There is an astounding number of historical phenomena with explanations lacking economic reasoning. Such is the case with the observed “divine right of kings,” or “divine monarchy,” commonly discussed in history textbooks. This ascribed status is common; aside from Europe, we find examples of divine monarchy in Asia, South America, and Africa.
If we were to extend our definition of divine monarchy to include tribal leaders, then our list might be even longer. The phenomenon also stretches much further back in time; Sumerians had god-infused monarchs, and the oldest written story in existence describes the Sumerian demigod, King Gilgamesh. While divine monarchy is often perceived as exploitative or absurd, I argue that it was not only wealth-maximizing for monarchs, but likely also for their subjects.
To begin, it is important to remember the nature of commitment issues in markets. Contrary to the contemporary layman’s perspective, trust is not a given; the cost of signaling commitment and trustworthiness to other market participants is higher in markets with lesser property rights. Save for some jarring criminal past, the contemporary reader could apply to a local McDonald’s for a job and likely be hired on the spot. Property rights are enforced so well that if one were to steal from McDonald’s after being hired, swift renumeration and punishment could be sought via courts and police.
Because postcontractual punishment is so easy to obtain, McDonald’s is inclined to hire anybody with a pulse, because trusting a random individual is near costless in situations like this one. However, in many parts of the world, this is not the case; while you may feel comfortable buying grapes from a random vendor in the United States, you may not feel the same way about a grape seller in war-torn Afghanistan, where there are no overarching authorities to guarantee postcontractual renumeration (and the risk of fraud or severe bodily harm is exponentially higher). In the past, markets were more like contemporary Afghanistan’s, and this sets the scene for a discussion on monarchy in the past. (My article here explains further the relationship between signaling and court enforcement if the reader is still interested.)
Monarchs are not immune to the aforementioned commitment issues. In fact, they were likely more susceptible to them. Richard Posner’s work on primitive markets enlightens us on this issue. A very real hindrance to building wealth in the past was the potential theft of said wealth. For every dollar earned, more must be spent on securing one’s wealth. Like it or not, monarchs (and nobles alike) were one of the only groups in medieval society that amassed and controlled sizeable fortunes. With great wealth comes great responsibility; that is, the responsibility to protect the wealth.
So, how did monarchs secure their property? They could rely on courts, but for nobles (and especially monarchs) there were no higher authorities to appeal to; if a monarch was “ousted” or murdered, any recompense would be decided by the successor, who conveniently benefitted from this role. I’m reminded of Shakespeare’s Macbeth; when King Duncan is slain, his son does not call the police or sue Macbeth, he lobbies foreign monarchs to recover the throne via force. Since court enforcement is a comparatively useless tool for preventing undue harm, monarchs must find other methods of securing trustworthy transactors, lest they succumb to theft and autarky.
On one hand, we would expect forms of signaling to stand in for court enforcement; this would allow for bad actors to be sorted out ex ante, or before the exchange occurs. I think an easy example of this is eunuchs—servants that “signaled” their safe intentions by voluntary castration. A eunuch that “reneged” on his contractual obligations would certainly lose a lot, as his “specialization” is rendered useless but he is left without childrearing capabilities. Gordon Tullock’s work on hereditary succession also explains the necessity of heirs for a stable monarchy, something that eunuchs could not have, incenting them against harming their masters.
On another hand, signaling is not the only solution to mitigating transaction costs. As the work of Peter Leeson (such as this) and others suggests, superstitious norms often act to solve issues in markets. As another example, Leeson also argues here that the use of superstition allowed for efficient dispute resolution in medieval Europe. I argue something similar: that the use of superstition allowed for monarchs to safely transact.
The idea of “divine monarchy” functionally renders everybody eunuchs. Everybody Christian, that is. If your subjects are Christian, and Christian norms uphold the idea that monarchs are divine (or are protected by an entity that is divine), then nobody can realistically replace a monarch, because only the “x dynasty” is divine or divinely protected.
It might be easy to imagine that divine monarchy is beneficial to monarchs, but logically, it is beneficial to any potential transactor as well, as long as the exchange is voluntary. Soldiers, staff, and courtiers would benefit. As extensions of the royal family, employees of nobility would benefit as well; in many historical countries, this would entail almost the entire population. The ability to transact with those of considerable wealth is incredibly lucrative and appealing.
While many view divine monarchy as an extreme version of megalomania, I conclude that it could possibly be a wealth-maximizing arrangement for all parties involved. Not only would it benefit monarchs by securing wealth, but it would also benefit any potential transactors, a list that would exclude very few. This is not to say that monarchs were not megalomaniacs, but only that divine monarchy exists for reasons beyond megalomania.
It is hard to believe that so many countries and populations would subscribe to a belief that only benefitted substantially less than 1 percent of the population. As with any prevalent phenomena in history, we should begin our explanation by evaluating how individuals would benefit, rather than how they are “exploited.” To do otherwise is to assume that historical actors were not rational, excellent for evaluating simple organisms, perhaps not so for humans.
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