Classic Social Theory: North, Weingast, and Wallis, 4/18
Russia typifies what they call a limited-access order. So does Ukraine. Who would like to discuss the book on Zoom?
Putin ensures loyalty by constructing “some kind of hook … even with the crony oligarchs and others most closely linked to him. … Participants in the system are not bought off in the classic sense of the term. They are compromised, made vulnerable to threats … basically mutually assured incrimination to guarantee loyalty.” To survive in Kremlin circles—and to gain and keep great wealth in Russia—it is necessary to be at least in an outer circle of approval.
. . .While he was president of Ukraine from 2010 to 2014 (his campaign was estimated to cost between $100–150m), Yanukovich amassed a colossal fortune, the fruits of which were displayed to the citizens after his flight from the revolt he had stirred up. The palace he had built outside Kyiv was constructed with hundreds of millions of dollars that he and his cronies had stolen from the budget of their poor state.
Lloyd goes on,
The liberation produced by the collapse of the Soviet Union was real enough—it brought to an end a system which blighted and cramped the lives of millions over more than seven decades. But the expectation—believed by many of the Western journalists in Russia at the time, including me—that a more or less stable democracy and a more or less active civil society would eventually emerge has so far met immovable forces.
Lloyd would not have been surprised had he been familiar with Violence and Social Orders, a classic work in social theory by Douglass North, Barry Weingast, and John Wallis. They argue that a limited-access order, in which a narrow ruling coalition controls the government and the economy, is what they call the natural state.
I would be up for having a discussion of their book at a Zoom session for paid subscribers. Who’s in?
"Participants in the system are not bought off in the classic sense of the term. They are compromised, made vulnerable to threats … basically mutually assured incrimination to guarantee loyalty."
Seems oddly familiar somehow. I wonder how that FBI investigation is going.
As we evolve into a "limited-access order" ruled by a legal/political/regulatory class, we limit the growth of the economy to the permissioned. This leads to stagnation and delay in progress. Meanwhile, there is hope in the form of the contributions of the scientific/innovative elements which have caused the main growth in our society to be in the permissionless areas. Amazon has expanded to fill many social needs in America. Had it had to go through the lengthy permission-seeking genuflections required by the regulatory class, it is doubtful that the underwear I ordered yesterday would have arrived this morning.
Despite the negative impacts of years-long delays in issuing building permits, etc., our elite legal/political class believes it can make things better if only it extends its authoritarian permission process by slapping on rules to the likes of Google, Facebook, Amazon, etc., whose remarkable contributions to America have been as-yet not overshadowed by the umbrella of government permission granters. Meanwhile, bankruptcy haunts the GM's and US Steels of the world who are very much regulated and part of the limited-access order.