by a subjective index of electoral rights. Finally, Schnytzer and Sustersic (1998) studies the
party membership in the republics of former Yugoslavia, which they view as the measure of
loyalty, and find some evidence consistent with the theory of Wintrobe (1998).
Two major limitations are characteristic to some extent of the literature reviewed
above. First, most of these works assume explicitly or implicitly that the non-democratic
regime is imposed upon an economy based on market and private property. Correspondingly,
two of the three empirical studies mentioned above exclude socialist countries. Second, they
consider the ruler (a dictator or a ruling elite) as a sort of social singularity, an entity that is
completely isolated from the rest of the society and has no internal structure. Only
Gershenson and Grossman (2001) and Moselle and Polak (2001), allow for a connection
between the ruling stratum and the general population.1
However the major tendency of a large part of the twentieth century was the rise of the
regimes that gave more power to the state than ever before in modern history and either
destroyed the institution of private property completely or marginalized independent
entrepreneurship. These regimes, often designated as “totalitarian,” spread throughout the
world in diametrically different ideological packaging: racist/fascist (Germany, Italy, Spain)
communist (USSR, China, Cuba, and many others), nationalist (e.g. Indonesia, Iraq), or
theocratic (Iran). They all share a number of common features that provide a stark contrast to
the principles of free-market democracy. The most important features include: hierarchical
political organization, open for entry from below; bureaucratic control over the economy,
1 Moselle and Polak (2001) addresses primarily the issues of anarchy and a primitive “predatory” state
and focuses on an individual’s choice to become a “bandit,” a member of a ruling clique.