INTRODUCTION

While much has been written on political extremes, little is theoretical, in economics or politics. Moreover, notwithstanding appearances, the term “extremism” is far from unambiguous. A conceptual chapter on this subject, sui generis, entails brainstorming, and delineation. As “necessity is the mother of invention,” so it will be here. Specifically, my charge is to determine what an economist, neoclassically trained, but with a more than passing understanding of the public choice canon, can contribute, qua economist, to our understanding of political extremes and political extremism. The discussion focuses, in the main, on the relevance of political extremes to modern democracies, in which they exist on the margins of politics; but the argument extends, as appropriate, to autocratic systems.

The place to begin is by searching out, conceptually, the meanings of these terms, often used loosely as synonyms for many things, sharing but the distaste of the observer. If nothing else, the concepts in question are decidedly relativistic. Neither moderation nor extremism can be assessed, much less judged, as simple rhetoric, absent a suitably defined reference point. To be meaningful they require contextual bounds. After all, what is reason to me may be irresponsibility to you. But this does not take us very far. Fortunately, moral absolutes lurk in the background.

PRELUDE

There are at least two possible approaches to the issue of political extremism. One is to study the operation of groups that are considered on some independent grounds to be extremist – perhaps in terms of the methods they use – and that see themselves and/or are seen by others to be broadly political in some meaningful sense. Thus, we might study the behaviour of the Red Guards or various of the nineteenth-century Russian anarchist groups for whom violence was an explicit tool in the pursuit of their political agenda. And we would distinguish such political terrorism from violence used by organized groups for merely criminal purposes. All such groups are extremist in method. Only those who have an explicit political agenda would be classified as relevant to political extremism. The reference in such a classification would be to the methods such groups use. Whether their political ends are extreme, and how indeed we would identify extremism of political ends, are separable questions. It is these latter questions with which I shall be concerned here. And I shall be concerned about them in a narrow, though not unfamiliar, context – the context of equilibrium outcomes in standard rational actor models of democratic political determination. Part of my reason for taking this approach is that this is where my expertise, such as it is, lies. But there is another reason, one perhaps more defensible.

INTRODUCTION

The “clash of civilization” is one of the most recent intellectual ghosts haunting the imagination of Western peoples. The expression has been coined by the political scientist Samuel Huntington (1993), who sees the impending danger of a world conflict in the clash of two opposing cultures, the Western and the Islamic. Evidence for this theory is found in the increasing consensus that accompanies the Islam-inspired political movements that have spread in the Arab-Islamic countries since the 1970s. These movements are named “Islamic fundamentalism,” a synonym for fanaticism, intolerance, and extremism (Mimouni 1996). Islamic fundamentalism is thus considered an atemporal phenomenon, devoid of historical, social or economic context, with a single illiberal, dangerous face: this deforming lens is today the common key of interpretation of the Arab-Islamic world.

The stereotype of Islamic fundamentalism prevents us from recognizing, instead, a definite historical phenomenon, born in Egypt in 1928 with the first modern Islamist movement, the Muslim Brotherhood, which was characterized by the rigorous respect for the Koran law and by anti-colonialism. The movement's founder, Hasan al-Banna, said in 1939:

INTRODUCTION

Realizing the gains to be had from specialization requires exchange, and exchange agreements must be enforced. The parties themselves may enforce the agreements. Self-enforcement, however, works well only for some agreements. Third-party enforcement often works better, because third parties are able to provide the principals to an agreement an altered set of incentives such that their net gains from interacting will exceed those they could attain under self-enforcement. Third-party enforcement, however, is costly and will not be used in all cases.

Third-party enforcers impose costs, either by the use of violence or through long-term relations. The distinction between the two types of enforcers is fundamental to the theory of the state, because there are differences between the kinds of agreements they can enforce, as well as differences in their capacities to abuse their own power.

In this chapter I first argue that many different individuals and organizations, each with their comparative advantages, can supply thirdparty enforcement services. Third parties can follow one of two radically different sets of measures for imposing costs. One set imposes costs by limiting or reducing the extent of valuable long-term relationships between the enforced party and its outside trading partners. The ability to do so requires that the enforcer and the enforced maintain a longterm relationship. The other set of measures is used where there are no enduring direct relationships between the enforcers and the enforced parties. In this case the enforcers impose costs by inflicting harm. This latter enforcement form is at the heart of the state.

I continue by exploring two central themes: the nature of third-party enforcement and the commonality and differences between the two thirdparty enforcement modes described.

As argued earlier, the size of the state as well as its scope will depend primarily on two sets of scale factors: protection and third-party enforcement. Because I do not have much to contribute to the topic of economies to protection, I touch it only briefly. I then elaborate more fully on the economies to third-party enforcement, arguing that governing on behalf of its clients, the rule-of-law state will pursue activities in which it has a comparative advantage, rather than using sheer “power.” The state has a comparative advantage in contract enforcement. State protection is especially useful for impersonal exchange, and for that reason it is complementary to contract enforcement. Contract enforcement is subject to scale economies. In the penultimate section of this chapter, I argue that the reason certain empires were created was to form a large area subject to a single ultimate enforcer in order to take advantage of these economies.

SCALE ECONOMIES TO PROTECTION

The economies of scale to protection seem to affect mostly the size rather than the scope of the state. They consist of simple economies of scale and of the gain from consolidation to internalize what otherwise would be external effects of protection. The dominant scale economies seem to arise in operations against outsiders. One example of scale economies is where a large force can overwhelm a small one at a low cost to the large force. That probably would be the case in a battle where the battleground was in open terrain. Another example is that of a radar installation that covers a territory encompassing the holdings of many individuals. Economies of scale to internal protection are also available, but seem to be less extensive than those to external protection.

Protection specialists presumably have a comparative advantage in providing protection services. Protectors are needed for deterrence of violence. In turn, specialists in protection require skill in the use of violence to perform their task. Some forms of protection are subject to scale economies. The scale economies to enforcement by force have been discussed extensively in Chapter 3. Protection subject to scale economies is provided efficiently when the same protector or set of cooperating protectors protects many individuals. Protection, therefore, can entail a large-scale assembly of power. The assembled power and its head can be controlled by the protector's clients or by the protector himself. A protector who is able to gain such control may use it to become a dictator.

Creating a collective-action mechanism is a necessary condition for preventing protectors from taking over. The costs of activating the mechanism, however, seem substantial. To reduce the probability of takeover, individuals are expected to undertake measures to restrain the protectors, thereby reducing the burden of activating the collective-action mechanism.

Individuals, besides directly activating their collective-action mechanism, can prevent themselves from becoming easy prey to their protector by the way they form their agreement with the specialized protector and by the restrictions they impose on him. The agreement that individuals make with their protector is expected to be incentive-compatible. Reducing the protector's inclination to take over, however, requires incentives very different from those that promote efficiency in more conventional circumstances.

In the discussion that follows, I argue that as long as the protector does not possess dictatorial power, the clients, rather than the protector, hold the purse strings to the protection budget. Clients determine what taxes to impose and at what rates and how to spend the tax revenue.

As pointed out in earlier chapters, the state is neither the only organization to engage in delineation nor the only one to use force to enforce rights within what is conventionally viewed as its territory. Other organizations operating in the same territory can act similarly. The medieval Catholic church, for example, delineated certain religion-related rights and sometimes was allowed to use force to enforce them within states that it did not control. States sanction, or at least tolerate, some of these organizations. In this chapter, I focus on criminal organizations operating within the state, but banned by it. They resemble the state in that they, too, delineate rights and forcefully enforce them.

As argued in Chapter 6, the state and criminal organizations can be viable side by side only if they differ in the kinds of power they use. The state seems to have a comparative advantage in the open use of arms and in the use of heavier weapons such as armored cars. Criminal organizations' advantage is in the covert use of arms, and they tend to use small, easy-to-conceal weapons. States can neither easily overpower criminal organizations nor effectively compete with them in their domain.

The two enforce different kinds of agreements; criminal organizations enforce primarily agreements that the state prohibits. They also differ in the ways they adjudicate disputes. Criminal organizations are unlikely to hold their trials in public and probably are less fussy than the legitimate state in the quality of evidence they require. We can expect transactors, then, to be more selective in the agreements they bring to criminal organizations for enforcement.

THE VIABILITY OF MULTIPLE THIRD PARTIES

In early society, at the inception of the evolution of interactions, anyone could become a third-party enforcer. No organized power yet existed to stop third parties from emerging. Because enforcement was diverse, numerous third-party enforcers could exist simultaneously, and more than one may have attempted to enforce the same agreements.

Third parties are able to charge a fee for the services they provide because their clients value these services. They set the fee so as to maximize their wealth. A third-party enforcer will not form agreements with individuals who are indifferent to whether or not to belong to his organization. Such individuals' cost of “defecting” is low, and thus the enforcer's power of enforcement over them is very limited. Given their predilection not to comply, an enforcer who allowed them to belong to his organization would only cast doubt on his enforcement ability. Indeed, if enforcement is to be effective, then to the marginal person in the enforcer's clientele the prospect of switching must be seen as resulting in a quantum loss of wealth. The size of that potential loss must be sufficient to prevent the individual from quitting under most of the anticipated cases of enforcement. The amount of the potential loss from quitting is what defines the community from which one might be expelled or excommunicated.

One result of the quantum-loss condition is as follows. Consider the enforcement services offered by two third-party enforcers. Their potential clients attach a value to the service of each of the two enforcers, taking into account the possibility of switching to the other. Correspondingly, each enforcer ranks the individuals according to their valuations of his service.