Of the security and productivity of farmland -- and of other, less historically important forms of property -- which were more important? Many traditional historians take it for granted that military organization (often determined by military technology) determined social structure as well as the success of a society. Thus, for example, the theory that the stirrup gave rise to feudalism or that the longbow, the pike, or the gun ended feudalism. Many economists and scientists who study history take it for granted that crop productivity, primarily determined by ecology and technology, was more important to the success of a civilization or to determining its political, legal, and economic institutions. Both sides tend to think that institutions follow almost automatically from either the means of production or the means of security.

Neither view is correct. Productivity and security interact, and institutions are at least as important to determining that productivity and security as the reverse.

To flesh out this theory I will make some corollary hypotheses about the role of geography in neolithic, ancient, classical, and medieval warfare. Geostrategic patterns are the most striking but by no means only pieces of evidence for the property security theory. These particular patterns might not apply to modern warfare. This paper will focus on the protection of farmland and the protection of goods; these particular patterns probably do not apply to the protection of nomadic herds, the protection of information, or other kinds of property that were not central to the societies examined herein.

There are many mixed societies which combined farming, livestock, hunting, etc. in various ways and thus have various intermediate institutions. To most readily test the property security theory one must study the purer forms, i.e. societies where wealth was dominated by a particular kinds of property.

The Security and Productivity of Farmland

Perhaps the two most important factors contributing to a neolithic, ancient, or medieval civilization were the productivity and security of farmland. Over these times (almost all of recorded history) productivity and security (largely, but by no means entirely, involving warfare techniques and organization) were probably the two main factors determining the ownership (or more generally control) of farmland and thus the structure of an agriculturally dominated society.

A few historians have started analyzing the interaction between crop productivity and security in a variety of detailed ways, an approach I think may shed quite a bit of light on history. One common strategy of ancient warfare was to "devastate" enemy crops. Historian and grape grower Victor Davis Hanson has studied the vines, olive trees, and some grain varieties grown in ancient Greece and has shown that they could often withstand intentional destruction (burning, chopping, digging up, etc.) rather well. [H98] I further suspect that plants in most places and times were bred, not merely for their nutritional content, and not merely to withstand weeds and animal pests, but to withstand such assaults from human pests as well.

Furthermore, I hypothesize that the pattern of control or ownership of land, and thus property law (and political structure in general) will vary depending upon the interaction of agricultural productivity and security, and vice versa.

* There are some economies of scale in protecting farmland. An obvious economy of scale is that the area (a good proxy measure for value) of farmland increases as the square of the length of boundary that must be guarded.

* There are some diseconomies of scale in protecting farmland. An important diseconomy of scale is that it becomes more difficult to coordinate ever larger armies (the knowledge problem familiar to Austrian economists) and to coordinate the tax collection needed to fund those armies.

* There is a tension between the optimal size of a farm for the application of organizational labor and technology and the optimal size for military protection. If security needs become too great, the two can become mismatched and farm productivity will fall. If this is not to occur some military coordination between landowners is needed (this may be feudal, or democratic/agrarian as in the classic Greek polis, or a wide variety of other kinds of coordination including the modern state).

* Geographic features can help protect farmland, allowing its size and organization to be optimized for productivity. Which geographic features are important depends on the scale on which farmland is defended. During many eras of history (from large-scale feudal coordination to the state) such coordination has occurred on a large scale.

In Japan with its four large islands, Great Britain, Italy, Iceland, Ireland, and the Low Countries, ocean or mountain barriers or floodable lowlands allowed the costs of securing property inside those barriers to be relatively low. Besides the sea, mountains can also form effective geographic barriers, as can man-made barriers such as canals or the lowlands of the Low Countries when they are purposefully flooded. Complete or almost complete protection from invasion occurred where the barrier effectively prevented incursion from the military technology of the time (e.g. Iceland) or where there were sufficient military organization and technology (e.g. the British Royal Navy and the Japanese navy(s) in late medieval and early modern periods) to take advantage of a good geographical barrier. It was almost always far less expensive to protect a long seacoast with a navy than a long land frontier with an army. Contrariwise, this theory predicts agricultural productivity will be lowest in unprotected continental regions. Indeed, interior continental regions easily reached by horse tended to be given over to much less productive nomadic grazing. Another result was that both Japan and Great Britain industrialized in advance of their continental neighbors. Both Tokugawa Japan (and indeed also Meiji Japan) and Great Britain on the eve of the industrial revolution had extraordinarily low taxes and secure, yet flexible, property rights, made possible by the relatively low cost of securing the productive property of these islands from neighbor states.

* Geographical barriers have interacted with the geographical variations of climate to create some of the main geographical patterns of history. Inland areas tend to be drier, and that may explain some of the discrepancy in farming productivity. However, there are plenty of inland places (e.g. some parts of southern Russia, some temperate parts of Siberia, northern China, and southern Mongolia) that had good rainfall or potential irrigation or both, and good soils, and access to technology diffusion, yet lacked substantial fixed agriculture. Some of these on the European side are visible on the annual precipitation map to the left: darker means more precipitation. In general, except for the minority of drier climates (which however can be remedied by irrigation where rivers are available) and the most extreme wet climates, the correlation between agricultural productivity and rainfall is small and can be dwarfed by other factors. See also the global preciptiation map below.

Security constraints were probably the main factor that prevented the rise of fixed agriculture in inland regions unprotected by geographical barriers. The causation was not, however, one way. Dry climate can lead to low value per acre, thus making the security of farms uneconomic. Contrariwise, lack of geographical barriers can lead to insecurity rendering areas with otherwise good climate and soil uneconomic to farm. You can have microclimates that are very good for farming but very underutilized because the surrounding areas are only good for nomads and the area good for farming is not geographically secure from the nomads.
My thesis with respect to societies where wealth was predominantly farmland is about the productivity of land in relation to what could be expected from its soil and climate, not about the product per capita, which before modern times faced Malthusian limits almost everywhere. In polities with less personal security, where one had a higher risk of being killed by one's fellow man, it may often have been the case that Malthusian limits were often not quite reached, so that the survivors were on average somewhat wealthier. Our measure of interest is value per acre of property, which might be approximated by calories/acre, but then adjusted for natural advantages of climate and soil. The question is whether the security of the land led to its greater productivity as farmland, and the answer seems to be in the affirmative. Although there are many variables to security and many causal connections between security and the productivity of property, there is striking evidence that the most successful civilizations were also those whose farmlands were the most geographically secure.

Some of the inspiration for this theory of history comes from Adam Smith[S76]. He pointed out that there was a large mismatch between land ownership patterns that provided the best incentives to productively use the land and laws derived from feudal protection needs. Under English law there were a variety of kinds of land ownership, called "estates." Smith advocated straight ownership called "fee simple" that allowed land to be divided among children, bought and sold, and used as collateral. The two now curious but formerly common kinds of estates Smith observed and criticized were "primogeniture," in which land could not be divided among children but had to be devised to the oldest male, and "fee tail," or restraints against transferring the property or using it as collateral. In the Middle Ages land ownership was bundled with the ability to protect the land. The law thus prevented foolish heirs from dividing up their land into portions too small to protected. These restraints also protected the tenants who actually worked the land.

Smith, living on an island well protected by the navy of a single state, observed that England was moving away from that kind of ownership and advocated getting rid of it altogether, pointing out its economic wastefulness. As evidence Smith cited large tracts of poorly cultivated or entirely uncultivated land in farms still under those feudal property law constraints. Furthermore, we have seen the importance of the ability to use land as collateral. Collateralization of land probably occurred first on a large scale in late medieval Italy. This may be due to its greater adherence to the traditions of Roman law (in which land was divided equally among children and was freely transferable) as well as its relatively secure geography.

Sumatra, New Guinea, Madagascar, Australia, and New Zealand did not develop productive native agriculture to the heights of Britain and Japan. Much of Polynesia, and much of Melanesia such as the islands of the kula ocean trade routes, did have a rather productive agriclture. According to Jared Diamond and others, agriculture may be at at substantial disadvantages at the tropics due to leaching of the soil, warm-soil bacteria, and other factors, which may explain some of this. However, there is a greater difference between productive tropical regions (mostly small islands) and unproductive tropical continental areas than between the tropical optimium productivity and the optimum at cooler lattitudes. This is readily explained by the the security of property. Furthermore, due to smaller sizes of military organization and perhaps the state of military technology, the security perimeters optimal for agricultural productivity in Melanesia and Polynesia were smaller than for much of Eurasia. For example, the size of island optimal for securely protected agriculture was smaller than a New Zealand or a Sumatra, and so the smaller Melanesian and Polynesian islands, our theory predicts, were typically more productive than Sumatra or New Zealand.

The lack of development in Australia and New Zealand, and to a lesser extent these other islands mentioned, is also explained by simple lack of access to the advanced technologies and institutions of neighbors, which these islands generally lacked. Britain and Japan were in a happy medium of having good natural security perimeters while not being so isolated from the earlier centers of civilization that advances did not diffuse to them. Also, even Japan and Britain were not well protected until they became at least somewhat politically unified with indigenous navies. It's much cheaper at that scale factor to be protected by a navy and a "big moat" than to be protected by an army on a long land frontier, but there does have to be enough political unification to build the navy.

Having a very large empire can theoretically and sometimes in actuality lead to high agricultural productivity in the protected interiors, for which I'd give China and the Roman Empire as examples, but the larger the state the more political constraints -- what public choice theorists call "rent-seeking" and Austrian-type knowledge problems -- are faced, so this is a limited and complicated process of acheiving scale economies in farmland security.

Early Civilizations

The farmlands and granaries of the earliest civilizations were protected by geographical barriers. Rivers for irrigation and barge transport were necessary but not sufficient. The ancient cities of Sumer (see map) were nestled within the meandering arms of the Tigris and Euphrates (Ur may have been an exception, depending on the ancient course of the rivers. It may also have been a seaport; the location of the coastline is an estimate subject to large error). Egypt had no substantial threats on its desert sides and was protected by sea to the north. To the south it needed only to protect a narrow neck of river. The long, thin shape the farming region in lower Egypt allows large amounts of farmland to be secured with a very small border, as long as there are no substantial threats from the desert.

Protecting Nomadic Flocks

Nomadism, in its pure form, is dominated by a different kind of property, secured in a different way, and will thus tend to be associated with different military organization, political structure, and property laws, which in turn impact the productivity of that property, according to my theory. This paper focuses on two other kinds of property, farmlands and goods.

Origins of Agriculture

Climate-based explanations for the birth of agriculture are nonsense (like this one, via Marginal Revolution, which adds further nonsense about agriculture having originated around rivers). Their popularity stems from little more than the climate being an easily measured variable. There was plenty of good land quite suitable for agriculture in temperate climates (and, more importantly, in thousands of temperate microclimates) during the last Ice Age. There were many areas even during the coldest part of the Ice Age that satisfied the climate, soil, ecology, and other environmental requirements of early agriculture. They were just closer to the equator.

More likely explanations for the agricultural revolution are probably far less observable. The crucial role of security for the history of farming may also shed light on the birth of agricultural in the first place. Hunter-gatherers were very knowledgeable about plants and animals, far more than the typical modern. It would not have taken a genius -- and there were many, as their brains were as large as ours -- to figure out that you can plant a seed into the ground and it will grow. There must have been, rather, some severe institutional constraints that prevented agriculture from arising in the first place. The basic problem is that somebody has to protect that seedling for several months from enemies, and then has to harvest it before the enemy (or simply a envious neighbor) does. Security and allocation of property rights between providers of security and providers of farm labor were the intractable problems that took vast amounts of trial and error as well as genius to solve in order for agriculture to take root.

This would also explain how agriculture could spread from a single innovation yet look like independent inventions in the archaeological record. There were at least eight centers of secondary innovations (e.g. crop and livestock domestications and agricultural tools) that look independent: the Middle East, China, India, sub-Saharan Africa, Peru, central America, eastern North America, and New Guinea. But they all occured within a few thousand years of each other, after at least 100,000 years of anatomically modern humans. During these millenia humans were without agriculture despite large numbers of microclimates and microecologies suitable for agriculture during that entire period.

This indicates the slow spread (with many failed attempts and, quite likely, many reversals) of a primary innovation necessary for the use of these secondary innovations. The primary innovation had to be primarily cultural rather than genetic because it came long after the out-migration from Africa c. 80K-40K BP and was taken up by many of the genetically diverse results of that out-migration. Given what we know about the importance of cooperation, institutions, and security to the productivity of human economies, that innovation which slowly spread and made agriculture possible was almost surely an innovation in the culture of cooperation. Alas, the spread of such an innovation in oral culture can be observed at best indirectly in the archaeological record. This would put the origins of agricultural into the more general large patterns of history, the most important of which are based on the interaction between security and productivity.

Origins of the State

According to Mancur Olson[O00], the state emerged from competition between roving bandits and stationary bandits. Stationary bandits, Olson explains, will tax less and invest more in public goods than roving bandits because the future of a stationary bandit is tied to particular people and resources, usually territorially. If, for example, a public good costs less than 25% of its value to citizens, and 25% of that value can be recaptured as taxes, it will pay the stationary bandit to make that investment.

Although today many states provide alleged public goods such as Rawlsian insurance, the dominant public good historically provided by the state was large-scale security. This could include conquest of neighbors in order to increase the tax base as well as defense of ones own persons and property from such conquests.

In contrast to the stationary bandit, roving bandits tax very heavily, or just loot. They do not invest in public goods, they just move on. The stationary bandits grew, invested in security to protect against roving bandits and each other, and became states. Implicit in this theory is that there is some economy of scale in being a stationary bandit.

David Friedman has analyzed the legal system of medieval Iceland, which was essentially stateless. Polycentric rather than state law in medieval Iceland is explicable under a property security theory of state formation, and shows that state formation was the usual but not the inevitable consequence of the need to secure real property. Britain required a state (and in particular, a strong navy) to secure its farmland, while Iceland did not.

Iceland was remote from any continent and thus not (up until the point it became absorbed into the state of Denmark) substantially vulnerable to external invasion. Since it was small, only handful of neighboring property owners posed a threat from which an owner needed security. This reduced need for security meant that land could be smaller, more fitted to productive agricultural size. Thus there were more owners and fewer tenants. It was, furthermore, less risky to both owner and tenants to allow land to be divided and alienated. A more productive economy, both in terms of agricultural productivity (despite the very poor soil and very short growing season) and more market-like dealings in land was the result. Furthermore, there was little need for military alliances between property owners, thus preventing the formation of a large state. What disputes there were could generally be dealt with via Iceland's system of private prosecution.

A similar effect led to higher agricultural productivity than would be predicted by the climate and soil and more freedom for farmer-tenants in late medieval England. However, Britain's "moat" was narrow enough that it was not sufficient without a strong navy. England from the Norman invasion to modern times has been immune to invasion, partly because of its strong royal navy and partly because of the high costs of mounting a cross-channel invasion. England's neighbors Scotland and Wales were not major threats and were ultimately conquered or absorbed. Examples of the costs of invading Britain include the Spanish Armada's failure in 1588 and the futility of Germany's Operation Sea Lion in 1940-41 despite Germany having easily conquered France, Poland, Denmark, Norway, and the Low Countries. Similarly, mainland East Asians repeatedly failed to invade Japan.

As a result of its size, access to ancient legal traditions, and relative security, among other factors, England led the way in Europe towards rejecting entail and primogeniture, returning to Roman-style division and alienability of land, increasing the number of owners and decreasing the number of tenants, and allowing land to be used as collateral for loans and reinsurance.
Furthermore, agricultural productivity rose still further when the wars between Scotland and England cease and the island is united. Agricultural productivity in Britain rose in an unprecedented fashion in the 18th and 19th centuries following. A similar effect might explain the rise in industrial productivity and increase in organizational size during this period -- security makes investment in large fixed capital much less risky. During the same period of late middle ages to the 19th century, French lands, for example, were invaded dozens of times, war severely set back the development of German agriculture, and so on across the Continent. During the 17th cenutry German lands had to switch from wheat and barley to potatoes, which are more secure against devasation.

Alan McFarlane has previously pointed us to the unique cases of Great Britain and Japan, which both went through industrial revolutions well before their continental neighbors.

Secure Storage of Goods

We have seen how the ability of Japan and Britain to defend their farmlands from foreign invaders, via their island positions and strong navies, allowed them to have high farm productivities and use marginal lands between medieval and early modern times, despite unfavorable soils and climates. The productivity of property was greatly improved by the lowered costs of securing that property.

A similar phenomena occurred for commerce in commodities (including agricultural commodities after being harvested). However, here the optimal scales of defense are much smaller since stores of commodities, along with the persons who produce, deal in, and consume those commodities, require far less space than farmland. Thus during many eras cities were independently defensible areas.

Medieval city-states specialized in protecting goods instead of farmland. This allowed them to protect a much greater value of property with much less area. Their security perimeters could be far smaller than those of large farming-dominated feudal estates and kingdoms. Thus medieval city-states developed different military structures, different property laws, and a different form of government (the republic) than the farming-dominated feuds and states.

During the period 5300-4300 BC, Makrygialos[K04] in what is now Pieria in Greek Macedonia, was an oceanside center for production of shell collectibles. It was surrounded by series of ditches in nested concentric circles, the outermost ditch surrounding an area of 28 hectares. This is a pattern similar to that of the canals in medieval low country cities such as Bruges, Ghent, and Amsterdam. Most of the ditches were smaller than the medieval canals, but one of the inner ditches was up to 4.5 meters in width and 3.5 meters in depth. The ditches were in various places reinforced by walls of mud-brick or stone.

Genoa, protected by a wall on a mountain summit on one side and the ocean on the other.

In late medieval Europe cities became so independently defensible and had such different laws (specialized for commerce in commodities instead of agriculture) that they often became politically independent. Indeed, four of the most successful medieval empires, Venice, Genoa, the Lombard League, and the Hanseatic League, were either centered on such cities or were an alliance of such cities.Several medieval areas especially benefited from small defensible areas. Some, like Harlaam (yellow map, above) and Luebeck were situated on river islands. Others were protected by purposefully built canals. Genoa (topographic map, right) and some Swiss cities were protected by defensible mountain ridges. Perhaps the best protected medieval city was Venice. (See satellite image above. There have been some small changes since the Middle Ages -- some of what is now ocean was once swamp land and low-lying land with canals). From their small island base, Venice was able to withstand the various Dark Age invasions and become a Mediterranean superpower. Successful Low Country cities such as Bruges, Ghent, and Amsterdam were surrounded and criss-crossed by canals.

Secure Goods Transport

Canals and oceanside locations also extended the reach of shipment for commodities. Adam Smith estimated, for example, that transport from Edinburgh, Scotland to London, England was about out twenty times cheaper by water than by the same distance on land. The proportion over very long distances, such as from England to Asia, was greater still, due not only to the physical friction of land transport but because the many polities in between which extorted more taxes from the caravans than pirates and navies extorted from ocean shipping.

These routes, too, had to be secured. Merchants provided some of their own security using devices such as seals and bills of lading. Sometimes, as with the East India Company, they provided their own armed escort or hired mercenaries. Usually, however, they cooperated with feudal, royal, or state armed forces to provide armed escorts.

In the 13th century, Genoa and Castile allied, both with naval warfare and the Reconquista of the Iberian peninsula, to secure Gibraltar. The result was that Genoa and Venice were able to establish regular seagoing trade between Italy and northern European ports of call such as Bruges and London, substantially cutting costs versus the traditional cross-Alps routes.
Much of the effort of the Portuguese, Dutch, and English navies during the 16th through 19th centuries lay in securing a handful of strategic points between the Indian and Pacific oceans, through which silver and manufactures from Europe and India had to pass eastward, and spices from Indonesia and the manufactures of China had to pass westward. The most important such choke point was the Strait of Mallaca between Sumatra and Malaysia.

Today, strategic choke points are still important threats to the security of transport of goods, especially oil.

Organizational Form and Size

Securing of property almost always has required police powers (i.e. force and threat of force considered legitimate in the society), and police powers often, but by no means always, required a large military organization associated with a fued or a state. In many areas, for example medieval Iceland, land was owned alloidally, and was protected by the fighting skills of its owner or the owner's hired champion. The feudal era essentially started as alliances of alloidal owners and ended with a dominant feud, the state.

In other areas and eras, by the polis, small and often democratic groups deploying military technologies such as the phalanx, longbow, or gun that favored infantry. The ancient Greek polis , formed by groups of hoplite-farmers, was a small group for jointly protecting the property privately held by each member of the polis. The focus was on protecting the small farms of the polis from trespass and outright invasion. The Greek hoplite-farmers (or eleutheria, freeholders) developed military technology, such as the phalanx, and micro-democratic institutions in order to protect their small farms. (We get the word "democracy" from these ancient Greeks, but it's not to be confused with our modern form of macro-democracy. Greek hoplite-farmer micro-democracies often involved just a few dozens to hundreds of citizen-soldiers). [H98]

On the American frontier, for example in Kansas and Iowa, there developed claim associations. These micro-democratic property clubs enforced squatter's rights both in terms of protecting against interlopers and legally when it came time to convert the claim association titles into government titles.

For most of history military organizations were the largest organizations. They were the first organizations to exceed the Dunbar number. There was usually great pressure for military organizations to exceed the Dunbar number due to the economies of scale in securing farmland.

In the case of fixed property such as farmland and oil fields the need for military/police powers is extensive. Since farmlands have been the dominant form of wealth until quite recently large organizations have never been too far removed from the military organizations needed to secure that wealth. However, such an association is not necessarily going to occur where other kinds of property predominate.

Having a very large empire can theoretically and sometimes in actuality lead to high agricultural productivity in the protected interiors, due higher area/boundary ratio and thus lower cost of protecting an acre of farmland. China and the Roman Empire are examples. But the larger the state the more political constraints -- what public choice theorists call "rent-seeking" and Austrian-type knowledge problems -- are faced, so this is a limited and complicated process of acheiving scale economies in farmland security without having farming rendered unproductive by rent-seeking and knowledge problems. Internally, these large empires often developed modern alienable property rights in land, with ownership completely unbundled from security, except for some agrarian programs where land was redistributed to veterans.

In modern states, external threats have increasingly been protected against and many threats to the security of property come from the state itself, as its political apparatus gets captured by what public choice theorists call rent seekers. Furthermore, the large organizations that run these states face severe limits caused by limits to the distribution of knowledge. Furthermore, new forms of wealth such as information are becoming increasingly important, and the property laws for these forms of wealth are poorly matched to property rights enforcement costs. The state, which we currently assume is universal, is in fact a contingent product of the need to protect farmland. While farmland, and property with similar security properties such as oil fields and residential and commercial real estate, are still very important parts of our economy, our political forms are probably holding use back from developing better kinds of information property and better ways to secure it.

Property, Security, and Freedom

We have seen how Britain's island position combined with England's navy gave England an inherent geographical advantage when it came to the Western European wars over farmland.

Taking advantage of this relatively secure position, England was able to segregate its armed forces from its main jurisdictions, thus avoiding the fate of the Roman Republic. Roman "imperium" was just military jurisdiction under the Republic, until the martial law of Julius Caesar when it became the general jurisdiction (thus soon turning into the Empire, from which we get the Justinian Codes with their hierarhical procedures, derivatives of which are now widely used on the Continent, Japan, China, etc. -- the so-called Civil Law countries as opposed to the English-derived Common Law countries).

Medieval and renaissance England was able to segregate the Royal Navy from other major jurisdictions with Admiralty jurisdiction and with a group of largely independent municipal franchises[S05], the Cinque Ports, where ordinary royal court writs did not run. England also isolated its main jurisdictions from frontier wars by making hinterlands ("the marches") such as Wales and Durham Counties Palatine, which again operated without much interference from (or interference with) royal and other franchise courts. All this made for an often quite minimal standing army where royal courts and other franchise courts had jurisdiction, and there were serious political movements (especially the early Whigs) to eliminate standing armies in England and early America, a political stance that was probably unthinkable on the Continent (and, alas, unthinkable today). Legally it meant that the English military, almost uniquely in Europe, had very little influence on English legal evolution.

Many liberties developed in England as procedures required to prove a defense of legal authorization against a lawsuit aginast a royal official (or most franchise officials) for improper deprivation of life, liberty, or property. Not having to account for military needs, for example to shoot trespassers first and ask questions later, probably greatly enhanced the ability of England to develop standard and liberty-friendly procedures for its courts.

Recently scholars and writers ranging from Michael L. Ross[R01] to Thomas Friedman[F06] have pointed out how oil revenue tends to vary inversely with democracy and freedom. Their main theory for this is that oil revenues allow governments to boost their own power and protect themselves from irate citizens. This is particuarly the case when oil prices are high, as now, whereas lower oil prices tend to decrease government power and encourage freedom. Taxing citizens or their more diffuse property directly tends to encourage democracy movements, but pricy oil allows despotisms in today's Venezuala, Russia, Saudi Arabia, Iran, and elsewhere to avoid depending overly on such diffuse taxes for their power. (Historically, democracy tended to emerge, for example in England, by the need for kings to get the "consent" of the realm via Parliament to tax internal property).

What these scholars tend not to have focused on, however, is why governments derive so much revenue and power from oil as opposed to manufactured goods, information, or services. The answer lies in the legal uncertanties and the physical insecurity of investments in oil relative to other kinds of taxable property. Private property rights in oil have tended to be problematic, because of the novelty of the industry, because these legal structures were created during an era (early 20th century) when private property was unpopular in most legal circles, and because of the large ratio of initial capital investment to subsequent operating costs needed to extract the oil.

All mineral rights give rise to legal problems, due to the interferences (externalities) that occur between mineral rights and rights in the overlying land. Mineral investments tend to be insecure because of the large ratio of initial capital investment in discovery and development to subsequent operating costs. In other words, once the exploration companies do the hard work, it is easy for whoever has the political or military power to come along and steal the benefits. This ratio is far larger for oil in particular than for the farmland which we have seen historically was very dependent on large scale militiaries for protection, and it is high for minerals generally. Once most kinds of minerals, and especially oil, are found, they are far more vulnerable than other kinds of property to political appropriation. Legal uncertainties and the nationalist and socialist traditions surrounding oil encourage this in particular for oil. As a result, most oil deposits around the globe have been nationalized, and even where they have not been nationalized their extraction is usually subject to steep taxation. Michael L. Ross [R01] has shown that the inverse relationship between oil and indicia of freedom is "valid and statistically robust" and extends to states rich in other kinds of minerals, which share the large ratio of initial capital investment in discovery and development to subsequent operating costs. The security needs of oil and other mineral property, combined with the unwillingess of governments providing that security to forego the revenue windfall (for example by privatizing oil fields and not steeply taxing them), explains why this is so.


Many deep patterns of history, including striking geostrategic patterns and forms of government and property law, can be explained by the interaction between the security and the productivity of property. Our current political forms and property laws are designed primarily to secure farmland and goods. None of this, including the state itself, is inevitable, but rather is contingent on the form of wealth that must be secured in order to optimize productive generation and use of that wealth. Furthermore, information technology may revolutionize the security of goods. While traditional property is still very important, our political forms and laws are probably very ill-suited to securing information wealth. The bare outlines of how to secure information, and how to use information technology to secure goods, in order to optimize our productive generation and use of that information and of those goods, have barely begun to be recognized.
Many measures of governmental efficiency and political freedom tend to be lower in the interior of the Eurasian landmass and higher in penninsula areas and islands, reflecting the large and insecure land frontiers of the mainlands and the corresponding traditional dependence on and power of governments. Here is a diagram showing citizens' perception of political corruption in modern states. Compare, for example, Japan, Taiwan, Ceylon, and Great Britain against the rest of East Asia, India, and Europe respectively. Also note that both smaller penninsular areas (such as Maylasia and Korea) and larger semi-penninsular areas such as Western Europe and Scandinavia tend to have higher ratings than corresponding mainland areas with large land frontiers. Chile and Switzerland are protected by high mountains. Also note the persistence of political culture, especially in the English colonies of America, Australia, and New Zealand where there were no previous civilizations. The contrast between North and South America may reflect the cultural differences between Great Britain and the Latin countries during the era of colonialism, the earlier colonization of South America, the greater wars involved in the conquest of South than North America, or a combination of these. Spain had just prior to the colonial era been involved in hundreds of years of wars on the Iberian penninsula, the Reconquista, and in South America engaged in extensive wars of conquest, including against the empires of the Aztecs and Inca, which were far more unified and powerful than any tribe the British encountered in North America. On the other hand, there have been only a few minor wars within and no hostile invasion of Great Britain in the last 950 years. Our political cultures are the legacy of thousands of years of agricultural security, even though many of us no longer live in primarily agricultural societies.

[F06] Thomas L. Friedman, "The First Law of Petropolitics", Foreign Policy May/June 2006.

[K04] Dimitra Kokkinidou and Marianna Nikolaidou, "Neolithic enclosures in Greek Macedonia: violent and non-violent aspects of territorial demarcation" in Carman & Harding, eds., Ancient Warfare.

[H98] Victor Davis Hanson, Warfare and Agriculture in Classical Greece.

[M97] Alan McFarlane, "'Japan' in an English Mirror", Modern Asian Studies 31:4 (Oct. 1997).

[O00] Mancur Olson, Power and Prosperity.

[R01] Michael L. Ross, "Does Oil Hinder Democracy?"

[S76] Adam Smith, The Wealth of Nations.

[S05] Nick Szabo, "Jurisdiction as Property".
Copyright (c) 2005, 2006 by Nick Szabo

Earlier versions of portions of this article previously appeared on the author's blog, Unenumerated and on comments the author has made on various blogs.