PPP: The three unsteady pillars of a successful autocracy

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Aliaksei Mukhachou's picture

Homo homini lupus est. This Latin saying has time and again shown to determine the course of action that humans take when no law stops them. Underneath all the layers of legal and moral software that our societies have created over the years to keep our instincts at bay, the hardware has not changed. Humans are still subject to their passions and desires. Is it therefore not surprising that when the power of laws, customs and morality holding men in peace and commonwealth fails, violence becomes the ultimate authority as described in Hobbes’s “Leviathan”[i]. All too often it is no other than the political leadership that erodes the popular recognition and respect for law by twisting it to needs of a select few. And compared to the developed markets, many developing states often see the mechanisms discouraging power abuse intentionally suppressed in spite of these nations being more prone to various social and economic shocks.

 

Expected Profit = Power - P Info Leak * Potential Punishment

 

The Three Pillars

What is the motivation of an autocrat? At the base are aspirations common to all men – to guarantee personal well-being and to be revered among his fellow men. This desire to live in comfort and be respected typically implies luxury and loyal servants in government, military and business, as befits a great father of a nation. Gaddafi may have lived theatrically in tents like a Berber tribesman during his foreign visits and Yanukovich may have clung to the public appearance of a simple coal mine patron, yet rebels’ excursions[ii] into their residences revealed this to be nothing more than theatrics. Now, if you put autocratic acquisition of wealth and power into a formal decision model, you can decompose a ruler’s propensity to subvert the law into the following factors: the opportunity and profitability of abuse, the likelihood of the information about misdeeds leaking to the public and the severity of punishment likely to follow.

Source of Satisfaction

What determines the degree of opportunity for corruption and its profitability? Clearly, executive power and the ability to pressure various branches of government supposedly taking independent decisions define how much ‘say’ an autocrat has in the affairs of splitting the budget pie, allocating government orders or changing market-setting laws. Think about all the difficulties the United States had to go through to implement the government-sponsored healthcare system, common to most western countries. On the other hand, over a similar period of time, Russian authorities were able to painlessly reform a “social tax” of about 30% on salaries, changed the pension system three times and then froze[iii] and effectively confiscated some of the pension fund assets. At the same time, Russia has become known for its massive government-sponsored projects such as the $52 billion Sochi Olympics and the $22 billion APEC summit with government orders often allocated to a select group of businessmen who at a certain moment of their lives coincidentally shared the same fenced cottage community[iv] with Vladimir Putin. Even when you omit the details of personal relationships between the president and a group of unnaturally talented entrepreneurs, the very fact that the state can wield such massive amounts of money with little concern over the public opinion and without any sign of political struggle creates plenty of opportunities for misconduct. And although some economists may like the idea of overspending, much of the wealth syphoned out of the federal accounts invariably ends up spent on foreign luxury, bars of gold or deposited on overseas accounts.

Probability of Discovery

Naturally, a taxpayer would not be amused were he to learn how his money is spend or why he can pay half for tickets sold by Ukrainian providers compared to identical tickets offered by Russian Railways, a state-owned monopolist, incidentally governed by another former neighbor of the president, Vladimir Yakunin. But of course information does not disseminate itself through the Ether. It needs channels, journalists and nodes. And all of these can be cut off, manipulated or captured. Thus, an autocrat can focus on severing media channels like Turkey’s Erdogan did with his in the case[v] of Twitter and Youtube. Alternatively, an autocrat can pressure the media corporations to fire unwanted journalists as in the case of Galina Timchenko, the ex-editor-in-chief of Lenta.ru, Russia’s most popular web news agency, fired just this month for inserting a hyperlink to a speech of a Ukrainian nationalist into an article. Finally, provided he has the means, an autocrat can just acquire a media node, for example through a subsidiary of a state-owned company like JSFC “Gazprom-Media”, and then scare advertisers and distributors away from a dissident media node such as the Russian television channel Dozhd’ ("TV Rain”).

Severity of Punishment

In any case, knowing does not always imply doing. Ukrainian Maidan did not happen after it became known that the son of Yanukovich, a dentist by profession, became a dollar billionaire within a year. In fact, of the three corruption factors, the “punishment” factor is the most complex one. Functioning democracies use impeachments or elections as a “punishment” for their leaders’ misses, however, in an autocracy an impeachment is unthinkable and election is often merely a ceremony. Thus, anecdotally, Chechnya, ruled by Ramzan Kadyrov, a passionate fan of Vladimir Putin, delivered miraculous 99,73% in favor of the future president in 2012. These regularly occurring miracles at elections discredit the whole procedure and make this civil way of venting social dissatisfaction effectively defunct. But, like steam building up in a closed pot, popular anger has a potential of blowing the lid off. Also, like steam, popular anger needs “heat” to be generated. Here welfare is one of the factors. Living in an absolute monarchy, Saudis don’t seem inclined on making a “Tahrir” of their own, and their GDP per capita of over USD 31,000 (at PPP) clearly makes a difference if you compare it to the Egypt’s USD 6,700 (at PPP). Apart from the natural impact that empty stomachs may have on political awareness, the soft factor of ideology can also make a huge difference. Both radical ideas represented by Muslim Brotherhood or Ukrainian “Praviy Sektor” and liberal ideas represented by the majority of protestors who started the EuroMaidan are a threat to the position of the proverbial lid on top of the pot. Of course, an autocrat can try and manage these threats. Populist policies with generous handouts would mitigate the conscious-raising effects of poverty. Ideological control is, on the other hand, more complicated – but still doable. You can start with diverting everyone’s attention to sports, by, say, holding a Winter Sports Olympics. Another popular alternative is the promotion of patriotism and linking it to the need for a “strong state”. Potential indecisive protesters might be ostracized and discouraged from “destabilizing” the country when the electorate is steadily supplied with hand-picked imagery about the anarchy of a revolution. Alternatively, the electorate could be taught that a “strong state” is the only salvation from the “schemes of our enemies in the West”. And a timeless classic of the genre is of course what Russian Imperial Internal Affairs Minister Pleve called a “small-scale victorious war” in 1904, preferably with a note of nationalistic enthusiasm and pride over the wise leader who led the nation to victory. Finally, if nothing else works, there’s always the secret police.

Instability

Unfortunately for an autocrat, history shows that the lid is inevitably blown off the pot once in a while. The moment an autocrat de facto spurns the laws and values that hold the commonwealth together, this universally recognized basis for the commonwealth is discredited. The social system, as an organism, will attempt to re-organize in a change that will have to ignore the laws and regulations imposed by an abusive autocrat. It is not a question if the conflict will happen, but when. And such events are invariably linked to our 3 factors and their determinants. The “quietest” scenario is the loss of power at the top with one elite replacing the other. Soviet Union is one example as the decentralization and “Perestroika” started by Mikhail Gorbachev deprived its initiator of his power. Shocks to the other two factors are linked to the “punishment” part of the equation and invariably lead to unrest. A sudden change in information flows is one possibility – the Arab Spring would have been impossible without social networks and mobile phones. Brazilian GDP growth slowing from 5-6% seen through most of the noughties to a measly 0.9% in 2012 coupled with one of the World’s highest inequality has fueled the 2013 protests. Liberal ideas capturing the imagination of Ukrainians led them against Yanukovich when he reneged on his electoral promises. Any country where the state ignores the aspirations of its subjects and provides no civil way of expressing their views risks waking up to witness burning tires and “molotovs” hurled into government buildings when the conditions change faster than the hand-steered system can handle.

 

[i] Thomas Hobbes, “Leviathan” – see Parts I and II

[ii] Huffington Post, “Fugitive President Yanukovich's Home Reveals Where Ukraine's Millions May Have Gone”

[iii] Forbes Russia, “Russian Government freezes the accumulative segment of pension fund for a year” [Russian]

[iv] Financial Times, “EU and US sanctions list: targets and their profiles”

[v] The Guardian, “Turkey blocks YouTube amid 'national security' concerns”

References: 

[i] Thomas Hobbes, “Leviathan” – see Parts I and II

[ii] Huffington Post, “Fugitive President Yanukovich's Home Reveals Where Ukraine's Millions May Have Gone”

[iii] Forbes Russia, “Russian Government freezes the accumulative segment of pension fund for a year” [Russian]

[iv] Financial Times, “EU and US sanctions list: targets and their profiles”

[v] The Guardian, “Turkey blocks YouTube amid 'national security' concerns”

Comments

Interesting article and an interesting model. I wonder does the decision-making calculus change depending on the sources of an autocrat's power? In terms of internal power sources, is monopolistic control over natural resources a more stable power source than control of the military? And what is the effect, if any, of external factors such as foreign aid flows, FDI, alliances, and remittances?

Hi Sam!

Well, it's not calculus really, its more of a consultant's top-down incentive decomposition with a simplistic model... But in any case, I believe that one has to distinguish between the role of control of money flows vs. military control. High Natural Resources rent gives you 2 things - in the "Power" part of the equation: 1. allows easy capture of money flows (additional taxes; formation of monopolies to "protect national interests so-that-they-are-not-seized-by-our-strategic-rivals") 2. seemingly reduces the economic necessity of developed institutions (e.g. you need good fin. markets for risky ventures; you need good courts and low corruption for FDI - neither are particularly important when you are feeding off a quasi-state-owned oil well). Both of these things encourage power abuse - first through giving control of cash flows, second through making combating the corruption less attractive. I recall there was an article on Project Syndicate about what role natural resource richness plays in autocracies... The military control, in my view is a subfactor of the "punishment" part of the equation - like the "secret police" which I mentioned - both are ways to discourage dissent... I can't comment on the last question - it seems too unspecific to me.

Thanks for the enlightening article, Aliaksei. I think the equation would look even more lucid (especially to the mathematically aware reader) if you were to break down 'Power' on RHS as Power=p(subvert institution)*profits gained from subversion. That would also make the RHS and LHS have all components in same units-expected values (since the 2nd term on RHS is alos expected value).

If I understand correctly, your model seems to take into account only the domestic abuse of power, and not invasion of foreign territory. Is that right? It would help if you can give some examples of different scenarios in which dictators have tried to meddle into different institutions, and some in which they haven't. For example, Mubarak is supposed to have largely kept aloof from the strong Egyptian Military because his probability of subverting this institution seemed low, which is probably what your model explains. On the other hand, military dictators like Zia ul Haq and Musharraf were able to subvert the military because they were insiders. It is interesting to note that certain other dictators like Stalin, Mao, Hitler were able to completely dominate military even though they were rank outsiders.
In the para on "punishment," you've rightly discussed how a rich economy prevents outbreak of popular violence. However, the significance of two more factors in determining the probability of such a revolt must not be underestimated:

1. Black Swan events: Tunisia (self-immolation of Mohamed Bouazizi), Egypt (custodial death of Khaled Said) and Syria ( could have been major triggers for both the revolutions.

2. Credibility of institutions: The general populace in most dictatorial nations is either ignorant or unconcerned with the amassing of wealth by its rulers as long as everyday institutions, such as judiciary, police and public works, remain in good health. Perhaps this could be a reason why China (with GDP/per capita close to Egypt's) hasn't seen such an outbreak. Of course, the other reason could be CPC's greater hold on the nation.

And one last thing, I would really like you to build another model predicting the probability of outbreak of popular revolt against a dictatorial regime.

Thanks!

Hi Prabhat! Thanks for your feedback! 1) Model definition - well, it is a top-down analysis and there is only that much you can do with the 1500 word cap, so it is understandable if you may want to "go down the pyramid", the facilitation of further analysis is, after all, the intention of setting this simple framework. 2) "Your model seems to take into account only the domestic abuse of power, and not invasion of foreign territory. Is that right?" yes, pretty much, I did mention that war is one of the instrument there. 3) the focus of the article has been not really on institutions but on the incentive to actually abuse the power (as opposed to "gain power") and what determines the feedback, so, to be honest, going through the examples you mentioned would have been somewhat off-topic, in my opinion. 4) "the credibility of institutions" you mentioned would indeed be a nice addition. probably would go as "popular opinion of local public administration" into the punishment part 5) I totally agree that it would have been nice to have the model you mentioned! at the same time, i think that the requirements of the complexity involved would by far exceed the essay format! But it is at least nice to have some of the variables on the table! BR, Alex

Apologies for the late reply, seeing your comment only now.
I realize the word cap limits one's imagination and content, but you could always take a shot at things left unexplained in another article, perhaps even in a blog which has no such limit.

On another note, do check out the new book titled "Capital in Twenty First Century" by Thomas Piketty. Does a good job of demolishing the so-called "trickle down effect." Some brilliant observations, though not without the taints of ideology.