Order&Violence(PoliticalEconomyofDevelopment)

Week1:Introduction&TheDemandforOrderChrisBlattman

Manysmartpeoplearegenuinelypuzzledbythesecases

• Whydocountrieswithsomuchpotentialseemtostaypoor,unequal,andviolent?

• Whyhavetheirleadersnotimplementingbetterpolicies?

• Actually,whydosomanyleadersseemtodotheopposite?

• Whydosomanyinterventions—aid,trade,peacekeeping,regimechange,democratization—lookgoodonpaperbutgoawry?

• What(ifanything)candomesticreformersorpeoplefromothercountriesdoaboutit?

• Whatcanyoudoaboutit?

Theideabehindthiscourse

Thesesituationsarelesspuzzlingonceweunderstand:

• Howgroupscompeteforpowerinasociety

• Whenandwhythiscompetitionturnsviolent

• Howstatesprovideorder

• Whyorderissooften“corrupt”

• Whentheseordersbecomemorefreeandequal

• Howinterventionsandreformsinteractwiththeseconditions

Mostofyouinstinctivelyknowhowcomplicateditalliswhenyouanalyzeyourowncountry

ButifyousendmetoLesothu,notonlydoInotknowthesepolitics,butIforgettoask

Cowswillteachusanawfullotaboutpoliticsinthisclass

“Theanti-politicsmachine”

• Solvingpovertyandimplementingprogramsisastechnicalproblem,notasocialandpoliticalproblem

• Developmentprojectsareapoliticalmachinesthatexisttoprovidesocialservices

• Cliques,factions,inefficiencies,andcorruptionareseenasimpedimentsratherthanstrategicreactionstotheenvironment

• Partisanandinterestedaidinterventionsaredisguisedasimpartialanddisinterested

Thiscourseisaboutpoliticsandpoliticaldevelopment

Thegoalistoavoidanyofyoubecominganti-politicsmachines

Economicdevelopmentis(relatively)easytoquantifyTotalincomeproducedperkm2,1995

Mellinger,A.D.,J.Sachs,andJ.L.Gallup.1999.“Climate,WaterNavigability,andEconomicDevelopment.”CIDWorkingPaperNo.24.

Basically,wearetalkingaboutindustrialization

WhatmostdevelopmentcoursestrytoexplainIncomepercapita(PPP,1990US$,logscale)

Perkins,D.H.,S.Radelet,andD.L.Lindauer.2006.EconomicsofDevelopment.6thed.NewYork:W.W.Norton&Company.

Endsversusmeans:ProductionandGDParenotanendinthemselves

Thelifeofmoney-makingisoneundertakenundercompulsion,andwealthisevidentlynotthegoodweareseeking;foritismerelyusefulandforthesakeofsomethingelse.

– Aristotle,Nicomachean Ethics

“

AmartyaSen’s“capabilitiesapproach”

• Thecentralaspectofwell-beingisfunctioning:thefreedomofchoiceandcontroloverone’slife– Freedomfromhunger,fromdisease,fromearlydeath,fromviolence,fromoppression…

Politicaldevelopmentasfreedomfromviolence,oppression,injustice,uncertainty

Defineasoutcomes…• Order

– Protectionfromviolence– Accesstojustice

• Equality– Massparticipation– Preferencesaggregatedand

represented– Ruleoflaw

• Abilitytoshapesociety

• Complex,adaptable,coherent,sharedrules

…orintermsofstructures• States

– Monopolyoflegitimateviolence

• Bureaucraticorganizationsandpublicadministration– e.g.formallegalsystem

• Constraining“institutions”– Constitutions– Democracy– Informalnormsandtraditions

Source:Ibasicallymadethisup.ButhelpfulwasPye,L.W.1965.“TheConceptofPoliticalDevelopment.”AnnalsoftheAmericanAcademyofPoliticalandSocialScience358:1–13.

Mostoftheeconomicsyouhavelearnedhasassumedthatorderexists

• Propertyrightsandcontractenforcementexist

• Actorscantradeandexchangepeacefully

• Statesarecoherentunitaryactorswhocanimplementpolicies

• Statesareconstrainedbyformalandinformalrules– E.g.Constitutions,socialnorms

• Marketsmaybeimperfect,perhapsbecausedifferentactorshavedifferentinformation,butmarketsmainlyfunction

Howdidthesethingscomeabout?

Whathappenswhentheydon’texist?

Weeks1–5:Understandinghowtheseoutcomesandstructuresevolvedhistorically

Weeks6–10:Understandingwhatreformsandinterventionscandotoday

1. Howandwhyorderemergesoutofanarchy

2. Whyisthereviolenceandwar?

3. Theoriginsandnatureofstates

4. Whendostatesbecomemoreequalandparticipatory?

5. Howdoescivilsocietyfosterandprotectfreedoms?

6. Addingitallup:Understandingtoday’sweakstates

7. Canarmedinterventionscreateorder?

8. Howtopeacefullypromoteorderandgoodgovernment?

9. Whataboutfosteringdemocracy?

10. Hownottobeananti-politicsmachine

Announcementsandlatestsyllabusorupdateswillbeon

Chalksite

Requiredreadings

• Roughly4chaptersorpapersaweek

• Yes,really,these4reallyarerequired

• Iwilldiscusssomeoftherecommendedreadingsinthelecture

• Alllinksonthesyllabus

• Letmeknowifoneisbroken

Midtermassignmentandexam

• Designedtorewardreadingalongtheway

• IwillgiveyouXessayquestionsinadvance

• IwillgiveyouY<Xquestionstoansweronthemidterm/final

• Alllecturematerialandrequiredreadingsaretestable

• Youshouldworkindependently,asoriginalinsightswillberewarded

• Themidtermwillbeatakehomeassignment,andyouwillbeallowedtobringyourlaptopforthefinal

Teachingassistants&sections

Wikipedia-basedassignments

• You’regoingtointegratemoresocialscienceintoWikipedia

• EachofyouwillberesponsibleforchoosingahandfulofarticlesandideasfromthereadingstoincorporateintoWikipediaarticles

• We’regoingtoteachyouwhatyouneedtoknow,startingnextweek

• WhatyouneedtodoBYMONDAY– FollowthelinktotheWikipediacoursepageIsentyou(orseeonChalk

site)– Joincoursewithsignupcode,registerwithWikipediaandcomplete

trainingbeforeclassbeginsApril3.– Thisis(asmallpartof)yourgrade

Thisweek:Theemergenceoforder

Week1objectives

• Whyisordervaluable?– Protectpeoplefromviolence– Lowertransactioncostsandrisk,promotingspecializationandtrade

• Howhavesocietiesproducedorder?– Cooperation,states,andbandits

• Earlystatesasorganizedcrime– Statesprovideprotectionandgovernanceinreturnfortaxandtribute– Haveoftenbeencoercive,andemergedthroughconquest

• Whyisitdifficultforpeopletocooperatewithoutstatesandcoercion?– Needtosolvecommitmentproblemsandovercomeinformation

asymmetries– Thesearetheconditionsthatproduceviolence

Example1:PropertydisputesinruralLiberia

EverydaydisputesA2010surveyof250townsandvillages

6%

7%

3%

2%

8%

20%

48%

28%

Murder

Rape

Inter-tribal violence

Violent strike or protest

Peaceful strike or protest

Disputes with other towns

Inter-family land disputes

Youth-elder disputes

Disputes reported by town leaders

6%

13%

6%

12%

22%

Any money dispute that results in

violence, property destruction or threats

Any serious money/business

dispute in past year

Any land dispute currently unresolved

Any land dispute that results in violence,

property destruction or threats

Any serious land dispute in past year

Disputes reported by residents

Resolutionsareslow andsometimesviolentbecausethesystemsforresolvingdisputesareimperfect

Whatcanmakedisputeshardtosolve?Asymmetricinformation,commitmentproblems,indivisibilty

Example2:DisputeresolutioninCaliforniaThecaseofloosecattledamagingcrops

Localslargelyresolvethesedisputesviainformalrules(socialnorms)thatdevelopwithouttheaidofastate

• Itcanbecostlytolearnthelawandenforcerightsthroughformalcourtsystems

• Transactioncostsfromdisputeresolutionarelowerifinformal,commonsensenormscanbefollowedandenforcedthroughthethreatofsanctions

• Here,ifacowdamagescrops,ranchersareexpectedtobegoodneighborsandcompensatethefarmer

– Cheaperthanbuildingfences

• Partofalargelibertariantraditionof“lawandorderwithoutlegislation”

Example3:AverydifferentoutcomeinSicily’sblackmarketforcattle

Nostatetoenforcecontracts

There’salsolittletrust:buyerscan’ttrustthequalityoftheseller’scow,andsellerscan’ttrustbuyerstopay

Alocalbigmanstepsintoprovideinformationtoeachsideandguaranteethesale

Thebigmanmayalsoenforcescontractswiththethreatofviolence

Heisabrokersoftrustbetweenbuyersandsellers

Themafiastepsinwherethestateandsocietydonot

Alocalbigmanstepsintoprovideinformationtoeachsideandguaranteethesale

Thebigmanmayalsoenforcescontractswiththethreatofviolence

Heisabrokersoftrustbetweenbuyersandsellers

Heproduces,promotes,andsellsprivateprotection

Thisisalubricanttothemarket,reducingthecostoftransactions

Example4:GangsofMedellin

From200–400localyouthgangscity-wide

• 30-60menaged11-35

• Littlestates-within-a-state– Settledisputesbetween

households– Regulatemarkets– Preventsomeformsof

insecurity(outsidetheft)– Collect“taxes”through

extortion

• Beganinlowerincomeneighborhoods,amongdisplaced,whenstatedidnotprovideservices

Thirdpartieslikegangsandgovernmentsdomorethanjustsellprotection

• Coordinatepublicgoods,likeexternaldefense

• Brokertrustbydefiningandenforcingpropertyrightsandcontracts

• Adjudicatedisputesandreducethecostandrisksoftransactions

• Stoppeoplefromtakingharmfulactionstowardsothers(externalities)

• Reduceorregulatesexualviolence

• Provideemploymentthroughregulatedmarkets

Example5:The“DarkWeb”

http://shenlinlab.com/Blog%20Topics%20html/FDA%20Law%20Blog%205%20The%20Dark%20Web.html#.Vp_EG_FrW3U

Inananonymousmarket,trustisevenhardertomaintainthanaruraltown.Ifbuyersarehesitantenough,sellerswillhaveno-one

tosellto,and themarketwillfallapart.

http://descrier.co.uk/technology/darknet-marketplace-silk-road-shut-fbi/

AsinruralSicily,awellfunctioningmarketneedsintermediariesandguarantees

Ihavebeenscammedmorethantwicenowbyassholeswhosaythey’relegitwhenIsayIwanttopurchasestolencreditcards.IwanttodotonsofbusinessbutIDONOTwanttobescammed.Iwishtherewerepeoplewhowerehonestcrooks.Ifanyonecouldhelpmeoutthatwouldbeawesome!IjustwanttobuyoneatfirstsoIknowthesellerislegitandhonest.

—AnonymouscommenterondarkInternetmarket

• Canprovideinformation

• Canguaranteeacontract

• Canenforcecontractsifneedbe

“

H. Farrell (2015). “Dark Leviathan: The Silk Road might have started as a libertarian experiment, but it was doomed to end as a fiefdom run by pirate kings.” Aeon.

Libertarianactivistandbusinessman:RossUlbrichtofTexas,a.k.a.the“DreadPirateRoberts”:Setsouttobuildamarketfreefrom

thethievingandmurderousstate

http://www.coindesk.com/ross-ulbricht-found-guilty-operating-silk-road-dark-market/

TokeepSilkRoadfromunraveling,Ulbrichtdevelopscentralizedmarketmanagement,defense,adjudicationandpunishment

• Introducedautomatedratingsystemandpaymentinescrowtoestablishcredibility

• Beganpolicingthesystem,banninguntrustworthybuyersandsellers

• Paidhundredsofthousandsofdollarstostaveoffdenial-of-serviceattacksthatthreatenedtocripplehiswebsite

• Eventually,turnedtoviolence.Oneseller,FriendlyChemist,threatenedtoleakthenamesofallitscustomers,threateningcredibilityofSilkRoad– “Hepaid$150,000tosomeonewhomhebelievedtobesenior

memberoftheHellsAngelstoarrangeforthemurderofhisblackmailer,laterpayinganother$500,000tohaveassociatesofFriendlyChemist murderedtoo.”

Freemarketsandfreeassociationcanbecostlytocoordinateandtransact

• Communitiesandmarketscanoperatemoreeffectivelyiftheysomehowcan:– Defineandenforcepropertyrightsandcontracts– Adjudicatedisputes– Preventpeoplefromtakingactionsthatharmothers(negativeexternalities)

– Managecommunalresources– Cooperateonsystemsofmeasurementandexchange– Minimizetheuseofforce

Differentstructurescanproduceorderandreducethecostsofcoordinatingandtransacting

• Societiescanevolveinformalwaysofcooperation,e.g.– Normsofdisputeresolutionandinformaljustice– Marketassociations

• Inothercases,orderisprovidedbyastableandeffectivestates

• Oftentimes,warlordsandmafioso supplyprotectionwherestatesandsocietiesdonot– Inmarketsforillegalgoods– Inblackmarketsthatevadetaxesorregulation– Inspacesdistantfromgovernmentreach– Incaseswheregovernmentinstitutionsaretooslow,ineffective,or

corrupt

Butbeingpreyeduponbymany mafiosos andwarlordsisalmostalwaysinefficient

• Mafiascanmakemarketsmoreefficientthananarchy– Makemoneybyprovidinginformation,guaranteeingtransactions,

threateningcheaters

• Butmanysourcesofinefficiency– Threatenandextort– Incentivestocultivateanatmosphereofparanoiainordertoensure

demandfortheirservices– Mayeliminatetraditionalsourcesoftrustandenforcement,formaland

informal

• Thecitizenryareacommonpoolresource andhenceviolenceisoverproduced

Thecommonpoolresourceproblem

Onepossiblesolution:Whynotpickjustonemafioso

orwarlordtoruleyou?

Mancur Olson:Thestationarybanditisonesolutiontothecommonresourceproblem

• Insmallgroupsvoluntaryagreementcanproduceorder,butthisbecomeshardertodoinlargergroups– Peoplecanfreeride,andasgroupgetslargerthisbecomeshardertocontrol– e.g.transitionfromsmallhunter-gathererbandstomoresettled,denser

agriculturalsocieties

• Largersocietiesattractrovingbandits(mafiosos,warlords)

• Thesesocietieswillpreferastationarybandit,continuouslystealingalittlefromthem– Rationalself-interest– Ifthestationarybandittakestoomuch,peoplewillreducewhattheyproduce

• Thusthebandithasanincentivetotakejustenoughthatthemarginaldollartaxeddoesnotdecreaseproductionenoughtolowertotalrevenues

Bandit’sPayoffs

Time

+

–

Maintain political order and extract

Steal as much as possible

Asimplemodelofstationaryvs.rovingbandits

Time

Civilian production valuable and can be

taxed or coerced

Civilian production less valuable or easily

hidden

Steal as much as possible

Whydomafiosos inSicily,Medellin,andtheDarkWebchoosetoprovideorder?

Bandit’sPayoffs

+

–

Whendowegetrovingbanditsversusstationary

bandits?

Example6:EasternCongo• Failedstate

• Multiplewarringarmedgroups

• Moderninstanceofrovingbandits?

https://ethuin.files.wordpress.com/2015/11/crg-2015-drc-mapping-essay-en.pdf

Rovingbandits:Armedgroupsrobandfleeisolatedvillages

CourtesyofRaulSanchezdelaSierra,seehttps://raulsanchezdelasierra.files.wordpress.com/2013/09/0-paper-1.pdf

RaulSanchezdelaSierra:Twocommoditypriceshocks.Howdoarmedgroupsrespond?

CourtesyofRaulSanchezdelaSierra,seehttps://raulsanchezdelasierra.files.wordpress.com/2013/09/0-paper-1.pdf

Coltan isverybulky,productioniseasilytracked

CourtesyofRaulSanchezdelaSierra,seehttps://raulsanchezdelasierra.files.wordpress.com/2013/09/0-paper-1.pdf

Goldnotsomuch

CourtesyofRaulSanchezdelaSierra,seehttps://raulsanchezdelasierra.files.wordpress.com/2013/09/0-paper-1.pdf

Ruler’s Payoffs

Time

+

–

Rise in price of easily taxed

coltan

Warlord income stream

Incentivestobecomestationarybandits

Coltan,notgold,leadstoanincreaseinconquestofterritory,taxation,andservices

• Armedgroupsbeginprovidingbasicservices:justice,security,roads

• Effectsarelargestclosertoairports,wheremineraltradecostsarelowest

• Attemptstotaxgoldleadtomoreviolence,dislikedadministration

• Uncleartowhatextentthereisa“socialcontract”

CourtesyofRaulSanchezdelaSierra,seehttps://raulsanchezdelasierra.files.wordpress.com/2013/09/0-paper-1.pdf

Thesehavebeenstoriesofstationarybanditsthroughconquestandcompetition

1. Startwithanarchicsituations– Liberiaandthetroubleofresolvingdisputes– TheDarkWebandtheSilkRoad

2. Mafiosos andotherwarlordsemergeasbrokersoftrustandcontractenforcers– SicilianandMedellingangsters– TheSilkRoad’sDreddPirateRoberts

3. Theycompetewithotherbanditsand“overfish”citizens

4. Sometimestheymanagetoeliminaterivalsandcreatea“monopolyofviolence”– Thiscanbebetterthantherovingbanditsituationforall– Someconditionspromotethismorethanothers

Isawarlordormafiosodifferentthanastate?

Leviathan

Hobbes:Earlystatesasstationarybandits

Publishedattheendofa9-yearEnglishCivilWarDeathratesfrommilitaryconflictsinEngland,1170s-1900s

http://ourworldindata.org/data/war-peace/war-and-peace-before-1945/#death-rates-from-military-conflicts-in-england-1170s-1900s-clark-2008refviaClark(2008)– AFarewelltoAlms:ABriefEconomicHistoryoftheWorld.PrincetonUniversityPress.

Anarchyasthe“Warofallagainstall”

duringthetimemenlivewithoutacommonpowertokeepthemallinawe,theyareinthatconditionwhichiscalledwar;andsuchawarasisofeverymanagainsteveryman.

[Lifeis]solitary,poor,nasty,brutish,andshort

—Leviathan(1651),ChaptersXIII&XIV

“

“

Hobbes’solution:Asocialcontractthatproducesastationarybandit

• Thewarofallagainstallavoidedbya“socialcontract”thatallowsanabsolutesovereigntocometopower

• Legitimateauthoritybackedbythreatofforce

– Threatofpunishmentpreventspeoplefromviolatingothers’rights

– Asolutiontothecommonpoolresourceproblem

Time

Commit to ruler’s rights to taxation,

primogeniture, etc.

War of all against all

Asocialcontractinoursimplemodel

Bandit’sPayoffs

+

–

Limit ruler’s ability to tax and time to rule

Howcredibleisthis“socialcontract”view?

• Ontheonehand,it’sasillyidea– Impliesthatsocietycallsforthsomekindofgovernor,andthatroving

banditscompetetooffertheirservicestowillingcommunities– Historysuggeststhatthesebanditshavebeencoercive,selfish

entrepreneurswhohaveconquored ratherthanbeinvited

• Ontheotherhand,onceacommunityhasastationarybandit,howmanywouldchooseareturntoanarchy?– Recallthatorderhasvalue

InMedellin,itishardtosaywhethercommunitiespreferthegangstothealternative

• Largelydependswhatpeoplethinkofasthealternative– Anarchy?– Increasedpresenceofthe

state?– Cooperativeorganization?

Wherewearegoingtotakethis(inWeek3):Whatisastate,howdotheyemerge,&whatmakesthemstrong?

“Stateless”Chiefdoms,

bands,andothersmallpolitical

units,oftenwithinformalsystems

ofrule

“Earlystates”Larger,more

hierarchical,oftencoercivepoliticalauthority(ies)thatmayonlylooselycontrolthepeople

“Modernstates”Morecentralized,rule-governed,bureaucratic,

depersonalized,politicalorgani-zations withmoresocialandsovereignterritorialcontrol

Let’sreviewWeek1objectives

• Whyisordervaluable?– Protectpeoplefromviolence– Lowertransactioncostsandrisk,promotingspecializationandtrade

• Howhavesocietiesproducedorder?– Cooperation,states,andbandits

• Earlystatesasorganizedcrime– Statesprovideprotectionandgovernanceinreturnfortaxandtribute– Haveoftenbeencoercive,andemergedthroughconquest

• Whyisitdifficultforpeopletocooperatewithoutstatesandcoercion?– Needtosolvecommitmentproblemsandovercomeinformation

asymmetries– Thesearetheconditionsthatproduceviolence

Whydoweneedabandittoprovideorder?Whycan’tpeoplecooperatewithoutgivingthe

monopolyofviolencetoathug?

(We’regoingtotacklethisinmoredepthinWeek5,butthisisactuallygoingtoleadus

intotheoriesofconflict)

Let’sgobacktoourLiberiaexample.Whycouldn’tpeoplesolvedisputesontheirown?

6%

13%

6%

12%

22%

Any money dispute that results in violence,

property destruction …

Any serious money/business

dispute in past year

Any land dispute currently unresolved

Any land dispute that results in violence,

property destruction …

Any serious land dispute in past year

Any money dispute currently unresolved

Whatkindsofdisputesarethese?

Inruralareasthereislittleformalstatepresence

• Legalrulesandlawsunclear,unavailable

• Civilandcriminalcourtscorrupt,expensiveandinaccessible

• Thefewpoliceareuntrained,poormobility,andcorrupt

• Competingandinconsistentbodies

Inprinciple,“informalinstitutions”canfillthegap

• Shared,unwrittenrulesofappropriatebehaviorenforcedthroughsocialsanctionandpraise

• Inthecontextofconflict,thesecanfacilitatebargainingandenforcement– Negotiation

• Decentralizedbargaining

– Mediation• Eldercouncils,chiefs,civilsociety,neighbors

ButLiberia’sinformalinstitutionsleaveroomforimprovement

Functionpoorly• Difficulttoreachbargains

– Don’tknowhowstronglyotherpartyfeels

– Don’tknowhowlongtheotherpartyiswillingtoholdout

• Difficulttoenforcebargains– Nocentralauthority– Reliesonsocialenforcement

• Problemisnotabsenceofinstitutionsbutmultiple,competingones– “Forum-shopping”– Defection

Canundermineruleoflaw• Inconsistentlyapplied

– Unequalapplication

• Potentialforbiasandinequality– Reinforcespowerimbalances– Mayviolateconstitutionalrights

• Illegaljustice– Extrajudicialviolence

Speakstotwogeneralreasonswhybargainingbreaksdown

1.Asymmetricinformation• Weeachknowourown

strengthandcostofholdingoutorfighting,butnottheotherperson’s

• Theoptimalstrategyisto“holdout”– Takeastrongposition– Graduallyconcedealittleata

time– Eventuallythepartywiththe

highestcostofholdingoutconcedes

• Leadstodrawnoutbargainingwithriskofbreakdown

2.Commitmentproblem• Thereexistsabargain,but

wecannottrusttheotherpartytoupholdit

• Rangeofenforceablebargainsthatavoidfightingcouldbesmallorzero

• Ifyouthinkpowerwillshiftinfuture,youhaveanincentivetostrikenow

Howdoinformationandcommitmentproblemsplayoutinlanddisputes?

Now:Caninformalinstitutionsofdisputeresolutionbefostered?

• ProgrambytheUN,GovernmentofLiberia,&localNGOin86smalltowns

• Intensivetrainingin“alternativedisputeresolution”(ADR)techniquesandnorms

• Aimedtoimprovethefunctioningofinformalinstitutionstoreduceinformationasymmetriesandimprovecommitmentwithoutcoercion

Changingskillsandnorms

• Aimedtoget15%ofeachtown’sadultsintoeightdaysofclassesspreadoverseveralmonths

• ThisispartlybecausetheywantedtoinstillADRskillswidely

• Butalsobecausetheywereexplicitlythinkingaboutwhatcoveragewasneededtochangesocialnorms– Generallyacceptedunderstandingof

howpeoplewillandoughttobehave– Andsocialsanctions/pressureto

enforce

ADRthroughthelensofnon-cooperativebargaining

1.Reduceinfoasymmetries• Teachesskillsandpractices:

– maintainingempathy– keepingcommunicationopen– buildingtrust

• Mediatorselicitinformation

• Instillnorms– Provideincentivesto

• Shareinformation• Haveempathy

– Emphasizemoresymmetricbargains

2.Increasecommitment• Discourage

– Defection– Forumshopping

• Legitimateinformalnegotiation

• Raisecostsofnon-cooperation– Socialsanctioning– Socialesteem

ADRthroughthelensofnon-cooperativebargaining

3.Speedbargaining,avoidbreakdown• Teachestechniquesfor:

– Managinganger– Recognizingbiases– Behave“rationally”

• Encourages– Engagedirectlyindisputes– Keeppeopleatthetable

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Lofa

Nimba

Sinoe

Bong

Gbarpolu

Grand Gedeh

Grand Bassa

River Gee

River Cess

Grand Kru

BomiMargibi

Grand Cape Mount

Maryland

Montserrado

0 50 10025Kilometers

Liberia Study Communities

±

Persons per sq km (2008 Census)

Less than 10

10-25

25-50

50-100

100-500

More than 1000

!( Study Community

County Boundary

Weconductedarandomizedcontroltrial

• Randomizeinterventionatcommunitylevel

• 246communitiesnominated– 116assignedto

treatment

• Rolloutover20months– Mar2009- Nov2010

• Randomizeorder(5phases)

• Programhaltsafterphase4– These86arandom

subsetof116– 160controls

Sierra Leone

Guinea

Cote d’Ivoire

Monrovia

Theresultssuggestthatskillsandnormscanbefostered,atleasttemporarily

Intendedconsequences Unintendedconsequences• Nodecreaseinthenumberof

disputes

• ButIncreasedtherateoflandconflictresolution– Especiallylongstandingdisputes

• Reducedviolence(especiallypropertydestruction)

• Contagiousbeyonddirectlytreated

• Persistentovertwoyears

• Fadedafterthreeyearssomewhat,inpartbecausedisputeslessen

• Noincreaseinresolutionofotherdisputes

• Moredisputes,withmoregusto– Butgenerallypeaceful

• Increasedextrajudicialpunishment

It’sdifficulttosettledisputesandreducetransactioncoststhrough

cooperationalone.

Thuswebegintoseesomeoftheadvantagesofstatesorevenmafias

ConflictsinLiberiamightbelesslikely,lesslasting,andlessviolentwithclearandconsistentlaws,accessiblecourts,able

andresourcedpolice

SowhydidinformalinstitutionsworkwellforthoseCaliforniacattleranchers?

Californiahadseveraladvantages

1. Easiertomaintaintrustinsmall,closeknit,relativelynon-changingcommunities

2. Engagedinregularexchange(hencearepeatedgame)

3. Theyoperatedinthe“shadowofthelaw”

4. (Maybe)Americancultureevolvedmoreeffectiveinformalinstitutions

Anexampleofsituationswhereinformalinstitutionsnolongersuffice:Californiaprisons

DavidSkarbekonLosAngelesprisongangs

• Thestateoutlawscurrency,communications,drugs,andothergoodsandservicesinprison

• Thiscreatesablackmarketwherethestate(theprison)cannotenforcecontractsorreducetransactioncostsandrisks

• Whenprisonpopulationsweresmallandpeoplewerenotmovedfromprisontoprisonmuch,informalsystemsofordersufficed

• Butastheprisonsystemandpopulationgrew,andtransfersandtrafficincreased,theinformalsystemscouldnotcope

e.g.The“MexicanMafia”

• ThemostpowerfulprisonganginCalifornia,andoneofthebestorganizedcriminalsenterprisesinUS

• Likemostprisongangs,organizedracially

• HastwoofthekeyfeaturesofOlson’sstationarybandit:– Theabilitytoforciblyextractresources(Cancrediblythreatentoharm

Hispanicsinprisonshouldtheybecomeincarcerated,oriftheyhavefriendsandfamilyincarcerated)

– Longtimehorizon(lifetimemembership,longjailsentences)

• ControlandextortHispanicdrugdealersoutsidetheprison,whopaytaxesof10-30%perweek

• Providegovernanceservices,protectingSureño membersinjailandonstreet,enforcingtransactionsaswellascreditandinsurancemarkets

Whatareothersituationswheredisputesmustget

resolvedwithoutthehelpofacentralizedpower?

Ininternationalrelationstheory,“anarchy”istheideathattheworldlacksanysupremeauthorityorsovereign toprovide

commitmentandmitigateinformationasymmetries

Younowhavealltheingredientsforatheoryofconflict

Betweenneighbors

Betweenwarlords

Betweenstates