Bandits Within the State: the Organizational Origins of Spontaneous Order

Abstract: The economics literature has long emphasized that order in society arises frequently through a spontaneous process. In this literature, any order arising outside the state is spontaneous. One of the most important examples of such processes is the emergence of norms of ownership. The canonical examples include norms of first possession, such as along the English coast or among miners during the Gold Rush. One of the most interesting features of these processes is that they arise without any organizational structure. This paper argues that in many instances, organizations are an important part of the story of spontaneous order. It uses examples from the American frontier and contemporary Afghanistan to illustrate the argument. In the context of the United States, claim clubs replaced informal norms of first possession early on in each of the major frontier sectors. In Afghanistan, most norms of ownership derive significance within the context of customary governance organizations that perform most of the functions normally associated with the state. As we show, attention to these underlying mechanisms will help scholars gain a greater understanding of the diversity of paths towards political order.