Bayesian Investor Blog

Book review: Political Order and Political Decay, by Francis Fukuyama.

This book describes the rise of modern nation-states, from the French revolution to the present.

Fukuyama focuses on three features that influence national success: state (effective bureaucracy), rule of law, and autonomy (democratic accountability).

Much of the book argues against libertarian ideas from a fairly centrist perspective, although he mostly avoids directly discussing libertarian beliefs. Instead, he implies that we should de-emphasize debates over big government versus small government, and look more at effectiveness versus corruption (i.e. we should pull sideways).

Many of these ideas build on what Fukuyama wrote in Trust – I suggest reading that book first.

1.

War! What Is It Good For?. Fukuyama believes that war sometimes causes states to make their bureaucracy more efficient. Fukuyama is more credible here than Morris because Fukuyama is more cautious about the effects he claims to see.

The book suggests that young nations have some key stage where threat of conquest can create the right incentives for developing an efficient bureaucracy (i.e. without efficient support for the military, including effective taxation, they get absorbed into a state that does better at those tasks). Without such a threat, states can get stuck in an equilibrium where the bureaucracy simply serves a small number of powerful people. But with such a threat, politicians need to delegate enough authority that the bureaucracy develops some independence, which enables it to care about broader notions of national welfare. (Fukuyama talks as if the bureaucracies are somewhat altruistic. I think of it more as the bureaucracies caring about their long-term revenue source, when individual politicians don’t hold power long enough to care about the long term).

It seems plausible that China would have helped to lead the industrial revolution if it had faced a serious risk of being conquered in the 17th and 18th centuries. China’s relative safety back then seems to have left it complacent and stagnant.

2.

Fukuyama hints that the three pillars of modern nation-states (state, law, autonomy) have roughly equal importance.

Yet I don’t buy that. I expect that whatever virtues are responsible for the rule of law are a good deal more important than effective bureaucracies or democratic accountability.

Fukuyama doesn’t make a strong case for the value of democracy for national success, presumably in part because he expects most readers to already agree with him about that. I’ll conjecture that democracy is mostly a byproduct of success at the other features that Fukuyama considers important.

It’s likely that democracy is somewhat valuable for generating fairness, but that has limited relevance to what Fukuyama tries to explain (i.e. mainly power and wealth).

3.

Full-fledged rule of law might be needed to get all the benefits of the best modern societies. But the differences between good and bad nations seems to have originated well before those nations had more than a rudimentary version of rule of law.

That suggests some underlying factor that matters – maybe just the basic notion of law as something separate from individual leaders or ethnic groups (Fukuyama’s previous book says Christianity played an important role here); or maybe the kind of cultural advance suggested by Greg Clark.

Fukuyama argues that it’s risky to adopt democracy before creating effective states and the rule of law. He’s probably right to expect that such democracies will be dominated by people who fight to get the spoils of politics for their family / clan / ethnic group, with little thought to national wellbeing.

4.

National identity is important for producing the kind of government that Fukuyama likes. It’s hard for government employees to focus on the welfare of the nation if they identify mainly as members of a non-majority ethnic group.

He mentions that the printing press helped create national identities out of more fragmented cultures. This seems important enough to Europe’s success that it deserves more emphasis than the two paragraphs he devotes to it.

He describes several countries that started out as a patchwork of ethnic groups, and had differing degrees of success at developing a unified national identity: Tanzania, Kenya, Nigeria, and Indonesia. I was a bit disappointed that the differences there seemed to be mostly accidents of the personalities of leading politicians.

He talks as if the only two options for such regions were to develop a clear national identity or be crippled by ethnic conflict. Why not also consider the option of splitting into smaller political units that can aim to become city-states such as Singapore and Dubai?

5.

He makes many minor claims that sound suspicious enough for me to have moderate doubts about trusting his scholarship.

For example, he tries to refute claims that “industrial policy never works”, mainly by using the example of the government developing the internet. (His use of the word “never” suggests that he’s not exactly attacking the most sophisticated version of the belief in question). How familiar is he with the history of the internet? The entities in charge of internet tried to restrict commercial use until 1995. Actual commercial use of the internet started before the government made a clear decision to tolerate such use, much less endorse it. So Fukuyama either has a faulty understanding of internet history, or is using the phrase industrial policy in a way that puzzles me.

Then there’s the claim that the Spanish conquered important parts of the New World before the native nations had declined due to European diseases. Fukuyama seems unfamiliar with the contrary evidence reported by Charles C. Mann in 1491 and 1493. Mann may not be an ideal source, but he appears at least as reliable as the sources that Fukuyama cites.

6.

That leads into more general doubts about history books, especially ambitiously broad books aimed at popular audiences.

Tetlock’s research into the accuracy of political pundits has led me to assume that a broad range of “expert” commentary is roughly equivalent to random guessing. Much of what historians do [1] seems quite similar to the opinions of the experts that Tetlock studies. Neither historians nor political pundits get adequate feedback about mistaken beliefs, or get significant rewards for insights that are later confirmed by new evidence. That leads me to worry that the study of history is little better than voodoo.

7.

In sum, I can’t quite decide whether to recommend that you read this book.

[1] – I.e. drawing inferences from aggregations of data. That’s not to say that historians don’t devote lots of time to reporting observed facts. But most of those facts don’t have value to me unless I can generalize from them in ways that help me understand the future. Historian’s choices of what facts to emphasize will unavoidably influence any generalizations I draw.