A Theory of the State: Economic Rights, Legal Rights, and the Scope of the State.

• Author: Vanberg, Georg
• Position: Book Review

By Yoram Barzel Cambridge, U.K.: Cambridge University Press, 2002. Pp. xiii, 289. $22.00.

In his new book A Theory of the State, Yoram Barzel aims to "explain how `the state' first emerged and to describe the forces that have shaped it over time" (p. 1). The book defends three central theses. The first contends that "the state" is created consciously as a violent third-party enforcement mechanism designed to facilitate agreements that are difficult to enforce using other mechanisms. Second, individuals will allow the emergence of such an enforcement mechanism only when additional safeguards have been put in place that mitigate the risk that this violent enforcer will abuse its powers. Finally, the precise definition of legal rights that the state will enforce depends critically on the transaction costs involved in delineating rights and adjudicating disputes. Barzel's argument is engaging and provocative. Nevertheless, I do not believe that he succeeds in providing the persuasive theory of the emergence of the state that he promises. After presenting an overview of Barzel's argument, I return to some of the shortcomings of his analysis.

The starting point for Barzel's theory is the Hobbesian jungle, in which individuals act independently and in the absence of organized power. In this state, humans' natural abilities will bring forth a distribution of goods over which individuals can exercise control. This distribution defines the "economic rights" (in contrast to the "legal rights") that individuals enjoy. Most interactions in such a state initially consist of aggression and resistance as individuals clash over possessions (p. 17). However, individuals eventually recognize and exploit opportunities for exchange, thereby bringing a novel problem to the fore. In many situations that provide opportunities for mutual gain by trade, exchange cannot be completed simultaneously. Similarly, in many cases, the quality of traded goods is not immediately observable. As a result, successful trade may require an "enforcement mechanism" that ensures that both parties "live up" to their side of the bargain, either by delivering previously promised goods in the future or by providing goods of a promised quality.

Individuals might rely on two alternative enforcement mechanisms: self-enforcement through reciprocity in long-term relations or enforcement via a third-party that can impose costs on the parties to an exchange. Barzel argues that individuals face...