The Strategic Foundations Of Political Sovereignty

Maintaining order is perhaps the most important problem confronting society, and establishing a sovereign ruler with monopoly control over the execution of violence creates two distinct security problems: one between private citizens (the horizontal dimension) and the other between the ruler and private citizens (the vertical dimension). I develop a framework to study these dual security problems and the incentives created in solving them together. I show that self-enforcing political sovereignty presents a problem of reciprocal agency, where every individual is simultaneously a principal and an agent and that a ruler will extort rents in exchange for upholding the social contract-the social contract tax-which crucially relies on balancing two distinct incentives, the desire to predate and the opportunity cost of political order. I consider the problem of selecting a ruler and show that the citizen who extorts the least is either the richest or the poorest, depending on the level of economic inequality.