Modern developed societies are rich and secure in large measure because citizens possess the civil right to form organizations and have access for this purpose to a set of legal tools that the government provides to everyone on essentially the same terms. Entrepreneurial activity thrives where organizations can freely form and freely dissolve and resources can move from lower to higher valued uses. Such an environment is also conducive to political security, for a competitive economy, with open access to markets and organizations, underpins economic interests needed to support a competitive de ... More

Modern developed societies are rich and secure in large measure because citizens possess the civil right to form organizations and have access for this purpose to a set of legal tools that the government provides to everyone on essentially the same terms. Entrepreneurial activity thrives where organizations can freely form and freely dissolve and resources can move from lower to higher valued uses. Such an environment is also conducive to political security, for a competitive economy, with open access to markets and organizations, underpins economic interests needed to support a competitive democratic political system. These advantages are obvious, yet perhaps eighty percent of the world’s population still lives in countries that prohibit open access to organizations and whose governments cannot enforce rules that treat every citizen the same. Why have so few societies moved to open access? We examine the experiences of the first developing nations of the eighteenth and nineteenth centuries, and how they came to grant their citizens organizational rights. The transition was not easy. Neither the political changes of the Age of Revolutions nor the beginnings of economic growth alone led to open access. In important ways, change initially occurred in the opposite direction, as political coalitions restricted access to rent-generating organizations in order to maintain control. Eliminating rents from privileged organizations threatened the entire foundation of political and social order. We document this problem and trace the difficult path by which these countries became modern civil societies.