1In this ambitious work, which stands at the crossroad of Public Choice and New institutional Economics, Mehrdad Vahabi relies on the concept of predation to revisit the analysis of the genesis of the state, states conflict and the transition from autocracy to democracy.
2Notwithstanding the introduction, the book begins with a long chapter (chapter 2) on the meaning of predation, in which the author displays an impressive level of erudition (be it on anthropology, ethology, history or philology). After having discussed the source of human violence, the author concentrates on manhunting, and more specifically on slavery, which is a particular form of domestication (slaves are considered as human chattels).
3Animal domestication, the author argues, developed in two steps. In the first stage, inclusive predation (that is, capture and protection of the prey) is preferred to exclusive predation (i.e., killing the prey for nutritional purposes) when the prey (the big mammals) became scarce. In the second step, domestication (and the transformation of the prey into human property) was a domination technique invented by humans to economize on the costs of inclusive predation. In other words, the prey (or a slave) may be saved if the cost of his protection is less than the price of protection (here price stands for value). The hunter/protector will try to maximize the tribute (i.e., the difference between the value of protection and its costs). This idea relies on a certain rationality assumption: as the author puts it “homo œconomicus was not born in the market but in hunting.” This chapter is an interesting read, but I would have appreciated that the author relates his ideas to the burgeoning economics of prehistory (Greg Dow’s website is a useful reference for this new literature).
4The next chapter (chapter 3) considers manhunting in general, i.e., all forms of conflict in which there is a radical asymmetry of power between the contending parties to the point that one behaves as predator and the other as prey (95).
5A major claim of this chapter is that power asymmetry is neglected in modern contest theory (99). Likewise, the author claims that domination is totally discarded in mainstream economics (and insufficiently tackled by the economics of conflict). This may be so. It seems to me, however, that contest theory can go a long way to study asymmetry by considering Stackelberg equilibria. Moreover, principal-agent models can be helpful in the analysis of domination.
6A significant part of the chapter is devoted to the economics of exclusive manhunting, and focuses on the so-called pre-emptive wars in Afghanistan and Irak. The author argues that these wars benefited private interests (through what he calls destructive creation: war destruction affords new opportunities for reconstruction). He then deepens the analysis of exclusive manhunting by considering absolute and differential protection rents. According to the author, many countries pay an absolute protection rent to the USA (Gulf states are a case in point). It is not clear to me, however, why a protection rent should be considered as an example of exclusive manhunting. As for differential rents, the clearest explanation of this notion appears p. 146: “While the American superiority is challenged by its potential rivals, ... , in many industrial branches, the military preeminence of the United States gives it the opportunity to sabotage their advantage by capturing an increasing share of the market.” As a matter of fact, I am not completely convinced by the relevance of this example. Indeed, many potential rivals are also protected by the United States. In this connection it is not at all clear that Europe and Japan pay all the cost of their protection (if only because this protection depends on US nuclear weapons).
7The chapter ends with a study of inclusive manhunting. This part comprises an analysis of anti-predatory strategies. A buyer of protection who lives in country A flees to country B if the cost of the flight is lower than the difference between the protection prices in country A and country B. Interestingly, the buyer of protection may also take refuge in a zone outside of his own national territory if the sum of the costs of the flight and self-protection is lower than the protection price in country A.
8Chapter 4 contains interesting discussions of the paradox of war (war is a priori an inefficient way to redistribute resources, so why do countries go to war?), as well as the dubious Political Coase Theorem (this issue is also addressed in chapter 5, which overlaps chapter 4 in part).
9The author’s thesis is well summarized by this assertion drawn from the conclusion of the chapter: “War is about predation and this explains why both or one of the contending parties may attach more value to the prolongation of war than to its termination.” The author may attach too much importance to this last fact. For sure, some “groups have an interest in waging wars”, nevertheless, wars do stop (as the author reminds us following Blainey, war is part of a bargaining process).
10Chapter 6 focuses on the economics of the State space. To tackle this issue the author introduces and examines in depth two properties of assets, namely, mobility and appropriability. This leads him to propose four major categories of assets: pure escape assets, mixed escape assets, mixed captive assets, and pure captive assets (243). The author convincingly argues that: “[t]he major question is not whether they [the assets] are movable but whether they are easily subject to confiscation.” (Brackets added)
11The author then considers what he calls the demand and supply sides of the protection market.
12“What determines the demand of protection? This demand strongly depends on the integration of the population detaining mixed assets”(261). Staying in a given country (i.e., demanding its protection) depends on the value of the exit option (that is, on the comparison of the costs and benefits of exit). This exit option is the sum of the differential rent (the difference between the price of protection in the home country in the foreign country) plus the net difference between the income per capita across countries, minus the displacement, conversion and legitimacy costs.
13The supply of protection is considered next. Among its determinants is the amount of absolute rent or tribute that could be appropriated by the use of confiscatory policy. Formally this tribute is equal to the difference between the market exit value of an asset and its non-market exit value, i.e., its booty value (235). According to the author, “[t]he appropriability is a process of transformation of an economic asset into a booty; the main issue is, then, how the booty will be converted back into an economic asset.” The author further distinguishes two cases. In the first case, the protection price is low so the holders of mixed assets (who represent a fixed share of the population) do not exit. In the second case, dubbed destructive coordination, coercion is used “to entrap captive assets with an objective of maximizing protection racket [i.e., absolute rents]” (275). In this last case, the author considers that there is a fixed monopoly price (of protection) and an inelastic supply curve (given the author’s assumptions, one may wonder why complete expropriation does not occur). The author does not address the equilibrium value of the price of protection, nor does he consider the interactions between several states (or refer to the literature on tax competition, e.g., Wildasin, 1988). These interactions, however, are studied in Petri et al. (2016).
14The chapter ends with an application of (a subset of) the concepts introduced in the chapter to a compelling study of the indeterminacy of property rights in the Islamic Republic of Iran.
15The aim of the last chapter (chapter 7) is to explain the transition from autocracy to democracy. This transition is interpreted as the evolution from a sellers’ market to a buyers’ market for protection.
16Vahabi defines authoritarianism as a seller’s protection market (where buyers of protection compete to have access to protection). When exit is limited, so is price competition between protection providers. In that case, to increase their “market shares” these providers resort to coercive rivalry (324). Democracy, by contrast, is characterized by a buyers' protection market. Sellers’ competition is warranted by political contestability and leads to a low protection price.
17According to Vahabi, the transition from tyranny to (limited) democracy is supported by capitalists and bourgeoisie (this is in part due to the fact that capital is the most mobile factor at international level). Full democracy, in turn, “was imposed on property owners by threat of scream power of working classes” (330) (in exchange for ending the revolutionary threat). This last conclusion probably overlooks the impact of ideas (such as the Enlightenment—see Tocqueville’s work on the incessant demand for legal equality).
18Given the scope, breadth and ambition of this very original book, criticisms of Vahabi’s work are unavoidable. Still, Vahabi’s approach can be used in many fruitful ways. While the author endeavors to further study classical warfare, with symmetric contending parties, his approach may be used to understand the rise and the fall of the USSR (the economics of the escape from the iron curtain comes to mind), or the rise of new Russia.