Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History by Douglass C. North & John Joseph Wallis & Barry R. Weingast

Author:Douglass C. North & John Joseph Wallis & Barry R. Weingast [North, Douglass C.]
Language: eng
Format: epub, azw3
Publisher: Cambridge University Press
Published: 2009-02-25T23:00:00+00:00

5.4 Doorstep Condition #2: Perpetually Lived Organizations in the Public and Private Spheres

Rule of law for elites creates some space for impersonal relationships among members of the dominant coalition, but until those relationships can be embedded in a matrix of more sophisticated public and private organizations, impersonality does not emerge historically. The capacity to form and support perpetually lived organizations has direct consequences for a society's ability to structure social relationships over time. The creation of legal personalities for organizations constitutes an essential element of perpetual life; it is inherently impersonal because it is defined without reference to any specific individuals. The creation of powerful organizations is consistent with the logic of the natural state, and therefore the effect of perpetually lived organizations on identity, personality, and impersonality plays a central role in moving societies to the doorstep conditions.

A note of caution. In developed, open access societies, the history of perpetually lived organizations is almost invariably told as legal histories of institutional forms: in private-sector organizations, business firms, churches, and other charitable institutions, corporate law structures perpetually lived organizations; in public-sector organizations, public law contains the institutions of national and subnational governments.5 The development of these organizations and institutions is typically explained in terms of functions, with little appreciation of the interrelated effects of organizations on both political and economic systems. The first societies to move toward open access invented the forms of perpetually lived public and private organizations because of a combination of political and economic forces, not simply to improve the functional characteristics of economic organizations or the functional characteristics of political organizations.

The creation of perpetually lived organizations poses two vexing historical problems. The first relates to beliefs. How do people come to believe that an organization will be perpetually lived when one has never existed? Consider an agreement with a perpetually lived organization (such as an insurance company) that involves a contract in which all the parties to the contract may be dead when the specified actions are to take place and all of the beneficiaries are yet unborn. How is it that all the currently living people come to believe that people yet to be born will honor the contract? Establishing the belief that commitments will be honored requires a long and incremental process of development.

The second problem is that a mortal state cannot credibly create a perpetually lived organization. The state is an organization of organizations and the development of natural states from fragile, through basic, to mature can be described in terms of the interaction between elite organizations within the dominant coalition. Political and economic development result from creating more sophisticated and durable institutions to structure elite relationships within the dominant coalition. Perpetually lived public organizations must coevolve with perpetually lived private organizations. Rule of law for organizations in a mature natural state does not imply that organizations are perpetually lived. The Romans developed rule of law for organizations, but they never solved the problem of perpetual life. By understanding why the Romans could

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