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In the shadow of the Gulag: worker discipline under Stalin

Author

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  • Miller, Marcus

    (University of Warwick)

  • Smith, Jennifer C.

    (University of Warwick)

Abstract

An ‘efficiency wage’ model developed for Western economies is reinterpreted in the context of Stalin’s Russia, with imprisonment – not unemployment – acting as a ‘worker discipline device’. The threat of imprisonment allows the state to pay a lower wage outside the Gulag than otherwise, thereby raising the “surplus” left over for investment: this externality provides a reason for coercion over and above the direct productivity of those in custody. Just how credible the threat of imprisonment was under Stalin is documented using archival data now available; but the enormous scale of random imprisonment involved is, we argue, attributable not to economic factors but to Stalin’s insecurity in the absence of a legitimate process for succession. We develop a model of demand and supply for industrial labour in such a command economy. To get more resources for investment or war, the state depresses the level of real wages; to avoid incentive problems in the wider economy, the harshness of prison conditions can be intensified. This is the logic of coercion we analyse.

Suggested Citation

  • Miller, Marcus & Smith, Jennifer C., 2015. "In the shadow of the Gulag: worker discipline under Stalin," CAGE Online Working Paper Series 218, Competitive Advantage in the Global Economy (CAGE).
  • Handle: RePEc:cge:wacage:218
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    Cited by:

    1. Nikolova, Milena & Popova, Olga & Otrachshenko, Vladimir, 2019. "Stalin and the origins of mistrust," GLO Discussion Paper Series 344, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Labour discipline; asymmetric information; efficiency wage; Soviet Union; Stalin;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects

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