In the Shadow of Violence: A New Perspective on Development

Abstract

This paper extends the North, Wallis, and Weingast (2009) framework for understanding the problems of development. Our approach distinguishes two development problems that are normally conflated. Most approaches to development focus on the second problem, namely, the transition of societies from limited access orders (LAOs), which limit access to organizations, to open access orders (OAOs), which allows any body to form an organization. In contrast, the first challenge involves the development of LAO societies toward forms of organization that enable more economic output, reduced violence, stable political outcomes, and greater individual well being within the LAO framework. Most World Bank borrowers face the first challenge.The control of violence is central to the logic of all LAOs and is therefore at the heart of the problem of development. Because the traditional economic framework fails to understand that LAO’s are organized to prevent violence, its policy recommendations usually fail to produce development and sometimes exacerbate the problem. Indeed, the Washington consensus of the 2000s is dominated by efforts to embed institutions of open access orders – property rights, entry into markets, elections, and institutions of good governance – directly into limited access orders. These efforts focus on the second development problem, not the first; they are therefore miss-targeted. Instead, our approach provides specific implications of the approach for development policy in four areas: rents and market constraints, organizations, democracy and elections, and organizations with violence capacity.