Existence and Evolution of the State:

A Conceptual Framework for Understanding the Whole Human History

Abstract: Understanding the evolution of human societies is the Holy Grail of the social sciences. From a viewpoint of interaction costs, this article develops a new theory of the state to shed light on the evolution. First, in a world where interaction costs are prohibitively high, there must be no human interaction and no state. Second, in a world of zero interaction costs, no state would be necessary. Between the two extremes, interaction costs determine not only the pattern of political and economic interactions: contractual exchange versus non-contractual violence, but also the interaction structure: bottom-up versus top-down, which defines the nature of a state or a society. Further, interaction costs can endogenously change through time and lead to the transformation of political and economic interaction framework and thus the transition of human society from primitive societies to non-contractual states, semi-contractual states, contractual states, anti-contractual states, and global contractual or anti-contractual states.