Building state capacity: lessons From ISIS

The New York Times has a very interesting article on ISIS and how they created a bureaucracy to administer their territory and collect taxes.

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The New York Times has a very interesting article on ISIS and how they created a bureaucracy to administer their territory and collect taxes. They recovered 15,000 pages of internal documents revealing how, in addition to brutal beheadings, ISIS paved potholes and ran a DMV.

ISIS built a state of administrative efficiency that collected taxes and picked up the garbage. It ran a marriage office that oversaw medical examinations to ensure that couples could have children. It issued birth certificates — printed on Islamic State stationery — to babies born under the caliphate’s black flag. It even ran its own D.M.V.

ISIS retained the civil service of the lands they captured.

They also suggest that the militants learned from mistakes the United States made in 2003 after it invaded Iraq, including the decision to purge members of Saddam Hussein’s ruling party from their positions and bar them from future employment. That decree succeeded in erasing the Baathist state, but also gutted the country’s civil institutions, creating the power vacuum that groups like ISIS rushed to fill.

Their effective bureaucracy allowed them to tax transactions, and the documents revealed

More surprisingly, the documents provide further evidence that the tax revenue the Islamic State earned far outstripped income from oil sales. It was daily commerce and agriculture — not petroleum — that powered the economy of the caliphate.

Interestingly, in certain circumstances ISIS acted as a profit maximizing agent by reducing bureaucratic hurdles to economic activity.

To increase revenue, the militants ordered the agriculture department to speed up the process for renting land, streamlining a weeks-long application into something that could be accomplished in an afternoon.

Surprisingly, ISIS was more effective administrators than the Iraqi government.

Residents also said that their taps were less likely to run dry, the sewers less likely to overflow and potholes fixed more quickly under the militants, even though there were now near-daily airstrikes.

The article illustrates the challenges of building state capacity, roughly defined as the ability of a state to effectively administer its territory. State capacity has become a hot topic in development literature. In order to have a common market and rule of law, first a state must create an effective monopoly on violence.