The Natural State

March 2, 2012 at 11:09 am (By Amba)

Promoting this from the comments on the last post—it’s an idea I’ve wanted to inject into the political conversation for ages. It seems to me this is a vital notion and ought to be common knowledge. It helps a great deal in thinking clearly about economics and politics.

* * * * * *

realpc said,

March 2, 2012 at 6:38 am

  1. The best way to make things fair is to allow competition. The problems we have right now are partly because Wall Street and the US government work together, instead of being in competition. So there is nothing to prevent them from being corrupt.

  2. mockturtle said,

    March 2, 2012 at 10:46 am

    The problems we have right now are partly because Wall Street and the US government work together, instead of being in competition.


  3. amba (Annie Gottlieb) said,

    March 2, 2012 at 11:02 am

    Double yep!

    Although I don’t think the government, by definition, can compete. In practice, that would turn into controlling/regulating. That’s the only kind of adversarial relationship it seems government and private enterprise can have. And deregulation or regulation loopholes then become one kind of favor the government has to sell.

    This idea seems really important to me: Nobel Prize-winning economist Douglass North on “the Natural State.” North says “limited-access” social orders, which we would see as cronyism (capitalist or otherwise) and the monopolizing of power by self-perpetuating elites, seem to be the natural way for large societies to organize themselves, and “open-access” social orders, which allow access by merit and are protected by competition, are a rare achievement. Once you grasp this idea, it becomes very clear how an open society is always tending to almost gravitationally revert back to the natural state. Once you see that inertial trend at work in our own society, you see what amazing tools the founding fathers gave us to fight it, but you also see how much vigilance and ingenuity must be employed in using those institutions to keep open access pried open as the heavy door keeps falling shut.


  1. kngfish said,

    I’m a bit more sanguine here….because it seems every society finds a way to have ‘insiders’ and ‘outsiders’, I’m not sure what can be done about this.

  2. lh said,

    Re: the post

    Yep, to the “nth.”

  3. Maxwell James said,

    Yeah, the proper role of government is as umpire or referee, not as competitor. What we have to do is figure out how to minimize collusion between industries and government, which requires simplifying (not eliminating) regulations and the tax code.

    And as for the “natural state,” absolutely. It is well known now that cooperation between actors tends to increase with exposure – i.e., the more you and I interact, the more likely we are to help each other out. That’s true for most life forms from viruses on up.

    There’s a tendency to focus on the good that comes out of cooperation – I’v’e certainly been guilty of it at times – but there’s a dark side to it as well. Collusion is the most straightforward example. When major government officials are appointed from Wall Street, and return to Wall Street firms when they step down from their posts, that’s evidence of tacit collusion between the government and and industry it is responsible for regulating.

  4. Icepick said,

    the more you and I interact, the more likely we are to help each other out.

    Explain the high incidence of divorce and the high incidence of contentious probate battles between siblings. (I admit current circumstances are coloring my view of the latter.)

    Chemistry matters, so do goals. There are some people that the more I’m around them the more I want to punch them in the face. (I’m sure they reciprocate.) Sometimes goals conflict.

    And sometimes greivances build up over time precisely because of the close contact.

    This doesn’t really make anything any more clear cut. Such are the vagaries of life.

  5. wj said,

    the proper role of government is as umpire or referee

    In sports, those who umpire or referee are charged with enforcing the rules. They do not, however, make the rules.

    I wonder if part of the problem with government colluding with business is not that the same people, or at least the same organizations, both make the rules and enforce them. If you had to persuade (or bribe) two separate sets of people to arrange special treatment, it would be that much harder to accomplish. Compared to the current situation, where you can go to the same place to try to ge the rules changed in your favor, or get enforcement (or non-enforcement) arranged to the same end.

    I can see the same difficulties that others will doubtless enumerate. And it certainly isn’t a complete solution. But might it be part of a solution?

  6. kngfish said,

    wj, you make a good point, and I wonder aloud if a big part of the problem is that the regulators and the regulated come from the same pool of people, based on social class, education, etc….if ‘government’ people and ‘business’ people were in opposition based on backgrounds…they might be more inclined to critique each other….otherwise, it’s “I won’t criticize you, if you don’t criticize me’.

  7. mockturtle said,

    I listened to the entire lecture and convinced that this country is becoming increasingly a ‘limited access’ state, applying every criterion he listed. Control of ‘the military’ clinched it, as I would venture that our military is quite in the hands of the elite today and not primarily to ‘protect and defend’ our nation. Our opportunities are possibly fewer than ever before for genuine competition. The twin oligarchies that wield the power [government and big corporations] promote their own, and each other’s, growth and perpetuity.

  8. amba (Annie Gottlieb) said,

    You see — this really is a tremendously useful idea.

  9. realpc said,

    I think one of the ideas expressed by the Tea Party was concern about the Wall Street/government coalition. But of course progressives can’t ever see the wisdom in any idea expressed by the Tea Party. Even though I guess the OWS movement shares that concern.

    One big problem progressive ideology has (one out of many) is they have a starry-eyed faith in humanity that makes them completely ignore the value of competition. Competition isn’t nice, because everyone can’t always win. And competition between nations often leads to war.

    So progressives, following Marx, want to get rid of anything that divides people, such as religion and nations, and social classes. But when you get rid of some divisions, others are created.

    Opposition is a essential in our universe and unification. The basic particles have attracting AND repelling forces. Things have to maintain their separate integrity.

    Progressives, like communists, really do want an all-powerful world government and the end of national divisions. Ok, that sounds like nice idea, right? Well think about what kind of power that government would have. It would be absolute, and terrifying.

    On every level of society and nature, there has to be competition. So what if they call it “social Darwinism.” Reality is what it is. We didn’t create this world, and we don’t understand it. And if we could make everything exactly how we think it should be, well that would really be hell.

  10. mockturtle said,

    But progressives–at least the extreme version–don’t really see humanity as individuals but rather as a bunch of mice in a maze.

  11. amba (Annie Gottlieb) said,

    But when you get rid of some divisions, others are created.

    “There are two kinds of people in the world: those who think there are two kinds of people in the world, and those who don’t.”

  12. kngfish said,

    Ah, see the problem in getting rid of the draft! The military becomes a closed society, with more people coming from regions of the country that still like/respect the idea of a military career. The draft made people who normally wouldn’t interact be united in the idea of not getting killed.

    Not to say we should have the draft again…but it does create separate societies…

  13. amba (Annie Gottlieb) said,

    The military as the great leveler, of a sort.

  14. realpc said,

    He only considers the past 10,000 years, but that is a very recent, and very unnatural, phase of human society. The natural state for humans is similar to the natural state for other social mammals — for most of our species’ time on earth, we lived in small nomadic groups that hunted and gathered food. Violence was limited by the fact that weapons were primitive, and because populations were sparse.

    Agriculture started about 10,000 years ago, and that caused everything to change. Competition for agricultural land intensified as populations increased (population was no longer contained by limited food supplies). Technology advanced and weapons became more deadly. Members of societies became more specialized.

    In a primitive society, most of the young men were warriors; there wasn’t a select specialized group. War was important but not nearly as important as it became after the start of agriculture. As war increased in importance, warriors’ status and power increased.

    Look at feudalism — the warrior class became the aristocrats. At first, they were the protectors of the people, but they evolved into absolute rulers. If any one group controls all the weapons, they control everything.

    But society continued evolving, and the merchants became increasingly powerful. They did not control the weapons, but they had more and more of the money. And money buys weapons.

    The rise in power of the non-aristocratic merchant class in Europe weakened the monarchy, which eventually led to the kind of democracies we have today.

    Well anyway, his definition of the natural state is wrong, in my opinion.

    The kind of arrangement we have now could be very fragile and precarious, because it depends on opposing powers that limit and restrain each other. When powers that are supposed to compete — like Wall Street and the central government — become allies, that can leave the rest of us helpless.

    Wall Street controls the money, and the central government controls the weapons. Joined together, they are unbeatable.

    So maybe I should go out and join the Tea Party.

  15. mockturtle said,

    I’ve been working on the Ron Paul campaign and our caucus is tomorrow. He won’t win but I’m hoping he’ll end up with sufficient delegates to have an impact on the platform. There are some things I disagree with him about but he seems to me to have the most sensible policies–namely, decentralization of government and getting out of these senseless and expensive wars.

  16. mockturtle said,

    Actually, ‘wars’ wrongly describes these actions. I should have said ‘nation-building efforts’.

  17. wj said,

    “There are two kinds of people in the world: those who think there are two kinds of people in the world, and those who don’t.”

    Which invariably puts me in mind of:
    “There are 10 kinds of people in the world: those who understand binary, and those who do not.”

    ** 10, for the binary-challenged among you, is how “2” is written in a base-2 numbering system. Like the one used in computers. The quote is how we divide the world into “those like us” and “everybody else”. ;-)

  18. kngfish said,

    wj, you remind me of olden days when I would do calculator jokes in both octal and hex! Sigh… We need an Epic Poem: “The Bitmask of the Ancient Programmer”

    I am von Neumann! Look upon my mighty algorithms and despair!

  19. mockturtle said,

    We need an Epic Poem: “The Bitmask of the Ancient Programmer”


  20. karen said,

    “Chemistry matters, so do goals. There are some people that the more I’m around them the more I want to punch them in the face. (I’m sure they reciprocate.) ”

    Yeah, i agree w/the whole family thing, ice– having bad dreams to prove it.

    It’s a Truth thing, for me. If people were truthful- honest- they would uphold the laws to aid the country and strengthen our(fill in the _____). No, instead, they act incestuously among the chosen, elite pool of… self-appointed experts(?)…

    All i’m saying is– i’d sure like to listen to a newscast and not hear a bit of snark(teabagger, ie)or spin. Only the facts. Maybe straight talk would help people who are too lazy to search out alternatives or are assured that all they are spoon fed is genuine and not just a few brightly coloured skittles blown outta the sky from random Unicorn asses.

    PS– i abhor the new CBS this morning/early show. I miss the young, pretty people(i miss Betty Winn(sp))& consider Charlie Rose to be particularly partisan– as is Gayle King.

    Binary… :0).

  21. realpc said,

    Well I read part of it, and he does acknowledge that there were primitive societies, even though he doesn’t consider them the natural state. I’ll try to read the rest of it later. At least it’s nice to see an academic admitting that competition has a purpose.

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