Political Rents, Promotion Incentives, and Support for a Non-Democratic Regime

the promotion-seeking activists.⁷ Although some of the results may not be applicable to any
non-democratic regime, studying the Soviet Union has two major advantages. First, the
dominant state ownership and fusion of political and economic administration produces a
single hierarchy. The policies with regard to wages, promotion, job assignments, etc. are same
or similar in the spheres of administration and production, across industries and regions.
Therefore, the Soviet-type political-economic system on the whole can be regarded as one
enormous corporation. This simplifies the analysis and allows applying the methods
developed for the study of provision of incentives in firms.⁸ Second, the high degree of
centralized bureaucratic control resulted in accumulation of data by governmental statistical
offices. Such accumulation can hardly be expected under a looser regime, in particular in
countries where bureaucratic rents come largely from corruption and/or where promotion is
based on family ties and clientelism. Moreover, relevant Soviet data are becoming
increasingly available. Some of them are used later in this paper to test the predictions of the
model.

⁷ State property and command economy are not necessary prerequisites for a nomenklatura-type
system. Any governmental intervention in the economy assigns resource allocation power to
bureaucracy, and therefore allows capturing political rents through corruption (Andrei Shleifer and
Robert Vishny, 1993). Indonesia is an often-cited example. In general, all authoritarian regimes
establish some sort of system of bureaucratic control over access to high-income positions beyond the
borders of the public sector (licensing of businesses and regulation of access to higher education). The
military-bureaucratic pyramids of Qing China and Imperial Russia in eighteenth century, medieval
Catholic theocracies and monastic orders are just a few of numerous historical analogs to the
nomenklatura. Military dictatorships, supported by the hierarchy of army command, are also
hierarchical political regimes.

⁸ See Canice Prendergast (1999) and Irene Valsecchi (2000) for recent surveys of the literature on
promotion-related incentives.

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