Declining state reward capacity triggered elite runoff akin to a bank run

Evidence

All this happened as the Soviet government was attempting to generalize and liberate national markets. That meant reducing government involvement in production and distribution of goods and services. As a result, the central government’s capacity to deliver rewards to its followers declined visibly from one month to the next. In response, officials and managers engaged in a sort of run on the bank: wherever they could divert fungible assets to their own advantage, they increasingly did so. They started stealing the state (Solnick 1998). The more one person stole, the more reason the next person had to steal before no assets remained. Soon a large share of government resources had moved into private hands. — Charles Tilly, Regimes and Repertoires, 1234

Categorization

• XREF: The ‘run on the bank’ asset-stripping dynamic is a textbook coordination problem — connects to the Milgrom law-merchant material on how defection cascades once monitoring breaks down. — connects to: Power emerges when rewards are threatened with withdrawal to exact unenvisaged conduct — Niklas Luhmann, Trust and Power, 622

Broader Connections

• Power emerges when rewards are threatened with withdrawal to exact unenvisaged conduct #exemplifies (0.92) — Niklas Luhmann, Trust and Power, 622