We analyze development trajectories of early civilizations where population size and technology are endogenous, and derive conditions under which such societies optimally ‘switch’ from anarchy to hierarchy – when it is optimal to elect and support a ruler. The ruler provides an efficient level of law and order, but creams off part of society's surplus for his own consumption. Switching to hierarchy occurs if the state of technology exceeds a threshold value, but societies may also be ‘trapped’ at lower levels of technology, perpetuating conditions of anarchy. We present empirical evidence based on the Standard Cross Cultural Sample that support the model's main predictions.
|Journal||Journal of Institutional and Theoretical Economics|
|Publication status||Published - 2010|