TY - JOUR
T1 - Calculating bandits
T2 - Quasi-corporate governance and institutional selection in autocracies
AU - Salter, Alexander W.
AU - Hall, Abigail R.
N1 - Publisher Copyright:
Copyright © 2015 by Emerald Group Publishing Limited.
PY - 2015
Y1 - 2015
N2 - This paper applies the logic of economic calculation to the actions of autocrats. We model autocrats as stationary bandits who use profit-andloss calculations to select institutions that maximize their extraction rents. We find in many cases autocrats achieve rent maximization through creating and protecting private property rights. This in turn yields high levels of production, with expropriation kept low enough to incentivize continued high production. Importantly, while this leads to increasing quantities of available goods and services over time, it does not lead to true development; that is, the coordination of consumer demand with producer supply through directing resources to their highest-valued uses. We apply our model to the authoritarian governments of Singapore and the United Arab Emirates, showing how they function as quasi-corporate governance organizations in the business of maximizing appropriable rents.
AB - This paper applies the logic of economic calculation to the actions of autocrats. We model autocrats as stationary bandits who use profit-andloss calculations to select institutions that maximize their extraction rents. We find in many cases autocrats achieve rent maximization through creating and protecting private property rights. This in turn yields high levels of production, with expropriation kept low enough to incentivize continued high production. Importantly, while this leads to increasing quantities of available goods and services over time, it does not lead to true development; that is, the coordination of consumer demand with producer supply through directing resources to their highest-valued uses. We apply our model to the authoritarian governments of Singapore and the United Arab Emirates, showing how they function as quasi-corporate governance organizations in the business of maximizing appropriable rents.
KW - Autocracy
KW - Economic growth
KW - Institutional selection
KW - Stationary bandit
UR - http://www.scopus.com/inward/record.url?scp=84938797683&partnerID=8YFLogxK
U2 - 10.1108/S1529-213420150000019010
DO - 10.1108/S1529-213420150000019010
M3 - Article
AN - SCOPUS:84938797683
SN - 1529-2134
VL - 19
SP - 193
EP - 213
JO - Advances in Austrian Economics
JF - Advances in Austrian Economics
ER -