The origins of the state: technology, cooperation and institutions

Abstract

We develop a theory of state formation shedding light on the rise of the first stable state institutions in Bronze Age Mesopotamia. Our analysis suggests that the mix of adverse production conditions and unforeseen innovations pushed groups favored by old technologies to establish the state by granting political and property rights to powerless individuals endowed with new and complementary skills. Through these reforms, the elite convinced the nonelite that a sufficient part of the returns on joint investments would be shared via public spending and, thus, to cooperate and accumulate a culture of cooperation. Different from the main alternative theories, we stress that: (1) group formation is heavily shaped by unforeseen shocks to the returns on both risk-sharing and innovation; (2) complementarity in group-specific skills, and not violence, is key determinant of state formation; (3) military, merchant and, especially, religious ranks favored state formation and culture accumulation.

Climate change and state evolution

“…Second, it has embraced a more credible structural empirical strategy based on a long game-theoretical tradition on state evolution (34)(35)(36)(37). The key tenet of this literature is that adverse production conditions push groups empowered by old technologies-elite-to establish the state by bestowing strong political and property rights on formerly powerless individuals-nonelite-endowed with complementary skills (18,38). Formally (18), assume that the elite-she-and the nonelite-he-try to cooperate in either farming or long-distance trade.…”

“…1). ‡ These reforms are favored by the nonelite's accumulation of a culture of cooperation, i.e., the internalized return from cooperating in any economic activity (38,44,45). Intuitively, a larger implicit reward from cooperation credibly signals the nonelite's commitment to invest even in activities inducing a small payoff and, thus, a little value from public good provision.…”

“…Intuitively, a larger implicit reward from cooperation credibly signals the nonelite's commitment to invest even in activities inducing a small payoff and, thus, a little value from public good provision. When, instead, the expected investment return is intermediate, the elite does not need to give up her preferred public good and accept full taxation to entice the nonelite, who, in turn, does not need to accumulate a large culture of cooperation to credibly signal participation (38,44). Then, the elite does not enact the more inclusive political institution and the tax rate falls with the investment return (see the R ; ≤ R < R light blue area in Fig.…”

Introduction to the special issue on institutions and culture in economic contexts

“…The essay by Benati and Guerriero (2021) brings us into an historical perspective about the intertwined relationship state-citizens, that is at the root of the connection between culture (citizens) and intuitions (state). In fact, the paper builds a theory of state formation based on the complementarity in group-specific skills by studying the first stable state institutions in Bronze Age Mesopotamia (3800-1750 BCE).…”

“…In this respect, this special issue devotes particular attention to the role of cultural aspects relative to economic and institutional outcomes (Mickiewicz and Kaasa, 2021;Moellman and Tarabar, 2021), individuals and social attitudes towards rent-seeking behaviours, corruption, tax evasion, and institutional trust, among others (Amini et al, 2021;Andriani et al, 2021;Kaasa and Andriani, 2021), and to the interplay between specific cultural traits and the evolution of institutional frameworks such as family systems and state formation (Benati and Guerriero, 2021;Gutmann and Voigt, 2021). Part of the special issue has also been devoted to commemorating Geert Hofstede, pioneer in the study of culture and institutional aspects (Sent and Kroese, 2021) as well as the review of Joel Mokyr's book 'A Culture of Growth' (Hodgson, 2021) and subsequent response of Joel Mokyr to this book review (Mokyr, 2021).…”