Economics of One-Party State: Promotion Incentives and Support for the Soviet Regime

Abstract

This paper analyses the relationships between the dynamics of political support for the Soviet regime, as revealed in party membership, and economic policy. The Soviet regime is considered as the rule of bureaucracy that captures rents through collective control over state property and job assignment. Activists support the regime in exchange for deferred promotion into rent-paying positions. Analysis of the implicit contract between the party bureaucracy and activists (party candidates) shows that the stability of the Soviet regime was consistent with high-income inequality and high rate of investment in the economy. Under certain conditions, a rational bureaucracy chooses not to renew the contract. Incentive compatibility and time consistency problems inherent in the implicit contract accelerate the movement toward regime change. The long-run trends in the communist party recruitment in the USSR and the end of the Soviet regime in 1991 are consistent with this explanation.

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Notes

  1. 1.

    3 For example, a 1970s Soviet sociological review purports: ‘Once you become a communist, you assume voluntarily an additional heavy duty to lead others.’ A characteristic career path of a new working class party recruit is described in the following manner: foreman – student in an engineering school – head of the planning department in a large enterprise. The next step would be further up the ladder of industrial management or to an entry-level position in the party bureaucracy. Eighty per cent of party bureaucrats of that period followed this career path (Rabochii; 1966–1970, pp. 225–234).

  2. 2.

    4 A contract ‘signed’ during hard times (uprising, war, etc), when expectation of T m goes down momentarily and the demand for activists experiences additional upward shift, is most likely to be renegotiated. As soon as the threat to power is restored, normal T m rebounds and a downward revision of promotion rate can take a form of massive purge of excess activists. This happened in the Soviet Union after the end of the forced collectivisation of peasantry (1929–1933) and after the World War II.

  3. 3.

    5 If the bureaucracy is a multi-layered hierarchy, as it really is, its higher-ranking officials have better chances to overstay in office, because they are protected from the pressure from below by intermediate levels, and the smaller size of higher layers makes it easier to establish mutual-protection networks. Formation of cliques causes the ‘clogging’ of promotion channels. Therefore, hierarchy effects an additional deceleration of job mobility.

  4. 4.

    6 Correlation between the two series in the post-war period should be higher, since the equipment removed from defeated Germany as reparations is probably not accounted for in the data.

  5. 5.

    7 Full party membership did not exceed administrative sector employment until mid-1930s. This implies that the probability of promotion was close to unity in that period. Anecdotal evidence suggests that full party membership indeed gave an unconditional right to fill an administrative or managerial position. The head of the Central Party Control Committee (KPK) reckons in 1936: ‘One who has a party membership card can enter <any office>. Once in there, he would demand a job…’ and get an appointment even if he has a criminal record (RGANI.6.1.15.37).

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I am grateful to Steve Craig, Marshall Goldman, Paul Gregory, Mark Harrison, and Gavin Wright for helpful comments and to the Hoover Institution for financial and intellectual support.

2 Voslenskii (1984) used the term nomenklatura to label the Soviet ruling bureaucracy itself. Although this usage of the word has become popular, I use it in a narrower sense of appointment control, which is more accurate historically.

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Lazarev, V. Economics of One-Party State: Promotion Incentives and Support for the Soviet Regime. Comp Econ Stud 47, 346–363 (2005). https://doi.org/10.1057/palgrave.ces.8100099

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Keywords

  • Soviet Union
  • one-party state
  • rule of bureaucracy
  • implicit contracts

JEL Classifications

  • D73
  • N44
  • P26