Oligarchic Versus Democratic Societies
AbstractThis paper develops a model to analyze economic performance under different political regimes. An oligarchic society, where political power is in the hands of major producers, protects their property rights, but also tends to erect significant entry barriers against new entrepreneurs. Democracy, where political power is more widely di used, imposes redistributive taxes on producers, but tends to avoid entry barriers. When taxes in democracy are high and the distortions caused by entry barriers are low, an oligarchic society achieves greater efficiency. Nevertheless, because comparative advantage in entrepreneurship shifts away from the incumbents, the inefficiency created by entry barriers in oligarchy deteriorates over time. The typical pattern is therefore one of rise and decline of oligarchic societies: of two otherwise identical societies, the one with an oligarchic organization will first become richer, but later fall behind the democratic society. I also discuss how democratic societies may be better able to take advantage of new technologies, how an oligarchic society might transition to democracy because of within-elite conflict, and how the unequal distribution of income in oligarchy supports the oligarchic institutions and may keep them in place even when they become significantly costly to society.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 47.
Length: 53 pages
Date of creation: 2007
Date of revision:
democracy; economic growth; entry barriers; oligarchy; political economy; redistribution; sclerosis.;
Other versions of this item:
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-CDM-2007-10-27 (Collective Decision-Making)
- NEP-DEV-2007-10-27 (Development)
- NEP-POL-2007-10-27 (Positive Political Economics)
- NEP-SOC-2007-10-27 (Social Norms & Social Capital)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- De Long, J. Bradford & Shleifer, Andrei, 1993.
"Princes and Merchants: European City Growth before the Industrial Revolution,"
3451302, Harvard University Department of Economics.
- De Long, J Bradford & Shleifer, Andrei, 1993. "Princes and Merchants: European City Growth before the Industrial Revolution," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 671-702, October.
- J. Bradford De Long & Andrei Shleifer, 1993. "Princes and Merchants: European City Growth before the Industrial Revolution," NBER Working Papers 4274, National Bureau of Economic Research, Inc.
- Bourguignon, Francois & Verdier, Thierry, 2000.
"Oligarchy, democracy, inequality and growth,"
Journal of Development Economics,
Elsevier, vol. 62(2), pages 285-313, August.
- repec:cup:cbooks:9780521473972 is not listed on IDEAS
- R. Hirschowitz, 1989. "The Other Path: The Invisible Revolution in the Third World," South African Journal of Economics, Economic Society of South Africa, vol. 57(4), pages 266-272, December.
- Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
- Abhijit V. Banerjee & Andrew F. Newman, 1990.
"Occupational Choice and the Process of Development,"
911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
- Leamer, Edward E. & Maul, Hugo & Rodriguez, Sergio & Schott, Peter K., 1999. "Does natural resource abundance increase Latin American income inequality?," Journal of Development Economics, Elsevier, vol. 59(1), pages 3-42, June.
- Galor, Oded & Moav, Omer & Vollrath, Dietrich, 2003.
"Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence,"
CEPR Discussion Papers
3817, C.E.P.R. Discussion Papers.
- Oded Galor & Omer Moav, 2005. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence," 2005 Meeting Papers 24, Society for Economic Dynamics.
- Oded Galor & Omer Moav & Dietrich Vollrath, 2004. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence," Working Papers 2003-04, Brown University, Department of Economics.
- Rodrik, Dani & Alesina, Alberto, 1994.
"Distributive Politics and Economic Growth,"
4551798, Harvard University Department of Economics.
- Caselli, Francesco & Gennaioli, Nicola, 2003.
CEPR Discussion Papers
3767, C.E.P.R. Discussion Papers.
- Francesco Caselli & Nicola Gennaioli, 2006. "Dynastic management," LSE Research Online Documents on Economics 3558, London School of Economics and Political Science, LSE Library.
- Francesco Caselli & Nicola Gennaioli, 2006. "Dynastic Management," CEP Discussion Papers dp0741, Centre for Economic Performance, LSE.
- Francesco Caselli & Nicola Gennaioli, 2003. "Dynastic Management," NBER Working Papers 9442, National Bureau of Economic Research, Inc.
- Konstantin Sonin, 2002.
"Why the Rich May Favor Poor Protection of Property Rights,"
William Davidson Institute Working Papers Series
544, William Davidson Institute at the University of Michigan.
- Sonin, Konstantin, 2003. "Why the rich may favor poor protection of property rights," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 715-731, December.
- Konstantin Sonin, 2003. "Why the Rich May Favor Poor Protection of Property Rights," Working Papers w0022, Center for Economic and Financial Research (CEFIR).
- Trezise, Philip H., 1982. "MITI and the Japanese miracle: The growth of industrial policy, 1925-1975 : , Stanford, California: Stanford Univ. Press, 1982. x + 363 pp., index. $28.50," Journal of Comparative Economics, Elsevier, vol. 6(4), pages 436-439, December.
- Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
- Daron Acemoglu, 2003. "The Form of Property Rights: Oligarchic vs. Democratic Societies," NBER Working Papers 10037, National Bureau of Economic Research, Inc.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Giovanni Bert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.