American Political Science Review Vol.87,No.3 September 1993 DICTATORSHIP,DEMOCRACY,AND DEVELOPMENT MANCUR OLSON University of Maryland nder anarchy,uncoordinated competitive theft by "roving bandits"destroys the incentive to invest and produce,leaving little for either the population or the bandits.Both can be better off if a bandit sets himself up as a dictator-a"stationary bandit"who monopolizes and rationalizes theft in the form of taxes.A secure autocrat has an encompassing interest in his domain that leads him to provide a peaceful order and other public goods that increase productivity.Whenever an autocrat expects a brief tenure,it pays him to confiscate those assets whose tax yield over his tenure is less than their total value.This incentive plus the inherent uncertainty of succession in dictatorships imply that autocracies will rarely have good economic performance for more than a generation.The conditions necessary for a lasting democracy are the same necessary for the security of property and contract rights that generates economic growth. n my student days,in reading Edward Banfield's order or to provide other public goods but receives (1958)account of the beliefs of the people in a only a share of the benefits.In a tiny group,such as Lpoor village in Southern Italy,I came upon a a hunter-gatherer band,each person or family will remarkable statement by a village monarchist.He obtain a significant share of the benefits of a peaceful said,"Monarchy is the best kind of government order,and the net advantages of such an order are so because the King is then owner of the country.Like great that even a single family's share of the gains can the owner of a house,when the wiring is wrong,he easily outweigh the sacrifices needed to obtain it. fixes it"(p.26).The villager's argument jarred against Moreover,when there are only a few,the welfare of my democratic convictions.I could not deny that the each noticeably depends on whether each of the owner of a country would have an incentive to make others acts in a group-oriented way.Thus each fam- his property productive.Could the germ of truth in ily,by making clear that cooperation by another will the monarchist's argument be reconciled with the bring forth its cooperation but that noncooperation case for democracy? will not,can increase the likelihood that another will It is only in recent years that I have arrived at an match its behavior,thereby increasing the incentive answer to this question.It turns out that for a each has to act in the group interest.The theoretical satisfactory answer one needs a new theory of dicta- prediction that sufficiently small groups can often torship and democracy and of how each of these organize for collective action is corroborated by types of government affects economic development. countless observations(Olson 1965). Once this new theory is understood,one can begin to This prediction is also in accord with the anthropo- see how autocracies and democracies first emerge.I logical observations of the most primitive societies. shall set out this conception in a brief and informal The simplest food-gathering and hunting societies way and use it to explain some of the most conspic- are normally made up of bands that have,including uous features of historical experience. the children,only about 50 or 100 people.In other The starting point for the theory is that no society words,such a band will normally contain only a few can work satisfactorily if it does not have a peaceful families that need to cooperate.Anthropologists find order and usually other public goods as well.Obvi- that primitive tribes normally maintain peace and ously,anarchic violence cannot be rational for a order by voluntary agreement,and that is to some society:the victims of violence and theft lose not only extent what Tacitus,Caesar,and other classical writ- what is taken from them but also the incentive to ers observed among the less advanced Germanic produce any goods that would be taken by others. tribes.The most primitive tribes tend to make all There is accordingly little or no production in the important collective decisions by consensus,and absence of a peaceful order.Thus there are colossal many of them do not even have chiefs.When a band gains from providing domestic tranquility and other becomes too large or disagreement is intense,the basic public goods.These gains can be shared in ways band may split,but the new bands normally also that leave everyone in a society better off.Can we make decisions by unanimous consent.If a tribe is in conclude that because everyone could gain from it,a the hunting-and-gathering stage,there is also little or peaceful order emerges by voluntary agreement? no incentive for anyone to subjugate another tribe or From the logic of the matter,we should expect that to keep slaves,since captives cannot generate enough in small groups a generally peaceful order will nor- surplus above subsistence to justify the costs of mally emerge by voluntary agreement but that in guarding them.Thus within the most primitive large populations it will not.The key to the matter is tribes of preagricultural history,the logical presump- that each individual bears the full costs or risks of tion that the great gains from a peaceful order can be anything he or she does to help establish a peaceful achieved by voluntary agreement appears to hold true. 567 This content downloaded from 202.120.14.67 on Sun,19 Feb 2017 15:11:57 UTC All use subject to http://about.jstor.org/termsAmerican Political Science Review Vol. 87, No. 3 September 1993 DICTATORSHIP, DEMOCRACY, AND DEVELOPMENT MANCUR OLSON University of Maryland l Tnder anarchy, uncoordinated competitive theft by "roving bandits" destroys the incentive to fJ Zinvest and produce, leaving little for either the population or the bandits. Both can be better off if a bandit sets himself up as a dictator-a "stationary bandit" who monopolizes and rationalizes theft in the form of taxes. A secure autocrat has an encompassing interest in his domain that leads him to provide a peaceful order and other public goods that increase productivity. Whenever an autocrat expects a brief tenure, it pays him to confiscate those assets whose tax yield over his tenure is less than their total value. This incentive plus the inherent uncertainty of succession in dictatorships imply that autocracies will rarely have good economic performance for more than a generation. The conditions necessary for a lasting democracy are the same necessary for the security of property and contract rights that generates economic growth. In my student days, in reading Edward Banfield's (1958) account of the beliefs of the people in a poor village in Southern Italy, I came upon a remarkable statement by a village monarchist. He said, "Monarchy is the best kind of government because the King is then owner of the country. Like the owner of a house, when the wiring is wrong, he fixes it" (p. 26). The villager's argument jarred against my democratic convictions. I could not deny that the owner of a country would have an incentive to make his property productive. Could the germ of truth in the monarchist's argument be reconciled with the case for democracy? It is only in recent years that I have arrived at an answer to this question. It turns out that for a satisfactory answer one needs a new theory of dicta- torship and democracy and of how each of these types of government affects economic development. Once this new theory is understood, one can begin to see how autocracies and democracies first emerge. I shall set out this conception in a brief and informal way and use it to explain some of the most conspic- uous features of historical experience. The starting point for the theory is that no society can work satisfactorily if it does not have a peaceful order and usually other public goods as well. Obvi- ously, anarchic violence cannot be rational for a society: the victims of violence and theft lose not only what is taken from them but also the incentive to produce any goods that would be taken by others. There is accordingly little or no production in the absence of a peaceful order. Thus there are colossal gains from providing domestic tranquility and other basic public goods. These gains can be shared in ways that leave everyone in a society better off. Can we conclude that because everyone could gain from it, a peaceful order emerges by voluntary agreement? From the logic of the matter, we should expect that in small groups a generally peaceful order will nor- mally emerge by voluntary agreement but that in large populations it will not. The key to the matter is that each individual bears the full costs or risks of anything he or she does to help establish a peaceful order or to provide other public goods but receives only a share of the benefits. In a tiny group, such as a hunter-gatherer band, each person or family will obtain a significant share of the benefits of a peaceful order, and the net advantages of such an order are so great that even a single family's share of the gains can easily outweigh the sacrifices needed to obtain it. Moreover, when there are only a few, the welfare of each noticeably depends on whether each of the others acts in a group-oriented way. Thus each fam- ily, by making clear that cooperation by another will bring forth its cooperation but that noncooperation will not, can increase the likelihood that another will match its behavior, thereby increasing the incentive each has to act in the group interest. The theoretical prediction that sufficiently small groups can often organize for collective action is corroborated by countless observations (Olson 1965). This prediction is also in accord with the anthropo- logical observations of the most primitive societies. The simplest food-gathering and hunting societies are normally made up of bands that have, including the children, only about 50 or 100 people. In other words, such a band will normally contain only a few families that need to cooperate. Anthropologists find that primitive tribes normally maintain peace and order by voluntary agreement, and that is to some extent what Tacitus, Caesar, and other classical writ- ers observed among the less advanced Germanic tribes. The most primitive tribes tend to make all important collective decisions by consensus, and many of them do not even have chiefs. When a band becomes too large or disagreement is intense, the band may split, but the new bands normally also make decisions by unanimous consent. If a tribe is in the hunting-and-gathering stage, there is also little or no incentive for anyone to subjugate another tribe or to keep slaves, since captives cannot generate enough surplus above subsistence to justify the costs of guarding them.' Thus within the most primitive tribes of preagricultural history, the logical presump- tion that the great gains from a peaceful order can be achieved by voluntary agreement appears to hold true. 567 This content downloaded from 202.120.14.67 on Sun, 19 Feb 2017 15:11:57 UTC All use subject to http://about.jstor.org/terms