The Dynamics of Property Rights and Consent in Autocracies

Abstract

This paper studies the dynamics of property ownership, appropriation, and in autocratic political systems. An autocrat representing the interests of an in-group chooses whether and how much to appropriate from public and private assets at each date. To maintain the appearance of the rule of law, the autocrat proposes an assignment that would not be rejected if the citizens could actually vote. Despite this consent constraint the autocrat systematically appropriates property and wealth from the out-group and from public assets by exploiting gaps in property enforcement in the absence of consent. Under some initial conditions, the autocrat initially implements popular land reform only to take it back down the road. More generally, the wealth shares of both public property and private property of the out-group decline monotonically after an initial adjustment period. The model rationalizes the connection between increasing wealth inequality and privatization occurring in many autocracies. Calibrating parameters to Russian and Chinese wealth data, simulations of these countries' wealth distributions to mid 21st century display widening gaps in wealth between elites and the rest of the populace. Finally, we show that the ruling group under anocracy, an autocratic system that admits opposition and civil society groups, will generally be better off than under a traditional autocracy. The dilemma is that the anocratic system might enable the growth of an opposition party that eventually displaces the ruling group.