The Limited Access Order (LAO) conceptual framework is an excellent way to understand why developing countries work the way they do, analyze their political and economic dynamics, and formulate policy ideas appropriate to their context. Its focus on power, violence, rents, and elite bargains provides far greater explanatory and predictive power than the standard template that uses developed countries as a model for how countries ought to work. As such, everyone in the development field working in a policymaking role should make use of it.
Created by Nobel Prize winner Douglass North, John Wallis, Steven Webb, and Barry Weingast, the LAO framework argues that:
No one, including the state, has a monopoly on violence . . . An LAO reduces violence by forming a dominant coalition containing all individuals and groups with sufficient access to violence . . . The dominant coalition creates cooperation and order by limiting access to valuable resources – land, labor, and capital – or access [to] and control of valuable activities – such as contract enforcement, property right enforcement, trade, worship, and education – to elite groups . . . The creation and distribution of rents therefore secures elite loyalty to the system, which in turn protects rents, limits violence, and prevents disorder most of the time.
Elites use their control of politics to limit the ability to form organizations that can threaten their interests. This allows them to control economies, and gain a disproportionate share of whatever wealth a society creates. Such conditions are especially stark in the less developed LAOs.
Privileged individuals have privileged access to social tools enabling them, and only them, to form powerful organizations. In limited access orders the political system manipulates the economy to create rents as a means of solving the problem of violence. Acknowledging this direct link between the creation of rents and maintenance of order enables us to integrate economic and political theory in a new way.
In contrast, Open Access Orders (OAOs)—which describe how developed countries typically work—use a rules-based system to maintain order.
The open access order relies on competition, open access to organizations, and the rule of law to hold the society together. These societies use competition and institutions to make it in the interests of political officials to observe constitutional rules, including consolidated political control over all organizations with the potential for major violence.
As the two types of societies differ fundamentally in how they operate,
Directly transferring the institutional forms and mechanisms of open access orders to LAOs will not produce development – even if the LAO adopts the forms with good will and good intentions . . . The logic of the limited access order takes any institutional form or mechanism and bends it to the purpose of rent-creation to sustain the existing dominant coalition.
Applying the LAO Framework to Pakistan
I use this framework to analyze Pakistan in a report for the Norwegian Peacebuilding Resource Centre (NOREF). As I explain in “Power and Politics in Pakistan,” the country fits the framework very nicely:
Patronage and the capacity for violence play crucial roles in determining political outcomes, and manifest themselves in repeated coups, sectarian conflict and feudalistic relationships. Political parties and the military are merely platforms that grant various elites access to state resources. The military in particular has derived huge economic assets from its strong political position. Combined with a weak and corruption-ridden state, such conditions have produced a government where institutions work very differently for different people.
The LAO model offers particularly useful insight into the conduct of politics in Pakistan and why change is so difficult:
Political parties and the military are in many ways merely platforms granting various elites access to state resources. The former are highly personalised, which is a common organisational feature in less developed LAOs because individuals and their families can leverage resources and longstanding relationships to achieve their aims more effectively than other organisations, while the state is unable to enforce rules and commitments on its own. The two main parties in Pakistan (like the largest parties in India and Bangladesh) both depend on personal relationships to maintain their cohesion and durability; transferring control to anyone outside the immediate family would probably lead to their dissolution. Other organisations, such as large business groups, are also built around families. The only exception to this general rule is the military, which is far more institutionalised than any other large player, giving it huge advantages and allowing it to enforce loyalty without relying on continual informal agreements.
The state may not work well for most of the population, but as long as it serves elites’ purposes, there is no urgency to extend public services or provide equitable justice. For those in power there is an incentive to limit the use of state resources to the narrowest group possible.
I shy away from the standard prescriptions in making my recommendations. Instead, I look for ways to gradually change incentives and move the country towards a more rules-based system that does not depend on violence:
As a start, steps must be taken to increase political stability by strengthening incentives for groups to achieve their aims peacefully. Securing peaceful (even if temporary) access to rents will play a crucial role in any negotiation. . . . A second goal should be that of enhancing the state’s ability to enforce the rule of law impersonally and equitably, especially in its dealings with non-elite-run political, economic and social organisations. . . . The goal should be to encourage the business community (and business diaspora) to seek profits from improving productivity by investing in learning, efficiency and technology rather than seeking rents from the state (or from tenant farmers) and parking their savings offshore. This will result in more firms that are interested in improving the rule of law and removing bottlenecks to growth, such as in the energy sector. Increasing the number of players will in itself enhance openness and compliance with rules by limiting the ability of any group to create exclusive partnerships with politicians.
Please see the whole report to read all the recommendations. It ought to prove useful not only to anyone working on Pakistan but also to anyone interested in understanding the LAO framework and how it can be used to better understand and formulate policies in less developed countries.
For a more thorough account of limited access orders, read Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History and In the Shadow of Violence: Politics, Economics, and the Problems of Development.
