Identity, religion, and the state: The origin of theocracy

Why do states become theocracies? Johnson and Koyama (2019) analyzed the transition from a conditional-toleration equilibrium, in which feeble state capacity allows distinct religious groups to co-exist under a system of religion-based identity rules, to a religious-toleration equilibrium, in which a strong state applies secular general rules without the need for religion as a legitimizing force. This implies that religious legitimacy and high state capacity are substitutes. We explore the alternative possibility that religious legitimacy and a strong state can be complements; that is, religion and high state capacity work together to extract resources from the citizenry. The result is an equilibrium of religious rather than secular general rules in which high state capacity and religion reinforce each other—a theocracy. An empirical analysis of the transition from premodern to modern theocracy, based on a unique dataset of religion and politics in world history, indicates that the adoption of general rules in the modern era differed systematically between societies in which strong state capacity was a complement rather than a substitute for religion.