Two Forms of Political Order

North, Weingast, and Wallis on limited-access and open-access orders. An essay in my series on human interdependence.

Violence and Social Orders, by Douglass C. North, John J. Wallis, and Barry R. Weingast, is a fundamental work of political economy. Much of it rests on the distinction between what they call a limited-access order and an open-access order.

To have order at all, a society needs a mechanism to restrain violence. In a limited-access order (what NWW call “the natural state”), the government is like a crime syndicate. It incorporates any group with a potential for organized violence. It excludes anyone who is not a member of the coalition from obtaining the most valuable economic and political positions in the society. Those who are in the governing coalition benefit sufficiently to not want to disturb the status quo. Those who are outside the coalition are powerless to fight it.

Think of a country with rich oil fields that are in the hands of the state. By distributing profits to favored groups, the government is able to maintain its hold on power.

In China, only members of the Chinese Communist Party are able to control large corporations. Those outside of the party have no ability to build large firms.

In contrast, in an open-access order, the right to lead a corporation is enjoyed by anyone who obeys the relevant laws. In the United States and Western Europe, you do not need to be a member of the ruling coalition in order to run a major enterprise.

We have an intuitive notion of liberal democracy (or “democracy with capitalism”) that corresponds to NWW’s open-access order. But we may not have an easy time clarifying what makes liberal democracy different from other social forms.

NWW provide a very specific way to differentiate an open-access order from a limited-access order. In an open-access order, anyone can organize a sizable, long-lived institution, including a business or a political party. In a limited-access order, only people who formally belong to the ruling elite have permission to organize sizable, long-lived institutions.

NWW explain why limited-access orders do not easily become open-access orders or vice-versa. When rights are tightly controlled, they are not easily loosened. And when rights are broadly available, they are not easily taken away.

Limited-access orders often have poor civilian control over the military or paramilitary groups. In Iran, the Revolutionary Guards are an important political force. In many countries a military coup is an ever-present threat. Militaries and paramilitaries often operate against broadening access beyond the ruling coalition.

Limited-access orders do not provide secure property rights. The ability to use land or build a business always depends on having a personal relationship with top government officials. Those officials in turn use their control over economic activity to maintain their wealth and positions of political power.

Sometimes in a limited-access order those in power start applying formal legal processes to themselves. Once these legal processes are established, the coalition may find it prudent to allow outsiders to make use of them. That results in a transition to an open-access order.

The stability of open-access orders comes from the way that every major group has a stake in maintaining the system. No group organizes a revolution.

In an open-access order, anyone has the right to build large organizations, such as corporations or political parties. When people have these rights, it is usually unwise for elite groups to try to take them away. Elites will compete to try to dominate any society, but in an open-access order other members of the society retain the ability to participate in the competition. To regress to a limited-access order, elites would have to engage in overt repression. This is a difficult undertaking.

American foreign policy often has been based on the naive view that any country can make the transition to an open-access order. But in South Vietnam, Afghanistan, and Iraq, we had to abandon the effort. Those countries were not ready to move beyond the limited-access order, “natural state” phase.

Today, there are widespread fears that liberal democracy is in trouble in the United States and Europe. On both the right and the left, there have emerged movements that are illiberal. New technologies, including surveillance and social media, create opportunities for repression. But I think that NWW would say that open-access orders are quite robust. It is unlikely that we will be taken over by illiberal forces.

This essay is part of a series on human interdependence.