Neither economics nor political science can explain the process of modern social development. The fact that developed societies always have developed economies and developed polities suggests that the connection between economics and politics must be a fundamental part of the development process. This paper develops an integrated theory of economics and politics. We show how, beginning 10,000 years ago, limited access social orders developed that were able to control violence, provide order, and allow greater production through specialization and exchange. Limited access orders provide order by using the political system to limit economic entry to create rents, and then using the rents to stabilize the political system and limit violence. We call this type of political economy arrangement a natural state. It appears to be the natural way that human societies are organized, even in most of the contemporary world. In contrast, a handful of developed societies have developed open access social orders. In these societies, open access and entry into economic and political organizations sustains economic and political competition. Social order is sustained by competition rather than rent-creation. The key to understanding modern social development is understanding the transition from limited to open access social orders, which only a handful of countries have managed since WWII.

All societies must deal with the possibility of violence, and they do so in different ways. This book integrates the problem of violence into a larger social science and historical framework, showing how economic and political behavior are closely linked. Most societies, which we call natural states, limit violence by political manipulation of the economy to create privileged interests. These privileges limit the use of violence by powerful individuals, but doing so hinders both economic and political development. In contrast, modern societies create open access to economic and political organizations, fostering political and economic competition. The book provides a framework for understanding the two types of social orders, why open access societies are both politically and economically more developed, and how some 25 countries have made the transition between the two types.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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We examine the importance of Roosevelt's "relief, recovery, and reform" motives to the distribution of New Deal funds across over 3,000 U.S. counties, program by program. The major relief programs most closely followed Roosevelt's three R's. Other programs were tilted more in favor of areas with higher incomes. For all programs spending for political advantage in upcoming elections was a significant factor. Roosevelt's successful reelections were based on developing specific programs for a broad range of constituents, delivering on his stated goals, but also spending more at the margin for political purposes.

Since Americans won their independence from Great Britain, they have engaged in an ongoing debate over the size of their governments, what taxes should be raised to support them, what services those governments should provide, how much debt governments should issue, and which of the three major levels of governments-federal, state, or local-should do the taxing, spending, or borrowing. It is in the nature of the constitutional structure of American government that these debates should be continuous, and that our governments respond to changing circumstances by changing their policies, whether incrementally or dramatically. At the end of the 20th century, American governments have come to an uneasy equilibrium where somewhat more than a third of all economic activity passes through the public sector, the national government collects slightly more than half of all government revenues, and state and local governments undertake slightly more than half of all government expenditures.1 But it was not always so.Between 1790 and 1990 the United States passed through three distinct systems of government finance. In each system, one type of revenue was relatively 1 Naturally, these numbers are approximate and change from year to year. In 1992, for example, the national government collected $1,259 billion in revenues, 55 percent of all government revenues. The national government transferred $179 billion, or 14 percent, of its revenues to state and local governments.

Between 1842 and 1852, eleven states adopted new constitutions, simultaneously creating procedures for issuing government debt and for chartering corporations through general incorporation acts. Why simultaneously? Voters wanted geographically specific infrastructure investments but opposed geographically widespread taxation. States resolved the dilemma by developing several innovative public finance schemes. One, “taxless finance,” used borrowed funds and special corporate privileges without raising current taxes. Another scheme, “benefit taxation,” coordinated the incidence of taxes with the geographic benefits of investments through the property tax. After the fiscal crisis of the early 1840s, states changed their constitutions to eliminate taxless finance in the future.

TX 75083-3836, U.S.A., fax 01-972-952-9435. AbstractWe describe a multistage parallel linear solver framework developed as part of the Intersect (IX) next-generation reservoir simulation project. The object-oriented framework allows for wide flexibility in the number of stages, methods and preconditioners. Here, we describe the specific components of a two-stage CPR 1 (Constraint Pressure Residual) scheme designed for large-scale parallel, structured and unstructured linear systems. We developed a highly efficient in-house Parallel Algebraic Multigrid (PAMG) solver as the first stage preconditioner. For the second stage, we use a parallel ILU-type scheme. This new and powerful combination of CPR and PAMG was the result of detailed analysis of the linear system of equations associated with reservoir simulation.Using several difficult reservoir simulation problems, we demonstrate the robustness and excellent parallel scalability of the IX linear solver. For the field case studies, the IX linear solver with CPR and PAMG is at least five times faster than an established and widely used industrial linear solver. The performance advantage of the IX linear solver over traditional reservoir simulation linear solvers increases with both problem size and the number of processors.