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Copyright © 2006-2013 Scientific Research Publishing Inc. All rights reserved.
2014. Vol.4, No.1, 24-30
Published Online January 2014 in SciRes (http://www.scirp.org/journal/sm) http://dx.doi.org/10.4236/sm.2014.41003
Civilisations and Capitalism: On Economic Growth
University of Freiburg, Freiburg, Germany
Received November 22nd, 2013; revised December 24th, 2013; accepted January 9th, 2014
Copyright © 2014 Jan-Erik Lane. This is an open access article distributed u nder the Creative Commons Attri-
bution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the
original work is properly cited. In accordance of the Creative Commons Attribution License all Copyrights ©
2014 are reserved f or SCIRP and the own er of the in tell ectu al p ropert y Jan-Erik Lane. All C o p yright © 2 0 14 are
guarded by law and by SCIRP as a guardian.
Theories of political culture have typically refrained from a reinterpretation of the idea of civilisations, as
a few well-known traditional approaches to this concept have been severely criticized. Yet, one may
probe into the relevance of the concept of a set of civilisations for mankind in the period of globalisation.
However, it is not the Weber thesis linking religion with modern capitalism or economic growth that ap-
pears most promising today when enquiring into cultural effects. Instead, it is the spread of respect for the
rule of law regime, which has a much longer history than the democratic polity.
Keywords: Global Capitalism; Institutional Economics; Political Culture; Civilisations; Economic Growth;
Rule of Law; Weber’s Thesis; Marxist Approach; Low and High Polit i cs; Principal-Agent
Problematic; Due Process of Law; Economic Sociology
The study of political culture ranges from micro level attitu-
dinal data about individuals over country macro characteristics
to the largest aggregation of civilisations. The categories of ci-
vilisations are immense aggregations in the world population,
collecting groups of the somewhat 200 countries of the world
into a parsimonious set of super groups. Several attempts have
been made, but they have all been criticised for either too much
simplification or some inherent bias.
The emergence of globalisation theory looking upon Planet
Earth as a whole in terms of politics, economics and culture
makes civilisation analysis relevant again, although this field of
study could use more other methods and starting-points than
those of for instance Spengler (1918) and Toynbee (1934-1954)
focussing upon the life cycle of civilisations or van Sloan with
his notion of civilisation leadership as well as Huntington with
his somewhat narrow focus upon conflict or clashes (1996).
Although the historical study of civilisations received new
stimuli from the evolutionary perspective of Diamond (1999),
the concepts of birth, life span and death as well as leadership
or conflict must be used with extreme care in relation to such
macro aggregates as civilisation. A civilisation is a mere statis-
tical concept, aggregating first and foremost country similarities
The Debate on Modern Capitalism
Typical of the civilisations of the world today is that they are
connected through the global market economy, i.e. both aspects
of it, namely the real economy on the one hand and the finan-
cial economy on the other hand. This ONE market economy is
often called “capitalism”, by both people on the Right (with ap-
proval) and people on the Left (with critique). Faced with sev-
eral civilisations and capitalism, one may enquire into whether
the various civilisations on Earth display different relationships
to capitalism. But how to approach this notoriously value-loa-
This is not the place to comment upon the longish discussion
surrounding the phenomenon (a) of what we label “capitalism”,
from Karl Marx to M. Friedman (1962) over Sombart (1927)
and Schumpeter (1989) to Acemoglu and Robinson (2013). It is
enough to make a few key distinctions.
First, one may separate between capitalism as dynamic eco-
nomic process, characterized by swing between expansion and
depression, as measured in rates of economic growth—an out-
come definition. In this sense, China is a capitalist country, or
perhaps the most capitalist in the world. Capitalism is this ap-
proach is driven by the search for profits, short-term or long-
run, and it could include both capitalisme sauvage and organis-
Second, one could link up modern capitalism with a set of
institutions, outlined in the school of Law and Economics (Co-
ter and Ulen, 2011), which makes it different from Ancient or
Feudal Capitalism. Crucial here is not only the limited liability
organisation—Aktiengesellschaft—or the Bourses, but a high
degree of economic freedom for both capital and labour, inclu-
ding full private property. Organised capitalism involves seve-
ral of the rights and duties that enter the concept of rule of law,
in the World Bank framework for analysing good governance
(WB 2009). According to this meaning, China is not yet a fully
capitalist country, especially when taking its high level of cor-
Author’s note: Jan-
Erik Lane is an independent scholar. He has been full
professor at three universities, and visiting professor at many more.
ruption into account also.
Third, it is necessary to reflect upon the value-loaded notion
of a civilisation. Alternative lists of civilisations have been sug-
gested (Toynbee, 1934-1954), but here we concentrate upon the
present vibrant civilisations with important economic activities
in both the real and the financial economies.
The Weber Thesis
In the early 20th century, Max Weber’s painstaking enquiries
into the economic ethics of world religions broke the estab-
lished racist perspective upon civilisations, typical of late 19th
century thinking (Weber, 1915-1920). It re jected any biological
basis for the classification of civilisations, very similar in tone
to his disbelief in primordialist ethnicity (Weber, 1978). What
separate men and women is their belief, and not races, he ar-
gued with emphasis against his famous competitor in the enqui-
ry into the sources of modern capitalism, namely Werner Som-
bart (1992) underling the role of Jewish merchants in furnishing
capital (Langer, 2012). And here religion constitutes a most
powerful source of belief-systems in the form of articulated
dogmas of faith.
Weber focussed upon the economic effects of the world re-
ligions, searching for the origins of modern capitalism, which
he equated with the requirements of rationality or modernisa-
tion. Of the link he suggested in 1904-05: inner-worldly asce-
tism—Protestantism and market economy, there remains noth-
ing today, as other civilisations or economic centres display pre-
sently as much if not more economic dynamism that the West-
ern one. Let us instead search for civilisation effects outside of
the global economic system, within politics.
In Marxist thought, one encounters another framework for
analysing capitalism (Wolf, 1982 ). Whereas Weber spoke of An-
cient or slave capitalism, feudal or agrarian capitalism and state
capitalism (tax farming), Marxists restrict “capitalism” for the pe-
riod of machine ca pital linked large scale social la bour in the in-
dustrial and urbanize d setting wit h global link s to two older ty pe s
of economic systems, the kin ordered (tributary) mode of produc-
tion and the mercantile economy with merchants’ capital.
I will argue that the countries of the world today display dif-
ference in the respect for rule of law as well as that this varia-
tion has a civilisation background. The crucial importance of
the rule of law institutions become intelligible when put into the
principal-agent framework for analysing politics and political
regimes, derived from the new economics of information.
How to Identify a Civilisation: What Cultural
Item to Use?
Culture is employed to single out a set of civilisations, but
culture covers a huge variety of items, such as behaviour, be-
liefs and artefacts. One may consider a number of criteria with
which to classify countries into a set of civilisations, inter alia:
1) Language families;
5) Economic mode of production;
Since civilisations are constructed by the scholar, the choice
between 1) - 5) depends upon what one intends to illuminate or
show. Given the sharply increasing relevance of religion in the
period of globalisation, I will employ the criterion 2) above.
Again, one may debate what a fruitful classification of the
religions in the world today would amount to. A number of
criteria have been used:
4) Salvation: Inner-worldly—outer-wordly;
5) Ascetics: World-rejecting against world mastering asce-
If we accept the Weber’s idea that religion has had a perva-
sive impact upon social organisation and politics, then it seems
most convenient to focus upon the world religions, i.e. the
largest of them: Catholicism, Protestantism, Orthodox, Islam,
Hinduism, Buddhism and Confucianism as well as Shintoism.
However, the growing number of atheists or agnostics should
be taken into account, as these groups are of considerable size
in both Western Europe and Eastern Europe, in Russia as well
as China. Thus, strong Communism is to be found in Far East
Asia, where religion is barely tolerated.
One could, of course, have included several other religions or
sects, but they are seldom predominant in a country. Using
countries as the basis for an enquiry into religion, one may sug-
gest a parsimonious list of eight civilisations:
1) Western: Mainly Protestantism + some Catholicism;
2) Latin America: Catholicism with some Protestantism;
3) Orthodox: Greek and Russian Orthodox;
4) Arab Islam;
5) Non-Arab Islam;
6) Sub-Saharan Africa: animism, Ch r istiani ty, Islam;
8) Buddhism, Confucian/Taoist, Shintoism;
10) Pacifi c: animism, Christia nity.
One may point out that these gro ups of countries are not com-
pact in terms of culture, not even when the criterion is world re-
ligion or atheism. Thus, religious minorities are to be found in
Yet, the theory that the world religions have had strong so-
cial implications implies that they have formed parts of legacies,
or historical traditions that linger one even, if the religious fer-
ment may have subsided. In the case of Communism, it is the
atheist legacy that counts, leading often to the suppression of
religion, as in China at times.
Neo-institutionalism and economic sociology has empha-
sized the importance of long lasting practices, or customs for
social, economic and political outcomes. Such legacies may
comprise patterns of behaviour, clusters of attitudes as well as
long lasting institutions. Civilisations are historical traditions,
but historical traditions could be smaller in scope and range
than entire civilisations. Historical traditions could be based
upon other kinds of culture than religion, such as ethnicity and
political history. One may argue that the civilisation categories
above harbour such a number of historical traditions, like for
instance the following tentative but not exhaustive listing:
1) Lat in America: Spanish and Portugal legaci es, Catholicism;
Indian legacies, the l atifundia mode of production, caudil los, etc.;
2) Sub-Saharan Africa: colonialism, tribal society, kinship,
3) Orthodox legacy: Hierarchy in state, society and church;
tsarism and caesaro-papism; the patriarch legacy, serfdom;
4) Islam: Submission to religion, religious jurisprudence, gen-
der inequality, oriental despotism; the madhi;
5) Hindu legacies: Incarnation and magic, oriental despotism,
castes and gurus; indentured labour, share cropping;
6) East and Far East Asian traditions: the sangha organisa-
tion or monasteries, oriental despotism, tantrism, spiritism.
7) Pacific countries: clans, tribes, ratu, colonialism, animism;
8) Western traditions: secularisation; individualism; institu-
tionalisation of the sciences;
9) Communist legacy: planned economy, atheism, state con-
trol over society;
One may wish to add numerous other traditions to the list
above, as it would be difficult to be exhaustive here. Historical
developments tend to be complex, meaning that various tradi-
tions may coexist with each other under more or less tensions.
When different traditions occur, it may be almost impossible to
tell which is most important. Important for what? One could
examine present day outcomes.
Weber saw modern capitalism, or the institutions of the mar-
ket economy, as the giant difference maker among the civilisa-
tions of the world, resulting in economic rationality meaning
affluence and power. If capitalism is merely a motivation force,
then it has always existed as the incessant search for economic
advantages, profits and success. However, if “capitalism” stands
for a set of institutions, or rules, then one may wish to enumer-
ate a number of different types of capitalisms: ancient, state, fe-
udal, modern, etc. Weber summed up his position as follows:
“It is only in the modern Western world that rational capi-
talistic enterprises with fixed capital, free labor, the rational
specialization and combination of functions, and the allocation
of productive functions on the basis of capitalistic enterprises,
bound together in a market economy, are to be found.” (Weber,
But the institutions of modern capitalism can be exported and
adopted by other civilisations, learned and refined, which is
exactly what occurred in the 20th century. Thus, even if Protes-
tantism, or Protestant ethics had something to do with the ori-
gins of modern capitalism in the West, which is an essentially
contested matter, it could never guarantee any persisting ad-
vantage. Today, modern capitalism, at least when measured in
terms of output, is perhaps stronger in East and South East Asia,
with a few strongholds also within Islam.
Modern capitalism is not a difference maker in the world to-
day. All civilisations practice it. If Weber perhaps led us in the
wrong direction by focussing upon the amorphous phenomena
labelled “capitalism”, then we must as ask: Why did he not
enquire into the civilisation sources of his famous ideal-types of
political power, or legitimate authority? I will show below that
the civilisation variation remains as large today as it was in
1900, when it comes legal-rational authority, interpreted as the
rule of law.
Capitalism as Economic Dynamism
One may raise the question whether we are witnessing the
definitive eclipse of what Weber theorized as the dominance of
modern Western capitalism, as we do not find European or
American countries among top most dynamic countries in the
world today. Table 1 shows economic growth among the G20
countries, for 2000-2006 (a) and 2007-2011 (b), where the eco-
nomic success of the BRIC is obvious.
Research in the 20th century had to ask: Did Weber get it
right when he argued in several painstaking enquiries into the
world religions that other civilisations than the Western could
not bring forward the market economy, or modern capitalism
(Weber, 1988). The debate concerning his portraits of some of
the chief world religions has not ended today, as scholars ask:
Did Weber harbour an occidental bias, i.e. orientalism? Here I
will underline not his omission of Catholicism and Orthodoxy,
or his brief as well as rather negative remarks upon Islam due to
its social effects. But instead I will emphasize that he concen-
trated exclusively upon economic outcomes in his civilisation
Weber identified four types of political regimes: naked
power, traditional, charismatic and legal-rational authority.
However, he was not clear about the nature of the last type,
Economic growth in G20 countries.
Argentina ARG 0.17978 0.24650
Australia AUS 0.19123 0.09261
Brazil BRA 0.17613 0.14672
Canada CAN 0.15345 0.03472
China CHN 0.58498 0.36754
France FRA 0.10399 0.00055
Germany DEU 0.0 6607 0.02390
India IND 0.41598 0.27488
Indonesia IDN 0.28449 0.22633
Italy ITA 0.07067 −0.04596
Japan JPN 0.07621 −0.03096
Republic of Korea KOR 0.27012 0.12290
Mexico MEX 0.14159 0.03974
Russia RUS 0.37593 0.05379
Saudi Arabia SAU 0.21701 0.15330
South Africa ZAF 0.24256 0.07929
Turkey TUR 0.28930 0.12620
United Kin gdom GBR 0.16739 −0.02858
United States USA 0.14494 0.00712
The European Union EUU 0.13451 −0.00314
Euro Area EMU 0.11019 −0.00788
=natural logarithmGDP year 1natural logarithmGDP year 100%nn−∗
x; World ban k : http://databank.worldbank.org/data/home.aspx.
linking wrongly—I wish to argue—legal-rational authority with
his ideal-type model of bureaucracy. Typical of legal-rational
authority is, I would wish to emphasize, government based
upon rule of law. Let us first state the definition of “legal au-
thority” from Weber:
“The validity of the claims to legitimacy may be based on: 1.
Rational grounds—resting on a belief in the legitimacy of en-
acted rules and the rights of those elevated to authority under
such rules to issue commands (legal authority).” (Weber, 1978:
The key terms in this general definition is rules or institu-
tions. Yet, he moves on to equate legal-rational authority with
“The purest type of exercise of legal authority is that which
employs a bureaucratic administrative staff.” (Weber, 1978:
Yet, bureaucracy as a mechanism for carrying out the poli-
cies of rulers has, historically speaking, never operated accord-
ing to the Weberian ideal-type. Bureaucracies have been inva-
ded by affective ties, tribal loyalties and opportunistic selfish-
ness. 20th century research into the bureaucratic phenomenon
has resulted in numerous findings that question the applicability
of Weber’s bureaucracy model. As a matter of fact, bureaucra-
cies can support traditional domination, as within Chinese Em-
pires or the Ottoman rule. It may also figure prominently in
charismatic rulership, as with The Third Reich or the Soviet
Legal-rational authority emerges in a state that honours rule
of law. This involves the employment of LAW, both in high
politics and in low politics. It differs from all other forms for
the exercise of political power by complying with norms and by
offering ways to correct abuses of these norms. Thus, this re-
gime is not only legal but also rational in the meaning of the
introduction and observation of a set of norms that are secular
in nature, protecting the common best of the political commu-
This legal-rational dispensation, ranging from constitutional
norms at the top to legality and reasonable principles for day-
to-day interaction at the bottom, does not have to harbour the
democratic polity. What legal-rational authority entails is the
following (Raz, 2009):
1) Legality: regulations are sanctioned by laws that are sanc-
tioned by a constitution, or lex superior;
2) Predictability of law enforcement: laws and regulations
meet with effective enforcement and wide-spread respect;
3) Equality under the law;
4) Autonomy of the judiciary;
5) Natural reason: no torture, no arbitrary seizure or arrests,
no prison sentence without court procedures, property rights.
The occurrence of legal-rational aut hority, i.e. rule of law may
be mapped using the governance indicators from the World
Bank Governance project.
Rule of Law Indica t ors
Rule of law—in Germa n Rechsstaat—include both low poli-
tics—the predictable institutionalisation of transparent norms in
everyday life—and high politics—the weight of constitutional
law in government and administrative law in public services.
In the World Bank Governance project, one encounters the
following definition of “rule of law”:
Rule of Law (RL) = capturing perceptions of the extent to
which agents have confidence in and abide by the rules of soci-
ety, and in particular the quality of contract enforcement, pro-
perty rights, the police, and the court, as well as the likelihood
of crime and violence (Kaufmann, Kraay, & Mastruzzi, 2010:
RL is explicitly separated from “voice and accountability”,
which is defined as follows in the WB project:
Voice and Accountability (VA) = capturing perceptions of the
extent to which a country’s citizens are able to participate in
selecting their government, as well as freedom of expression,
freedom of association, and a free media (Kaufmann, Kraay, &
Mastruzzi, 2010: 4).
The WB Governance project suggests four additional dimen-
sions of good governance (political stability, government effec-
tiveness, regulatory quality and the control of corruption), but
we will only enquire into RL here. The WB Governance project
employs a host of indicators in order to measure the occurrence
of RL around the globe, which results in a scale from −2 to +2.
Rule of law with the WB is a complex index, composed of
the addition of many often used indicators, such as:
1) Fairness of judicial process
2) Occurrence of political violence
3) Confidence in courts and police forces
4) Security of persons and goods
5) Independence of judiciary
6) Property rights.
It is true that many countries are so-called constitutional de-
mocracies, meaning that they score high on both these two
composite indices in the WB Governance Project, rule of law
on the one hand and voice and accountability on the other hand.
However, the two concepts are distinguishable. From an his-
torical point of view, it must be emphasized that rule of law
developed much earlier than the democratic polity.
One may wish to go beyond this conventional classification
of political regimes, based upon the Western concept of de-
mocracy, and enquire into the relevance of rule of law for any
country, whether liberal, illiberal or anarchic. In whatever po-
litical regime a human being may live, he/she would value in-
stitutions that promote: Transparency of norms in low politics
or daily life, constitutionality of high politics, court independ-
ence from politics and religion, immunities: a list of rights like
e.g. habeas corpus.
Thus, one may advocate rule of law reforms in all kinds of
political regimes without the accusation that one wants to force
countries to adopt Western type democracy. Several countries
score low on democracy, according to the WB Governance in-
dices, but they achieve a moderate level of rule of law. Let us
look at the global variation in rule of law, as measured by the
WB. Here, we will employ the notion of a civilisation, as it of-
fers a high level set of aggregates, suitable for globalisation
Cultural Outcomes: Civilisations Matter
Approaching political culture as a set of legacies, the ques-
tion that this interpretation of civilisations raises is what the
more specific social and political impact has been for the pre-
sent. Broadly speaking, one may search for cultural effects in
either the economy—affluence—or in politics—democracy. The
former approach is distinctly Weberian, whereas the latter per-
spective figures prominently in the theory of civic culture.
Here, I will target the rule of law, which is not identical to
either the standard economic outcomes or the occurrence of the
democratic regime. Concerning affluence and culture—the We -
ber thesis, it has little relevance for the world today, as other
civilisations than the Western have adopted the institutions of
capitalism with considerable success. With regard to the de-
mocratic political system, it can be argued that it is too much of
a dichotomy. One cannot expect that the ideal-type of competi-
tive democracy with party governance could be introduced in
each and every country, at least not in the short run.
Let me focus upon a variable that allows for a large variation
and that is related to both the market economy and democracy,
namely the rule of law. The rules inherent in the notion of rule
of law date far back into political history and Ancient philoso-
The Governance Project of the World Bank has made a tre-
mendous effort at quantifying the occurrence of rule of law,
employing all the indices in the literature. The findings are
presented in a scale ranging from +2 to −2 that is an interval
scale. Ta ble 2 present s the aggregated score s for the civilisations
The eta squared statistic from ANOVA—.54—suggests that
civilisation is indeed highly relevant for understanding the
country variation in the respect for rule of law. Some of the
civilisations display negative overall scoring, although the high
standard deviation should be taken into account. Thus, the
Communist, Muslim NON-Arab and African civ ilisations score
negative, which is also true of the Orthodox civilisation. We
also find negative scores for the Hindu civilisation, but it only
comprises two countries: India and Nepal. One may perhaps
have expected a more negative score for the Arab civilisation,
but the scores for several of the countries in this group is
slightly positive: the UAE, Kuwait, Qatar for example. Both
Hong Kong and Singapore score strongly positive, like Japan
and South Korea.
It should perhaps be pointed out that poverty accounts to
some extent for the disrespect for due process of law (see Fi-
However, culture also matters in the form of civilisations.
The Latin American civilisation has still some way to go before
the overall ranking is positive. But compared with the 1980s,
major improvements have been accomplished.
Importance of Rule of La w
One may discuss the relevance of rule of law from two dif-
Civilisations and rule of law 2009.
Civilization Mean Std. Dev. Freq.
Communist −0.755 0.383 6
Hindu −0.533 0.643 2
Moslem NON Arab −0.724 0.656 21
Africa −0.801 0.622 38
Arab −0.304 0.715 18
Asia 0.475 0.963 9
Latin America −0.185 0.788 34
Orthodox −0.507 0.355 8
Pacific −0.187 0.630 16
Western 1.200 0.668 38
Total −0.107 0.984 190
Sources: WB Governance Project (2009) Governance matters: Aggregate and in-
dividual governance indicators 1996-2008.
Rule of law and affluence (GDP per capita).
6.00 8.00 10.00 12.00
ferent angles, the micro on the one hand and the macro on the
other hand. Thus, rule of law may matter for single individuals,
or ordinary men and women. Or it has a clear impact upon the
political system and the structuring of political institutions.
Micro or Low Politics
For the individual person, the implementation of some form
of rule of law regime, or set of institutions would affect daily
considerably. Thus, the single individual would cherish:
Predictability: Public law when properly implemented makes
it possible for people to increase the rationality of behaviour.
They know what rules apply, how they read as well as how they
are applied consistently. This is very important for the making
of strategies over a set of alternatives of action.
Transparency: Societies operate on the basis of norms pro-
hibiting, obligating or permitting certain actions in specific si-
tuations. Rule of law entails that these norms are common
knowledge as well as that they are not sidestepped by other im-
plicit or tacit norms, known only to certain actors.
Due Process of Law: When confli c t s occur either between in-
dividuals or between persons and the state, then certain proce-
dures are to be followed concerning the prosecution, litigation
and sentencing/incarceration. Thus, the police forces and the
army are strictly regulated under the supervision of courts with
rules about investigations, seizure, detainment and prison sen-
tencing. No one person or agency can take the law into their
Fairness: Rule of law establishes a number of mechanisms
that promote not only the legal order, or the law, but also justice,
or the right. For ordinary citizens, the principle of complaint
and redress is vital, providing them with an avenue to test each
and every decision by government, in both high and low poli-
tics. Here one may emphasize the existence of the Ombudsman,
as the access to fairness for simple people. People have certain
minimum rights against the state, meaning that government
faces definitive duties concerning the protection of life and per-
sonal integrity. Thus, when there is due process of law—proce-
dural or substantive—one finds e.g. the habeas corpus rights.
One could dare suggest that a majority of individuals in al-
most each and every country would wish to live under these
Macro or High Politics
Rule of law at the macro le vel is conducive to constitutional-
ism in high politics. Constitutionalism was identified already in
Roman political thought as the best regime, with Cicero and his
painstaking analysis of republicanism (Everett, 2003). It com-
Lex superior: If the making of single decisions by the au-
thorities is regulated by agency rules, and agency rules by ad-
ministrative law, and administrative law by ordinary legislation,
then what regulates legislation? Ultimately, one arrives at Kel-
sen’s Basic Norm that both legitimates and restrains the rule of
law regime, in the form of a constitution. Thus, we have today:
Secularism: In terms of religion, it adheres to a secular state
based upon religious tolerance. When a state is identified with
some religion or religious sect, then it cannot maintain neutral-
ity and anonymity in relation to all groups in society. The idea
of multiculturalism is as relevant for ethnically divided socie-
ties as for countries with high religious heterogeneity.
Separation of Powers: In order to have respect for the law as
the key instrument for governing society and regulating the
state, legislation, policy-making and implementation as well as
law adjudication must somehow be separated. Under rule of
law, this separation of powers targets the political elite active in
the state, with the claim that it has to be divided into three dif-
ferent elites: legislators, governors or governments and courts.
Counter-weighing Powers: Under the rule of law regime
there could be no single source of political power, or a hierar-
chical order of command. Instead, it favours multiple centres of
power, or pluralism. Separation of powers enhances checks and
balances in the state.
Court Independence and Judicial Integrity: Government un-
der the laws is not feasible unless the judicial branch of gov-
ernment rests upon the interpretation of law as impartiality,
with regard to both government and civil society.
Constitutionalism, harbouring the rule of law regime, is to-
day combined with the democratic polity in almost 50 per cent
of the states of the world. However, it is also relevant for non-
Conclusion: Solving the Principal-Agent
Problematic in Politics
The significance of the rule of law regime derives from the
omnipresent principal-agent problematic in the state, both with
regard to policy-making and policy implementation. Political
elites—whether they are politi cians, royal family , religious lea-
ders, bureaucrats or professionals—must be seen as the agents
of the population. How are they to be selected, monitored, re-
munerated and evaluated as well as held accountable, given the
omnipresence of asymmetric information (Rasmusen, 2006)?
The rule of law regime solves this problem by two mechani-
1) Government under the laws restraining political agents;
2) Checks and balances within the state among the agency
elites with counter-weighing powers.
The respect for rule of law today occurs unevenly in the ma-
jor civilisations of the world. Where the enforcement of its
principles is weak, like in several countries in the Muslim civi-
lisations, in many states in Sub-Saharan Africa as well as in
parts of the Orthodox civilisation, people suffer from politics.
The so-called West still enjoys a comfortable advantage in
terms of due process of law, both procedural and substantive,
which should be emphasized when scholars speak of the de-
cline of the West (Ferguson, 2012).
Acemoglu and Robinson (2013) show that the key rules in
the society, its institutions, have a large impact upon cou ntry af-
fluence and wealth. To vindicate their theory that the central
norms in society explain how the key elements in the neo-clas-
sical growth model above develop over time, they construct two
ideal-type models of institutions in a country: extractive rules
and inclusive norms. The former set of institutions destroys
economic growth whereas the latter set of rules promotes it,
when properly enforced.
“Extraction” covers all kinds of phenomena where whatever
affluence exists are captured and dissipated: wars, looting, ex-
ploitation, monopoly and oligopoly, corruption, embezzlement,
patronage, and so forth. Inclusive norms institutionalize the op-
posite phenomena: surplus sharing, free entry, innovation, pro-
perty rights, honesty in contracting, an open society with peace
based upon a flourishing competitive market economy.
To put it somewhat differently, inclusive economic and po-
litical institutions solve the principal-agent problems in so-called
capitalist democracies, favouring organised capitalism.
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