Bargaining Hypothesis and the Sovereignty Paradox

In the period from 1200 to 1500, the kings of England lived in a fragmented society composed of individuals and groups that joined in towns and villages, the nobles, the church, and aristocracy, for example, with the aim to gain power and solve personal tasks. However, in the sixteenth century, England experienced a transition to a Monopoly State. It was determined by the expansion of towns and markets, as well as a growing need to protect the population during the warfare. The Monopoly State allowed the king to act as a supreme war leader at the head of the military, aristocracy, and freemen, a supreme protector of the country’s religion, and a supreme lawmaker. What used to be a weakness was transformed into an advantage. The royal command required compliance and loyalty in order to prevent or suppress any rebellions and resistance. While ruling this way, it was difficult to keep order over a vast territory. Therefore, kings managed to turn the institutional weakness into the strength by offering their subjects a bargain. However, the exchange of power for revenue is the Surrender Paradox because instead of relying on the own ability to self-govern and self-protect, individuals and groups began expecting the state to solve all political problems associated with the law, order, and control.

A power shift from the local and regional nobility moved to a single ruler through a set of small changes probably unseen to an average contemporary. It was similar to the way politicians participated in the election process by using different strategies and encouraging people to vote for them with bonuses and other stimuli. There are three basic ways to give power to an institution, in this case, an institution of the ruler. It can be done via the warfare, taxes, and legal power. In order to be able to earn a large political power, the ruler should have significant economic influence.

A monopoly state can be made through either coercion or bargaining. In any case, the population realizes that “the benefits and costs of monopoly rule were significantly greater than the costs and benefits of any feasible alternative change” (Magagna 1-6). Territories are under constant threat of invasion so the monopoly state promises a better protection than the local rulers can offer.

Coercion seems a natural action of the monopoly state because it provides its services on the conditions of the protection and punishment. The state promises to protect its citizens who, in their turn, promise to pay the state for its services. However, unlike a company that provides, for example, electricity, the state has the power to punish and coerce. According to this logic, taxes can be viewed as money that people pay for the state’s protection services.

However, the state’s coercive power is not endless. In its best interests, the monopoly state should not impose excessive taxes on the population. If the state’s demands are too high, or if it does not provide adequate protection to the population, or if it is engaged in too many wars or a too bloody war, the society might express its dissatisfaction in a very unpleasant way. In the case of any uprising or another form of social unrest, a wiser politics of the monopoly state is highly advisable.

At the same time, there can be mechanisms in the structure of the monopoly state to limit its power over its population. For example, the U.S. citizens’ right to carry weapon may enlarge the freedom of its citizens and curb a possible abuse of power by the political elite.

Thus, bargaining is another tactics of the monopoly state to retain its power. At the heart of the bargaining hypothesis, there is a “core assumption” that “all individuals and groups are rational and self-interested” (Magagna 1-11). The population enters the bargain “unless corresponding benefits signifcantly exceed costs of concessions” (Magagna 1-11). The rationality behind the population’s concession, as well as the agreement of other influential local groups to accept the power of the chief ruler, is the idea that it is efficient.

If nobles, villages, towns, churches, or other power groups are not able to protect themselves and provide protection to citizens, they pass their power to a ruler. In this way, they solve three basic problems such as the order, market, and population pressure. Both the monopoly state and a strong ruler are able to ensure the physical security of the population, decrease social pressure from people, as well as grow their economic power by regulating contracts and property rights (Magagna 1-11).

Before 1500, the decentralized condition of many states resulted in a social unrest. Additionally economic growth and an increase in the number of citizens made a need for centralized governance more visible. It put forward an understanding that “more efficient rules and rights [would] reduce the costs and capture the increase of benefits of these changes” (Magagna 1-11). In order to encourage individuals and groups to surrender their power to a single leader, territorial rulers had to offer significant bargains.

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As an example, Magna Carta of 1215 showed that the king’s power was not limitless; thus, all freemen were granted legal justice. Also called the Great Charter, Magna Carta established the rights for both the nobles and freemen in England and Wales concerning property, legal proceedings, and the ruler’s influence. As a result, the king’s arbitrary power was limited. It also meant that territorial laws were to be followed more precisely (Magagna 1-8).

However, at the same time, Magna Carta increased the king’s power. It established more precise laws, and the king was appointed to the territorial ruler and named “a source of legal rights” (Magagna 1-8). From that time on, royal courts were able to demand the population to follow the law, “define the legal states of all subjects [either] free [or] unfree” (Magagna 1-8). Thus, this single document predetermined the future development of the English legal life and chartered the structure of social order. The Great Charter gave rulers power to use “law and jurisdiction as a strategy of rule” (Magagna 1-8).

In the situation of expanding towns, the centralized power was necessary to keep the order. By surrendering their power, individuals and groups received a possibility to increase their income. For example, when the market increases its capacity by welcoming new customers, it “creates the need for large-scale rights and regulations” in order to regulate ownership, solve disputes, and exterminate fraud. Additionally, there is an emerging need for a mechanism to make people act according to their contracts and respect their obligations. Therefore, if a ruler is able to offer his subjects a legal mechanism to facilitate their trade, they will concede their power in return for the assistance and protection. Thus, it shows that as long as individuals or groups notice a “decline in the efficiency of local self-help solutions,” they will agree to comply with the requirements of the Monopoly State (Magagna 1-8).

Another example, when individuals and groups can resort to the measure of conceding their power is the warfare. In the period from the sixteenth century to the nineteenth century, wars were ongoing all over Europe. Thus, individuals and groups could see the way out and assistance in accumulating the efforts of each in the monopoly of power. The ruler should be attentive to the moods and opinions of masses to respond to the newly generated demands. If it is achieved, the ruler is able to offer a good bargain while individuals and groups are eager to respond because new rules and rrights satisfy their requirements.

The population has a different way of how to demand changes in the social structures and institutions. They can sign up different individual and collective petitions. Moreover, they can forward legislative proposals to the Three Estates consisting of towns and villages, clergy and nobility that are represented in the territorial estates. These measures are taken because territorial rulers are considered powerful entities able to influence the life in the state. In the case of social demand, the ruler is able to make up rules and rights that will have a wide scope and cover the whole territory. In such a manner, new rules and rights are enforceable, and individuals and groups are obliged to observe them.

Individuals and groups can be regarded as mutually beneficial entities. While the population needs protection and assistance, the ruler needs power conceded by the population. Thus, the ruler is interested in offering good bargains to the population and earn as much power as possible. When the nobles, churches, villages, and towns are not able to solve their issues or have conflicting interests, they turn to the ruler for institutional rules and rights for large-scale problems. Thus, the ruler acts as a third-party enforcement agency, “In exchange for a surrender of local power and access to local resources, rulers create more efficient legal, order-maintaining, and regulatory institutions” (Magagna 1-15).

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Thus, the Bargaining Hypothesis can explain the Surrender Paradox. It seems paradoxical that individuals and groups give away their power to the ruler while they could use their power themselves. The paradox is that individuals and groups agree to have less power while realizing that power is money. However, they benefit that the state or the ruler are able to perform important political functions such as make laws, regulate markets, define citizenship, and keep order, in general. These functions make the state a monopoly because there are no other entities able to perform them.

Following this logic, the paradox is easily solved because territorial rulers pay for the power they get by providing security. In their turn, individuals and groups pay for security with taxes. The whole collaboration ensures peace and provides favorable conditions for work. Thus, it enables individuals and groups to maximize their wealth and continue exchanging income for the security. However, even this explanation does not fully solve the surrender paradox because this seemingly mutual cooperation has some problems. If the state is a monopoly, it can abuse its power and impose excessive taxes, as well as demand too much of the price surplus. Besides, rulers can behave in a dishonest manner and rob the population. Thus, the paradox is that individuals and groups prefer monopoly to a well-balanced society, in which the two arrange self-help and exist peacefully maximizing their own power.

Summing up, it can be said that a change in the social and economic environment creates premises for the Monopoly State. Should there be an increase in the warfare, expanding markets, or population growth resulting in the shortage of resources, wave of crime, and housing problems, it creates a demand for a change of institutions of power in the state. Thus, the ruler gets a possibility to offer a bargain of protection and assistance to citizens in exchange for the taxes and loyalty. Such cooperation between the state and population may seem a mutually beneficial deal but, in its core, it is illogical because groups and individuals willingly agree to have less power. The Surrender Paradox can be solved if the population chooses society over monopoly remembering that too much power corrupts. Society is able to self-govern and self-regulate; thus, social self-help is an alternative to monopoly.

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