This Book Tests 4 Alternative Models of Economic Dictatorship: Scientific Planner, Stationary Bandit, Selfish Dictator, and Referee-Dictator

This book asks another core question: What truly motivated the Soviet dictatorship? What was the dictator’s objective function? What did Stalin and his allies most want to accomplish above all other things? We posit and test four alternative models of economic dictatorship. Our first model is the “scientific planner”–a benevolent dictator prepared to turn resource allocation over to planning experts, content to set only general rules and guidelines. The scientific planning model is that heralded in the official Soviet literature. An all-knowing party (the dictator) plays its leading role but leaves the concrete decisions to scientific planners. The planners follow the general principles and guidelines of the party and plan outputs and inputs using scientific norms and mathematical balances to achieve the best results for society.

The second model is Mancur Olson’s “stationary bandit,” based on Stalin as the exemplar. A stationary bandit is characterized by a long time horizon. No matter how ruthless, despotic, or evil-intentioned, the stationary bandit must maximize growth and development in his own selfish interest. A reasonably efficient, growing economy is necessary to maximize long-run tax revenues, achieve military power, and accumulate resources to reward political allies. The stationary-bandit model suggests that the growth-maximizing policies of the 1930s would have been pursued by any person in Stalin’s shoes. The stationary bandit is, in effect, a development planner. Given that the Soviet Union was backward and surrounded by capitalist enemies, the stationary bandit’s best strategy was to aim for rapid industrialization, high investment rates, and autarky.

A third model is the “selfish dictator,” whose primary goal is the accumulation of political power, which is achieved by strategic gift giving and the buying of political loyalty. The selfish dictator is driven not to maximize growth or welfare but to consolidate totalitarian control. When confronted with choices, the selfish dictator allocates resources to maximize political power not to achieve the best economic results. The selfish dictator gains allies and political support by distributing the economic rents extracted from ordinary citizens. Insofar as citizens will not part with their economic resources voluntarily, the dictator must apply force and coercion. Indeed, Stalin carefully chose and cultivated allies; he reacted with fear and panic to threats to his political power, no matter how small; he bullied and bribed associates. Selfish dictators, who sacrifice economic performance for political power, are not rare. Examples would be those who initiated the Chinese Cultural Revolution, Pol Pot in Cambodia, Mugabe in Zimbabwe, and Castro in Cuba.

The fourth model is the “referee–dictator,” who mediates among the powerful vested interests that constitute the real sources of power. The referee–dictator model would be expected at a mature phase of dictatorship, when the stationary bandit or power-maximizing dictator is no longer able to dominate, but falls under the influence of industrial and regional elites. In market economies, the domination of the political process by interest groups may emerge slowly due to free riding and the difficulty of organizing effective lobbying. Mancur Olson and others have characterized the mature Soviet economy as dominated by interest groups pulling the leadership in different directions and giving it a lack of coherence. Interest groups, however, might form more quickly in young administrative-command economies because of the ready-made concentration of economic power in industrial ministries and regional authorities. Unlike others who relate interest-group power to the mature Soviet system, historian J. Arch Getty has suggested that even Stalin had to bow to lobbies in key decisions in the 1930s.

--Paul R. Gregory, The Political Economy of Stalinism: Evidence from the Soviet Secret Archives (New York: Cambridge University Press, 2004), 11-13.