The Origins of Political and Property Rights in Bronze Age Mesopotamia

by Giacomo Benati, Carmine Guerriero, Federico Zaina (University of Bologna)

The full paper from this blog is available here

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Mesopotamian map of canals. Available at <http://factsanddetails.com/world/cat56/sub363/item1513.html&gt;

Despite the overwhelming empirical evidence documenting the relevance of inclusive political institutions and strong property rights, we still lack a unified framework identifying their determinants and their interaction. We develop a model to address this deficiency, and we test its implications on a novel data on Greater Mesopotamia during the Bronze Ages.

This region developed the first recorded forms of stable state institutions, which can be credibly linked to geography. Worsening  climatic conditions between the end of the Uruk period (3300-3100 BC) and the beginning of the Jemdet Nasr and Early Dynastic periods (3100-2550 BC) reduced farming returns and  forced the religious elites to share power previously acquired from the landholding households, with rising military elites. This transformation led to the peasants engaging in leasing, renting and tenure-for-service contracts requiring rents and corvèe, such as participation in infrastructure projects and a conscripted army. Being an empowerment mechanism, the latter was the citizens’ preferred public good. Second, the Pre-Sargonic period (2550-2350 BC) witnessed a milder climate, which curbed the temple and palatial elites’ need to share their policy-making power. Finally, a period of harsher climate, and the consequent rise of long-distance trade as an alternative activity, allowed the town elites to establish themselves as the third decision-maker during the Mesopotamian empires period (2350-1750 BC). Reforms towards more inclusive political institutions were accompanied by a shift towards stronger farmers’ rights on land and a larger provision of public goods, especially those most valued by the citizens, i.e., conscripted army.

To elucidate the incentives behind these stylized facts, we consider the interaction between a land-owning elite and citizens able to deliver a valuable harvest if the imperfectly observable farming conditions were favorable. To incentivize investment, the elite cannot commit to direct transfers, but can lean on two other instruments: establishing a more inclusive political process, which allows citizens to select tax rates and organize public good provision, and/or punishing citizens for suspected shirking by restricting their private rights.  This ‘stick’ is costly for the elite. When the expected harvest value is barely greater than the investment cost, citizens cooperate only under full property rights and more inclusive political institutions, allowing them to fully tax the output. When the investment return is intermediate, the elite keeps control over fiscal policies and can implement partial taxation. When, finally, the investment return is large, the elite can also weaken the protection of private rights. Yet, embracing the stick is optimal only if production is sufficiently transparent, and, thus, punishment effectively disciplines a shirking citizen. Our model has three implications. First, the inclusiveness of political institutions declines with expected farming returns and is unrelated to the opaqueness of farming. Second, the strength of property rights diminishes with the expected harvest return and is positively related to the opaqueness of farming. Finally, citizens’ expected utility from public good provision increases with the strength of political and property rights.

To evaluate these predictions, we study 44 major Mesopotamian polities observed between 3050 and 1750 BC. To proxy the expected farming return, we combine information on the growing season temperature, averaged—as any other non-institutional variable—over the previous half-century and land suitability for wheat, barley and olive breeding (Figure 1). This measure is strongly correlated with contemporaneous barley yields in l/ha. Turning to the opaqueness in the farming process, we consider the exogenous spread of viticulture through inter-palatial trade. Because of its diplomatic and ritual roles, wine represented one of the exports most valued by the ruling elites. Regarding common interest goods, we gather information on the number of public and ritual buildings and the existence of a conscripted army. To measure the strength of political and property rights, we construct a five-point score rising with the division of decision-making power and a six-point index increasing when land exploitation by the elite was indirect rather than direct and/or farmers’ rights were enforced de jure rather than de facto. These two variables build on the events in a 40-year window around each time period.

Conditional on polity and half-century fixed effects, our OLS estimates imply that the strength of political and property rights is significantly and inversely related to the expected farming return, whereas only the protection of private property is significantly and positively driven by the opaqueness of farming. Finally, public good provision is unrelated to property rights protection but significantly and positively linked to the inclusiveness of the political process, and more so when the public good was the setup of a conscripted army.

These results open three crucial avenues for further research. First, did reforms towards stronger political and property rights foster, thanks to the larger provision of public goods, economic development (Guerriero and Righi, 2019)? Second, did the most politically developed polities obstruct the market integration of the Mesopotamia empires, pushing the rulers to impose a complex bureaucracy on all of them and extractive policies on the less militarily relevant ones (de Oliveira and Guerriero, 2018; Guerriero, 2019a)? Finally, did reforms towards a more inclusive political process foster the centralization of the legal order, i.e., reforms towards statutory law, bright-line procedural rules and a strong protection of the potential buyers’ reliance on their contracts (Guerriero 2016; 2019b)?

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Figure 1: Political and Property Rights, Public Good Provision and Farming Return.        Source: as per published paper

 

References

de Oliveira, Guilherme, and Carmine Guerriero. 2018. “Extractive States: The Case of the Italian Unification.” International Review of Law and Economics, 56: 142-159.

Guerriero, Carmine. 2016. “Endogenous Legal Traditions.” International Review of Law and Economics, 46: 49-69.

Guerriero, Carmine. 2019a. “Endogenous Institutions and Economic Outcomes.” Forthcoming, Economica.

Guerriero, Carmine. 2019b. “Property Rights, Transaction Costs, and the Limits of the Market.” Unpublished.

Guerriero, Carmine, and Laura Righi. 2019. “The Origins of the State’s Fiscal Capacity: Culture, Democracy, and Warfare.” Unpublished.

North, Douglass C., and Barry R. Weingast. 1989. “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England.” Journal of Economic History, 49: 803-832.

 

To contact the authors

Giacomo Benati (giacomo.benati2@unibo.it)

Carmine Guerriero (c.guerriero@unibo.it)

Federico Zaina (Federico.zaina@unibo.it)

When political interests block new infrastructures: evidence from party connections in the age of Britain’s first transport revolution

New research shows how party politics and connections slowed the diffusion of much-needed improvements in river navigation in Britain during the early eighteenth century. The study by Dan Bogart (University of California Irvine), which is forthcoming in the Economic Journal, reveals that modern concerns about powerful interests coalescing to block infrastructure projects that will benefit the wider economy are nothing new.

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Islington Tunnel in the early 19th century. Source: <http://www.islingtongazette.co.uk/news/a-look-back-at-regent-s-canal-history-200-years-after-plans-were-approved-1-1443464&gt;

 

The famous economist Adam Smith noted in The Wealth of Nations that landowners close to London petitioned Parliament against the extension of transport improvements because it threatened their rents. Was Smith right: do ‘downstream’ interests use their political connections to block ‘upstream’ transport improvements? The new research addresses this question in the context of river navigation, which before the development of canals and railways, was a key part of Britain’s early transport system.

A river navigation act established a company with rights to levy tolls and purchase land necessary for improvements in navigation. Through their statutory powers, navigation companies played a key role in the extension of inland waterways. Improved navigation lowered transport costs since freight rates by inland waterway were approximately one-third of the freight rates by road.

In light of their economic importance, it is significant that the diffusion of navigation acts was slow. It took nearly 50 years to extend navigation on most rivers in Britain. One immediate reason is that projects were proposed several times in Parliament as bills before being approved, and some were never approved.

In general, bills proposing infrastructure projects had high failure rates in Parliament. Opposition from interest groups was the most direct reason. Interest groups would appeal to their MP for assistance, and as this research shows, it was significant whether their MP was connected to the majority political party.

The Whig and Tory parties were in intense competition between 1690 and 1741, with the majority party in the House of Commons switching seven times. The two parties differed in their policy positions and their supporters. The Tories were favoured by small to medium-sized landowners, and the Whigs by merchants, financiers and large landowners.

This study is one of first to test empirically whether Britain’s early parties contributed to different development policies and whether they targeted supporters. The research uses new town-level economic, political and geographical data to investigate how party connections and interest groups worked in this important historical period.

The results show that the characteristics of river navigation supporters and opponents in neighbouring areas had a large effect on their diffusion. For example, more towns with roads in upstream areas (generally supporters) increased the likelihood of a town’s river bill succeeding in Parliament and more towns with harbours downstream (generally opponents) reduced the likelihood of the bill succeeding. Such factors were as important as project feasibility, measured by elevation changes.

Another important factor was the strength of majority party representation in neighbouring political constituencies. Having more downstream MPs in the majority party (a measure of opposition connections) reduced the likelihood of a town’s bill succeeding in Parliament and getting blocked from navigation acts. The identity of the majority party was also relevant. Whig majorities increased the probability of river acts being adopted.

These findings confirm the forces highlighted by Adam Smith and show that the institutional environment in Britain was not always favourable to rapid adoption of infrastructure. Interest groups were powerful and could block projects that went against their interest. The Whig and Tory parties contributed to the blocking power or bias from interest groups, although the Whigs appear to have been more pro-development.

More generally, this case focuses attention on the distributional effects of infrastructure and efforts to block projects. Political connections matter and can have important economic consequences.

‘Party Connections, Interest Groups, and the Slow Diffusion of Infrastructure: Evidence from Britain’s First Transport Revolution’ by Dan Bogart is forthcoming in the Economic Journal.