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I think you make a good point about the threat of violence being something that makes humans acquiescent to top-down authoritarianism, and surely that is one of the reasons why egalitarian city states eventually after hundreds of years were overthrown. Probably natural disasters and climate changes were another reason they eventually dissolved. However, in my opinion your other option, benefiting from margin advantages due to scale, would only be a factor if people ALREADY had a capitalist mindset. Why would they be thinking of accruing more when they had what they needed? If they had an interest in accruing "more" it would be devoted to the deity--the temple, etc. These city states did a lively business of trade with other cities, and each city tended to specialize in products such as jewelry or pottery or metalwork that would then be traded with other cities. However, they did not seem to have had a system whereby an individual artisan could accumulate wealth and "move upward" in society, because there was no "up." All we know is that houses and gardens seemed to be around the same size as each other, and that household goods in each house seemed to be about the same, with no house having riches, while other houses had little. There was no sign of servants. However, each house was individually decorated, sometimes quite dramatically, to make it unique. I'm sure there was competition on a small scale in such societies--who was the more successful hunter, whose pottery won the most admiration, but one thing that characterizes such societies is that the group teases and takes the piss out of anyone who gets a big head. Competition and success never translates to POWER. This is characteristic of ALL the societies like this with a literature or written records, so we know it was pretty common. We see it in most of the major epics. This seems to have been a conscious choice in these societies, because clearly others made different choices. So I completely disagree with you about societies based on competition, meritocracy and capitalism. Growth and capitalism by nature can only benefit an elite; capitalism carries the seeds of its own destruction within it.

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