Microeconomics,, 16th Canadian Edition

(Sean Pound) #1

16.1 Basic Functions of Government


Governments are very old institutions. They arose shortly after the
Neolithic Agricultural Revolution turned people from hunter–gatherers
into settled farmers about 10 000 years ago. Over the intervening 100
centuries, the functions undertaken by governments have varied
enormously. But through all that time, the function that has not changed
is to provide what is called a monopoly of violence. Violent acts can be
conducted by the military and the civilian police arms of government, and
through its judicial system the government can deprive people of their
liberty by incarcerating them or, in extreme cases, by executing them.
This is a dangerous monopoly that is easily abused. For this reason, stable
and well-functioning societies have systems of checks and balances
designed to keep the government’s monopoly directed to the general
good rather than to the good of a narrow group of privileged “insiders.”


The importance of having a monopoly of violence can be seen in those
countries whose governments do not have it. Somalia and Nigeria in
recent years and China in the 1920s provide examples of countries in
which individual warlords commanded armies that could not vanquish
each other. Mexico and Russia provide examples of organized crime
having substantial power to commit violence that the government cannot
control. In extreme cases where many groups have almost equal ability to
exert military violence, power struggles can create havoc with normal
economic and social life. Life then becomes “nasty, brutish, and short”—to

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