come together, as a group of citizens, to change laws that they feel are inconvenient or out-of-date or unjust, no one member of the middle-class can simply defy the law. But oligarchs can, and so oligarchs undermine the rule of law.

The end of feudalism: monopoly oligarchs versus the honest entrepreneurs

In the early modern period, after 1500, the struggle for democracy was in a recurring battle, one where monopoly and oligarchy were on one side, while the other side was supported by small-scale merchants, bankers, lawyers, doctors, and yeoman farmers. Often an illiberal prince found themself in a struggle with an illiberal Pope and both sides, eager to find some help somewhere, would make appeals to the public of the early towns of Europe. And then those townsmen could ask for the grant of some specific set of rights, in exchange for helping one side or the other. That is, cracks among the ruling elites opened up when those ruling elites were fighting with each other, and the quest for freedom got started in those cracks, like grasses springing up through the cracks of overly stressed pavement. Illiberal elites, fighting each other, weakened each other enough that liberalism could make a start.

During the 1600s, as Britain struggled through war and revolution towards some kind of formal democratic limits on the power of the monarch, much of the tension was between oligarchic companies, backed by the great lords, demanding monopolies, but opposed by the small merchants and small businesses who were eager for free trade.

The Century of Revolution: 1603-1714

© 1961, 1980 by Christopher Hill

Page 29

Long-term government policy preferred to concentrate trade in the hands of a few rich merchants. Trading in companies was agreeable to monarchy, said Francis Bacon; free trade to a republic. Companies were easy to control; they could be made to accept royal nominees on their governing bodies, with which governments frequently interfered. In 1604 a ‘free-trade’ bill supported by other ports against London companies failed: but in 1606 Parliament dissolved the Spanish Company, and declared all subjects free to trade with France, Spain, and Portugal. In 1624 Parliament threw the export of dyed and dressed cloth open to all; the Merchant Adventurers were not able to buy their monopoly back until 1634, under the King’s personal government.

Selling patents, which guaranteed monopoly, was how feudalism tried to hold on to power, during a century when commercial forces were gaining power. Since the King could not get Parliament to grant him new taxes, the King resorted to selling more and more patents, in a desperate attempt to raise money. And the great lords, who had no talent for normal commercial competition, eagerly bought up monopolies as they offered safe money that required no entrepreneurial skill. By contrast, the independent merchants and professions, who had real entrepreneurial skill, were eager to see the whole system of monopolies smashed to pieces. After 1642 the revolution and civil war that tore the country apart aimed to end feudalism, but it also aimed to end the monopolies.

In 1601 a member of Parliament asked, when a list of monopolies was read out, ‘Is not bread there?’ His irony exaggerated only slightly. It is difficult for us to picture to ourselves the life of a man living in a house built with monopoly bricks, with windows (if any) of monopoly glass; heated by monopoly coal (in Ireland monopoly timber), burning in a grate made of monopoly iron. His walls were lined with monopoly tapestries. He slept on monopoly feathers, did his hair with monopoly brushes and monopoly combs. He washed himself with monopoly soap, his clothes in monopoly starch. He dressed in monopoly lace, monopoly linen, monopoly leather, monopoly gold thread. His hat was of monopoly beaver, with a monopoly band. His clothes were held up by monopoly belts, monopoly buttons, monopoly pins. They were dyed with monopoly dyes. He ate monopoly butter, monopoly currants, monopoly red herrings, monopoly salmon, and monopoly lobsters. His food was seasoned with monopoly salt, monopoly pepper, monopoly vinegar. Out of monopoly glasses he drank monopoly wines and monopoly spirits; out of pewter mugs made from monopoly tin he drank monopoly beer made from monopoly hops, kept in monopoly barrels or monopoly bottles, sold in monopoly-licensed ale-houses. He smoked monopoly tobacco in monopoly pipes, played with monopoly dice or monopoly cards, or on monopoly lute-strings. He wrote with monopoly pens, on monopoly writing-paper; read (through monopoly spectacles, by the light of monopoly candles) monopoly printed books, including monopoly Bibles and monopoly Latin grammars, printed on paper made from monopoly saltpetre. He exercised himself with monopoly golf balls and in monopoly-licensed bowling alleys. A monopolist collected the fines which he paid for searing. He travelled in monopoly sedan chairs or monopoly hackney coaches, drawn by horses fed on monopoly hay. He tipped with monopoly farthings. At sea he was lighted by monopoly lighthouses. When he made his will, he went to a monopolist. (In Ireland one could not be born, married, or die without 6d. To a monopolist.) Peddlers were licensed by a monopolist. Mice were caught in monopoly mousetraps. Not all these patents existed at once, but all come from the first decades of the seventeenth century. In 1621 there were alleged to be 700 of them.

…By the late sixteen-thirties the economy was beginning to suffer. The clothing industry was hit by increased cost of soap and alum, and by the scarcity of potash caused by suppression of imports. The Greenland Company lacked oil. The salt monopoly embarrassed the Fishery Society. The rise in the price of coal hit nearly all industries. ‘No freeman of London,’ said a pamphlet of 1640, ‘after he hath served his years and set up his trade, can be sure long to enjoy the labour of his trade, but either he is forbidden longer to use it, or is forced at length with the rest of his trade to purchase it as a monopoly, at a dear rate, which they and all the kingdom pay for.’

…Since monopolies were enforced by the royal prerogative and the prerogative courts, they gave rise to constitutional conflicts. Parliament, the representative institution of the men of property, favoured greater industrial freedom. In 1624 Parliament declared that monopolies were opposed to the ‘fundamental laws of this...realm’. Because of its invasion against the prerogative, this Statute of Monopolies was described by a contemporary as ‘a bill against monarchy’. Charles evaded it by disregarding the common-law courts, and bringing cases affecting monopolies before Star Chamber, on the ground that his prerogative was being questioned. Sale of monopolies was the line of least resistance for governments in financial difficulties, and was extensively used in the sixteen-thirties. The knowledge that their patents would be attacked if Parliament ever met encouraged monopolists to aim at quick profits. Indeed, the King himself was not above selling the same patent twice over, so no patentee could be squeamish about consumers’ interests. It was a vicious circle.

The long era of civil war and revolution, from 1642 to 1688, eventually smashed feudalism and also the monopoly system, so that during the 1700s Britain could become a society where the activity of entrepreneurs was genuinely celebrated. But there is never a permanent victory for freedom, not anywhere, not ever. What the people of Britain eventually won, through multiple revolts and massive struggles, is something that will always be at risk. There will always be those who hope to re-establish monopoly. There will always be those hoping to become oligarchs of such power that they will be able to challenge the power of the state, and thus establish a kind of neo-feudalism.

In all countries, in all centuries, the struggle for democracy is the struggle against oligarchs

Even now, in the 21st Century, the world is full of weak states and powerful oligarchs. The evolution of Ukraine since 1991 offers an example of a nation that has struggled to become a real democracy, and which has made progress through a series of revolutions, each of which has strengthened its democratic norms, as well as its democratic governance. Nevertheless, till Russia launched its full-scale invasion in 2022, the democratic movement in Ukraine was in a perpetual struggle with the oligarchs. Money is anarchy, especially when money allows oligarchs to hire their own private armies and so go to war against the government. This problem of internal war was widespread in Ukraine.

I’ll here quote Constantine Pleshakov, though I should warn that he is pro-Russia and anti-Ukraine. All the same, he does correctly bring out the destructive influence of the oligarchs. Keep in mind that he wrote this in 2017.

The Crimean Nexus

Putin’s War and the Clash of Civilizations

By Constantine Pleshakov © 2017

Page 132-134

Ukraine as a Failed State

By unleashing war in Donbass, Putin foolishly jeopardized the future of his regime, or “managed democracy” as his ideologues call it. But the other side in the conflict, Ukraine, simply collapsed as a state.

A state fails when it loses (in Max Weber’s famous formulation) its monopoly on the legitimate use of physical force on its territory. The Ukrainian state has done that, and now also meets all the other criteria of a failed state: massive movement of refugees and domestically displaced persons, vengeance-seeking group grievance, the rise of factionalized elites, and the intervention of external actors.

The movement of refugees and displaced persons is the largest in Europe since World War II; as of August 2015, according to United Nations data, at least 1.3 million people had been “internally displaced” within Ukraine, and 900,000 had fled abroad, mostly to Russia.

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In August 2015, members of another right-wing party, Oleh Tyahnybok’s Svoboda, clashed with police in front of the parliament building in Kiev, killing three servicemen.

Within a year, the power of warlords spread beyond the war zone. In July 2015, a Right Sector battalion clashed with government forces in the town of Mukachevo in western Ukraine. The fighting originated in a business dispute over trade in contraband cigarettes: Mukachevo sat on Ukraine’s border with Hungary. Several people died; the weapons used included machine guns and grenade launchers. In 2015, more than forty private battalions existed in Ukraine. Besides Donetsk and Luhansk, several other areas were controlled by warlords. Among the most colorful was Ihor Kolomoysky, an oligarch commanding at least $3 billion, and a citizen of three countries – Ukraine, Cyprus, and Israel – who spent at least $10 million to create the Dnipro Battalion. He called Putin a “schizophrenic of short stature.” Putin returned the compliment by calling him a “unique crook.”

The war in the east has been too bloody, too ugly, and too dishonest on both sides for any Ukrainian national unity to be feasible. Even after the bloodshed eventually ends, Ukraine will likely never be able to return to its 2013 borders.

For a student of government, watching the transformation of Ukraine has been a real education. Russia launched its full-scale invasion in February of 2022, and the Western democracies responded by sending massive amounts of aid. The war has completely sidelined the Ukrainian oligarchs, who are suddenly powerless, as they lack the power to defend themselves from Russian invaders, and so they are now wholly dependent on the Ukrainian government to save them. A society that had been riven by seemingly endless internal fights is suddenly more unified than it has ever been before. After February of 2022, the central government suddenly had large flows of funds being made available to it from outside powers. Instead of having to beg the oligarchs to pay their taxes, the Ukrainian government suddenly was given the money necessary to organize itself more effectively than it had ever been before. More so, the crisis gave President Zelenskyy the pretext to push through many needed reforms, eliminating some of the worst remnants of the old Communist system. The hard shock of war, which lead to Western support, allowed Ukraine to break out of the cycle of weakness to which the oligarchs had condemned it for 30 years.

The greatest irony of all was that Republicans in the USA were worried about corruption in Ukraine and so demanded an especially high level of auditing for every dollar that was sent to Ukraine. This allowed Zelenskyy to reduce corruption in broad areas of Ukrainian life. The doubts of the Republicans translated into unusual levels of success in cleaning up Ukrainian society. And this offers a general rule for us in the USA: every dollar should be audited, not just in Ukraine, but in everything the government does. An especially educational comparison is the contrast in Republican attitudes towards Iraq and Ukraine. Under President Bush the Republicans saw Iraq, in 2003, simply as a way to make money, and so they did everything possible to encourage corruption. The USA leadership in Iraq was given the power to hand out large, unexamined, unaudited, no-bid contracts. And some of those contracts went to well-connected Republican insiders. And this established a pattern of corruption. And the result is that, even today, Iraq is deeply corrupt. By contrast, Republicans were suspicious of Ukraine, and so they demanded rigorous auditing, and so Ukraine has emerged as a success story that has been able to reduce corruption. The lesson for USA leadership is obvious: we want more Ukraines and less Iraqs.

Historically, most oligarchs have genuinely believed in oligarchy as a way of life. They view democracy as chaotic and confused. They view oligarchy as orderly, rational, philosophical, objective. Imagine a society with 100 million people, each of whom have an opinion — isn’t that confusing? But imagine a society where only 200 or 300 people matter — isn’t that a lot easier to organize? 200 people can meet in one room and work out an agreement, which is so much easier than the normal democratic processes of elections and public debates and public criticism and the public push-and-pull of politics. Most oligarchs sincerely believe that an oligarchic system is better.

And yet, oligarchs are often their own worst enemies. These are men of ego, they believe they are right and everyone else is wrong. As such, societies that are oligarchic are also societies with a propensity for civil war. This is exactly why most oligarchies resolve into dictatorships — given their propensity to destroy one another, and often destroy themselves, after a certain amount of fighting the oligarchs start to hope for a single strongman who can unite them all. An excellent example is given to us by Russia’s brief experiment with democracy, during the 1990s, and the way the oligarchs were happy to eventually see Putin rise to power.

Mr. Putin

Operative in the Kremlin

Fiona Hill & Clifford G. Gaddy

Copyright © 2013 The Brookings Institution

Page 152

The people who brought Vladimir Putin from St. Petersburg to Moscow never cared about his credentials as a specialist in developing business. For them he was an expert in controlling business. All the time Putin worked in St. Petersburg, he played an official role as deputy mayor and chairman of the Committee for External Relations, but behind the scenes, Mr. Putin operated in his most important identity – the Case Officer. In St. Petersburg, Vladimir Putin was an “operative.” Businessmen were not partners but targets. Once he came to Moscow, Putin eventually began to target another set of businessmen, the Russian oligarchs. His goal was to make sure that Russia’s own new class of capitalists did not predate on each other and on the Russian state. He was to try to harness them to be “bigger and better” and make more money in the service of Russia – not just for themselves.

Page 186-187

THE OLIGARCHS’ DILEMMA: MR. PUTIN’S SOLUTION

Despite their vast wealth, Russia’s oligarchs in the 1990s were constantly at risk from the public, which almost universally regarded their ownership of the country’s largest corporations as illegitimate. At the same time, the oligarchs were individually at risk from one another. They were constantly predating on each other’s businesses and could not trust each other. Thanks to their own efforts to reduce any power of the government to control them, they had also undermined the state as the one institution that could protect all their property rights. As a result, they were reduced to trying to protect themselves individually. The biggest vulnerability each of them had was the information about their financial status and their financial operations. In such circumstances, the only protection the oligarchs had was to make everyone equally vulnerable. They focused on digging up potentially damaging information about each other. The threats and counter-threats deterred aggression. The result was a mutual and perpetual state of blackmail – what is known as a “mutual conflict equilibrium” in game theory. In other words, delicate balance is better than war, but only barely so.

To maintain the equilibrium, the oligarchs had to expend a huge amount of effort and resources that they could otherwise have used to manage their companies and generate more wealth. They also ran the constant risk that the balance would tip, that the infighting would get out of control, and the whole system would come crashing down around them. For their own sake, the oligarchs needed an outside arbiter. They needed a completely and clearly impartial agent who would be strong enough to enforce the peace in a credible and sustainable way – and who, most important for them, would never become a rival, another oligarch. This arbiter would, in effect, have to hold them all hostage so that each of them would have the opportunity to disarm and conclude a non-aggression pact. If the state could not do this, by enforcing the rule of law, then something or someone else would have to step in.

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Page 188-189

When he was propelled into the highest Russian offices in 1999-2000, Putin first offered himself to the oligarchs as a protector. He reassured them that he would not dispossess them. He would recognize the basic parameters of their 1996 deal with Yeltsin in acquiring their business assets. He also reminded the oligarchs that few others in Russia saw their ownership as legitimate. He used this reminder, in February 2000, to announce that Russia’s businesses would now be “equidistant from power.” They could not use any of their old levers to buy influence and cultivate goodwill across the Russian Federation. They would have to start from scratch. Their only key relationship would be with Putin’s Kremlin, and this would be for their protection, from disappropriation, not for their influence.

Since the emergence of the first civilizations, 6,000 years ago, a dictator overseeing an oligarchy has been the most common form of government. Most feudal governments at least initially resemble this form: some powerful dukes who agree to have a King so as to avoid civil war. Or, in the case of China during the Warring States period, a civil war that went on and on, for centuries, till finally one winner united all of the conquered territory. As a kind of government, oligarchy seemed to work well enough during the times when most of humanity was absorbed into agricultural work.

Modern economies depend on the initiative of specialists, whose freedom of initiative will be limited under a dictatorship by the fear of arbitrary punishment

The problem with oligarchy is that it is not especially effective in running a modern, high-technology society. An advanced economy will depend on highly trained specialists who have knowledge that no one else has, and for them to be effective, they need to be able to take initiatives on their own, without asking for permission. But oligarchic dictatorships tend to be fragile — they lack legitimacy and so they rule by naked, unrestrained violence, and that violence causes everyone in the system to avoid taking any initiative.

As many scientists in Russia have found out, the slightest setback, however normal to research or development, can end your career. If you go over budget, or miss a deadline, or have a test that misses expectations, then you could be going to prison. There is no bureaucracy that can protect you. Everything depends on the whim of the dictator.

Another aspect to this is the way oligarchs love power, and seethe with contempt to any source of power other than their own. Again, these are men of ego. As such, they tend live in a perpetual rage towards government, whose existence is a perpetual slap in the face for those who doubt the legitimacy of all authority other than their own.

Surviving Autocracy

By Masha Gessen

Copyright © 2020

Page 28-29

We Could Call It a Kakistocracy

Trump’s disdain for excellence is neither a personal quirk nor an anomaly among autocrats present and past. It is logical: they see the work of government as worthy only of mockery, and so they continue to mock it when they have power. It is also integral to their overall stance: these are men who intentionally, openly call out to the worst that humans have to offer. Trump’s contempt for excellence is of a piece with his public mockery of a disabled journalist, just as Putin’s contempt is expressed in his deployment of gutter humor. Trump’s project is the government of the worst: a kakistocracy.

For all of these reasons, the type of government that oligarchs will support will tend to be fragile. To avoid civil war, the oligarchs will tolerate a strongman who can keep the peace, but the oligarchs hope for a strongman who holds the government in contempt, even as they do.

In Russia, Putin has been constantly running into the limits of the system he built. He rules through fear and violence, yet he wants others to take the initiative and show leadership, but they cannot because they are afraid that Putin will murder them if they make a mistake. Anyone who knows history of other oligarchic dictatorships is aware that Putin will never find an answer for the problems that now cripple the system he built.

Page 211-212

In the years since Beslan, Putin has found the vertical of power wanting. In spite of relishing his role as the boss, and the PR benefits it accrued, Putin has had to take action himself over and over again. Either he has had to send someone from Moscow out to Russia’s regions, or he has had to intervene in person, like in Pikalyovo or during the 2010 fires. Instead of standing on the sidelines and monitoring the mechanism of the state, or formulating and providing strategic vision from the top like the CEO, Putin has been increasingly diverted from his task. He has plunged into ad hoc tactical improvisations to fix the mechanism. Appointed officials still seem to have the same affliction as the irresponsible elected official who vanished from the scene in Siberia. They have a propensity to look for guidance and instruction – if not an outright bailout – from the top. They do not seem to realize that they are part of the mechanism of a Swiss watch all working in synchrony. They do not know that the buck stops with them. This clearly frustrates Mr. Putin, based on his numerous public complaints in interviews and in discussions about officials’ general and specific lack of responsibility.

A SYSTEM BASED ON DISTRUST

The failure of Putin’s vertical of power shows that the corporate management model he envisages cannot work on the scale of the entire state apparatus. The apparatus is too large. The system he has created has too many peculiarities. There are no clear lines of responsibility within the system as a whole. Even if the formal institutions of the state are still in place, the entire system is in many respects completely unstructured. The corporate model appears to have worked in the 2000s, for the purpose of controlling the oligarchs and monitoring their activity in service of the mission Putin has laid out. Beyond that, Putin’s actual practice has not lived up to the blueprint. In a properly functioning corporation, there is delegation of responsibility and accountability up and down the entire chain of command. There is also reward and merit at every level. In Putin’s virtual corporation there are no clear chains of authority because there can be no authority that does not come from Putin personally. Personal relationships trump professional resumes, apart from in a handful of cases, and rewards are concentrated at the very top of the system.

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Page 216-219

PERSONALIZATION: THE “ONE-BOY NETWORK”

Threats and extortion may address one set of systemic issues, but they will not solve everything. Since 2004, Putin has had to face the dilemma that distrust and the personalized nature of the system he has created also undermine his general concept of the vertical of power. The fact that the particular person in a specific position, or carrying out a discrete function, is crucially important has weakened the vertical of power from the top to the bottom. Some people are more powerful than others by virtue of who they are and their connections rather than their positions – especially if they have close personal ties to Putin. Most Russians working in the state apparatus are well aware of the existence of the parallel universe of the informal, unofficial, special world of privilege and access to Putin.

…Furthermore, throughout his tenures as president and prime minister, Putin has undermined the value of other key institutional positions, either by moving the same set of close associates from job to job at the very top of the system, or conversely by keeping others further down firmly and unassailably in place. Again, the people count, rather than the positions they hold. Unlike Dmitry Medvedev during his presidency, Putin does not generally sack people within the system, even for clear incompetence – he gives them another chance to do better (or do something else).

Compare the USSR to modern Russia: many people insist that Communism was an inefficient economic system, and yet the USSR had fast economic growth from 1920 to 1960 (faster than the USA) and during this time it took the lead in many technologies, becoming the first nation to put a satellite into space, then the first nation to put a dog into space, then the first nation to put a man in space, and then finally the first nation to put a woman in space. Mistakenly, many people assume that the large bureaucracy that organized the USSR was the reason that the economy was inefficient. Towards the end, after 1970, this might be true, but in the early days it was that vast bureaucracy that allowed the USSR to outperform the USA, to mobilize vast amounts of capital towards the fastest program of industrialization that the world has ever seen. And though it is common to say that the USSR system was wasteful, at its peak it was saving 40% of its GDP, thanks to a highly efficient suppression of consumption. 40% of GDP is unheard of, it is shocking number. It implies violence. But it also implies massive investment and massive growth.

Under Putin, Russia’s economic performance has been weak, and almost entirely tied to the price of oil. By contrast, between 1920 and 1940 the USSR managed to grow from 8% of world GDP to 18% of world GDP. But nowadays Russia constitutes just 1.5% of world GDP.

It’s become common to say that the USSR had economic inefficiency because of central planning, but a close look at the decline of the USSR suggests the opposite was true: it had rapid economic growth when it could at least centralize savings and reinvestment, and it went into decline as various factions of the bureaucracy became powerful enough to defy the center.

The Struggle to Save the Soviet Economy:

Mikhail Gorvachev and the Collapse of the USSR

By Chris Miller ©2016

Economic efficiency was also restrained by the relative leniency of the Communist Party during the postwar period. Under Stalin, the party had few interest groups because the Soviet dictator enforced his writ through purges and mass killings. Enterprise managers dared not miss production targets, on pain of death. The rapid rotation of cadres, facilitated by Stalin’s purges, reduced the influence of patronage networks. Brezhnev’s policy of “stability of the cadres” ended the use of the firing squad to encourage effective management. That made the Soviet system more humane, but it degraded incentives to work efficiently. Bureaucrats and managers now faced few reasons to act effectively: their firms could not go bankrupt, their salaries did not depend on performance, and they received promotions based on political connections.

The irony here is that Stalin’s vicious murder rampage actually created the kind of churn in personnel that allowed the centralized system to work well. By contrast, when it became clear that Brezhnev was unwilling or unable to crack down on the cadres, then the factionalism grew, and formed interest groups that were able to fight for their own narrow interests, to the detriment of the USSR.

The Struggle to Save the Soviet Economy:

Mikhail Gorvachev and the Collapse of the USSR

By Chris Miller ©2016

Page 57-59

Long-serving officials in Soviet industrial ministries developed power bases and patronage networks that let them implement policies independently of, and sometimes in contradiction to, the party leadership’s wishes. During most of the postwar era, this rarely presented a problem because leaders such as Brezhnev generally gave industries what they wanted. But as Gorbachev developed an agenda that was less favorable to industries, the ministries worked to counter decisions from party leadership that would harm their interests.

The power exercised by these ministries over the USSR’s economy was widely noted by Soviet scholars. Influential sociologist Tatiana Zaslavskaya, for example, openly argued that “the ministries are the most powerful state with the state” and “the most important element in the structure of state power.” She pointed out that ministers treated their organizations as personal fiefdoms and referred to their ministry’s possessions as their own: “I have 330 state farms,” she quoted the minister of medium-machine building as saying. “My cows give 6,000 litres of milk....By volume of production, my ministry is between the Ukraine and Kazakhstan.” The minister is “an emperor,” Zaslavskaya explained.

It’s important to note that as these interests groups became more and more independent, and more able to defy the central government, then the USSR increasingly resembled a nation suffering a plague of powerful oligarchs. In the same way that oligarchs often gain enough power that they can defy the government, and even overthrow the government, the interest groups in the USSR gained more and more power until finally they were able to overthrow the government and bring an end to the USSR in 1991. And many of the people who emerged as actual oligarchs during the 1990s were already powerful bureaucrats who had begun to accumulate dangerous levels of power back in the 1970s and 1980s.

In other words, the USSR did well when it had a powerful central government, but when the central government became weak, the bureaucrats enriched themselves and became de facto oligarchs, and then later some of them became actual oligarchs. After 1960, and especially after 1980, the bureaucrats became a gang of parasites who stole as much as they could, fatally weakening the USSR.

When Mikhail Gorvachev became the leader of the USSR in 1985, he knew what economic reforms were necessary to save the country, but he lacked the power to implement those policies. Everyone in the USSR saw that China was having success with market reforms, and doing the same reforms in the USSR would have also brought success, but by this point independent bureaucrats, and the concentrated power of the largest special interests, had grown too powerful — they were easily able to defy Gorvachev. They taunted him, frequently, with the threat of a coup, and then finally in 1991 they helped initiate the coup that ended the USSR.

Page 168 - 171

Coup and Collapse

When the army did rise up in August 1991, imprisoning Gorbachev at his summer home in Crimea and attempting to establish power in Moscow, it did not act alone. The security services were well represented in the ranks of the coup-plotters, led by Defense Minister Yazov, KGB chief Kryuchkov, and Internal Affairs Minister Pugo. Yet it was not just a military coup: anti-Gorbachev economic lobbies also strongly backed the putsch. Oleg Baklanov, first deputy chairman of the Defense Council, which represented the military-industrial complex, were all prominent supporters of the coup. The coup’s leaders and the organizations they represented opposed a market economy on ideological grounds. Kryuchkov, the KGB chief, declared the previous year that it would be a “ruinous mistake to throw the country into the arms of the elemental forces of the market.”

Yet Kryuchkov and his allies from the farms and industries also had more prosaic concerns: they feared that the next round of economic pain would fall on them. Tizyakov, the coup leader who led the Association of State Enterprises, long opposed perestroika’s effects on the enterprises he represented and had a track record of backing authoritarian rule as an alternative to Gorbachev. Along with Tizyakov, the chairman of the USSR Union of Peasants, Vasily Starodubtsev, participated in an array of anti-perestroika political activities, famously signing the reactionary manifesto “A Word to the People,” which was published in Sovetskaia Rossiya on June 23, 1991. The state enterprises and farms that Tizyakov and Starodubtsev represented were threatened by perestroika.

The coup’s leaders are often described as hard-liners, but they were not committed to a return to Brezhnev or Stalin-era economic management. Indeed, in the press conference that announced the seizure of power, they promised to support private entrepreneurship! Rather than Marxism-Leninism, what united the coup leaders was a desire to defend their turf and a willingness to use force to do so. Many of the coup leaders had longstanding ties to advocates of authoritarian politics. By mid-1991, as the economy weakened, they moved from advocacy to action. If they did not seize power, the coup leaders reckoned, they were about to get hit with a big bill.

It is worth noting how much this story resembles a story of a nation destroyed by overly powerful oligarchs. Don’t let the word “Communism” fool you, this is just a story of oligarchy in another disguise. Certain men had become wealthy and powerful, and when they thought the government might take away their wealth and power, they reacted by overthrowing the government.

Why doesn’t every society become an oligarchy? What are the countervailing powers?

But if we say “the bureaucrats became so powerful that they morphed into oligarchs” then we must admit that’s only half the story. Why did it happen when it did? Why doesn’t it happen more often in other countries? In every human society there will be greedy, ego-driven individuals who try to gain enough power and wealth that they can rival of the government in terms of power. So why doesn’t every society become an oligarchy?

There are two forces that can limit oligarchy:

1. indiscriminate totalitarian violence that causes high levels of personnel church so that no one bureaucrat is able to gain much power before they are killed.

2. a vibrant civil society, in a country with a prosperous middle class, that is able to use the political process to limit the powers of the incipient oligarchs.

And yet, no nation can long survive a fit of totalitarian terror ordering the ceaseless murder of its leadership class. And so the decay of the USSR was absolutely inevitable, for at some point the mass murder had to end, but without that mass murder there was no way to discipline the bureaucrats, and no way to keep them from becoming oligarchs. And so we should draw this conclusion: If you are very naive, then Communism seems like a simple solution to oligarchy: take the property away from the oligarchs and give it to the government. But it turns out that oligarchy is highly contagious. If you take an oligarch's property, you are now the oligarch. It really doesn't matter if the property is owned by the government or a private citizen, all that matters is how much the property is concentrated. As Lord Acton said, "Power tends to corrupt, and absolute power corrupts absolutely." For a society to retain a system of accountability, there needs to be multiple, competing voices. That might be millions of independent businesses, or in theory it could be millions of competing businesses that are owned by the government, so long as the businesses are allowed to be truly independent. The ideal is a society with a vibrant civil society, bursting with informed voices that can offer constructive criticism to both the government and to the other sections of civil society.

Even when democracy is able to establish itself for awhile, in poor Third World countries that discover they have oil, often the "resource curse" takes over and the country soon becomes a dictatorship. If the oil is the only thing in the country that has value, then the oil tends to create all the problems of oligarchy. Again, it does not matter much if the oil is publicly owned or privately owned, what matters is that the wealth of that nation is highly concentrated. And yet, in nations such as Norway and Canada, we can see that oil doesn't have to destroy society so long as the nation already has a large, happy, prosperous, well educated middle class which is active in politics. The danger of concentrated wealth can be offset by a sufficiently vibrant civil society.

More so, a large, happy, prosperous, well educated middle class will be full of professionals who can bring real expertise to managing complex enterprises. Modern economies are extremely complicated, more than any one mind can understand. It takes legions of talented, intelligent men and women to work through the details of each industry and each speciality and match the needs of each business with the resources needed to build a growing, beautiful, successful operations. And for these professionals to do their best work, they need protection from violence. And here it is worth comparing the Western democracies with the USSR and with Putin’s Russia.

The Western democracies obey the rule of law, where independent courts protect the rights of individuals from the possibility of the government abusing its authority. This offers a high level of protection from violence, to the various professionals trying to get a job done.

The USSR has no formal protections for its bureaucrats, but each agency and bureau had some power to protect its own people. This offered limited protection from violence.

In Putin’s Russia there is no accountability for the behavior of the oligarchs, nor the Russian government. Any mistakes can be punished by death. The situation has slowly gotten worse and worse, since 2000, as Putin has slowly consolidated his power. There is no protection from violence.

A final point to consider about the USSR is that, for most of its history, its bureaucracy was better staffed for managing a modern industrial economy, and this explains why it was more successful than Putin’s Russia:

The immense power that such bureaucrats wielded made it essential for enterprises to lobby them for favors. One Moscow newspaper reported, for example, that although only 3,500 people worked in the planning commission’s headquarters, the lunch cafeteria regularly served 6,000. The 2,500 guests in daily attendance did not come for the borscht - they came to lobby planning officials for more handouts from next year’s budget. According to economist Leonid Abalkin, every ministry had a representative at Gosplan to facilitate lobbying. Another economist noted that in the Soviet economy, resources were allocated “by the principle: who has the loudest voice.” In theory, the Communist Party controlled the economy, but in reality the industries controlled the party. They were fully capable of defending their turf.

Three interest groups stood out: farms, energy companies, and the military. In Soviet terminology, these industries were grouped together as the agro-industrial complex, the fuel-energy complex, and the military-industrial complex. Each of these groups represented its own microcosm of the Soviet economy; each was governed by its own bureaucracy, and personnel usually spent their entire career within a single industrial complex, creating interconnected webs of relationships, favors, and loyalty. Officials who moved from one of the complexes to another part of the Soviet bureaucracy, were believed - usually correctly - to be representing in their new organization the interests of the complex that previously employed them.

Bureaucracy is modernism. Getting bureaucracy right is the key to the future.

Long ago, when the economy was simple and agricultural, a single dictator might have been able to form some intuitions about the needs of their society, but nowadays the complexity of technology means any large scale project will need hundreds or thousands of specialists, as well as those project managers who understand enough about a project to demand the correct budget for that project. “Only 3,500 people worked in the planning commission’s headquarters, the lunch cafeteria regularly served 6,000” — those extra 2,500 people might well have been the correct number to represent the interests of the industries which were growing rapidly during the USSR’s best decades. By contrast, Putin will only meet with a small handful of oligarchs, and as such he never knows enough to effectively manage Russia, and as such, Russia today is just an anemic shadow of what the USSR once was.

In the early 1900s the historian Max Weber invented the word “bureaucracy” and defined it as an essential part of our modern world.

According to Weber, beaucracy is a particular type of administrative structure developed through rational-legal authority. Bureaucratic structures evolved from traditional structures with the following changes:

1. Jurisdictional areas are clearly specified, activities are distributed as official duties (unlike traditional form where duties delegated by leader and changed at any time).

2. Organization follows hierarchial principle -- subordinates follow orders or superiors, but have right of appeal (in contrast to more diffuse structure in traditional authority).

3. Intential, abstract rules govern decisions and actions. Rules are stable, exhaustive, and can be learned. Decisions are recorded in permanent files (in traditional forms few explicit rules or written records).

4. Means of production or administration belong to office. Personal property separated from office property.

5. Officials are selected on basis of technical qualifications, appointed not elected, and compensated by salary.

6. Employement by the organization is a career. The official is a full-time employee and looks forward to a life-long career. After a trial period they get tenure of position and are protected from arbitrary dismissal.

Putin’s personal system relies on violence, and so no one wants to report failure, and so everyone lies. This further undermines the effectiveness of Putin’s government, as it is often flying blind, lacking accurate information because everyone in the Russian system is lying. An example from Russia’s invasion of Ukraine:

This is one of the most extraordinary consequences of Russian propaganda on TV and on social media.

[Imagine] Russian forces are engaged in an offensive to take village X. On the front the Ukrainian forces are engaged in defending it successfully. Russian TV announces that the target village X was assaulted and taken by the 1075th Orc Battalion.

Except it wasn’t.

However, having announced it and made it official through Russian channels the military now sees the village as taken up at the High Command end of the chain, while on the front troops have got nowhere close. High command then cuts back the resources they need to take the village because it’s already been taken in their propaganda world, leaving forces at the front with little supporting artillery, and yet local commanders expecting and expected to make good on the claims made by propaganda!

One recent intercept highlighted this process explicitly saying they had to look on a map for the village and they were nowhere near it and wouldn’t be for weeks, if ever. But as soon as it was announced they’d taken it their mortars and artillery were stripped from their formations and they were left with rifles and nothing else. Yet they were still expected to mount offensive operations to reach the target, which they had already supposedly taken!

This also demoralizes the troops further because they can’t be seen to have achieved if they did take the target, they know the target is near impossible to take without support.

The whole process of fake news creates a spiral of decline and demoralization as unrealistic expectations are placed on those with even fewer resources than they had to carry them out. Russian soldiers have little trust or belief in their commanders as it is, all this does is reduce that to nothing.

Even some centuries ago, the economy was already becoming too complex for any one dictator, or monarch, to understand what was happening. After 1700, the push towards representative government was driven in part by the need to have leadership in government that actually represented the different parts of the economy. This was keenly understood during the early years of America’s independence. Keep in mind, this was written by a man who felt that American democracy was not representative enough (and I agree that the problem he is pointing to remains an unsolved problem — we should consider forms of democracy that can bring more experts into different parts of the government, so that the leadership better understands how the economy actually works).

Melancton Smith, New York Ratifying Convention

20--21 June 1788

The knowledge necessary for the representatives of a free people, not only comprehends extensive political and commercial information, such as is acquired by men of refined education, who have leisure to attain to high degrees of improvement, but it should also comprehend that kind of acquaintance with the common concerns and occupations of the people, which men of the middling class of life are in general much better competent to, than those of a superior class. To understand the true commercial interests of a country, not only requires just ideas of the general commerce of the world, but also, and principally, a knowledge of the productions of your own country and their value, what your soil is capable of producing, the nature of your manufactures, and the capacity of the country to increase both. To exercise the power of laying taxes, duties and excises with discretion, requires something more than acquaintance with the abstruse parts of the system of finance. It calls for a knowledge of the circumstances and ability of the people in general, a discernment how the burdens imposed will bear upon the different classes.

After 1700 the most successful economies in the world were exactly those that were able to find ways to get experts into positions of authority. In places like Germany and Japan, hybrid political systems developed mixing elements of monarchy and limited democracy, mixed also with some liberal protections for at least some categories of people who then felt free to discuss important issues in an unrestricted manner. And, at least for awhile, this offered a somewhat effective way of guiding society forward through an era of entirely novel technological development. But still, the freest societies, with fuller democratic participation, eventually did a better job of evolving the government needed to oversee the emergence of a high technology civilization in the 1800s and 1900s.

By contrast, a personal dictatorship, such as Putin’s, is an anachronistic throwback to an earlier era. There is no possibility, in the 21st Century, that a dictator plus a few hundred oligarchs can run a modern and complex society. They simply lack the knowledge to cover the millions of small-scale details whose careful management could add up to a large-scale national success. And their use of violence as a management technique means they have no hope of hearing of those details. Instead, they wallow in defeat and self-pity, while wondering why the system doesn’t work more automatically.

Mr. Putin

Operative in the Kremlin

Fiona Hill & Clifford G. Gaddy

Page 191-192

Beyond this protection scheme at the core of the system, Mr. Putin plays the role of the chief executive officer, the CEO, of the “corporation” that is Russia – the sum of all the assets managed either by the oligarchs or by the appointed stewards of state enterprises. In carrying out these functions, Putin is assisted by a very small group of trusted aides – in essence, the staff of the CEO’s office. Outside this small group lies the larger, vast sphere of the state apparatus of Russia, which includes officials of both the federal (central) and regional governments. In Putin’s idealized version, this is the sphere of governance that is supposed to function like a “Swiss watch.” It is not supposed to require his personal attention – although, to his evident frustration, it constantly does. Finally, beyond the circles of governance are the governed, the Russian populace. They have no voice in the operation of the corporation or the system.

This teaches us something essential about modern economies: money is anarchy, and therefore difficult to corral towards the public good, but violence can be used to corral money, and yet violence also gets in the way of truly novel innovation. Or to put that differently, violence might be enough to corral the oligarchs, but violence also keeps people from taking the initiative needed to build anything original, innovative, or anything that involves much risk, which would include most large-scale projects. So violence must be limited for anything worthwhile to be achieved. In a liberal society, the threat of violence is still implied by the existence of the government, but the violence is controlled in ways that maximize the range of action that a citizen can consider. Or to put that differently, in a civil society under the rule of law, the government holds an absolute monopoly on all legitimate violence, but the use of that violence is carefully limited, so that citizens can freely pursue a wide range of initiatives, without having to worry about the government.

We can establish a hierarchy of effectiveness:

1. pure violence, without limit, inhibiting any risk-taking, because a person who wishes to engage in economic activity cannot find any protection should something go wrong

2. violence, but a person who wishes to engage in economic activity can find protection in large bureaucracies, so such people can take some limited initiative, relying on their limited protection

3. violence, but under an autocratic regime that aspires to be liberal, and which has introduced the rule of law, so that people can engage in any activity that is lawful, knowing in advance exactly what is allowed, however the autocracy still leaves the individual vulnerable to arbitrary prosecution, because there are no checks and balances

4. violence, but under the rule of law, in a liberal democracy, so that people can engage in any activity that is lawful, knowing in advance exactly what is allowed, with multiple checks and balances to protect against arbitrary prosecution

Liberal democracy is what allows entrepreneurs to pursue initiatives that can bring economic benefits to society, in exactly the same way that liberal democracy allows citizens to pursue social projects that also bring benefits to society. That is, there is nothing unique about economic activity, it is exactly the same as every other activity that citizens might pursue, it is the rule of law that allows citizens and entrepreneurs to pursue their initiatives, and it is democratic accountability that shapes the law that shapes such lawful activity towards ends that are socially useful.

The Moral Basis of a Backward Society

By Edward C. Banfield

Copyright © 1958 by The Free Press

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Page 7-10

Introduction

In democratic countries the science of association is the mother of science; the progress of all the rest depends upon the progress it has made.

--Tocqueville

Most of the people of the world live and die without ever achieving membership in a community larger than the family or tribe. Except in Europe and America, the concerting of behavior in political associations and corporate organization is a rare and recent thing.

Lack of such association is a very important limiting factor in the way of economic development in most of the world. Except as people can create and maintain corporate organization, they cannot have a modern economy. To put the matter positively: the higher the level of living to be attained, the greater the need for organization. Inability to maintain organization is also a barrier to political progress. Successful self-government depends, among other things, upon the possibility of concerting the behavior of large numbers of people in matters of public concern. The same factors that stand in the way of effective association for economic ends stand in the way of association for political ones too. “The most democratic country on the face of the earth,” Tocqueville observed, “is that in which men have, in our time, carried to the highest perfection the art of pursuing in common the object of their common desires and have applied this new science to the greatest number of purposes.”

…Americans are used to a buzz of activity having as its purpose, at least in part, the advancement of community welfare. For example, a single issue of the weekly newspaper published in St. George, Utah (population 4,562), reports a variety of public-spirited undertakings. The Red Cross is conducting a membership drive. The Business and Professional Women’s Club is raising funds to build an additional dormitory for the local junior college by putting on a circus in which the members will be both clowns and “animals.” The Future Farmers of America (whose purpose is “to develop agricultural leadership, cooperation, and citizenship through individual and group leadership”) are holding a father-son banquet. A local business firm has given an encyclopedia to the school district. The Chamber of Commerce is discussing the feasibility of building an all-weather road between two nearby towns. “Skywatch” volunteers are being signed up. A local church has collected $1,393.11 in pennies for a children’s hospital 350 miles away. The County Farm Bureau is flying one of its members to Washington, 2,000 miles away, to participate in discussions of farm policy. Meetings of the Parent Teachers Associations are being held in the schools. “As a responsible citizen of our community,” the notice says, “you belong in the PTA.”

An implication of this is that a liberal democracy will tend to be a middle class society, or perhaps a society where even the poor still have circumstances that allow them to join many organizations and therefore participate in the life of their nation. A vibrant mesh of voluntary organizations (a civil society) is an essential part of a system of democratic accountability. Most of these organizations will appear to be non-political, but in fact, every organization has a political impact in so far as it creates fellowship among citizens. Loneliness is the enemy of democracy, and every dictator strives to create a world where citizens are lonely and distrustful of one another. A society of oligarchs, in which all wealth is concentrated into a few hands, will tend to be a lonely society, as the poor will be pitted against each other in such a brutal competition for survival that there will be no room for ordinary friendship.

Page 115-117

Friends are luxuries that the Montegranasi feel they cannot afford. Prato, who we mentioned before, pairs off with a certain man when they work on the same job, but he does not see this man off the job and he does not consider him a special friend.

All of the peasants who were asked said that they have no special friends but that they “get along with everybody.”

Peasants sometimes exchange labor or make each other small loans of bread or cash, but they do so from self-interest, not from charity or fellow-feeling. No one expects help from another if the other stands to lose by helping. The peasant who works for another keeps a careful record of his hours. Even trivial favors create an obligation and must be repaid. When a visiting social scientist said he planned to leave the key to his house with a neighbor for a few days while he was away, his landlord pointed out that such a thing would be foolish. “You would needlessly create an obligation which you would have to repay.”

As the Montegranesi see it, friends and neighbors are not only potentially costly but potentially dangerous as well. No family, they think, can stand to see another prosper without feeling envy and wishing the other harm. Friends and neighbors are, of course, peculiarly liable to envy, both because they know more about one’s business than do others and because they feel themselves to be more directly in competition.

Those who promote oligarchy will tend to promote fear, suspicion, conspiracy theories, envy, and distrust, and they will tend to promote narrow understandings of their own identity, in ways that might allow some of the poor to identify with the them and therefore support that oligarch, while hating those who have clear differences with the identity of the oligarch. If it is possible to get two ethnic groups or two religious groups to distrust each other, the oligarchs will eagerly sow such division.

A society where wealth is concentrating into the hands of a few oligarchs will tend to be a lonely society, but the people always have the power to fight against that loneliness and fighting against that loneliness will tend to overlap with actions that would allow society to become more democratic. Simply holding a big party, on a regular basis, and inviting a large group of strangers, so that new friendships can form, is a way to fight loneliness, while also creating the kinds of connections that would help spark a political movement. And if the party gathers together enough people it becomes a chance for each person to learn something they didn’t know about the society they live in.

Gatherings are how groups reinforce their identity. Catholics gather at a Catholic church, Methodists gather at a Methodist church, actors committed to the teachings of Stanislavski gather at a theater founded in his memory, economists of extreme libertarian teachings gather at the Chicago university which is most famous for that kind of economics, Chinese immigrants gather in a particular park each day to play games of Go. And yet some people are both Methodists and also actors who follow Stanislavski and some people are both Chinese immigrants and also devout Catholics. The freedom of expression and the freedom to gather plays an essential role in the creation of multiple, overlapping, complex loyalties, which are an essential building block of a civil society.

Loneliness is caused by political factors, it is always a legitimate subject for political debate. Centrist parties that support democracy tend to support policies that indirectly help to reduce loneliness:

1. freedom to gather and freedom to talk

2. income compression to decrease status competition to reduce a source of alienation

3. good educations to give citizens a common base of cultural references

4. free health care, for many reasons, but also because, practically and historically, the single most common cause of loneliness is poor health

5. good mass transit so that the poor and the disabled and the young can easily travel to events and gatherings

6. limits on child labor so children can focus on school and socialization

7. limits on work hours (in some countries mandatory minimum vacation time) to ensure leisure to ensure people can maintain relationships with family and friends

8. strong enforcement against domestic violence, since protection against violence is a basic human right, but also, this indirectly helps people escape from situations that are likely isolating

I could go on, but the basic point is: loneliness is caused by political factors, it is always a legitimate subject for political debate, and political parties who are strongly pro-democracy tend to push programs that also, indirectly, reduce loneliness.

What is the connection between totalitarian rule and loneliness?

A community of people, speaking freely with one another, is what grounds people in reality. Especially when people can look directly into each other's eyes, and confirm the truth of what the other is saying, people are given confidence regarding their understanding of events (by contrast, online communication is notorious for disinformation and lies). The Czech writer Milan Kundera, while considering the suffering that Communism inflicted on Eastern Europe, said "The struggle against totalitarianism is the struggle of memory against forgetting." But free and honest communication among a free people allow people to confirm for one another the reality of each other's memories. By contrast, autocrats who aspire to absolute power aim to create amnesia. The autocrat will create as much confusion as possible, to cause people to doubt their own memories.

Lack of such association is a very important limiting factor in the way of economic development in most of the world. Except as people can create and maintain corporate organization, they cannot have a modern economy. To put the matter positively: the higher the level of living to be attained, the greater the need for organization. Inability to maintain organization is also a barrier to political progress. Successful self-government depends, among other things, upon the possibility of concerting the behavior of large numbers of people in matters of public concern. The same factors that stand in the way of effective association for economic ends stand in the way of association for political ones too. “The most democratic country on the face of the earth,” Tocqueville observed, “is that in which men have, in our time, carried to the highest perfection the art of pursuing in common the object of their common desires and have applied this new science to the greatest number of purposes.”

In this view, democracy is the opposite of loneliness. The most democratic nation on Earth will be the nation where people enjoy the greatest surfeit of fellowship. Of course, in the modern era, that fellowship needs structure. Individual voices are important, but to have an impact at the national level, individuals need to join together into organizations (whether religious or professional or work or ethnic or racial or language or even artistic or some other aspect of expressed identity). And those organizations can then speak loudly, and be heard, at the national level. In this way, fellowship becomes democratic accountability.

Conclusions

And so we can conclude: freedom of association and freedom of speech give rise to complex, multiple, overlapping loyalties, which gives rise to constructive criticism, which gives rise to systems of accountability, which corrals money towards socially useful ends, and therefore such freedoms are nearly the same thing as economic development.

Those libertarians who suggest that something called “capitalism” is successful in marshaling economic resources towards the social good overlook the many, many historical examples where oligarchs have concentrated economic power into their own hands and then used that power to their own selfish ends. At some points in history there is no clear distinction between the private sector and the public sector, but rather, given a sufficient concentration of wealth, an oligarch becomes the state.

If we want to build a better economy, we should focus on building even stronger systems of associations, which should lead to even stronger systems of accountability. A vibrant civil society is the basis of a free society, and it is also the basis for any healthy form of economic growth.

Much of this repeats a point made by Amartya Sen who won a Nobel Prize in Economics in part for showing the connection between freedom and economic development. See my earlier essay Democracy Is Practical. Amartya Sen said:

…There is, I believe, an important lesson here. Many economic technocrats recommend the use of economic incentives (which the market system provides) while ignoring political incentives (which democratic systems could guarantee). This is to opt for a deeply unbalanced set of ground rules. The protective power of democracy may not be missed much when a country is lucky enough to be facing no serious calamity, when everything is going quite smoothly. Yet the danger of insecurity, arising from changed economic or other circumstances, or from uncorrected mistakes of policy, can lurk behind what looks like a healthy state.

The recent problems of East and Southeast Asia bring out, among other things, the penalties of undemocratic governance. This is so in two striking respects. First, the development of the financial crisis in some of these economies (including South Korea, Thailand, Indonesia) has been closely linked to the lack of transparency in business, in particular the lack of public participation in reviewing financial arrangements. The absence of an effective democratic forum has been central to this failing.

…The vulnerable in Indonesia may not have missed democracy when things went up and up, but that lacuna kept their voice low and muffled as the unequally shared crisis developed. The protective role of democracy is strongly missed when it is most needed.

Finally, we should consider that this line is 200 years old, and so we might be able to go even further than what is here suggested:

In democratic countries the science of association is the mother of science; the progress of all the rest depends upon the progress it has made.

--Tocqueville

While a vibrant non-governmental civil society is the starting point of a free society, we should also consider how much we can echo the voices of civil society inside of government. It is especially the voices of the middle classes and the professional associations who need to be helped. The wealthy and powerful do not need help, their voices are already heard loud and clear. The real question is how much we can help other voices be heard in the halls of power.

Some people will argue that giving non-governmental organizations formal roles in the government will corrupt those organizations and ruin the role they place in civil society, however, in the modern era, the greatest risk is that multinational corporations and international flows of money have such great power that their voices dominate the creation of governmental policies, and so, to offer some kind of balance, more needs to be done to amplify the voices from the working and professional classes.

We previously quoted Melancton Smith, the great Anti-Federalist who felt that American democracy failed to be representative enough. He warned that the wealthy would have too much influence, and many of the things that he feared have come to pass:

Melancton Smith, New York Ratifying Convention

20--21 June 1788

Besides, the influence of the great will generally enable them to succeed in elections… The great easily form associations; the poor and middling class form them with difficulty. If the elections be by plurality, as probably will be the case in this state, it is almost certain, none but the great will be chosen--for they easily unite their interest--The common people will divide, and their divisions will be promoted by the others. There will be scarcely a chance of their uniting, in any other but some great man, unless in some popular demagogue, who will probably be destitute of principle. A substantial yeoman of sense and discernment, will hardly ever be chosen. From these remarks it appears that the government will fall into the hands of the few and the great. This will be a government of oppression. I do not mean to declaim against the great, and charge them indiscriminately with want of principle and honesty.--The same passions and prejudices govern all men. The circumstances in which men are placed in a great measure give a cast to the human character. Those in middling circumstances, have less temptation--they are inclined by habit and the company with whom they associate, to set bounds to their passions and appetites--they are obliged to employ their time in their respective callings--hence the substantial yeomanry of the country are more temperate, of better morals and less ambition than the great. The latter do not feel for the poor and middling class; the reasons are obvious--They feel not the inconveniences arising from the payment of small sums. The great consider themselves above the common people--entitled to more respect--do not associate with them--they fancy themselves to have a right of pre-eminence in every thing. In short, they possess the same feelings, and are under the influence of the same motives, as an hereditary nobility.

While we can say that America and Britain, during the 1700s and 1800s and 1900s, built systems that functioned better than the dictatorships, and better than the hybrid systems developed in Germany and Japan, it remains true that we still have much further to go. We built a better system, but we can build a better system still.

We can go much further in building a system of associations, especially among the middle classes and the poor (for as Melancton Smith said, the wealthy form associations easily, they need no help). Over the last century we took some steps down this road, formalizing the relationships between some professional organizations and the government. This is especially true in medicine where doctor organizations were given formal roles in the process of offering feedback to the recommendations coming out of the National Health Institute and the Food and Drug Administration. We should view this as the starting point of new strategies for enabling civil society to guide the government. But we can go much further, and there are at least two paths to consider: how to better encourage the formation of such professional and worker associations and how to best plug their feedback into the overall system of creating government policy.

One possibility would be to move policy creation away from the legislature and towards committees full of specialists who have the relevant knowledge and skills to best shape the policy coming out of that committee. Please see my essay “In our highly specialized and complex world, all real political power needs to move to specialized committees.”

Finally, throughout this essay I’ve referred to liberal democracy without going into any detail about the ideal structure of a liberal democracy. Specific ideas about specific styles of organization is a subject I’ve discussed in many previous essays on this weblog, so I see no point in belaboring the subject here. It is enough to remember that when designing a liberal democracy, there are a great many architectural decisions to be made:

1. multiple parties: proportional voting or ranked choice voting of multi-candidate approval voting?

2. the legislature choses the executive or the people chose the executive?

3. the executive is part of the legislature, or independent?

4. the term of the executive is tied to the term of the legislature, or independent?

5. the legislature is unicameral or bicameral?

6. the whole legislature is voted in each election, or it is staggered like the USA Senate?

7. length of terms in executive and legislature and the judiciary? Is it appropriate to have people serve for life? (On the British High Court the judges serve for 18 years, whereas USA Federal judges serve for life)

And so on. We could make a long list of specific design elements that should be considered, and we will discuss those in other essays. For this essay, it was enough to make clear the role that liberal democracy plays in ensuring that a society’s wealth is corralled for the best possible social goals.