Summary of Olson Dictatorship Democracy

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Source: OLSON, M. 1993. Dictatorship, democracy, and development. American Political Science Review, 567-576. Key words: Stationary bandits vs. roving bandits; monopolized and rationalized theft; taxation; monopoly of violence; production and innovation; economic growth; property and contract rights; public good provision; revenue-maximizing tax rate; extraction of social surplus; long live the king; autocracy; democracy; encompassing interests; balance of power; power sharing Brief Summary: Major arguments: 1. “Roving bandits” versus “stationary bandits” a. the ‘roving bandits’ under anarchy conducted uncoordinated competitive theft, which destroys the incentive to invest and produce b. by contrast, a ‘stationary bandit’ monopolizes and rationalizes theft in the form of taxes by setting himself up as a dictator; a secure autocrat thus has an encompassing interest to provide a peaceful order and other public goods that increase productivity in his territory 2. the tenure of an autocrat matters: c. the brief tenure, the inherent uncertainty of succession in dictatorships imply that autocracies will rarely have good economic performance for more than one generation d. the conditions necessary for a lasting democracy are the same necessary for the security of property and contract rights that generates economic growth The first blessing of the invisible hand 1. Why have most populous societies throughout history normally avoided anarchy? a. Why should warlords, who were stationary bandits continuously stealing from a given group of victims, be preferred, by those victims, to roving bandits who soon departed? b. If roving bandits rationally settles down and takes his theft in the form of regular taxation while maintaining a monopoly on theft in his domain, then those from whom he extracts taxes will

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