Social sciences analyze the relationships between and among persons, groups, and organizations. This inclusive definition incorporates economic, legal, political, and social interactions. In ordinary market exchange, the individual is simultaneously a demander and supplier, a buyer and seller. In social arrangements, the person may be both a care giver and a care receiver, a lover and a beloved, a gift taker and gift giver, a friend and a befriended. By comparison, in law and in politics such reciprocity need not be present. The individual is subject to the law, but he may or may not be a member-participant of the organized entity that makes-changes or enforces the law. In fiscal politics, the individual is subject to the coerced exaction of taxation and to the possible nonexclusive benefits of governmental programs, but he may or may not be a member-voter-participant in the collectivity that makes basic political choices. In either of these cases, in which the individual is subject to but not a participant in the process, reaction rather than explicit reciprocation describes behavior.

Our concern in this book is exclusively with those structures of social order that qualify as “democratic” in some ultimate participatory sense. We shall not analyze the relationships between individuals and an externally existing maker-enforcer of law and political authority. Critics may suggest that the authority of convention and tradition, especially in law, places any subject-person in a position that is not different, in kind, from that which is present under externally imposed rules. But the individual, as a participant in a continuing process, also plays some part in constructing the order itself.

As we have previously noted, the analytical structure of this book is simple and involves a single theme. We have repeatedly used the two-person matrix metaphor to demonstrate that, by its own logic, majoritarian politics must violate the generality precept. Outcomes tend to be off the diagonal, and only the potential rotation of majority coalitions indirectly legitimizes the whole process. The economic argument for imposing a generality constraint constitutionally is based on predictions about the relative inefficiency of off-diagonal outcomes, as measured both in the orthodox allocative sense of neoclassical economics and in the public-choice, rent-seeking sense of minimizing resource wastage.

We have discussed only briefly (Chapter 6) temporal characteristics of the political setting, despite the obvious fact that, even as stylized, majoritarian rotation requires a time sequence. Implicitly, it is as if we assume an inclusive constituency of long-lived participants, whose effective planning horizons are sufficiently extended to allow for nonbiased expectations concerning membership in successful and unsuccessful political coalitions.

The two-person (or coalition) matrix metaphor is useful in this postulated setting. To the extent that rotation among the off-diagonal positions generates a pattern of outcomes that is deemed to be relatively inefficient, all parties to the collective interaction may be persuaded to agree on a constitutional constraint that requires generality – a constraint that dictates in-period equality in political treatment, at least as an idealized objective. The separate applications discussed in the immediately preceding and following chapters can all be brought within this analytical umbrella.

This chapter departs from the common analytical structure, and the argument is necessarily more complex.

To this point, we have argued that government policies should aim at uniformity if they are to conform to the generality principle. Government policies that have uniform consequences for all within a polity obviously meet the requirement. A pure public good is equally available to all within its reach. A proportional tax on a broad base implies uniform marginal and average tax rates. Transfers may take the form of universal demogrants. General laws of property should apply to all within the polity of interest without regard to the geneology, region, age, or wealth of the owner. We have argued that such uniform treatment of individual citizens generally improves political and economic efficiency by reducing coalitional instability and incentives for rent seeking.

In this and the following chapter, we demonstrate that some departures from ex post uniformity may be consistent with our analysis of the political merits of the generality principle. It is well-known that there are many cases in which conventional economic efficiency requires nonuniform service levels insofar as preferences, wealth, or circumstances among persons vary significantly. It may seem troubling, indeed problematic, that the generality principle seems to demand uniformity in settings in which established normative theories of public economics seem to require differential treatment. One can well imagine some cases in which completely uniform policy consequences would fail to command a consensus even from behind an idealized Rawlsian veil. Nonetheless, issues of political efficiency would remain germane.

It bears noting that the benefits of adhering to the generality principle do not require completely uniform service levels in the objective sense that every citizen must be observed to receive exactly the same measured flow of service as any other.

The simple interaction models introduced in earlier chapters share a common feature that must be examined further. In each setting, the participants are described by behavioral symmetry in the absence of or prior to collective action. The Nash equilibrium is reached when each person maximizes personal anticipated payoffs from independent or private action. This setting is, of course, familiar and is analyzed variously in the standard PD models of game theory, in the “tragedy of the commons,” with Samuelsonian public goods phenomena. Our own example, that of David Hume's farmers who might join forces to drain the adjacent meadow, is broadly illustrative. In the terminology of Chapter 2, the models presume that the Nash or independent adjustment equilibrium is on the diagonal of the imaginary matrix. We must examine the extent to which this on-diagonal feature is important for the relevant normative conclusion concerning the efficiency of a generality constraint.

At this point it is useful to recall just what our analytical enterprise in this book is all about. Our normative concern is about political discrimination among separate persons and groups – discrimination that is reflected in unequal or differential treatment at the dictates of a governmental-collective authority, as guided by some decision rule or process. The generality norm, elaborated through the on-diagonal metaphor in earlier chapters, is aimed toward enforcing uniformity in political treatment for all persons in the polity. This norm does not, and should not, imply uniformity in behavior or actions by individuals in their private or noncollective spheres of activity. Outside the realm of collective action, individuals should be at liberty to act as they prefer, within the constraints that each one separately confronts.

Introduction

Should Adolf Eichmann have been found guilty of the crimes with which he was charged and for which he was condemned in 1962 by the court in Jerusalem? Were the eighteen Nazi leaders condemned by the International Military Tribunal in Nuremberg similarly guilty? Were the three defendants – Fritzche, von Papen, and Schacht – who were acquitted by that tribunal innocent? Seventeen minor subordinates from Auschwitz were pronounced guilty at the Frankfurt trial, while others were acquitted. On what logical or legal principle were those and other verdicts based?

This question persists because in every case the accused made and continue to make what appears to be a perfectly sound defense: They are not guilty because they were merely subordinates in large organizations (bureaucracies) – “cogs in a machine” – who were obeying “superior orders.” In all the trials noted above, the defendants repeatedly made this point.

Perhaps even more interesting, the bureaucratic status of the defendants has often been acknowledged by the judges presiding over the trials, by the prosecuting and defense lawyers, by the jurors (when they were used), as well as by the scholars and reporters writing on the trials. All these people struggled with the problem they thought was posed by that subordinate status. They did so because they all more or less explicitly based their reasoning on a common theory of bureaucracy.

Introduction

One popular explanation of how “too much” democracy can be bad for economic development involves the idea that democracy is “plagued” by redistributional impulses. Perhaps the most famous work to advance this theme is Mancur Olson's The Rise and Decline of Nations (1982); in this book interest groups are reclassified as “distributional coalitions” which pursue their own selfish interests at the expense of overall economic efficiency. The older and more established the democracy, the larger the number of distributional coalitions that have a chance to form, and the more the economic landscape is “rent” with inefficient laws, regulations, and other practices that hinder growth. In a similar vein, the vast literature on rent-seeking, which was originated by Gordon Tullock (1967), A.O. Krueger (1974), and R.A. Posner (1975), identified rent-seeking and its associated social costs with democratic government. This literature made it possible, by a strange twist of logic in which democracy is identified with the proliferation of economic monopolies, for monopoly to be elevated to the status of a serious problem.

Although critical of democratic processes, none of the above-named authors has embraced the notion that authoritarianism can facilitate economic development, and indeed, Olson in particular has forcefully argued the opposite (1993). However, the closely related idea that insulating economic policy from democratic processes – “a little bit”1 of dictatorship – can be good for economic development has gained currency, especially in political science and among both economic and political science theorists of development who specifically point to the capacity of authoritarian states to resist distributional pressures as the key to successful development.

Love and hate in the Roman Empire

The ancient Roman Empire still remains the example of greatness to which many dictators aspire. It was the model for Mussolini and Hitler, who tried to emulate it in both architectural style and longevity – and who failed on both counts. As an illustration of absolute power, what was perhaps most remarkable about the empire was its extent: Whoever commanded the empire monopolized political power in the civilized world. As Gibbon (1981) expressed it,

The emperors themselves did not use the title “dictator,” but they most surely had those powers. The main other contenders for power were the Senate and the people of Rome.

The working of the system

We will now apply the model of the preceding chapter. The basic conception of the way the classic Soviet system is intended to work that will be advanced here is that the entire Soviet system of production may be likened to a giant bureaucracy. Within this bureaucracy the Communist party serves a function which is analogous to private property rights in a capitalist economy (insofar as it enforces trades). When the system functions as it is supposed to, subordinates within it compete with each other to advance the goals of their superiors by showing initiative, enterprise, dedication, and flexibility, just as they do within any successful large firm, government bureau, or other form of bureaucratic organization. Successful performance (not obedience to orders) is rewarded with (exchanged for) bonuses, more rapid promotion, and so forth, all of which are ultimately under the control of the Party in the classic Soviet system. The Party leadership sets the goals of the system, and through its vertical network, it ‘enforces’ trades which advance those goals. In this sense, commentators such as Alec Nove (1964) are correct in saying that ‘it is, most of all, the Party which, by its decisions at all levels, replaces the operation of economic forces’ (p. 61). But they are, in our way of thinking, wrong to conclude that this primacy of political decision is necessarily ‘inconsistent with economic rationality’ (p. 62).