The Five Keys to Progress (Part 4): Decentralization of Power

This the fourth post in a series of posts about the Five Keys to Progress. If this is the first post that you have ever read on my blog, I would recommend starting with An Introduction to Progress: Mankind’s Greatest Accomplishment. Then I would recommend reading the first post of this series.

In the previous posts in this series, I argued that the concept of the Five Keys of Progress enables us to better under the history of how nations developed and what policies will work in promoting progress today.

The Five Keys to Progress are the fundamental preconditions that must be established for a society to experience progress. All are necessary, but none are sufficient by themselves. Each evolved slowly as individuals solved local problems and then copied what worked.

I also argued that to transition from poverty to progress, a society needs to acquire and maintain the five keys to progress:

  1. A highly productive food production and distribution system. This enables societies to overcome geographical constraints to food production so that large numbers of people can focus on solving problems other than getting enough food to eat.
  2. Trade-based cities packed with a large number of free citizens possessing a wide variety of skills. These people innovate new technologies, skills and social organizations and copy the innovations made by others.

So effective food production leads to cities, and cities lead to innovation and progress. Sounds pretty simple. Unfortunately, it is not so easy. Whenever farmers create a food surplus that can potentially lead to the growth of dynamic trade-based cities, elites in those societies have other ideas.

Unfortunately, throughout most of human history the bulk of the food surplus has been extracted by political, economic or religious elites in the form of taxes and land rents. Rather than allowing specialists in cities to consume this food surplus, the elites spent the food surplus on conspicuous consumption, military conquest, signaling their social status and celebrating their religious or ideological visions. These elites effectively stifled the growth of trade-based cities, which in turn stifled the possibilities of progress.

Sometimes these elites extracted wealth from the peasantry individually, as in European feudalism, but more often elites establish centralized extractive institutions to do so on a vast scale. Usually operating as government-sanctioned monopolies, these extractive institutions channeled the food surplus generated by farmers towards elites. Unfortunately, through most of human history, the more productive farmers become, the more extractive institutions funneled that wealth to elites.

And even worse, elites funneled this food surplus into building powerful military machines that competed against each other to expand the scope of extraction into neighboring polities. The Chinese, Roman, French, Ottoman, Persian, Spanish and Portuguese empires are just a few of the dominant empires that have chosen this path. Many other potential empires attempted to do the same, but were outcompeted by their more famous competitor empires.

For this reason, the decentralization of political, economic, religious and ideological power is essential to innovation and progress. Ideally, this decentralization comes from the creation of institutions that compete against each other without the use of violence. When institutions compete peacefully, they have a strong incentive to embrace new technologies, skills and processes that give them a competitive advantage against other institutions.

Today we often hear activists complain about the entrenched power of elites, but those activists miss the point. Once mankind evolved past Hunter Gatherer societies, there have always been elites.

The key question is whether elites are able to establish government-sanctioned monopolies that rest upon violence, or whether elites are forced to compete against each other non-violently. When elites are forced to compete against each other non-violently, they must offer something to others to win that competition. This competition gives city-dwelling specialists a sphere where they can innovate new technologies, skills and organizations without being stifled by extractive institutions.

Modern societies have evolved a number of means to force elites to compete against each other non-violently. Political parties, rule of law and elections force political elites to compete against each other non-violently. Markets, property rights and corporations force elites to compete against each other non-violently in the economic sphere. The separation of church and state forces religious elites to compete against each other for worshipers non-violently.

And the specialization of institutions in a modern society means that an institution can compete in only one of those spheres. When elites compete non-violently, the rest of society has the opportunity to choose which sub-section of the elite most benefits society.

Today, we take all of that competition for granted, but for millennia Agrarian societies (as well as authoritarian regimes today) strictly limited competition by imposing government-sponsored monopolies. These monopolies enabled political, economic and religious elites to extract wealth from the masses. More recently ideological elites have played that role. Any new organizations that could create wealth that benefits the masses are a distinct threat to elite power, as they could become power bases for rivals.

Forcing elites to compete against each other non-violently is critical because it changes how people become wealthy. Rather than conquering new lands or squeezing taxes from the peasantry, modern elites become wealthy by creating wealth. They do so by innovating new technologies, skills and social organizations. The innovators gain vast wealth from those innovations, but the masses as a whole receive far more of the benefits.

Next post in this series is about high value-added export industries.

If you would like to learn more about this and other related topics, read my book From Poverty to Progress.


Michael Magoon is the author of the “From Poverty to Progress” series of books. The first book in the series is already published with many more to follow.

The writings above are under the same copyright as the main book “From Poverty to Progress”
Copyright © 2021 Michael Magoon

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