For Spruyt, what was new about the modern state was that it was "sovereign," territorially bounded, and internally hierarchical. Equally important, a state was a state precisely because it was accepted as a juridically equal member of a state system by existing states. This reflected institutional "copying" or "mimicry," as well as the fact that existing state "actors" were better able to deal with like entities and deliberately sought to eliminate competitors grounded on other "logics."

Spruyt concedes that military factors played a role in state emergence, as Martin Van Creveld and Charles Tilly say, but he believes that internal institutional arrangements were of primary importance. After all, one has to explain how territorial states eliminated other competing systems – city leagues, city-states, and "capstone" empires – when at least the first two of these showed just as much mastery of existing military technologies as did the emerging states. In his view, the first important state, the French kingdom was fully formed before any revolution in military technique had set in.

Spruyt makes his case using a combination of game-theoretical, economic, and neo-Darwinist arguments. He regards his method as a methodological individualism which attributes rational calculation to historical actors, insofar as we can reconstruct how they viewed their situation and the given structure of incentives. I could have done without the frequent references to Darwinism and punctuated equilibrium, but I suppose an author’s metaphors are his own business.

FEUDAL BREAKDOWN, NEW FORMS OF GOVERNANCE

Spruyt sketches out the institutional logic of feudal society as it existed in what are now France and Germany. This allows him to ignore the exceptional development of English history, which one reviewer considers a major flaw in the book. Feudalism allowed for "crisscrossing" jurisdictions based on personal contractual relationships between lord and vassal and precluded claims to final territorial sovereignty on the part of any actor in the system.

Jurisdiction was not confined to bounded territories. In addition, the competition between the Papacy and the German Emperor, both of which made universal claims, worked to reinforce the multiplicity of jurisdictions. Clerics theorized a three-caste model of society – priests, warriors, and producers – in an interesting reinvention of an Indo-European theme. As in Hindu society, the commercial classes were outside the logic of the system. It was the revival of trade from the 11^th century on which brought into being a class of merchants and town-dwellers who would, in time, seek protectors for their interests. These economic changes are the "endogenous variable" which Spruyt says set off political innovation in feudal society.

THREE COMPETING MODELS OF EARLY MODERNITY

Spruyt holds that the relative size and strength of towns explains the political coalitions which came into being. In France, which became the model of the victorious state system, towns were small and the bourgeoisie accordingly entered into alliance with royal power against local nobles and bishops. In northern Germany, towns were more significant. Their Baltic and North Sea trade was in bulk products with low profit margins. The central power having weakened itself in futile attempts to control Italy, power had devolved to the German princes. There was no real central power with which the commercial classes could ally themselves. Not wishing to be subject to the princes, the North Sea towns banded together in city leagues, the most famous of which is the Hanseatic League, to provide for their common defense and assert political control over their markets.

In Italy there were other variables. Cities had never disappeared there, nor was the nobility exclusively rural. Merchant oligarchies sprung up on the basis of long-distance trade in luxury goods with high profit margins. This made the towns more competitive and less likely to band together, except when temporarily allied with the Papacy against intrusions by the German Empire. Indeed, the towns fought one another continually. Some became local territorial states in a sense, but never achieved internal politically stability based on an accepted hierarchy.

SUCCESS OF THE TERRITORIAL STATE

Spruyt believes that the territorial state prevailed in this competition, not because it was militarily superior but because its institutional logic made it a more reliable protector in the eyes of the pivotal social force, the new commercial classes. Continual city-state warfare in Italy created an opening for foreign encroachment by Aragon and France. The Hanseatic League was plagued by "free-rider" problems – the inability of the League to make its constituent town governments keep agreements made in the name of the whole body. Finally, once the state form spread, states found it easier to deal with similar organizations with fixed boundaries and the power to make their citizens answerable for international agreements made by the sovereign.

In this new power field, the German princes remodeled their domains into small-scale territorial states, as did the surviving Italian city-states, in order to play the new game. The German towns, unable to remodel themselves into a Low German version of the Dutch Republic, fell under the sway of the princes, although Hamburg, Lübeck, and Bremen lasted a while longer as micro states. Everywhere, "international relations" came into being, resting on fixed boundaries. People were either inside or outside of borders, but they were under the rule of some sovereign. The citizen/alien or friend/foe distinction came into full play.

AN EXTREME CURE FOR A LITTLE ‘FREE-RIDING’?

Looking at the European state system from the other end of the telescope, one can only wonder if our ancestors didn’t pay an excessive price to deal with a little free-riding. That merchant capitalists in France and elsewhere looked to territorial monarchs to reduce their "information" and other costs with standard weights and measures, predictable taxation, and provision of justice which bypassed local feudal magnates may well explain much of what happened. The possibility remains that even those merchants who benefited substantially from central administration made a serious mistake which their descendants had reason to regret.

INSTITUTIONAL COMPETITION: ROUND TWO?

At this late date, we might wish to savor the classical liberal insight that all politics is about plunder ("rent-seeking"). Certainly, this insight gave content to many battles later fought out within the victorious territorial states. Unfortunately, liberal victories were cut short, to say the least, by the consequences of battles fought between these same states. Hence our departing 20^th century – and hence the hope, or fear, that the state system as we have known it may be unraveling.

National states have suffered a certain decline in respect related to the criminal demands they made on their societies in this century. This goes well beyond conventional distinctions about ideologies or good and bad nations. It goes to the heart of the institutional form. Are people prepared to continue paying the costs in blood and treasure of this political form, whatever its possible efficiencies four centuries ago? We know now what it can cost.

UNIVERSAL PHILANTHROPIC EMPIRE, CITY-STATES, OR WHAT?

If one were Oswald Spengler, one might say everything is once again up for grabs, that the next century will go to those who have the courage to throw the historical dice. There would be references to Caesar, the Rubicon, and so on. Unfortunately, I am not up to Spengler’s level of pessimism, or optimism.

Certainly, the bipolar Cold War system gave a Europe break from state-level warfare. Elsewhere, a lot of people were killed. And now the costs of the Cold War can be reckoned. But the Cold War raises another alternative: universal empire. With the Soviet claimant gone, only the US Empire has the resources to bid for universal rule. But claims that US rule is necessary to make the global economy go, to make it more efficient, ecologically friendly, and all the rest, or to prevent disorder and disruption, seem rather weak and thin compared to earlier imperial doctrines. This may explain the "ideological turn" in US policy in recent years: the US Empire will uplift the downtrodden, enforce Universal Human Rights, implement sundry Humanist Manifestos, wash and wax your car, and realize the Kingdom of God on Earth, all at an affordable price.

Many suspect that the crazed attempt by existing US political elites to make the world safe for social-democratic ideals and state-connected profits for the right sort of capitalists will fail in the long run. (God help us, if it "succeeds" – and what could that possibly mean?) But it could prove quite costly and might make us almost want those competing states to come back. Spruyt wonders if the European Union constitutes a sort of modern Hanseatic League, since it is not exactly a state but can rely on existing states to carry out its policies. Maybe it is and maybe it isn’t. Given the character, so far, of the EU and its policies, one can only hope that it does not become a proper state. I say this, not because it might challenge the US Empire, which would be laudable, but because of what it will do to Europe. There must be some other way for Europeans to be prosperous and independent.

Nonetheless, Spruyt’s book is both interesting and important. The analogy between the Hansa and the EU also brings to mind what may be the biggest problem in Spruyt’s account. Nowhere is a clear distinction drawn between trade and political capitalism. But surely there is a difference between traders who use political means to wealth and those who do not, just as there is a difference between the incentives on which merchants act and those on which politicians act. The drive of the latter for power, wealth, and fame might reflect antisocial incentives and calculations. This bears addressing in any reconstruction of the rise of states. In particular, as Guido Hülsmann points out, there may be another "logic" at work, whereby rulers who have plundered their existing territories to their economic limit seek wider fields of political profit.¹ One doubts that an overriding concern to reduce people’s information and judicial costs would drive the process.

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