We build on the model of Chapter 3 to explain how sedentism could have developed in response to better climate conditions involving higher means and lower variances for temperature and rainfall. Sedentism is defined to mean a willingness of human populations to stay at the same site for multiple generations despite occasional periods of low productivity in relation to other sites. We identify three causal channels leading to sedentism. First, there is a short-run channel where climate improvement leads agents to remain at sites when weather there is temporarily bad, because when conditions are harsh, they are less harsh than they were under the previous climate regime. Second, there is a long-run channel where better climate leads to higher regional population. This causes some people to remain at sites where weather is temporarily bad because sites with good weather are now more heavily occupied than before. Finally, there is a very-long-run channel where higher regional population leads to the use of previously latent resources and technological innovation. These mechanisms help to explain the rise of large sedentary communities in southwest Asia during the Epi-Paleolithic and in Japan during the early Holocene.

The subject of early warfare is controversial: Some authors argue that it has been prevalent throughout human biological evolution while others argue that it arose more recently. We study warfare over land among internally egalitarian groups, which were the norm for most of human prehistory. Archaeological evidence for Europe and southwest Asia indicates that warfare was rare in the Upper Paleolithic, common in the Mesolithic, and widespread in the Neolithic. This suggests an increase in the frequency of warfare along the trajectory from mobile to sedentary foraging, and from sedentary foraging to agriculture. We constructs a model in which two groups occupy sites with possibly different productivities, and each group must decide whether to attack the other. If either group attacks, the probability of one group seizing the land of the other depends on the sizes of the two populations. If neither attacks, there is peace. We show that when individual agents can freely migrate between sites before group decisions about warfare are made, a stable equilibrium with warfare cannot occur. However, a model involving costly individual migration and Malthusian population dynamics can generate warfare if climatic or technological shocks alter the relative productivities of the sites.

Prehistory refers to the period before written documents. Evidence about the events of prehistory is obtained from archaeology, and from anthropological research on small-scale societies of the recent past. For the vast majority of human existence, people lived in small mobile foraging bands. In the trajectory that ultimately led to large-scale societies, six crucial transformations stand out: the transitions to sedentism, agriculture, inequality, warfare, cities, and states. We suggest that economic theory can be used to explore the causal factors behind these transitions. We sketch the nature of the evidence available from archaeology and outline basic economic ideas for non-economists. Our general method in studying a particular type of transition is to review well-documented regional cases from archaeology, together with other relevant empirical generalizations, and then construct a formal economic model to account for this body of evidence. After deriving predictions from our model, we often discuss further regional cases that were not used in the construction of the original model. We will preview the conclusions reached in subsequent chapters, briefly survey the economic literature on prehistory, and compare our framework to the theoretical frameworks used by archaeologists and other scholars.

A large body of archaeological and anthropological research suggests that warfare is more common when societies are stratified. This is true for societies based on either sedentary foraging or agriculture. We argue that warfare in stratified societies does not require climatic or technological shocks, and results from competition among rival elites over land rent. In our model, elites recruit specialized warriors by offering booty in the event of victory, which may involve elevation to elite status. After each elite recruits an army, the rival elites must decide whether to attack, defend, or flee. We solve for the equilibrium at the combat stage as a function of army sizes, and use backward induction to solve for the equilibrium army sizes. If stratification is relatively low (the land rents are small relative to commoner food income), elites can sometimes win through intimidation without fighting an actual war. But if stratification is high, such equilibria disappear and the only outcome is a mixed-strategy equilbrium with a positive probability of open war. In either case, successful elites expand their territory. Fiscal constraints on the capacity of elites to recruit warriors can sometimes limit warfare, but do not prevent it entirely.

This chapter reviews the literature on the origins of cities and states. We argue that purely agricultural societies are unlikely to have cities because population dispersal reduces travel costs for farmers and herders. But incentives for agglomeration could arise from the productivity of urban manufacturing, the need for collective defense, or cultural factors. We supplement our study of Mesopotamia with archaeological data on state formation in Egypt, the Indus Valley, China, Mesoamerica, and the Andes. All of these cases had highly productive food technologies, pre-existing stratification, and close links with urbanization. Based on our models in Chapters 6, 8, and 10, we suggest three pathways to a state. In the “property rights hypothesis,” improving food technology and long-run population growth lead to the creation of elite property rights over the best sites, a shrinking commons, and falling commoner wages. This eventually triggers urban manufacturing and city-state formation. In the “elite warfare hypothesis,” warfare among elites over land rents causes defensive agglomeration in cities and territorial expansion by successful elites. In the “environmental shift hypothesis,” commoner populations migrate toward refuge sites (often river valleys) controlled by local elites, again leading to falling commoner wages, urbanization, and state formation.

Sedentary foraging is not identical to agriculture, which involves cultivation of plants and eventually their domestication. Cultivation appears to have developed in southwest Asia during a large negative climate shock called the Younger Dryas. After a prolonged period of warm and wet conditions during which regional population reached a high level, an abrupt reversion to colder and drier conditions forced this large regional population into a few high quality refuge sites where surface water was available from rivers, lakes, marshes, and springs. The resulting spike in local populations at these sites drove down the marginal product of labor in foraging and triggered reallocation of some labor toward cultivation. Once some populations adopted cultivation, learning by doing reinforced the incentive to engage in it. Eventually climate improved in the Holocene, regional population grew, and agriculture spread. We believe this mechanism accounts for the archaeological facts in the case of southwest Asia, and similar mechanisms might account for other pristine agricultural transitions (e.g., in China and sub-Saharan Africa). Our model clarifies the causal roles of climate, geography, technology, population, and migration in the development of pristine agriculture. It also helps explain why certain regions did not experience pristine agricultural transitions.

Our study of economic prehistory begins with mobile foraging in the Upper Paleolithic. Foraging bands can obtain food from various natural resources. At a given point in time, some resources are actively exploited while others are latent. Social learning improves techniques specific to the exploited resources but with diminishing returns over time. Societies can experience lengthy periods of technological stagnation where latent resources are not used due to inadequate techniques, but techniques do not improve because these resources are not used. A positive climate shift can increase the standard of living in the short run, generating population growth in the long run. Agents then exploit previously latent resources, broadening the diet. Once new resources are in use, learning by doing raises productivity in the very long run, causing more population growth, until a new equilibrium is reached with an increased population and wider diet. The expansion of technological knowledge creates a ratchet effect where a return to the original climate regime need not imply that population or diet breadth will return to their initial levels. These mechanisms can explain how humans migrated into more severe environments over time without reference to resource depletion due to overharvesting.