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A Concert of Civilizations

negotiation among bounded regions of reduced transaction costs

In this portion of a posting by James C. Bennett to the "Albion's Seedlings" blog (slightly edited here) he introduces the phrase, a "Concert of Civilizations". A short way into the original posting, at

the following question is raised:

Why should international law be considered superior to the national law of a democratic, constitutonal state with a well-defined concept of human rights and a well-established track record of popular support for the same?

Bennett continues, and finally proposes the idea of "A Concert of Civilizations":

In answering this, it's useful to clarify assumptions about why various kinds of states exist, and what is the nature of the rule sets governing relations within them (i.e., the province of national law) and between them (i.e., that of international law). Can the metaphor of law, that is to say national law, even be extended usefully to cover the rules governing behavior between states?

Ronald Coase illuminated the nature of the corporation and the role of transaction costs in economic relations by asking the simple question "Why does the firm exist"? If, as generally understood, market mechanisms are efficient means of allocating economic resources, why are they not used to allocate resources within the firm? In actual fact, market-based alternatives to the firm were legally available throughout the period of the firm's rise, yet the firm emerged as the organizational form of choice for almost all business activities. Coase theorized that the firm's role was to act as a zone within the wider matrix of market relations in which the transaction costs imposed by use of market mechanisms (for example, the time and attention required to negotiate or auction use of resources) were avoided by use of other means (rule-based allocation, direct management allocation, or some combination thereof).

Can similar insights and understandings about the nature of the nation and nation-state be obtained through asking "Why does the nation exist?" in a Coasean vein.

Let's examine the possibility that such might be the case. Just as the firm may be viewed as a zone of non-market relations within a wider framework of market relations, in which transaction costs are locally minimized, the nation-state may be viewed as a zone within a wider framework of negotiated relations (i.e., international space) in which transaction costs are sufficiently minimized to permit market relations to flow efficiently. Thus, three scales of endeavor, and their respective regimes, can be thought about: The firm scale, in which relationships are sufficiently localized to permit individual management allocation or rule-based allocation of resources; the national scale, in which relationships are too generalized and decentralized to permit individual allocations or rule-based allocations to act efficiently, but in which the role of the state as generic framework setter and enforcer permits market transactions to flow with tolerable transaction costs; and the international scale, in which interactions are fundamentally anarchic (while mediated by partially effective reciprocal agreements and minimal international standards and practices) and in which nations exist as local zones of lower transaction costs. Because the total number of international zones or actors are quite finite, resources and relations between nations can be managed by negotiation.

The key to this tripartite scheme of relational frameworks is the problem of knowledge as it affects transaction costs, and the effects of scale on the desirability of various types of relations. In small permanent groups of people, where the personalities and histories of the individual actors are well-known to all, negotiation and individual judgement permit a relatively efficient and satisfactory resolution to most disputes. Even rule-based systems (as in corporate bureaucracies) can be tempered and made to work effectively by good judgement, which accounts for the high value placed on managers with good judgement and interpersonal skills. At some size of unit, or velocity of turnover, this system breaks down and the inability of such managers to know people sufficiently well prevents effective management. Particularly in political systems, where the solution of dismissal is not readily available, tools for dealing with the problem of information stochastically begin to offer more effective solutions. Thus, mechanisms such as the unanimous jury trial or the exclusionary rule, which tolerate some imperfection of outcome, are preferred because on average they produce better results than purely rule-based or personality-based systems.

Thus the state as an institution becomes a framework for creating a zone in which transaction costs are higher compared to those in a smaller group, such as a firm, but lower than a global-scale regime in which there are insufficient commonalties of understanding of rules to permit state institutions to effectively lower transaction costs of adjudication and recourse. Understood thus, we can then examine types of states: nations, empires, and multinational confederations, with the objective of determining which type most effectively lowers transaction costs in its internal areas. Because of the substantial transaction costs historically imposed by language and culture, the initial hypothesis is that nations that are relatively homogenous in these regards have historically enjoyed fewer internal transaction costs, and thus have proven more competitive than other state forms. This may form an explanation for the dominance of the nation-state as an institution over the past four centuries. Various types of states typically categorized together as "nation-states" will also be differentiated, such as the organic or "Herderian" concept of the nation as opposed to the looser "Anglo-Saxon" concept of the state, sometimes (inaccurately) known as the "night-watchman" state, but which is more accurately called a state-nation.

Finally, this analytical framework, if validated, has potentially important consequences for international law and the search for peace, order, and prosperity on a global scale. Since at least the Renaissance, two opposed ideas of international order have been contending in Western (and now global) thought. One is the traditional or Westphalian schema of sovereign and independent states (now with an institutional bias toward nation-states) linked by an international law that is fundamentally a set of heuristics or rough rules of thumb for guiding international actions, a sort of mitigated anarchy, and the other is the vision of an enforceable international law with some form of collective sovereign. The latter vision essentially takes the mechanisms used internally within states, and attempts to apply them to enforcing decisions on states, with the ultimate goal of using the transaction-cost reduction mechanisms at national scale to create a uniform and global transaction-cost reduction zone. The questions of scales of actions and transaction costs will be used to evaluate the applicability of both systems. The critical question is whether nations should be treated as actors within each of which different sets of understanding prevail, (and in which case we are thus dealing with an international system having perhaps two or three hundred actors) or whether nations become essentially administrative adjuncts whose populations collectively follow a single set of rules and understandings.

Even if the former assumption remains true, an international order is not precluded. However, it would be an international order founded firmly on the idea that nations remain the collective boundaries of transaction-cost reduction areas, and that the scale of international relations, negotiation and individual knowledge (in this instance, of national officials) remain the primary tool for resolution of questions. In particular, the small number of actors suggests that stochastic solutions (such as rules of procedure used in criminal trials) remain inappropriate for international action, because the actors cannot tolerate the costs of such a framework. A city of a million people can tolerate the acquittal of some number of burglars on procedural grounds, but a community of, say, one hundred cannot permit a known thief to remain among them without consequence, and typically, one or another informal solution is found to deal with such a situation. The case of one genocidal aggressor remaining in power in a world of two hundred sovereigns is more akin to the latter case than the former, I would suggest.

What is of interest is the examination of various systems by which transaction costs are broken down across state borders short of a universal solution. In particular, the question of how nations with very similar internal means of transaction-cost lowering can create bilateral or multilateral structures for creating a merged zone of transaction-cost reduction without fully merging the nations in question is of interest, and may hold the key to the basis of an effective international order that resolves problems never adequately addressed by the Westphalian system, but without the very problematic issues raised by the various Kantian systems of universal jurisdiction. We should explore such an order, with the ultimate goal of, rather than a universal government, a "Concert of Civilizations" in which the various national and civilizational means of transaction-cost reduction are gradually bridged by international collaborative and cooperative structures, many of which could have roots in existing institutions such as free-trade areas.

We should not be forced to choose between a universal legal system of personal jurisdiction based, not upon the consensus of a particular society and its history (as there is no such consensus on a global basis), or a cynical and amoral international order in which the sacredness of national borders is the only rule. I believe another solution is both possible and desirable. At the moments, the Hegelian proponents of a global order have the upper hand in the perceptions of many ... . There is a need for an active alternative to that concept of order, which is fundamentally anti-democratic and subversive of freedom and self-determination. A Concert of Civilizations is such an alternative.

Posted by James C. Bennett at December 21, 2005 06:20 PM

For the full context which inspired the above posting see the original blog entry at:

See articles by Bennett on the site of Hudson Institute:

Articles & Publications by James C. Bennett, Adjunct Fellow
entered before July 9, 2006

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