1. There is No Such Thing as a “Dumb” Question

2. Bates, Greif, Singh Synopsis

3. Two steps in the argument Two person society – no government –Private provision of security/property rights What are the properties of this system? How will people behave? What are the implications for welfare? Then two person society with a government What are the properties of this system? How will people behave? What are the implications for welfare?

4. Two Member Society Set up as a Game Actors: i є (i,j) Actions: w i, or work l i,, or leisure m i,, or military activity Constraint: T i =w i + l i + m i Payoffs to i: U i =U i (Y i,I i ) where Y i =f(w i )+g(m i )f(w j )

5. What is the Nature of this Game?

6. With Repeated Interaction can have political order In repeated interaction, can play punishment strategies If one person steals at t=0, Then other can choose to punish: E.g. “Grim trigger” For t=1,2,...,∞, m j >0. If future losses given sufficient weight, then m i =0,at t=0 This claim follows from the “folk theorem” of repeated games

7. Yields Following Payoffs Possibility of “Folk Theorem” + 0-0- Payoffs Defection Punishment phase Time

8. I Study Development Why may I not wish to appeal to the Folk Theorem?

9. What if Development Took Place: What if economic growth? + 0-0- Payoffs Defection Punishment phase Time Increment of value

10. Importance for Fighting

11. First Best Therefore Unlikely Therefore we looked at two other equilibria Neither first best. But: –One with peace –One with prosperity

12. Peace m i = 0 Implies: T i =w i + l i + m i Or that better to be poor

13. Prosperity f(w i ) Implies T i =w i + l i + m i Or that better to be prepared to fight

14. Think what this implies Demilitarization Prosperity

15. People Like Both Demilitarization Prosperity

16. Think of a Third Axis: Wellbeing Demilitarization Prosperity Ideal point Wellbeing

17. Implies Political System (Statelessness) Constrains Level of Welfare Demilitarization Prosperity Ideal point #1: m i going to 0 #2: f(wi)

18. One Implication Demand for change in political institutions Demand for the state

19. Our strategy Posit a 3 rd Actor –Call this actor G Also values income and leisure Doesn’t work for a living –Rather: income from m –That is: from the use of force G a specialist in violence

20. First Question We Asked Are there conditions under which a specialist in violence will choose to use force to protect rather than prey upon private citizens? OR Are there conditions under which will promote the production of wealth rather than secure its redistribution?

21. 2 nd Question Are there conditions under which private citizens will choose to put down their arms and refrain from raiding; pay taxes; and devote their time to production and leisure?

22. Political order When both the government and the citizens choose those actions –Specialist in violence: Protection –Citizens: Setting aside arms Note stress on choice

23. The State When those choices prevail in equilibrium can say there is a state.

24. What is different about this approach

25. Equilibrium Path Punishment Phase Deviation G’s Choices Look at the problem from the point of view of G

26. Punishment Phase Warlord equilibrium States may choose to go there

27. + 0-0- Time Payoffs Temptation Punishment phase – state failure Tax revenues

28. (Some of) The conditions for G to Adhere to the Equilibrium Path Conditions on tax revenue –Not too high –Not too low Conditions on discount rate –High levels of patience Conditions on payoffs off the equilibrium path

29. Note These are the conditions under which a state becomes possible. These conditions also represent the conditions under which states will fail.

30. Thus my recent book

31. Finishing note State yields peace + prosperity Goes to the first best as discount rate approaches 0.