Decentralized vs. Authoritarian Governments - Who has Better Outcomes?
A mix of decentralization and coordination is the secret sauce for prosperity
How to Change the World is a weekly blog about reversing American decline. I will (1) study successful models of governance throughout history, primarily in the West, (2) highlight what’s going wrong leading to institutional decline or ‘political decay’, and (3) present models of democratic innovation that could lead us into a prosperous, peaceful and abundant 21st century.
Is the United States becoming more authoritarian or less authoritarian? If it were going one way, how would we know? What are the signs?
As I complete Part 4 in Fukuyama’s Origins of Political Order, titled “Accountable Government,” that is the question that comes to mind. In this section he outlines four models of government that developed throughout Europe and Asia from roughly 1300 to 1800. The four models are Weak absolutism, Successful absolutism, Failed oligarchy, and finally Accountable government. He gives an example of each through deep dives in to the experiences of specific countries at that time.
Below, I’ll quickly describe each of the four, focusing mostly on the power dynamics. Then I’ll discuss why understanding the model of the distribution of powers in each society helps explain why they wound up with their respective outcomes. I’ll then use this model as a lens to judge the current US establishment, and will finally conclude with a few thoughts on what can be done about it.
Below is a rough outline of the power-players in the societies of the mid second millennium AD. Each country’s political and economic development had a lot to do with the dynamics between these players- how successfully they fought for their interests, and whether they maintained their independence, and if the could ultimately collaborate with each other. Nobility is royalty. Gentry are large land holders. Third Estate are the merchants. (Ignore my scribbled note.)
Weak absolutism - France
“Weak absolutism arises when neither the centralizing state nor the groups opposing it are able to organize themselves adequately in their struggle for dominance… it was a fragile system that could not withstand the Enlightenment shift in the ideas the based legitimacy on the Rights of Man.”
What the French State did, very interestingly, was to bribe the upper classes by offering them favors. This was a way of breaking them up so that they all had more loyalty to the state than their class. The state funded itself by leaning heavily on the peasantry for taxes, letting the upper class live largely tax free. The priority of the upper classes then just became maximizing the extraction of value from the state, rather than adding value into the economy. This is known as “rent seeking” and is a thriving practice to this day. The more the ‘rent,’ the less incentive there is to provide valuable services to the population and to innovate - the key skill organizations need it just to get better at taking more from the state. This incentives corruption and massively degrades the economy over time, which is what happened in France leading eventually to the French Revolution.
The term ‘absolutist’ refers to the monarchy as a centralized power that was not formally accountable to a parliament or any other representative body. It was ‘weak’ because the different parties were not well-organized and could not act collectively resulting in a weak country
Failed Oligarchy - Hungary
Hungary is a super interesting example because they had a diet (like a parliament) that counterbalanced the State, but it was actually too powerful. It was made up of landowners and nobles who ultimately teamed up to dominate the state. This created an oligarchic paradise where the wealthy and powerful could do what they wanted to the peasantry unobstructed by the state. So, just at the time the peasants of Western Europe were becoming more free, in Hungary they began being ensurfed, with their freedoms increasingly restricted.
With the state thus weakened, Hungary became vulnerable to foreign enemies, and began to lose wars and territory.
France had a strong state that broke up the nobility and gentry by making them dependent on them. Hungry had a strong nobility and gentry that starved the state. In both cases progress was all but halted and the peasantry was exploited.
Russia - Successful absolutism
Russia’s brand of absolutism was a “success,” because it successfully created a dominating state whose power was totally unchecked. The state and the nobility fused to create an unaccountable system of oppression that survives to this day. Fukuyama points out that this is why Communism triumphed so thoroughly in Russia, as in China. They both had deep and long held absolutist traditions.
An interesting factor contributing to their absolutism that I was unaware of is that they were invaded by the Mongols who occupied them for 250 years, from roughly 1250-1500. It cut Russia off from trade and interaction with Europe, causing them to not participate in developments like the Renaissance and Reformation.
“The Mongols undermined any legal traditions inherited from Byzantium and made political life far harsher and more cruel. In sharp contrast to the Christian princes of Europe, Mongol rulers saw themselves as pure predators whose avowed purpose was to extract resources from the populations they dominated… They recruited Russian princes, including the Muscovite prince who would go on to create the Russian state, to act as their tax collectors. The Mongols thus trained several generations of Russian leaders in their own predatory tactics. Indeed, through intermarriage they merged genetically with the Russian population.”
By the 18th century, Russia had freed themselves from the Mongols and created a modern state, but much of the brutality of the Mongols lingered in their political culture.
“The Russian state was stronger than it’s French or Spanish counterparts in several respects. The latter felt bound by respect for a rule of law, at least with regards to elites, which simply didn’t exist in Russia. The French and Spanish governments nibbled away at property rights through debt defaults, currency manipulation, and trumped-up charges through court proceedings designed to extort money from their target. But at least they felt compelled to work through the existing legal system. The Russian government, by contrast, expropriated private property outright with no pretense of legality, forced the entire nobility into government service, and did away with enemies and traitors without attention to due process.”
England - Accountable government
England is our best case scenario. The greatest achievement of governance in it’s day. It contained all three dimensions of political development that Fukuyama feels are essential to a high-functioning, representative government - the state, rule of law, and political accountability.
England had a both powerful and cohesive parliament.
“It represented not just the aristocracy and clergy, but also the broad mass of gentry, townspeople, and property owners more generally who, as the Commons, were its soul and driving force.”
In other words, it was the most truly representative and accountable of the governments. Their ability to create and maintain such a political order will be discussed below, but the upshot is that the outcomes were vastly superior for all parties - the state became the most powerful in Europe, the merchants became the wealthiest, the cities became prosperous, and the citizens had the best legal protections and political representation.
One large differentiator for England was their orientation toward local government.
“The whole of English society had been organized down to a village level into highly participatory political units. This was not a grassroots phenomenon of local social organization taking on a political role, rather, it was a national government inviting local participation in a way that structured local life and became deeply rooted as a source of community.”
Not just the political system, but even the legal system was far more local:
“The participatory nature of English justice, and the locally responsive nature of judicial rule-making under the Common Law, created a much greater feeling of popular ownership of the law in England than in other European societies… One of the chief functions of rule of law is the protection of property rights, and this Common Law did much more effectively than law in other lands. This is due in part to.. decentralized decision making that is highly responsive to local conditions.”
Religion in England also played a unique role in incentivizing government decentralization compared with other countries:
“Unlike the French, Spanish, Hungarian, and Russian cases, English resistance to absolutist power was overlaid with a religious dimension that immensely strengthened the solidarity of those on the parliamentary side.”
Part of that was the presence of protestants:
“It was clear that the more radical Protestant sects served as vehicles for social mobilization and economic advancement, since they provided outlets for protest and community that were unavailable through more traditional and hierarchical religious channels.”
Their bias toward decentralized governance left room for cities to experiment with new economic forms, leading not only to extraordinary prosperity, but also paving the way for social progress.
“Once a city-based capitalist market economy appears, we leave the old Malthusian world and begin to enter into a modern economic system where productivity increases become much more routine. At that point, the conditions for political development change as well, through the mechanism of an increasingly wealthy bourgeois class that is more and more in a position to undermine the power of the old landed order… Thus began a truly modern system of political development in which political change could be induced by economic and social change.”
Finally, taxation. Unlike the corrupt French nobles who bought themselves favors with the state and were therefore able to avoid taxes, the nobility in England actually paid the majority of the taxes. In other words they had a progressive tax system much like the modern United States.
Because governance was done in a decentralized way, the population felt consulted on how the taxes were spent, allowing the government to tax at twice the rate of France, who, because they had no principle of “consent of the governed” had to take their taxes by force which proved extremely inefficient. While England was developing the Industrial Revolution, France was going bankrupt.
All of this efficiency and balance allowed new ideas to take root:
“Ideas were again important. By the late seventeenth century, thinkers like Hobbes and Locke had broken free of concepts of a feudal social order based on classes and estates, and argued in favor of a social contract between state and citizen.”
They both agreed that legitimate rule could only arise from the consent of the governed.
In summation: England had a strong monarchy, but also a strong Parliament and local governments where citizens were encouraged to participate, a strong capitalist merchant class, and a religious tradition that also favored the decentralization of power. All of these forces created a tension where one power was never able to trump the others, but due to their relative sophistication, could still work together. There was also the highly efficient and decentralized legal system of Common Law which favored tradition and the local. All of this created such a positive environment for progress that new ideas of freedom could be imagined and bestowed on the entire society.
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Reflecting on the US:
So then I can’t help but wonder, how are we here in America doing with our ‘separation of powers?’ I would argue that there are developments that we should be concerned about, and those of us concerned with prosperity should push back on.
The fact that US tech companies have been conscripted by the government to be de facto surveillance organizations is a bad sign. The Twitter Files show government agencies essentially ordering social media networks to de-list messages, silence opposing narratives, and ban accounts. The latter happens even if the accounts are posting true information that’s in the public interest, so long as it interferes with certain narratives. We’re told it’s not a first amendment violation because the government is merely ‘suggesting’ a private actor silence speech on their behalf. But when the state has created an environment where the citizenry can only discuss certain permitted topics online, power inevitably tips in their favor. This is bad for the decentralization of power.
We’re seeing the same thing happen with banks. For instance Operation Chokepoint 2.0 is an initiative where the executive branch is putting pressure on banks to cut off crypto’s access to the US financial system. Bitcoin and Crypto are largely considered empowering to the population because they offer an alternative to state money. As we saw in the Authoritarian states above, the state will manipulate the economy to benefit the elite at the expense of the average citizen. That the government is trying to cut off onramps to alternatives so that people are trapped into their system of economic abuse is bad for the balance of power.
Lastly much of the news media both print and TV have transformed from agents critical of the state, to organs of the state. Just consider how the New York Times last week helped find Jack Teixeira, a leaker of classified documents that harm the Pentagon’s narrative about the war in Ukraine. The NYT found him, handed him over to the FBI, and then bragged about it. It cannot be exaggerated how conditioned many. people are to believing that they are “being informed” by watching “the news.” When instead they are being exposed to state-sanctioned information that is indifferent to the truth, this does enormous harm in the citizen’s ability to organize and act effectively.
Fukuyama seems to draw a direct connection between the merger of state and economic power in France, Hungary and Russia and negative outcomes. In every case, including in England, the state wanted to increase it’s power. Only in England were competent powers able to match it and keep it at bay.
Here in the united states, who would be those providing a balance of power? It’s not like we have nobles anymore. I would posit that the independence of the above listed powers are essential: The internet, banking, and the press.
The internet - New decentralized communication platforms are being developed like Nostr (Notes and Stuff Transmitted by Relays) which are designed to be literally uncensorable. Information is routed through a collection of nodes such that there’s no way to choke it off. It doesn’t yet have the action of Twitter, but still has it’s advantages. For example it’s very easy to tip people for their content.
If we can get the technology to take off, we can create communication networks that are safe from government interference not because we have to trust the CEO, but because at a protocol level it cannot be stopped.
Banking - It’s possible that one of the most important life decisions you can make is to take control of your money. When the government is responsible and competent, this matters less. When they are not, the money is in trouble. In the past, gold provided this security. Now, we have Bitcoin.
Like Nostr, Bitcoin cannot be censored by the government. Additionally it cannot be inflated like fiat currencies, so it historically it appreciates against fiats - all fiats. This provides sovereignty and stability as we approach uncertain times.
News media - News is personal and a matter of preference. To some degree it’s even subjective - we like news that covers events that interest us. A good way to be able to follow news which interests you personally while only supporting journalists of integrity is to follow them specifically on Substack. My personal favorite is Matt Taibbi, who I find to be a rare voice of morality.
Okay folks, that’s it for this week’s edition of How to Change the World. Bottom line? If you want freedom, prosperity and innovation, avoid an overly centralized state. Do this by developing and supporting other strong powers that are capable of coordination in times of need, but independent most of the time so they avoid coercion.
Matt Harder runs the public engagement firm Civic Trust, where he helps cities strengthen their civic environment by helping residents, civic organizations, and local government work together to create public projects. Follow him on Twitter.