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Democracy, creeping socialism, and ideological socialism in rent-seeking societies

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  • Erich Weede

Abstract

Rent-seeking societies suffer from a serious distortion of incentives. Incentives to engage in distributional struggles, to seek contrived transfers are strong, but incentives to engage in productive work are too weak. Stagnation and some unemployment should be expected. Long lasting democracies within unchanged borders create a permissive environment for rent-seeking. The provision of rents very much depends on government. The stronger the governmental involvement in the economy, the higher social security spending, the more rents the government is likely to generate. Therefore, creeping socialism understood as increased government control of the economy should reinforce the rent-seeking society and the corresponding negative effects on growth and employment. Whether such creeping socialism is backed by ideological socialism or not should make little difference for growth or employment. These ideas have been tested and partially supported by a 19 nation sample of industrial democracies, using data from the sixties and seventies. By and large, the rent-seeking approach is fairly successful in explaining national differences in economic growth rates, but receives ambiguous support or less for unemployment. Olson's (1982, 1983) proposition about the negative impact of long lasting democracy within unchanged borders on economic growth is much better supported than the growth-retarding effects of government revenues or social security spending are. Copyright Martinus Nijhoff Publishers 1984

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  • Erich Weede, 1984. "Democracy, creeping socialism, and ideological socialism in rent-seeking societies," Public Choice, Springer, vol. 44(2), pages 349-366, January.
    • Handle: RePEc:kap:pubcho:v:44:y:1984:i:2:p:349-366
    DOI: 10.1007/BF00118768
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    References listed on IDEAS

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    1. Robert D. Tollison, 1982. "Rent Seeking: A Survey," Kyklos, Wiley Blackwell, vol. 35(4), pages 575-602, November.
    2. Brittan, Samuel, 1978. "How British Is the British Sickness?," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 245-268, October.
    3. World Bank, 1982. "World Development Report 1982," World Bank Publications - Books, The World Bank Group, number 5965, April.
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    Cited by:

    1. Weede, Erich, 1997. "Income inequality, democracy and growth reconsidered," European Journal of Political Economy, Elsevier, vol. 13(4), pages 751-764, December.
    2. Michael Marlow, 1988. "Private sector shrinkage and the growth of industrialized economies: Reply," Public Choice, Springer, vol. 58(3), pages 285-294, September.
    3. Erich Weede, 1987. "A note on Pryor's criticism of Olson's rise and decline of nations," Public Choice, Springer, vol. 52(3), pages 215-222, January.
    4. Jac C. Heckelman & Bonnie Wilson, 2013. "Institutions, Lobbying, and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 360-386, November.
    5. Coates, Dennis & Heckelman, Jac C. & Wilson, Bonnie, 2010. "The political economy of investment: Sclerotic effects from interest groups," European Journal of Political Economy, Elsevier, vol. 26(2), pages 208-221, June.
    6. Erich Weede, 1987. "Interaction effects in cross-national studies," Quality & Quantity: International Journal of Methodology, Springer, vol. 21(4), pages 361-375, December.
    7. Erich Weede, 1990. "Ideas, Institutions and Political Culture in Western Development," Journal of Theoretical Politics, , vol. 2(4), pages 369-389, October.
    8. Michael Marlow & David Joulfaian, 1989. "The determinants of off-budget activity of state and local governments," Public Choice, Springer, vol. 63(2), pages 113-123, November.
    9. John McCallum & André Blais, 1987. "Government, special interest groups, and economic growth," Public Choice, Springer, vol. 54(1), pages 3-18, January.
    10. Erich Weede, 1991. "The impact of state power on economic growth rates in OECD countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 25(4), pages 421-438, November.
    11. Jac C. Heckelman, 2007. "Explaining the Rain: The Rise and Decline of Nations after 25 Years," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 18-33, July.
    12. Michael Marlow, 1986. "Private sector shrinkage and the growth of industrialized economies," Public Choice, Springer, vol. 49(2), pages 143-154, January.

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