This is another post that is as much about organizing my thinking on a subject as it is about anything else. It's primarily elicited by a lot of ancient and medieval history that I've been reading. It's based on basically two observations. First, when state power breaks down, we universally see non-state actors taking on more of the attributes of the state. This can be the growth of secular powers among bishops in dark ages Italy or the broadening of feudal kinship groups from simple extortion of subject populations to gradually take on the duties normally provided by formal governments, such as providing justice and upkeep of at least a very minimal civic infrastructure (Chinese kinship groups and warlords show some of the same dynamics, as do conquest dynasties from the plains, but these are building upon a higher degree of formal structure and I am a bit less certain about the dynamics in these cases, not that I am exactly expert in the western case either).
The second observation is how we see various different types of organizations taking upon a similar set of tasks across different societies that have basically now been taken up by the modern state. In particular, I'm thinking of the frequent formation of guild like entities in different societies and how these, as well as religious bodies, usually end up fulfilling the kind of social insurance roles filled by the modern state. Guilds frequently perform tasks such as providing subsistence to widows and orphans of former guild members as well as providing services such as burial. We also see mutual assistance compacts that serve to provide a degree of judicial protections, which bear at least some similarities to protections later extended by the modern state to its citizens.
Something that largely preceded modern growth is the break down of these institutions (largely because the state was attempted to centralize and expand its power, to the extent this had to do with growth it happened to be an unanticipated benefit of political aggrandizement, history has a rather of large number of instances of good things happening for reasons that are not philosophically or morally defensible). I don't believe that it is any coincidence that Britain possessed a legal system which extended rights to its citizens that obviated the need for some guild services and that it was the first to experience the industrial revolution (not that I'm claiming causality here, this is what I would call a contingent, or really catalytic factor, rather than a causal one). It's also notable that states with strong guilds tended towards moving slower towards industrialization (I particularly have Austria-Hungary in mind, guilds were also strong in other parts of Germany however, as well as Italy, so I do want to emphasize that I see this as an influential and not causal factor).
The reason I believe this had such a significant impact is that pre-modern societies had substantially divided sovereignty (and not in the rationalized modern institutional sense of defined hierarchies and shared responsibilities between various levels and branches within one larger entity but rather in a sense of competing claims by institutionally separate entities which were decided by raw power more than anything else) that was shared between a variety of corporate bodies, often crossing formal political lines. This meant that even nominally commercial entities, guilds being the most notable example, also found themselves tied up with a variety of non-commercial interests, some political, others simply representing people's non-economic interests such as social status or security. I think a not insignificant part of modern growth was the rationalizing of these ties, in particular restricting the kinds of non-economic activities that tied people to these corporate bodies and allowed them to act more as individuals* as well as restricting most competition to the economic realm and away from the social and status based activities that tied up so much time and effort in the pre-modern world.
In this sense, I see the primary role of the state as being a body which allows individuals to focus their efforts and competition primarily to the economic sphere by providing a venue in which society can address its numerous non-economic concerns (of course, the family also plays this role, I have what could loosely be called public concerns in mind). Something that is striking about the modern era compared to others is the extent to which competition is restricted almost entirely to the economic realm and to be primarily between individuals, rather than being competition in just about every sphere of human life and involving mostly corporate bodies with ascriptive membership (which is not to deny the ambition of individuals in earlier history in the economic, social, political, and especially military spheres, however it is striking the extent to which certain ethnic groups and corporate groups, whether guilds or family banking houses, dominated all spheres of pre-modern life). Once these impediments were removed and competition focused primarily on economic, rather than the whole realm of economic-social-political that makes up life, growth seems to accelerate markedly.
Following from this, I see the role of the state as keeping this separation firmly in place. Growth occurs because business is able to focus on business. The more that the state is unable to fulfill other social tasks, the more that businesses (or potentially other corporate bodies) will have to evolve to fill these social roles. This will erode the efficiency they gain by specialization on economic tasks. Many of these tasks, such as social insurance, are inherently inefficient. Their inefficiency proceeds from what they are, private institutions that used to fill these roles, such as guilds, did not provide them at all more efficiently than the state has been able to.
I'm not sure how coherent I've made the above, I plan to take up some individual aspects of this later. But this viewpoint is a really big part of what drives my politics. I am very pro-market and pro-business, however, unlike many I do not see them as essentially more efficient by their nature. I see them as efficient because they have such a short writ of things to be concerned with, they can treat all the inefficient stuff as things they can ignore since the state is there to pick up the residual concerns of the members of society. I see the biggest threat to this as the view that the private sector is more efficient by its identity as the private sector, rather than that it is more efficient as a result of the tasks it is called upon to fill and the short writ of factors it needs to take into account. For this specialization to occur, it is necessary for another entity, necessarily less efficient by the infinite size of the concerns it must address, to exist that can fulfill all of the social institutional roles demanded by the members of a society. The tendency towards the concept of additional stakeholders in business, as well as the tendency to try to get the private sector to take on roles previously fulfilled by the public sector, concerns me. I see it as threatening to widen the range of concerns the private sector must address beyond simple profit, which I believe would erode the market system.** More on this topic later.
* I plan a few posts on rational choice theory which will address how modern institutions such as democracy and aspects of the market system work to force people to act more as individuals and less as members of corporate bodies. For various reasons that would take time to go into, I see corporate identity as something that is more natural than the modern emphasis on individual identity. I do see individualism as a major advance, but I don't really see it as a natural unit. We see various forms of corporate identity pop up too quickly in times of lawlessness and it appears too often in various forms of historical political organization.
** I see a much more simple explanation for the development of markets as being the restriction of private activity rather than its expansion.