Iraq's Natural State

Tech Central Station today features an excellent summary of a brilliant pamphlet and expands its discussion to include implications for our venture in Iraq. The book is The Natural State: The Political Economy of Non-Development (available as a .pdf). The article is "Iraq's Natural State," by Arnold Kling.

The Natural State delineates three types of societies:

Primitive orders are small bands of hunter-gatherers.... Limited-access orders are societies that provide meaningful political and economic rights only to narrow elites. Open-access orders are capitalist democracies that give political and economic rights to most citizens. [The pamphlet's authors] argue that limited-access orders are the "natural state:" they are stable, they resist economic progress, and they only rarely make the transition to open-access orders.

The pamphlet goes on to describe the characteristics of the limited access orders that make up the bulk of world governments:

The limited access order is a social equilibrium. The equilibria share common characteristics:

1) Control of violence through elite privileges.

2) Limits on access to trade.

3) Relatively strong property right protection for elites and relatively weak property right protection for non-elites. To the extent a natural state is characterized by the rule of law, it is for elites.

4) Restrictions on entry into and exit from economic, political, religious, educational, and military organizations.

The central feature of the transition is the development of impersonal exchange among elites. Personal exchange involves a personal, on-going relationship between the exchange parties so that repeated dealings can be a central aspect of exchange enforcement. If one party cheats another, they risk losing the relationship and the benefits it implies. The necessity for repeated interaction limits the range of exchanges of any one individual.

In contrast, impersonal exchange involves parties without long-term personal relationships who may make a single exchange. Impersonal exchange requires that the parties to the exchange be confident enough that their rights and obligations will be secure despite the absence of repeated dealings. Impersonal exchange therefore requires some form of third-party enforcement.

The pamphlet argues that there are three conditions necessary for a limited-access order to transition to an open-access society:

1. The rule of law for controlling elites

2. Perpetual life for basic social institutions (i.e., not requiring just personal relations between their leaders to remain functioning)

3. Civilian control of the military

Ultimately, institutions are held together by personal, family, or tribal loyalty. Open-order societies are impossible under such structures. The pamphlet also states that the natural alternative to the limited-access order is chaos (and, as our founding fathers understood, ultimately greater tyrrany).

Implications for Iraq. Kline states:

Iraq under Saddam Hussein was a limited-access order, or "natural state." NWW claim that such states resist the change to open-access orders. They resist our attempts to stimulate economic development, because true economic development requires fair competition, which threatens the privileges that are the stabilizing element in limited-access orders. Although NWW do not discuss "nation-building," it seems reasonable to infer that they would take an equally dim view of that notion.


Iraq was never on the "doorstep" of becoming an open-access order. The major factions are not willing to give up their weapons and concede military power to a central coalition. There are no perpetual-lived organizations that can make long-term contractual commitments. There is not even a willingness among factions to grant one another rights under the rule of law.


Accordingly, I would say that there is no chance that the United States will succeed in its objective of establishing an open-access order in Iraq. The best we can hope to do is restore Iraq to a natural state, meaning a limited-access order where rights and power are exclusive to certain elites, who will be subject neither to economic nor political competition as we know it.


For a limited-access order to emerge, the leaders of each major faction in Iraq must have a stake in peace. For each leader, that means having enough exclusive economic and political rights to feel that he has more to lose than to gain by resorting to violence.


If we want to set up a limited-access order, then we have to determine which factions we want to have in the governing coalition, and we must give each of them something of value in return for maintaining peace. To put it crudely (so to speak), one could imagine giving each major party in a coalition government control over a particular set of oil wells. Factions that we do not want in the coalition (Al Qaeda in Iraq, for example) would have to be hunted down and killed. Factions that receive an allocation of oil wells but continue to engage in violence would have to be declared outlaws and deprived of personal security, with their oil resources confiscated and redistributed to other factions.

Daunting prospects, but accurate I think. Iraq ruled by a strong oligarchy well-disposed toward us better than Iraq's growing chaos,

Monk