All of this implies that the Despotic Leviathan may create better economic opportunities and incentives than Warre or the cage of norms. It may even organize society, structure laws, and make investments so as to directly stimulate economic growth. This is the essence of what we call “despotic growth.”
The history of the Islamic state illustrates this type of growth clearly. Compared to the warring clans that had previously dominated Medina, Muhammad’s ability to resolve disputes and enforce his laws spurred economic activity. Property rights became more secure for the Medinans as Muhammad’s state prevented disputes from escalating and after his unification of the Arabian tribes put a stop to raids. The same factors also facilitated trade. As we have just seen, this proto-state organized new public infrastructure investments, including dams, underground canals, and other irrigation facilities. Agricultural productivity increased greatly as a result. All in all a far cry from where Medina was heading before Muhammad’s arrival.
Yet in the same way that the Leviathan is Janus-faced, so is despotic growth, and Khaldun understood this very perceptively as well. He recognized that the despotic state, lacking any popular control or mechanisms of accountability, is bound to concentrate more and more political power in its hands. With more power comes greater monopolization of economic benefits, greater temptation to violate the property rights that it was meant to protect, and a creeping slide along the Laffer curve toward the place where the tax rates and the risks of expropriation are so high that not only citizens’ livelihoods but even the state’s tax revenues start to suffer. Khaldun in fact saw this stage, where the state turns against society, as inevitable. This not only meant that the fruits of despotic growth would ultimately dry out, but also that the anticipation of the fearsome face of the Leviathan would undercut the benefits it generates even sooner than that. In Khaldun’s poetic language, this meant:
Like the silkworm that spins and then, in turn
Finds its end amidst the threads itself has spun.
A second reason why despotic growth will be limited is equally fundamental. As we emphasized in our previous book, Why Nations Fail, sustained economic growth necessitates not just secure property rights, trade, and investment, but more critically, innovation and continual productivity improvements. These are much harder to usher in under the stern gaze of the Despotic Leviathan. Innovation needs creativity and creativity needs liberty—individuals to act fearlessly, experiment, and chart their own paths with their own ideas, even if this is not what others would like to see. This is hard to sustain under despotism. Opportunities aren’t open to everybody when one group dominates the rest of society, nor is there much tolerance for different paths and experiments in a society without liberty.
Indeed, these are the reasons why we argued in our earlier book that “extractive growth,” a close cousin of what we are calling despotic growth here, is limited and is highly unlikely to become the basis of sustained, long-term prosperity. We illustrated this limited nature of extractive growth with several examples, the simplest being the rise and fall of the Soviet growth miracle. The Soviets could organize the economy to pour resources and huge investments into manufacturing and subsequently into the space race and military technologies. Yet they could not generate sufficient innovation and productivity improvements to keep their economy from stagnating and then collapsing. This example underscores the fact that extractive growth results when a ruler who is constrained neither by institutions nor society finds it in his interest to support growth. But even when this is the case, the ruler will not be able to organize or command innovation. Nor will he be able to secure a broad-based distribution of opportunities to make best use of the creativity of the people. It’s the same with despotic growth called into existence by the Despotic Leviathan, without any popular control, active participation by society, or true liberty.
The Law of the Splintered Paddle
The benefits of despotic growth for state builders were well understood by Kamehameha as he was unifying the Hawaiian islands. The first law he passed after his final conquest was the Law of the Splintered Paddle. This read:
Oh my people, honor thy gods;
respect alike [the rights of] men great and humble;
see to it that our aged, our women and our children
lie down to sleep by the roadside without fear of harm.
Disobey and die.
This law has been seen to be so significant in the history of Hawaii that it was incorporated into the 1978 State Constitution, Article IX, Section 10, of which reads:
Public safety. The law of the splintered paddle, mamala-hoe kanawai, decreed by Kamehameha I—Let every elderly person, woman and child lie by the roadside in safety—shall be a unique and living symbol of the State’s concern for public safety.
The State shall have the power to provide for the safety of the people from crimes against persons and property.
The law’s original intention was to indicate that the new state would not tolerate unprovoked attacks on people or property. The name of the law referred to an incident in which Kamehameha, as a young warrior, was engaged in a raid on the Puna Coast, on the southeastern side of Hawaii Island (see Map 6 in the previous chapter), and decided to attack some fishermen to take their catch. Jumping out of his canoe onto the shore, Kamehameha got his foot caught in a crevice of lava, and seeing this, one of the fishermen had the courage to come up and hit him with a paddle that splintered on impact. The title of the law indicates that Kamehameha later realized that the attack had been wrong, and he signaled his intention to eliminate such behavior.
He was worried about unprovoked attacks not just against the persons and property of indigenous Hawaiians, but also against foreigners. He realized that the prosperity of his new island kingdom rested on increased commercial relations with the outside world. During the unification of the islands an active trade in the provisioning of foreign ships had developed, yet this was continually threatened by hostile acts. Hawaiians were particularly fond of stealing the anchors of foreign vessels. In the previous chapter we saw that the chain of events that led to the death of Captain Cook had been initiated by the theft of a cutter from Cook’s flagship. As early as 1793, Kamehameha had declared to a Mr. Bell, a member of the explorer George Vancouver’s expedition to the islands,
his most solemn determination never to molest or disturb the weakest vessel that comes to Kealakekua, or where he himself is, on the contrary to do everything he can to make their stay among them comfortable.
Kamehameha was serious about this and about galvanizing despotic growth. Soon he managed to overcome the reticence of foreign traders to come to the islands. The potential economic benefits were substantial, and Kamehameha aptly took advantage of them. He monopolized foreign trade by introducing new kapu regulations to stop common people from engaging in trade with foreigners. He cornered the market so successfully that he was able to choose the terms of trade with foreigners, setting high prices for the supplies they needed to provision their ships. Such provisioning was lucrative, but Kamehameha soon realized that there were even better profits in the export of sandalwood. In 1812 he signed a contract with Boston ship captains the Winship brothers and W. H. Davis, under which he had the monopoly of sandalwood exports from Hawaii. The agreement was to last ten years and Kamehameha personally took one quarter of all profits. Ibn Khaldun would have noted that this arrangement wouldn’t bring prosperity for long. It didn’t, and in exactly the way Khaldun would have anticipated.