Mancur Olson (1993) Dictatorship, Democracy, and Development, APSR

One line summary: 

Rational self interest theory can explain the different development under dictatorship, and democracies.

What are the main arguments:

1. The optimal tax-rate for democrats is lower than autocrats. (See below for why)
   
2. Rational autocrats are like stationary bandits - as opposed to roving bandits. (See below for description)
   
3. In the short-term, autocrats behave like roving bandits; and they also have credible commitment issues (See below for why)
4. Conditions needed for maximum economic development (or property rights) are same as the conditions required for lasting democracy.
5. Pathways to a democratic transition are possible if the autocracy is not possible. 
   

Explanation:

 

 

 

 

Relevant quotes:   

 

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.

A majority at the revenue-maximizing tax rate is bound to increase its income from a reduction in tax rates: when the national income goes up, it not only, like the autocrat, collects taxes on a larger national income but also earns more income in the market.

 

He (Autocrat) will then spend money on public goods up to the point where his last dollar of expenditure on public goods generates a dollar's increase in his share of the national income.

 The majority's interest in its market earnings induces it to redistribute less to itself than an autocrat redistributes to himself.... So the optimal tax rate for it is bound to be lower than the autocrat's.

 

The main obstacle to long-run progress in autocracies is that individual rights even to such relatively unpolitical or economic matters as property and contracts can never be secure, at least over the long run

 

The same emphasis on individual rights that is necessary to lasting democracy is also necessary for
secure rights to both property and the enforcement of contracts.

If no one leader can subdue the others or segregate his followers into a separate domain, then
the alternative is either to engage in fruitless fighting or to work out a truce with mutual toleration

 

 It would therefore be wrong to conclude that democracies will necessarily redistribute less than dictatorships. 

 My Analysis

 

 

 

Short-cuts:

Roving bandit - uncoordinated competition theft

Stationary bandit - rational monopolization of theft 

How does it relate to the larger scholarship