Property Rights and Stratification in Socialist Redistributive Economies

Abstract

In socialist economies, work organizations differ widely in the compensation they provide employees, despite the absence of key product and labor market processes thought to explain such inequalities in market economies. Existing theories of stratification in socialist economies focus on the power and privilege of elites, but inequalities among organizations are not created by political particularism or elite power. In this paper I sketch elements of an institutional theory of stratification anchored in a conception of property rights--the right to derive income from productive assets. Two aspects of property rights guide the analysis: (1) the dispersion of property rights across a hierarchy of government jurisdictions, and (2) the exercise of these rights by government jurisdictions as they extract revenues, primarily through taxation. Extraction of revenues from a work organization varies with the budgetary resources of a government jurisdiction and the dependence of that jurisdiction on the outputs of the organization. Variation in revenue extraction, in turn, creates inequalities among work organizations in their abilities to provide benefits to employees. An analysis of survey data on the provision of housing and benefits by work organizations in the large industrial city of Tianjin, China provides provisional support for these ideas.