The literature which takes a public choice approach to dictatorship, largely barren before 1990 except for Tullock’s Autocracy (1987), is now growing and may be entering a period of prosperity. This survey focuses on the most recent literature, and on three questions in particular: (1) The behavior of dictators, including the the strategies dictators use to stay in power; (2) The relative efficiency of dictatorship: Which is better, dictatorship or democracy, in promoting economic growth and efficiency?; and (3) What policies should the democracies adopt to deal with dictatorships if they are interested in promoting freedom?
1. The Behavior of Dictators
1.1. The Dictator’s Dilemma
The standard view of the difference between democracy and dictatorship in political science is that dictators can use the tool of repression to stay in power. Thus dictators typically impose restrictions on the rights of citizens to criticize the government, restrictions on the freedom of the press, restrictions on the rights of opposition parties to campaign against the government, or, as is common under totalitarian dictatorship, simply prohibit groups, associations, or political parties opposed to the government. To be effective, these restrictions must be accompanied by monitoring of the population, and by sanctions for disobedience. The existence of a political police force and of extremely severe sanctions for expressing and especially for organizing opposition to the government such as imprisonment, internment in mental hospitals, torture and execution are the hallmark of dictatorships of all stripes.
However, the use of repression creates a problem for the autocrat. This is the Dictator’s Dilemma (Wintrobe, 1990, 1998) — the problem facing any ruler of knowing how much support he has among the general population, as well as among smaller groups with the power to depose him. The use of repression of course breeds fear on the part of a dictator’s subjects, and this fear breeds a reluctance on the part of the citizenry to signal displeasure with the dictator’s policies. This fear on their part in turn breeds fear on the part of the dictator, since, not knowing what the population thinks of his policies, he has no way of knowing what they are thinking and planning, and of course he suspects that what they are thinking and planning is his assassination. The problem is magnified the more the dictator rules by repression, i.e., through fear. The more his repressive apparatus stifles dissent and criticism, the less he knows how much support he really has among the population.
From a theoretical point of view, the Dictator’s Dilemma originates from the lack of an enforcement mechanism in politics. It is advantageous for the dictator to "buy off" some of his constituents, especially those who may be too powerful to repress, and those whose demands are easily satisfied. So a simple trade of rents or policies for support would solve the dictator’s dilemma, and also allow his subjects to rest easily. But there is no mechanism analogous to legal contractual enforcement which would enforce this trade. Another way to put it is that the dictator and his subjects have a mutual signaling problem. In general, the easiest way to overcome the problem of obtaining support is to "overpay" supporters, i.e., to pay them more than they are worth by distributing rents to them. The support of workers can be obtained through paying them excessive wages, of capitalists by giving them monopoly privileges, of particular regions by locating manufacturing facilities in places where they don’t really belong but where they are politically valuable, of ethnic groups by giving them special privileges and so on. Of course, similar practices are widespread in democracy where they are known as "pork barrel politics". They are often described as a failure of democracy. But if democracy may be likened to a pork barrel, the typical dictatorship is a temple of pork! That is, these practices appear to be much more widespread under dictatorship than under democracy.
In sum, while there is always a class of people who are repressed under a dictatorship, there is also, in any successful dictatorship, another class — the overpaid. As far as the people in the middle are concerned, the sad thing is that they can side with either group. The general population may be repressed in that their civil liberties may be taken away, but other aspects of the regime may compensate for this as far as they are concerned.
However, the use of repression doesn’t mean that dictators aren’t popular. Indeed, it sometimes appears from the historical record that the more repressive they were, the more popular they became! All the evidence indicates that Hitler was very popular. Communism was popular at one time; when it became unpopular, the regimes fell. Reports in the newspapers suggest that Castro and Saddam Hussein were often popular with their peoples.1
That dictatorships use two instruments — repression and loyalty or popularity — to stay in power suggests a useful classification of regimes. Four types can be distinguished: tinpots (low repression and loyalty), tyrants (high repression, low loyalty), totalitarians (high levels of both), and timocrats (low repression, high loyalty). Thus, totalitarian regimes combine high repression with a capacity to generate loyalty. Under tyranny, the regime stays in power through high repression alone and loyalty is low. A tinpot regime is low on both counts. And timocracy implies that loyalty is high even at low levels of repression. These four types or images have tended to recur over and over in the literature on dictatorship.2
This classification may be thought of in three ways. On one level, the regimes simply represent different combinations of the variables loyalty and repression. However, the classification also illuminates behaviour, because the regimes differ in their response to economic change. Suppose, e.g., that there is an increase in economic growth which raises the dictator’s popularity. Tinpots and timocrats both respond to an increase in popularity by lowering the level of repression; tyrants and totalitarians, by raising it.
A third way to think about the regimes is that they simply represent different solutions (levels of repression and loyal support) to the same general model. Thus, assume that all dictators have the same utility function, where the arguments are consumption (C) and power (v).
U = U(v, C) (1)
Power may be desired either for its own sake, or because dictators wish to impose their ideas of the common good on society.3 The tinpot ruler represents the special or "corner" solution where the sole aim is to maximize consumption. On the other hand, the leaders of tyrannies and totalitarian regimes represent the opposite extreme of dictators who maximize power. Finally, timocracy4 represents the case of benevolent dictatorship, where the dictator’s objective is the welfare of its people. While many if not all dictators profess this objective, it is hard to think of an instance where it explains much about their behavior.5
Combining this utility function with a constraint which shows how money can be converted into power and power into money provides an illuminating explanation of the limits to a dictator’s power. Totalitarian dictators in particular appeared to maximize the control of the state over the individual. For example in Nazi Germany, one official suggested that "the only time an individual has a private life is when he is asleep." What limits a dictator’s pursuit of power? It would be arbitrary to specify that the dictator’s power is limited by a revenue-maximizing tax. For, so long as the dictator has sufficient power, he can raise more funds by imposing new tax bases and by finding other ways to raise money. In short, if there is no limit to his power, there is no limit to his resources either. And vice versa. In the end, the constraint on his behavior does not arise from an artificially fixed budget, nor from arbitrary limits to his power, but from the ultimately diminishing possibilities of transforming money into power and vice versa. So the limits to budgetary resources and to power must be simultaneously determined.
More precisely, the dictator is constrained in two ways. The first constraint — the costs of accumulating power — is governed by the political institutions of the regime, and the second — the capacity to use his power to increase revenue — by the dictator’s economy. These constraints are combined in equation
The left-hand side of the constraint (2) shows the dictator’s budget B as a function of power (v), i.e., it shows how the dictator’s power may be used (through taxation, regulation or the provision of public goods) to obtain budgetary resources. The right-hand side shows how the funds are "spent": either on consumption, C, or accumulating power v via the money-to-power relation v(B – C), with each unit of v multiplied by Pv — the "price" of power in terms of money.
The solution (first-order conditions) may be obtained by choosing v and C to maximize (1) subject to the constraint (2). Rearranging terms, it is expressed simply as
Equation (3) displays in a particularly transparent way the elements that enter into the dictator’s calculus — the
The first term (Pv) is governed by the dictator’s political apparatus for building loyalty and for repression and the productivity of these instruments in producing power. The second (Bv) shows what the exercise of power does to the dictator’s budget via its effects on the economy, e.g., its effects on economic growth, economic efficiency, and the capacity to implement taxes. Sometimes (e.g., if power is used to provide a public input, or to raise or implement taxes) the exercise of state power will raise revenue, i.e., Bv > 0. Sometimes (i.e., if power is used to impose inefficient regulation on industry) power will lower state revenue B < 0). The third factor (UC/UW) simply represents the dictator’s preferences between consumption and power. Sometimes one can see some of the factors at work molding these preferences — e.g., how Party organization or the nature of the dictator’s support can drive him in the direction of maximizing power. But, perhaps more than any other political or economic agent, political dictators have some freedom to put their stamp on society.
This equilibrium provides the limit to power. At the equilibrium, the dictator cannot obtain more power (its marginal cost in money is larger than the extra power required to support this budget) and cannot obtain more revenue (the power required to do so is larger than the revenue necessary to support this level of power). Note the simultaneous equilibrium of money and power.
In turn the model also simultaneously determines the dictator’s consumption, equilibrium level of repression and loyal support. So this model of a utility maximizing dictator can be put together with various types of economic system (communist, apartheid, capitalist-authoritarian, etc. each of which contain values of Bm ew and Pw) to derive implications about the behaviour of different regimes — comparative static changes in n and B, as well as in levels of repression, loyalty, etc. Put differently, the three elements in equation (3), determine the nature of the dictatorship — whether the regime resembles more closely that of a tinpot, totalitarian, tyrant, or timocrat.
As far as the economy is concerned, what turns out to be crucial is not whether the dictator’s intervention helps or hurts the economy on the whole, but the effects of marginal (further) interventions on economic growth, efficiency, or the dictator’s budget. If this marginal effect (Bw) is positive, whether the total effect is positive or negative within a considerable range, the dictator will tend to be oriented more towards power rather than consumption. On the other hand, if the use of power tends to retard growth and other dimensions of economic efficiency rather than favoring it, the dictator tends to be a tinpot. So the marginal economic effects of the dictator’s power helps to determine whether the dictator is tinpot, totalitarian or tyrant.
Winer and Islam (2001) test Wintrobe’s theory of non-democratic regimes using a large sample of both non-democratic and democratic countries. Some additional hypotheses about the differences between democratic and non-democratic countries suggested but not explicitly considered by Wintrobe are also considered. The results indicate clearly that the relationship between an index of civil and political freedoms and economic growth varies substantially across all regime types. Other aspects of the theory are partially confirmed. In particular, positive growth leads to a reduction in the degree of freedom in totalitarian regimes (that attempt to maximize power), and negative growth (falling levels of per capita real income) appears to reduce freedom in tinpot regimes (that just attempt to maintain power), as predicted by the Wintrobe theory. On the other hand, positive growth in tinpots and negative growth in totalitarians also reduces freedom, contrary to the theory, although in the case of tinpots, the absolute value of the effect on the index of freedom appears to be bigger for negative than for positive growth, as predicted by Wintrobe’s model. Some results concerning differences across regimes in the effect of schooling on freedom are also provided.
1.2. New Work on Repression: Dynamics, Ideology and Genocide
The theory of repression has been extended by Philip Verwimp (2001), who attempts to understand the behavior of the Habyarimana regime in Rwanda, and in particular to explain the origins of the tragic genocide that took place there. The paper applies Wintrobe’s model in a new way (by using the price of coffee as an index of the capacity of a dictatorial regime to generate loyalty) and it extends the model to explain genocide. Verwimp suggests that the Habyarimana regime, frustrated by its loss of power, attempted to split the population along ethnic lines and set one group against the other, culminating in rewarding Hutus for the extermination of Tutsis. Thus the genocide is interpreted as the attempt by the regime to remain in power by accentuating the ethnic split the population into two groups, ultimately singling out one for extermination by the other.
Spagat (2001) studies the optimal strategy for a dictator hanging onto power by choosing how much repression to apply in every period. State variables are the amount of "hate" and "fear" in society which are both increasing in the amount of repression from the previous period. Hate, fear and a random shock determine the quantity of repression required for the dictator to survive. They show that in every period there are only two possible optimal choices: the minimal repression necessary to retain power ("no demonstration") or the maximum possible repression ("demonstration"). The state space can be divided into two regions separated by an increasing function such that "no demonstration" is optimal in one and "demonstration" in the other. Under some conditions the opportunity for international borrowing makes demonstration optimal when it would not have been without this option.
Bernholz (2001) develops a model of the evolution of totalitarian regimes. In the model there are "believers" who are convinced that others have to be converted to the supreme values of their ideology for their well-being and, possibly, enemies of their creed whose presence is obnoxious to them. Believers spend resources on winning new converts and to win the secular power of the state. Whether they succeed in this endeavour depends on the costs of converting new believers and on the amount of resources they are prepared to spend for this purpose, given their incomes and their propensity to consume. Their chances of success are greater if a crisis occurs, an event which is usually outside of their control. Once secular power has been secured, the resources of the state can be used to win more converts, to drive into exile or to kill inconvertibles and to try to reach the imperialistic aims implied by the ideology. If the latter is not the case, the regime may turn into a mature "ideoc-racy" after having reached its domestic aims. This would for instance be the case, if all inconvertibles had been removed and all the other population been converted. In this case no further terror and (or) repressions characteristic of totalitarian regimes are required. If the ideology implies ambitious imperialistic aims, for instance the conversion of all people on earth (except for inconvertibles) or the domination of the whole globe by the believers, it is highly probable that these aims cannot be reached. As a consequence either a war is lost and this leads to the removal of the totalitarian regime, or the ends have to be adapted to maintain the credibility of the ideology. But then the totalitarian state may again turn into a mature ideocracy, if the ideology has been reinterpreted to remove its unrealistic imperialistic aims. Or the change of the ideology weakens the regime in a way that it loses its proselytizing character altogether, and turns into an ordinary autocratic regime.
1.3. The Irony of Absolutist Monarchy
Another important analysis of the limits on the power of dictatorship is provided by the "irony of absolutism." The problem is described in a series of works by North, Weingast, Root and others (e.g., North, 1981; North and Weingast, 1989; Root, 1994). In North’s (1981) model of the monarchy, the King maximizes revenue, and the central problem is that the structure of property rights which is appropriate for this purpose is not usually that which is efficient from the economic point of view. More subtly, there is a tradeoff between power and revenue. As Root describes the "Irony of Absolutism", absolute power gave the King the capacity to repudiate debts, but
Creditors took into account the king’s reputation for repudiating debts and therefore demanded higher interest rates than would otherwise have been needed to elicit loans. Actually, because he was above the law, the king had to pay more for loanable funds than did his wealthy subjects. In short, the Crown had a problem asserting its credit because it had a history of reneging on commitments. [Italics added.]6
North and Weingast suggest that this problem gave rise to the Glorious Revolution in England, in which power over the Treasury was devolved on Parliament. In this way the King could credibly commit to repay. No such devolution of power occurred in France. The result was that the English King solved the problem of how to raise funds and could finance his army and other expenditures while the French King did not, leading to the chronic shortage of revenue that was one of the factors leading to the French revolution.7
Congelton (2002) extends this analysis by pointing out that all kings share power. He suggests a generalized template, "King and Council" for looking at these issues. In practice one rarely observes pure forms of dictatorship that lack a council, or pure forms of parliament that lack an executive. Generally government policies emerge from organizations that combine an executive branch of government, "the king," with a cabinet or parliamentary branch, "the council." Congleton provides an explanation for this regularity: The bipolar "king and council" constitutional template has a number of properties which give it great practical efficiency as a method of information processing and collective choice. First, a council generally has a wider array of direct experience and/or knowledge than the king does, and therefore is in position to be a better estimator of "policy consequences" than the king alone tends to be. Second, a bipolar design can reduce losses from conflict in cases where significant power centers other than the king exist. Third, a king and council template which provides agenda control to the king, tends to reduce the extent to which majoritarian cycles may arise in the council. Fourth, the king and council templates allow gradual evolutionary shifts of power between the executive and parliament as circumstances change without the necessity of violent conflict. Insofar as a form of majority rule is used by the council and is stable, the recommendations of council tend to be both robust as estimators and moderate in their policy recommendations.