The great economist Thomas Sowell once asked, not why are so many people poor, but why are so few able to become rich? For most people in the world, freedom is not the norm. The vast majority of the population does not have access to many of the things Western societies take for granted. If the nation-state is truly what leads to an increase in freedom, then why don’t most nation-states exhibit these characteristics? Most nation-states are on the brink of collapse or in dire straits. 

The annual Fragile States Index (http://fsi.fundforpeace.org/rankings-2015) ranks 178 countries based on social, economic, and political indicators to see how capable states are in terms of solving their own problems and how many states are on the verge of collapse. Of the 178 states ranked in 2015, 38 have an “alert” status, 87 are in “warning” mode, 12 are “less stable,” 26 are “stable,” and only 15 states are considered as being “sustainable” (with Finland being the only state which is considered “very sustainable”). Therefore, if one takes the nonpartisan Fragile States Index as a guide, the majority of nation states are failing to provide peace, stability, protection, and liberty to their citizenry. An effective, protective, liberty augmenting government is the exception, not the rule.

Daniel Hannan credits the nation-state for the existence of freedom. He states, “It is extremely rare to find justice, freedom, or representative government flourishing in any context other than a nation-state” (Hannan 2013, 66). Yet even Hannan admits that the majority of nation-states are not successful and that freedom primarily resides among the 11% residing in the Anglosphere and the closely related and largely Protestant states of Nordic and Germanic origin. (Hannan 2013, 313-314). Thus while Hannan may credit the existence of liberty and justice to the creation of nation-states, it is only a certain kind of nation-state. The vast majority of nation-states do not in fact protect liberty and justice, therefore the success of these countries must be due to something other than simply the creation of the nation-state.

Most nation-states have failed to provide the liberty and security they promise. Therefore, the question should not be that since some nation-states do not result in failure the solution is a nation-state, but why are some nation-states successful, while most are not? 

What determines how successful a nation-state will be? While I am not so presumptuous as to have an answer on how to create a successful society, I do hope to provide some theories as to possibly explain why exporting democracy has worked in some areas and not in others.

Chris Coyne, Peter Leeson and Boettke (hereafter CLB) have tried to explain what determines how successful the rule of law is and why the rule of law is respected and enforced in some areas and not in others. Borrowing a phrase from Ludwig von Mises, they have argued that the regression theorem determines the stickiness of institutions.

What institutions will stick and be successful depends on the institutions, norms, and culture of the previous time period. Or in their words, “The regression theorem maintains that the stickiness, and therefore likely success, of any proposed institutional change is a function of that institution’s status in relationship to indigenous agents in the previous time period” (Boettke, Coyne, & Leeson 2008, 331). They argue that there are three different types of institutions: those imposed by a domestic government; those imposed by a foreign government; and those that emerge spontaneously as a result of individuals’ actions, but are not formally designed (Boettke, Coyne, & Leeson 2008, 335). The institutions that are the stickiest emerge spontaneously. If a foreign or domestic government enforces rules that already subscribe to the endogenous institutions they are successful and those that try to impose their legislation from top-down are not. 

CLB mention that the reason that reconstruction in Japan and West Germany succeeded was because both German and Japanese culture had a positive view of trade, market exchange, and democracy. The reconstruction in Bosnia failed because the political climate and the climate of private individuals were not aligned. In Bosnia there were numerous conflicting political interests and when democracy was trying to be exported from above there was no effort to try to get people’s interests to coincide. Different political institutions within the nation-state had different, and often conflicting, constitutions. The timing of the elections was rushed before there was grassroots support. (Boettke, Coyne, & Leeson 2008, 349).

The reason why Poland had a successful transition from a communist dictatorship into a more capitalistic government than Russia is because before the collapse of communism in Poland, the Poland government passed the “1988 Law on Economic Activity, which granted every Polish citizen the right to engage in private business” (Boettke, Coyne, & Leeson 2008, 351). In Russia, the reformers decided to immediately privatize 70% of state enterprises before allowing a gradual transition, where the cultural climate was not in sync and capable of transitioning to a more capitalistic society. It isn’t enough to privatize industries for capitalism to work. If the masses and the culture are not ready to adopt, one can’t force freedom on those not yet ready for it. Even when Poland was under communist rule the Poland government allowed some private businesses to operate, where none were allowed during the Soviet Union. People in Poland has some experience with seeing private enterprise operate and were more open to it, allowing for a successful transition.

Lansing studied the Balinese water temples. The water temples across Bali also were considered places of worship for the various gods the people of Bali worshipped. In the 1970s, the International Rice Research Institute decided to usher in the “Green Revolution” for the citizens of Bali, which would get rid of the backwards practices of rice production and replace it with rice that required fertilizer and pesticides. The government instituted this new policy by encouraging farmers to plant rice without taking account of the traditional irrigation schedule dictated by the gods. At first there was a boom in rice production but after a water shortage, there was an outbreak of rice pests and diseases (Boettke, Coyne, & Leeson 2008, 340). But the real problem was that the Balinese government failed to understand the implications of replacing having gods determine water irrigation with modern technology. Farmers did not understand the new system and could not adapt to new innovations and institutions. Imposed governance often fails to be reciprocal since legislation is based on authoritarian edicts, whereas spontaneous law is a result of “mutual benefit through exchange agreements” (Benson 1991, 53).

The above discussion highlights the importance in ideology in determining a successful society and not the rule of law. In a superstitious society where private property is considered an enemy of the gods, private property rights are unlikely to be respected no matter what law is passed. Many nation-states fail because government interests are at variance with the interests of the citizenry. 

Hayek distinguished between laws and legislation. Laws arise spontaneously and are not deliberately designed, whereas legislation is. Government legislation that goes against what people are used to is unlikely to be adaptable and succeed. For the supporter of the nation-state this means that government’s role is simply to enforce the law and not create it. If the role of government is simply to enforce preexisting laws which conform to cultural norms and expectations then the government’s role is not to determine the rules of the game, but enforce the rules which already exist. If a successful government’s job is not to create rules, but enforce them, this can also be done by private institutions. Citizens could pick their own defense agency and arbitrator instead of having one foisted on them. Furthermore, without a price mechanism there is no way for those in government to determine if they are doing a good job or not. It is also not clear how those in government ascertain that they are satisfying the people without the people demonstrating this by showing them that their actions which are successful generate a profit and those which are not generate a loss.

[Except from my article, "Anarchy: The Lesser of Two Evils," which can be found here: https://works.bepress.com/daniel_rothschild/10/]