As I see it, a genuinely economic theory of the nation state must satisfy at least two criteria: (1) it has to explain why a community of self-seeking individuals is better off with certain forms of decision-making centralized rather than dispersed, and ( ) it has to explain what factors determine the optimal jurisdictional area over which this centralized decision-making will take place. At the risk of oversimplification we may say that an economic theory of the state must explain why both anarchism and one-word government are generally nonoptimal political arrangements. Recently, James Buchanan (1975, pp. 1-73) and Robert Nozick (1974, pp. 3-119) offered economic accounts of the origin of the nation state. In their view, the nation state emerged to reconcile quarrels among self-seeking individuals that invariably occur in the 'state of nature'. Inasmuch as quarrels add to the transaction costs of economic activity, a rational basis exists for the creation and maintenance of a quarrel-quelling agency of one sort or another. Buchanan named his quarrel-quelling agency the 'protective state', and Nozick named his the 'minimal state'. However, the fact that Buchanan saw his 'protective state' as being grafted onto a discordant 'state of nature' by way of a social contract and that Nozick saw his 'minimal state' as gradually evolving out of the competitive market process (the unintended result of self-seeking behavior), suggests that the modem Hobbesian and the modern Lockean have little in common. Yet, as I shall demonstrate, they have much in common. In fact, Buchanan's theory of the 'protective state' and Nozick's theory of the 'minimal state' are essentially complementary and together provide a novel framework for developing an economic theory of the state that meets the two aforementioned criteria. In summarizing their arguments, I shall apply the model of McGuire's (1974) analysis of the technology of public-goods provision. In this way the Buchanan-Nozick theory may be used to derive an empirical theory of early state formation. I must emphasize that it is the public-goods model that provides the framework for combimng or reconciling the two theories. * Associate Professor of Economics, Babson College. An early version of this paper was presented at the June 1976 meeting of the Western Economic Association in San Francisco. Public Choice 35 (1980) 17-26 .All rights reserved.