Of capital and kings

Posted by Marc Hodak on July 23, 2013 under Governance, History, Invisible trade-offs | Be the First to Comment

The birth of a new British heir once again causes us governance geeks to scratch our heads at the succession mechanism formally known as primogeniture, the winner-take-all system whereby the first-born (generally male, but not always) becomes heir to substantially all of the parents’ titles and property. In the context of a monarchy, has anyone ever believed that such a mechanism would consistently yield good leaders?

The answer, of course, is “No,” but the question assumes the wrong purpose. In fact, primogeniture did not evolve as a way to select a certain quality of leader; it evolved as a way to enable society to accumulate capital.

For most of history, it was extremely difficult to preserve and grow capital from one generation to the next. Before the 19^th Century, the lives of ordinary people–how they labored and what they had in their homes–were virtually indistinguishable from that of their grandparents. Things were hardly better among the aristocracy. For them, accumulated property was basically an invitation to plunder. Consequently, from the Fall of Rome to the Industrial Revolution, the vast majority of capital created by the upper classes was in the form of weaponry, and most of that was consumed in battle. It was in this neo-Hobbesian war of all against all that primogeniture evolved as a way to select kings.

The customary transfer of allegiance of powerful nobles from their king to a royal heir greatly reduced the odds of a civil war. Societies that tended to avoid civil war tended to accumulate far more capital. More capital made them more powerful, economically and militarily, creating a dynamic that eventually led to the institution of monarchical succession via primogeniture spreading throughout most of the world.

The American experiment showed democratic elections as an alternative mechanism for peaceful succession.  Democracies also generally selected better leaders than whoever the queen happened to pop out first, or at least avoided leaders who drooled in their cereal. Better leaders meant stronger nations, and democracies began to overtake monarchies as the predominant form of government. Today’s remaining monarchs are on the run.  They are seeing their political power increasingly challenged by popular assemblies.  In countries like the UK, where this process is very far along, the monarch has become vestigial figurehead.

The question “Is this the best way to select a leader?” has much less urgency when dealing with figureheads. The worst that can happen with them is that the royal family fails to positively sustain its peculiar celebrity, and gets cut off by their government. Such a civil war would be fought in the assemblies and the tabloids, not in the fields.

The larger governance lesson is that the quality of a leader is not the only thing that matters to the growth of capital. In certain hyper-competitive environments, it may not even be the most important thing. Some organizations are so close to the edge that they cannot afford the waste of political infighting, and can actually be taken under by a botched succession, where a clear leader fails to quickly emerge.