Government describes how a civilization is run in Call to Power II. There are twelve different forms of government in the game (including Anarchy, which is less a form of government than a state of chaos that exists between governments), each of which can be adopted once the appropriate advance has been discovered and has unique effects on a civilization's growth, production, science, gold, and military, as well as its citizens' loyalty and concern for the environment.
Certain governments enable special units that cannot be built under any other form of government. The Cleric, for example, can only exist under a Theocracy. Any of these special units you build can only exist under the government in which they were built. When you enact a new form of government, all of these special units will automatically disband and disappear from the game. For example, all Clerics created under a Theocracy will be lost when you switch to a Republic.