Why we need decentralized government

Decentralization forces elites to compete against each other non-violently. This benefits the masses.

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In previous articles, I made the case that we can best understand the nature of human material progress using the concept of the Five Keys to Progress. The Five Keys to Progress are critical because they are the necessary preconditions for a society changing from a state of poverty to a state of progress, and they are actionable in today’s world. In other words, the concept not only helps to understand the world but also how to make it better.

In previous excerpts, I explained:

• Key #1: A highly efficient food production and distribution system. This enables societies to overcome geographical constraints on food production so that large numbers of people can focus on solving problems other than getting enough food to eat

• Key #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.

In this excerpt, I would like to explain the third Key to Progress:

Key #3: Decentralized political, economic, religious and ideological power. It is of particular importance that elites are forced into transparent, non-violent competition that undermines their ability to forcibly extract wealth from the masses. This also allows citizens to freely choose among institutions based upon what they have to offer to each individual and society in general.

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The following is an excerpt from my book From Poverty to Progress: Understanding Humanity’s Greatest Achievement. You can purchase discounted copies of my book at my website, or pay full prize at Amazon.

Other books in my “From Poverty to Progress” book series:

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In previous articles, I made the case that we can best understand the nature of human material progress using the concept of the Five Keys to Progress. The Five Keys to Progress are critical because they are the necessary preconditions for a society changing from a state of poverty to a state of progress, and they are actionable in today’s world. In other words, the concept not only helps to understand the world but also how to make it better.

In previous excerpts, I explained:

• Key #1: A highly efficient food production and distribution system. This enables societies to overcome geographical constraints on food production so that large numbers of people can focus on solving problems other than getting enough food to eat

• Key #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.

In this excerpt, I would like to explain the third Key to Progress:

Key #3: Decentralized political, economic, religious and ideological power. It is of particular importance that elites are forced into transparent, non-violent competition that undermines their ability to forcibly extract wealth from the masses. This also allows citizens to freely choose among institutions based upon what they have to offer to each individual and society in general.

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So far we have seen that productive agriculture 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 possibility of progress.

Sometimes these elites extracted wealth from the peasantry individually, as in European feudalism, but more often elites established 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 have 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 areas. 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 they 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 can no longer acquire all their resources by extracting from farmers and urbanites.

Organizations that are forced to compete non-violently have the incentive to offer material benefits to the masses in order to acquire more resources. The people are no longer beasts of burden to be exploited, but potential customers, employees, investors and voters.

Organizations that compete non-violently have a strong incentive to embrace new technologies, skills and processes that give them a competitive advantage against other institutions. At this point, instead of having the incentive to stifle progress, elites suddenly had the incentive to promote progress.

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

The key question is whether elites acquire their wealth from extracting wealth using 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 and ideological elites to do this. So do markets, property rights and corporations. Meanwhile, separation of church and state and the concept of religious liberty forces religious elites to compete non-violently against each other for worshipers.

And the specialization of institutions in a modern society means that an institution can compete in only one of those spheres. They must specialize in one of politics, economic or religion. When elites compete non-violently, the rest of society has the opportunity to choose which sub-section of the elite most benefits society. And with so many options, they can mix and match as they choose.

Today, we take all of that competition for granted, but for millennia Agrarian societies (like 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 will benefit the masses are a distinct threat to elite power, as they could become power bases for rivals.

Forcing elites to compete non-violently against each other 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.

In the next article in this series, I will discuss the Fourth Key to Progress: At least one high-value-added industry that exports to the rest of the world.

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The above is an excerpt from my book From Poverty to Progress: Understanding Humanity’s Greatest Achievement. You can purchase discounted copies of my book at my website, or pay full prize at Amazon.

Other books in my “From Poverty to Progress” book series: