According to some, states are an inevitability. In The Social Order of the Underworld, David Skarbek uses prisons as a natural experiment to observe how states arise.26 He explores how prisoners develop their own institutions, including their own hierarchies and rules, as a means to resolve common problems ‒ in their particular case, the supply of drugs. Gangs provide both governance and protection, acting like their own mini-states. In prisons, the population is immobile; no one can (in theory) escape. That provides a parallel with the work of James C. Scott, who argues that the state first came into existence when human beings made the shift from hunter-gatherers to farming the land.27 Once we settled down in fixed locations, we became sitting ducks. As Walter Scheidel explains:
Confined to territories of arable land, early farmers submitted to a new political order that protected them in much the same way as the mob protects its unwilling clients. The early state was born, erecting ambitious structures of command and control in support of steep hierarchies, vast inequality and endless war. Scott rightly stresses the critical role of domesticated grains ‒ wheat, barley, millet, maize and rice ‒ in sustaining political power: grown above ground, ripening on a predictable schedule and eminently storable, grain invited assessment and appropriation by the taxman. Alongside compulsory labour services, grain taxes formed the sinews of the early state … Any visitor to Giza, Angkor or Machu Picchu who is left with a sense of admiration rather than dread and compassion fundamentally misunderstands the nature of early states and the steely cages they erected for humanity.28
The history of modern as opposed to ancient states begins with the fall of the Roman Empire, a time at which Europe fragmented. Power rested in the hands of local lords, who built castles to defend themselves from incursions from neighbouring lords. The population was enserfed. According to some accounts, freedoms ‒ such as the freedom to move ‒ were given up willingly in return for the safety and security offered by the local lord and his castle. More cynically, it was the natural result of the rich exercising their power over the local population, which was particularly beneficial at a time when population was shrinking due to the instability and insecurities which followed the collapse of Roman rule. By limiting the freedoms of (increasingly scarce) peasants, lords were able to hold down the price they effectively paid for them to work their lands, enabling the extraction of a surplus to fund their lavish lifestyles.
In this post-Roman feudal world, local power was strong. This meant that an overarching state that operated over a larger geographical area could only develop and hold onto power if it negotiated with local lords, leading to the development of some of Europe's earliest parliaments.29 Although not everyone had a vote, local areas were at least given representation within the umbrella of an emergent state.
As population grew, the balance began to tip in favour of free as opposed to enslaved labour. With a greater supply of people, the market wage fell, making it cheaper for lords to employ free labour through the market. Serfdom went into decline. However, when the Black Death hit in 1348, it devastated the population, wiping out between a quarter and a half of Europeans. The result was a fundamental change in the balance of power between lords and peasants. The power of landowners was diminished as land fell in value, having become relatively more plentiful compared with the number of people whose mouths needed to be fed. In some parts of Europe, serfdom witnessed a revival as a result, and in other areas peasants successfully took advantage of their increased scarcity to push for greater freedoms.30 Where that happened, such as in England, the diminished power of local lords paved the way for the centralization of the state. The local forces that had in the past resisted centralization were now too weak to prevent it.31
Regions were more likely to join together to form states where not only local resistance fell, but also where there were clear benefits to working as one. Economists argue that it can be in our mutual interest to contribute to a common pot of resources ‒ what we may think of as a nascent state ‒ as a result of the need for human societies to provide public goods to support their existence.32 According to historians, war was, in this sense, the great driver of today's states.33 War required adjoining regions to cooperate in an effort to defend themselves, which in turn required the creation of a common pot to which different localities would contribute. The threat of Viking invasions is often seen as one of the key reasons for the early formation of a centralized English state. In the case of the Netherlands, the hostile geographical environment, which required cooperation to instigate systems of irrigation and land reclamation, also pushed in the direction of state creation.34 By contrast, local regions in present-day Italy and Germany were both too strong and too antagonistic to enable the early development of a broader state.
For states to operate, they needed to tax. The expansion in the state's fiscal powers began in England in the seventeenth century.35 At that point, states mostly taxed to wage war with one another. How the state funded defence and other such activities was a big question. Since historically society had consisted of rich landowners and serfs, the key things that the state could tax were land and imported luxuries. As markets developed ‒ as more people moved beyond self-sufficiency and barter and as serfs gained their freedom ‒ more things were bought and sold. As markets expanded and the economy grew, not only were there more goods in circulation, all of which could be taxed, but a new class emerged: one of merchants. This new commercially oriented class managed to get a seat at the top table, something which economic historians have argued is central to understanding how the West went on to become the richest part of the world. According to Jared Rubin, and in contrast with Europe, ‘Middle Eastern leaders were strong enough, due to the legitimizing capacity of Islam, to exclude them.’36
As the economy advanced, not only did the new commercial interests push in the direction of representative government but a new political philosophy began to emerge. The seventeenth century is commonly seen as the period in which the ‘divine rights of kings’ came to be challenged. From Locke onwards, philosophers began to question the idea of fixed social positions, seeing us all as free agents with rights that should be supported by the law of the land.37 Having grown in strength in the previous centuries, and in some cases stamping on the parliaments that had emerged in medieval times, states seemed to be overstepping the mark. The notion of individual freedom was born.
Not only were merchants and intellectuals beginning to question the ‘natural’ authority of kings but the Reformation began to wreak havoc both with their religious claims and with their fiscal ones. Rubin notes that in countries that emerged from the Reformation as Protestant, religion proved to be even less of a legitimizing tool than in those that remained Catholic. Hence, in Protestant England and in the Dutch Republic, the state turned to ever more commercial (as opposed to religious) interests in order to legitimize its rule.38 This also had implications for gender, which further aided the emergence of state capabilities. As we saw earlier, the extent to which religion feeds into the state affects the state's longer-term ability to pursue, for example, changes in family law and the extent to which it gives women freedom over their bodies (such as by legalizing abortion and supporting women's access to birth control). These in turn affect the extent to which growth will be equitable and sustainable.
Whether Catholic or Protestant, religious wars in seventeenth-century Europe meant not only the deaths of millions of Europeans but also greater pressure on taxes. And no one likes tax, particularly when it hasn't been voted for. Rebellion was in the air: not only in England in the seventeenth century but also in France in the eighteenth century. Influential in the associated French Revolution were a group of economists known as the physiocrats. They argued that order did not require the imposition of authority from above but could instead be achieved by leaving free individuals to engage with one another through the market. Where commercial interests had a seat at the top table, such as in Britain, the result was Adam Smith's laissez-faire app
roach, one of small government where individuals were no longer under the thumb of a heavy-handed state or its partner in crime: religious authorities.
For a while, laissez-faire seemed to pay off. The country of Smith's birth was the first to industrialize. People were free to start new businesses and develop new technologies, leading to another new class: one of industrialists, many of whom came from relatively humble roots. This new class, along with merchants, rivalled the aristocracy, lords whose power dated back to feudal times. However, whereas industrialization brought significant benefits, it also brought squalor, overcrowding and unsanitary conditions. People suffered and, as a result of the associated health problems and pollution, so too did the economy. By the latter half of the nineteenth century, the state therefore began to do more than fund law and defence; it stepped in to help provide sanitation, clean water and public health programmes. The state was building its capabilities ‒ fast.
Revolution, both economic and political, was followed by further democratization. Unlike in the past, this democratization allowed the state to hold on to its authority at a time when it was expanding. As the vote spread to the working classes, the state began to spend even more on utilities, education, health and the welfare state, so much so that across the course of the twentieth century, the size of the state expanded rapidly. So too did tax. The share of taxation in national income rose from well below 10% of GDP in 1910 to, in the present day, 28% of national income in the United States, 35% in the United Kingdom and more than 45% in France and Sweden. We find the coincidence of bigger states and more prosperous economies.
Although this might seem like a natural end point, a cursory look across all today's rich countries suggests that if we include gender in our definition of state capability, then there is room for further progress. States that may appear capable in economists’ standard definition of the term are not necessarily capable once we bring gender to bear, as we have seen in this chapter. By rethinking how we judge states, we can start to see how opportunities to keep on building a more successful relationship between the market and the state still remain for the taking. That involves acknowledging a third sphere: alongside the market and the state, there is a whole other realm in which the vital work of care takes place. Making the most of this third sphere may require more to be done than at present by the state, but in a way that supports markets and creates more equitable and sustainable growth. It is a win‒win.
Three Ways Women Helped to Build Today's Most Capable States
In our story of how today's modern states emerged, women have only received a passing mention. In fact, they are entirely absent from economists’ accounts of how state capability emerged in today's rich countries. The importance of society is, however, something that has come to be acknowledged, although a big debate rages. Some see the state and society as interchangeable,39 whilst others argue that they are complementary, pointing to the way in which a well-functioning and cohesive society makes for a more capable state. Johnson and Koyama pinpoint culture and civil society as two deep determinants of effective states.40 They point to a long line of thinkers who argue that ‘social capital’ is critical to the successful establishment of liberal democracy. Needless to say, the relationship goes two ways: political institutions that are corrupt foster a wider culture of mistrust and undermine social cooperation.41 The degree of internal cohesion amongst the population also affects how long lasting the state will be.42 It is, therefore, of little surprise that states have gone to great lengths to engineer a national identity. Knitting people together ‒ creating a common sense of belonging, whether through national songs and festivals or by demonizing ‘the other’ in foreign countries ‒ helps the state to hold onto its tax-raising powers and its authority. The fact that society matters helps to explain why attempts to transplant political institutions ‒ such as democracy ‒ have not always generated successful outcomes.
However, there is another underlying factor that can lead to both capable states and economic prosperity: women's freedom. Gender equality (or a lack of it) has had a powerful effect on the way that modern states have developed and helps explain why western states have tended to be less deleterious ‒ more capable ‒ than those elsewhere. Here we will focus on three particular channels: the way in which more gender-equal family systems help to foster democracy; the way in which women's freedom has led to a historical shift in the provision of care from the home to the state; and the way in which votes for women changed the priorities of the state.
1 Women and democracy
One of the great ironies of history is that the first states to develop were not those in the now rich economies but those in the parts of the world that are today relatively poor. That includes the part of the world often seen as the cradle of civilization, the Middle East. Being an early developer in state terms was, however, no guarantee of positive outcomes for women. It is precisely where states first developed in human history that we also find some of the highest levels of gender inequality today.43 By contrast, in regions in which hunter-gatherer ways of life persisted for longer, meaning that there was a longer history of gender equality, modern states formed somewhat later and in a way that proved to be less inimical to gender equality and better for long-run growth. That includes in Europe.
The relationship between the state and gender equality has been examined by Emmanuel Todd, following in the footsteps of J. S. Mill, the nineteenth-century political economist, and Susan Okin, the feminist political theorist.44 Todd notes that the state and the family ‒ the public and the private spheres ‒ are fundamentally linked. Political institutions are influenced by family institutions in a way that has long been ignored by economists. Power and voice within the household act as a model for wider institutions. Democratic government requires democratic family structures, structures that nurture democratic citizens from a young age. As Jan Kok notes, ‘[p]eople are socialized within families; it is here they learn the basic rules of interaction, negotiation, dominance and submission.’45
Not only does women's freedom push in the direction of democracy, but democracy also fed back to women. As political scientist Valerie Bryson writes of the seventeenth century, when the divine rights of kings was being questioned:
Conservative defenders of absolute monarchical power argued that the authority of the king over his people was sanctioned by God and nature in exactly the same way as that of a father over his family; this meant that ‘patriarchy’ (the rule of the father) in the home was used as justification for a parallel power in the state. Opponents of such state power, who argued that authority was not divinely ordained but must rest on reason and consent, were therefore forced to re-examine arbitrary power within the family as well: logically, it seemed, patriarchy in state and home must stand or fall together.46
As we saw in chapter 2, the way families operate differs dramatically across the world, with implications for female agency and, as a result, political institutions and markets. The more egalitarian ‒ nuclear ‒ family forms in Europe helped to not only underpin democratic states but also market activity and the types of institutions needed to support market exchange. Avner Greif argues that the weaker kinship ties in Europe ‒ a result of more nuclear as opposed to traditional family structures ‒ led people to engage with those outside the family.47 That meant building trust outside the ‘kinship’ group, which aided the development of markets and trade ‒ and the types of formal institutions needed to support them ‒ in the longer run. By contrast, in the Middle East, kinship ties were stronger, including as a result of practices such as consanguineous marriage. Greif argues that this produced a more collectivist culture, where families had strong ties with each other and didn't need to build as many with the outside world as a result. These strong family ties helped the economy in the early days of trade but, as market opportunities expanded, they became more of a hindrance.48 In this sense, we see how women's freedom ‒ itself aided by market opportunities ‒ helped to support the
commercialization of the economy, at the same time fostering a democratic state and associated institutions that supported as opposed to hindered market activity. Women's freedom is key to enabling both prosperity and a supportive state.
2 The emergence of the welfare state
Women's freedom is also relevant to the emergence of a now common role for government in the form of the welfare state. However, women's freedom helped to ensure that the welfare state developed in a way that worked with rather than against markets. Recent research has enabled us to compare welfare spending in different parts of Europe over the last six hundred years. The results suggest that ‘from a European perspective the degree to which the English state succeeded in enforcing a nation-wide tax-based system of poor relief was exceptional.’49 In the words of Johnson and Koyama: ‘The revenues generated by the increased fiscal capacity of European states after 1500 was predominantly spent on warfare rather than on other public goods … One of the few exceptions to the absence of government provided insurance or public goods was the English Poor Law.’50 The question is: why? Why did England manage to develop a welfare state so early on ‒ and why didn't it cost the economy?
The British welfare state dates back to Tudor times. At this time, local parishes used land taxes to help support the elderly and ‘infirm’, as well as chasing fathers who had abandoned their children. Although it was far from perfect, this Old Poor Law system helped to fill the hole left by a retreating family-based welfare system as economic opportunities for women outside of the home began to spread, thereby supporting the market.51 Internationally, England was something of a backwater at this time, compared with the more famous Italian city states, but internally it was becoming highly commercial.52 England was ahead of its time in developing internal markets centuries before many other European countries, in part a result of geography that was favourable to trade and of the emergence of a relatively centralized state which meant that there were limited internal barriers to trade. The welfare state emerged to pick up the slack as society began to change, moving away from traditional to more nuclear family structures, and from feudal structures to the market. It was by no means a perfect relationship (or a perfect system of welfare), as Adrienne Roberts makes clear,53 but the state and the market were already starting to dance with one another very early on, at least more so than in other parts of the world. It is, of course, by building on this history ‒ on the way in which state interventions that take on board caring activity can support as opposed to ‘crowd out’ the market ‒ that we can make further progress in the modern day.
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