Stationary bandit theory

The theory of the stationary bandit is a theory on the origin of the state developed in 2000 by American scholars Martin C. McGuire and Mancur Olson. The theory posits that state powers emerge from political anarchy when a bandit comes to control a territory and becomes incentivized to manage its economy. The theory has been used in analysis of warlord states.

Basic principles

In this theory, the emerging state is equated with a "stationary bandit" who decides to settle in a specific territory, to unilaterally control it and to generate income from the population (carry out robberies) in the long term. As the stationary bandit expects to remain in control long enough to benefit from the territory's economy, the stationary bandit is incentivized to stimulate economic activity and development, and to set a level of taxation that leaves sufficient resources for the population to use for accumulation, investment, and subsequent increases in production. The stationary bandit is also incentivized to protect the territory from roving or "itinerant bandits" who seek to extract maximum benefit in the short term and undermine the territory's economy.^[1]

For an autocrat, the main threat is losing power, either by revolution or by conquest from a roving bandit. Historically, rule has been legitimized by establishing a dynastic form of governance (shifting from a tyrant to a monarch). Otherwise, lacking confidence in stability, there is a high likelihood that the stationary bandit will abandon the attempt to control the territory and will transform into a roving bandit.

Olson holds that leaders of a democracy, like stationary bandits, are guided primarily by their own self-interest. The leader needs the support of the majority to win elections, requiring lower tax rates and greater sharing of goods to the population than an autocrat, and must also contend with the lobbying of interest groups which may not serve the interests of the majority.^[2]

Critiques of competing theories

The stationary bandit theory includes criticisms to refute other theories of state formation.

Marxism

Marx's theory of the state links the origin of the state to the emergence of private property in society. The property owners form a class which creates the state for governance, increasing their own well-being while suppressing and exploiting the class which does not own property. Olson finds fault in this concept, as he does not believe that classes represent "organized groups with common interests" that drive them to start a revolutionary struggle and facilitate social changes. He found that individuals avoid engaging in class struggle as they are primarily guided by personal interests and it is sometimes more beneficial not to make efforts to change the social order.^[3]

Social contract theory

The author also critiques social contract theory, according to which the state arises as a voluntary union, which implies that individuals yield some of their rights to the state in exchange for their own security and prosperity. Olson casts doubt on the likelihood of this when dealing with large groups due to the free-rider effect, in which individuals decline to adequately pay for public resources. Olson points to the consequence of low economic productivity in such states, as individuals lack incentive to increase their contribution to the production of public goods.

Criticisms

Assumptions of state formation

While the stationary bandit theory explains why a population would prefer a stationary bandit to a roving bandit, the motives that lead a roving bandit to become stationary are unclear. In an uncontrolled (anarchic) competitive looting environment, the urge for bandits to monopolize looting within a given territory to the exclusion of others is not explained. One could assume that roving bandits want to increase their profits by subduing populations under the control of other bandits, but this would mean that some local states already exist, contradicting Olson's theory.^[4]

Role of the state

The stationary bandit theory asserts that the state is the sole factor possessing a monopoly on violence, whose behavior can be studied. According to Douglass North, this approach is fundamentally flawed because the state manages society through a range of complex and specialized organizations. In addition, the dynamics of relations between the political elites in the ruling coalition also influence the interaction between the state and society. Secondly, the theory overlooks the fundamental problem of the state's acquisition of a monopoly on violence (i.e.: how a coalition that structures the state and society emerges).^[5]

Problem of definitions

As a historical case study to support his theory, Olson refers to the Warlord Era in China (1916–1928), when the country was controlled by various military strongmen who ruthlessly plundered the population. The warlord Feng Yuxiang subdued others and established his control over significant territories of China. According to Olson's theory, this is how a state emerges. However, some researchers consider it unjustified to use the term "state", as the advantage and ability to collect taxes from subjects in its territory do not automatically lead to the formation of a state. In such a case, it is rather the emergence of a "quasi-state", an organization with a comparative advantage in exerting violence over a certain territory, but not being a state.^[6]