provides public goods- both to the point where the marginal benefit( to her alone) is sufficient to account for her costs in terms of foregone income. The evolution of the forms of government is then simple to derive: autocracy(the stationary bandit) arises out of anarchy as the bandit with the greatest capacity for violence takes over the area and substitutes an encompassing for a narrow interest;democracy arises out of dictatorship if autocracy is overthrown and it turns out that none of the individuals or leaders involved in the coup has sufficient power to make themselves autocrats The first two chapters of the book outline this basic logic. In the end, just two variables are necessary to compare and analyze governments ithe breadth of (how encompassing is )the interest of the ruler ii the length(time horizon) of his interest The theory appears as breathtaking in its simplicity as it is surprising in its power. Thus, in the same way that dictatorship is superior to anarchy because the dictator has an encompassing interest in the society he rules, so democracy is superior to dictatorship because democratic majorities are more encom- passing than the interest of the dictator. Second, dictators or democracies with long time horizons have more of an interest in preserving or enhancing the wealth of the society they rule than those who rule only for the short term Chapters 3-6 contrast the theory of power implicit in this approach with the everything is efficient"school. I found these chapters provocative and intriguing, and their emphasis on the importance of power refreshing, but I leave it to the reader to decide whether Olson really has, as he asserts disproved"the Coase theorem. I do not understand why the losses to the victims do not bear on the outcome, as asserted(p. 61). Chapters 7 and 8 offer a new interpretation of communism as a system for taxing workers while stimulating their effort. The fact that, under Stalinism, the state kept the profits of the enterprises while setting wages low is interpreted as a form of implicit taxation. At the same time, bonuses, progressive piece rates, etc favored work. What Olson refers to as this"invention of stalins does much more than ordinary autocratic revenue-maximizing taxation to raise revenues while at the same time stimulating effort. Finally, Chapters 9 and 10 discuss the implications for the transition from communism to capitalism. These turn out to flow largely not from this frame- work but from that set forth in The Rise and Decline of Nations. Thus the slow Russian transition is interpreted as a severe form of the British disease so well analyzed in that book. The problem is that the organizations left over from the communist era continue to function, and this means lobby for subsidies and otherwise hobble the transition on this line of thought392 provides public goods – both to the point where the marginal benefit (to her alone) is sufficient to account for her costs in terms of foregone income. The evolution of the forms of government is then simple to derive: autocracy (the stationary bandit) arises out of anarchy as the bandit with the greatest capacity for violence takes over the area and substitutes an encompassing for a narrow interest; democracy arises out of dictatorship if autocracy is overthrown and it turns out that none of the individuals or leaders involved in the coup has sufficient power to make themselves autocrats. The first two chapters of the book outline this basic logic. In the end, just two variables are necessary to compare and analyze governments: i) the breadth of (how encompassing is) the interest of the ruler; ii) the length (time horizon) of his interest. The theory appears as breathtaking in its simplicity as it is surprising in its power. Thus, in the same way that dictatorship is superior to anarchy because the dictator has an encompassing interest in the society he rules, so democracy is superior to dictatorship because democratic majorities are more encom￾passing than the interest of the dictator. Second, dictators or democracies with long time horizons have more of an interest in preserving or enhancing the wealth of the society they rule than those who rule only for the short term. Chapters 3–6 contrast the theory of power implicit in this approach with the “everything is efficient” school. I found these chapters provocative and intriguing, and their emphasis on the importance of power refreshing, but I leave it to the reader to decide whether Olson really has, as he asserts, “disproved” the Coase theorem. I do not understand why the losses to the victims do not bear on the outcome, as asserted (p. 61). Chapters 7 and 8 offer a new interpretation of communism as a system for taxing workers while stimulating their effort. The fact that, under Stalinism, the state kept the profits of the enterprises while setting wages low is interpreted as a form of “implicit” taxation. At the same time, bonuses, progressive piece rates, etc., favored work. What Olson refers to as this “invention” of Stalin’s does much more than ordinary autocratic revenue-maximizing taxation to raise revenues, while at the same time stimulating effort. Finally, Chapters 9 and 10 discuss the implications for the transition from communism to capitalism. These turn out to flow largely not from this frame￾work but from that set forth in The Rise and Decline of Nations. Thus the slow Russian transition is interpreted as a severe form of the British disease so well analyzed in that book. The problem is that the organizations left over from the communist era continue to function, and this means they lobby for subsidies and otherwise hobble the transition. On this line of thought