Culture, sovereignty, and the rule of law: lessons from Indian country

The rule of law is a process whereby the citizens—society—are in a race with the state—government—to thread the needle between anarchy and despotism, or to live in “the narrow corridor,” as Acemoglu and Robinson (2019, Penguin Books) call it. In the narrow corridor, private and collective institutions balance the coercive power of the state necessary to prevent citizens from taking from one another with private control of resources and exchange that create gains from trade. We argue that pre-contact Native Americans, as residual claimants of rents created by rules of law embedded in cultural practices that achieved this balance, were able to build healthy economies based on clear property rights and exchange. During the early period of European contact, American Indians and Europeans continued to abide by rules of law that encouraged trading rather than raiding. By the nineteenth century, however, rules imposed by the federal government declared Indians to be “wards” of the state and replaced productive trading rules of law with predatory rent-seeking rules. Settler governments justified rent seeking on the grounds that tribal customs and cultures were lawless and inefficient, but a deeper understanding suggests that those more local institutions represented a rule of law that balanced collective action and private action in ways that encouraged investment and exchange. Ironically, federal laws have suppressed Indian liberties, caused abject poverty, and left jurisdictional gaps in the rule of law that have enabled disorder. We conclude that the path back to the narrow corridor requires granting American Indians the sovereignty that will make tribes residual claimants of rents created by productive rules of law of their own making.