Abstract

In order to maintain order, all societies allocate resources to defence, policing, surveillance, contractual monitoring and other activities that sustain the property rights and other claims that characterise status quo institutions. Transfers of resources among members of a society also contribute to the maintenance of social order. We model the growth in a modern capitalist economy taking explicit account of the problem of social order, and borrowing themes from the classical economists (unproductive labour, profit-driven investment), Marx (the labour-disciplining effect of unemployment), and the contemporary theory of incomplete contracts (the role of monitoring and enforcement rents). We use this model to identify the resources devoted to the maintenance of order, which we term guard labour, as we measure these in labour units.

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