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The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force

Author

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  • Martin C. McGuire
  • Mancur Olson Jr.

Abstract

If the leader of a bandit gang in an anarchy can hold a territory, he gains from becoming a public-good-providing autocrat. His monopoly over crime gives him an "encompassing" stake in the productivity of his domain that limits his tax-theft and makes him pay for public goods. We prove that a democracy run by an optimizing majority earning incomes in the market necessarily redistributes less than an autocrat and that a majority that earns a sufficient fraction of market income to be a "super-encompassing" interest redistributes no income and provides an ideal level of public goods.

Suggested Citation

  • Martin C. McGuire & Mancur Olson Jr., 1996. "The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 72-96, March.
    • Handle: RePEc:aea:jeclit:v:34:y:1996:i:1:p:72-96
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