Institutions and Economic Growth: How Agriculture Shaped the Modern State

From the first grain stores in Mesopotamia to modern fiscal policies, food production has shaped the rise of states, economies, and institutions. Agriculture enabled taxation, governance, and social hierarchies, influencing economic inequality and political stability. This article explores how food systems created the foundation of modern societies and the divergence between centralized and decentralized governance models, leading to prosperity or hindering growth.

The Economic Divide and Institutional Heritage

The economic gap between northern and southern Italy remains significant, with GDP per capita in the north nearly double that of the south (ISTAT, 2022). Unemployment rates further illustrate this disparity: Calabria faces rates exceeding 20%, while Emilia-Romagna enjoys one of the country’s lowest, at under 6% (Eurostat, 2023). This persistent divide has deep historical roots, shaped by institutional structures and social dynamics. Edward Banfield (1958), in The Moral Basis of a Backward Society, introduced the concept of "amoral familism"—a societal pattern where loyalty is confined to immediate family, undermining broader cooperation and institutional trust. Decades later, Robert Putnam (1993) in Making Democracy Work demonstrated how northern Italy’s civic traditions and cooperative culture fostered stronger institutions and economic prosperity. However, to fully understand these regional differences, we must examine the foundational role of food production and distribution in shaping institutions.

Food Systems and Institutional Development

Economic growth and societal well-being are deeply intertwined with inclusive institutions that protect property rights, encourage innovation, and maintain stability (Acemoglu & Robinson, 2012; North, 1990; Tirole, 2017). However, these institutions did not develop in isolation—they were shaped by historical food systems. James C. Scott (2017) argues that centralized governance structures emerged primarily from the need to manage collectively large-scale grain production. Before agriculture, human societies were predominantly composed of small, mobile hunter-gatherer bands with relatively egalitarian structures. The domestication of plants and animals around 10,000 years ago allowed for surplus accumulation, which necessitated new forms of management and control.

Jared Diamond (1997) highlights that cereal cultivation—wheat, barley, rice, and corn—necessitated structured governance, facilitating permanent settlements, population growth, and increasing social complexity. The need to coordinate large-scale agriculture led to the development of administrative systems, record-keeping, and specialized labour divisions (Goody, 1983). These innovations also enabled the creation of taxation systems, trade networks, currency, and standing armies, which strengthened state structures (Polanyi, 1944).

Unlike perishable foods such as fruit or meat, grains were highly visible, harvestable at specific times, and easily taxable. This made them not only a vital economic resource but also a foundation for taxation, governance, and social stratification. The management of surpluses allowed for the emergence of political elites who controlled redistribution, as well as religious institutions that legitimized authority through rituals and temple-based economies (Mann, 1986). Consequently, civilizations such as Mesopotamia, Egypt, China, and the Aztec Empire developed rigid hierarchies, where bureaucratic states extracted wealth from the working population to maintain control over economic and military resources.

Centralized vs. Decentralized Governance Models

In contrast, societies based on pastoralism, fishing, or diverse horticultural systems often maintained decentralized and more egalitarian governance models. The Swiss alpine pastures, managed collectively for centuries, and the traditional fisheries of Southeast Asia exemplify communal governance structures that thrived without state intervention (Ostrom, 1990). Similarly, in Burkina Faso, West Africa, societies built around mixed cropping and livestock herding developed cooperative institutions that emphasized mutual aid rather than centralized control (Galor, 2022). This historical divide between extractive and inclusive institutions continues to influence economic trajectories today.

The European North-South divide reflects this institutional heritage. Northern Europe, where food systems historically relied on diverse agrarian structures involving grains, dairy, and fish, developed cooperative farming systems that fostered civic engagement and institutional trust. In contrast, Southern Europe, particularly regions dominated by latifundia—large estates dependent on cereal monoculture—retained extractive governance models that concentrated wealth and political power among a small elite. This pattern is also visible in Asia: China, a grain-based empire with a long tradition of centralized bureaucracy, contrasts with the more decentralized governance structures in maritime Southeast Asia, where trade-based economies encouraged institutional flexibility.

Institutional Resilience and Political Stability

The historical impact of food systems on governance is further evidenced by major political collapses. The decline of the Roman Empire coincided with disruptions in grain supplies from North Africa, triggering food shortages, political instability, and a weakened state apparatus (Tainter, 1988). Similarly, the French Revolution was preceded by rising bread prices and famine, which eroded trust in monarchical institutions and fueled social unrest (Schama, 1989). More recently, the Arab Spring was catalyzed by soaring food prices, exposing the fragility of authoritarian regimes unable to ensure food security (Lagi, Bertrand, & Bar-Yam, 2011).

The influence of food systems on political stability is also apparent in modern fiscal policies. Governments in countries with strong social welfare systems, such as Scandinavia, prioritize food security as part of broader social stability strategies (Esping-Andersen, 1990). In contrast, nations that fail to regulate food markets effectively or invest in sustainable agriculture remain vulnerable to social unrest, as seen in various historical and contemporary cases (FAO, 2021).

The Contemporary Relevance of Food Systems

"Tell me how you feed your population, I'll tell you how you govern"; historical governance models, shaped by food production and distribution, have evolved into modern economic structures that sustain global inequalities. Centralized, extractive states maintained control through surplus taxation and hierarchical administration, while decentralized, cooperative institutions promoted economic flexibility and social trust. These historical patterns continue to influence disparities in political stability, wealth distribution, and institutional resilience across the world.

Today’s food systems remain a critical determinant of institutional stability. Recent crises—such as the 2008 financial collapse, which triggered food price surges, the COVID-19 pandemic’s supply chain disruptions, and geopolitical tensions affecting fertilizers or grain exports—unveil the vulnerabilities of modern economies.

Understanding the economic divide between regions such as northern and southern Italy requires examining the institutional legacies shaped by historical food systems. As the world faces new challenges—ranging from climate change to geopolitical conflicts—the lessons of history remain crucial. Reevaluating food systems could serve as a foundation for reconstructing more inclusive and adaptable institutions that address contemporary challenges. As Jeffrey Pratt and Peter Luetchford (2013) observe, "Food has become a focal point for action (and reflection) on contemporary economic processes […] the most prominent area in which people try to realise an alternative economy." By fostering cooperative management, reducing economic inequalities, and ensuring resilience against crises, food governance could become a catalyst for systemic transformation.

References

• Acemoglu, D., & Robinson, J. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Crown Business.

• Banfield, E. C. (1958). The Moral Basis of a Backward Society. Free Press.

• Diamond, J. (1997). Guns, Germs, and Steel: The Fates of Human Societies. W.W. Norton & Company.

• Eurostat. (2023). Regional Unemployment Statistics. Retrieved from [https://ec.europa.eu/eurostat]

• Galor, O. (2022). The Journey of Humanity: The Origins of Wealth and Inequality. Penguin Press.

• ISTAT. (2022). Regional Economic Indicators. Retrieved from [https://www.istat.it]

• Lagi, M., Bertrand, K. Z., & Bar-Yam, Y. (2011). The Food Crises and Political Instability in North Africa and the Middle East. New England Complex Systems Institute.

• North, D. C. (1990). Institutions, Institutional Change, and Economic Performance. Cambridge University Press.

• Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press.

• Pratt, J., & Luetchford, P. (2013). Food for Change: The Politics and Values of Social Movements. Pluto Press.

• Putnam, R. D. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press.

• Schama, S. (1989). Citizens: A Chronicle of the French Revolution. Knopf.

• Scott, J. C. (2017). Against the Grain: A Deep History of the Earliest States. Yale University Press.

• Tainter, J. (1988). The Collapse of Complex Societies. Cambridge University Press.

• Tirole, J. (2017). Economics for the Common Good. Princeton University Press.