The Origins of Political Institutions and Property Rights.

53 Pages Posted: 14 Jun 2019 Last revised: 15 Jul 2022

See all articles by Giacomo Benati

Giacomo Benati

University of Barcelona - Economic History

Carmine Guerriero

Department of Economics, University of Bologna

Federico Zaina

Università di Bologna - Alma Mater Studiorum Università di Bologna

Date Written: November 5, 2019

Abstract

We study the possible cooperation between nonelites exerting an unobservable effort and elites unable to commit to direct transfers and, thus, always assure the nonelites' participation. The elites can, however, incentivize investment by granting to the nonelites strong property rights to the input and a more inclusive political process, which entrusts them with control over fiscal policies. Adverse production conditions force the elites to enact strong nonelites' political and property rights to convince them that a sufficient part of the returns on joint investments will be shared via public good provision. These reforms assure cooperation. When, instead, the expected investment return is large, the elites keep control over fiscal policies but refrain from weakening the nonelites' property rights, while strengthening their own, if the production conditions are sufficiently opaque. Then, the expected cost of providing the extra public good guaranteeing the nonelites' participation is too large. These predictions are consistent with novel data on 44 major Mesopotamian polities observed for each half-century from 3050 to 1750 BCE. While a lower growing season temperature favored a larger division of the decision-making power and stronger farmers' use rights to land, only the latter are related to the diffusion of the very opaque viticulture. In addition, only the inclusiveness of the political process fostered the provision of public and ritual buildings as well as conscripted armies. Crucially, our results are robust to considering the trade potential, the severity of conflicts, and the degree of urbanization.

Keywords: Geography; Time Inconsistency; Opacity; Inclusive Political Institutions; Property Rights.

JEL Classification: O13; H10; D23

Suggested Citation

Benati, Giacomo and Guerriero, Carmine and Zaina, Federico, The Origins of Political Institutions and Property Rights. (November 5, 2019). Available at SSRN: https://ssrn.com/abstract=3395353 or http://dx.doi.org/10.2139/ssrn.3395353

Giacomo Benati

University of Barcelona - Economic History ( email )

Diagonal 690
Barcelona, Barcelona 08034
Spain

Carmine Guerriero (Contact Author)

Department of Economics, University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

Federico Zaina

Università di Bologna - Alma Mater Studiorum Università di Bologna ( email )

Bologna
Italy

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