The Economics of Coercion and Conflict (The Tricontinental Global Economic Issues)

The papers brought together in this volume represent a decade of advances in the historical political economy of defence, dictatorship, and warfare. They address defining events and institutions of the world in the twentieth century: economic consequences of repression and violence, the outcomes of two world wars, and the rise and fall of communism. They cross traditional disciplinary boundaries, combining a broad sweep with close attention to measurement and narrative detail; offering insights into these issues from economics, history, political science, and statistics; and demonstrating in action the value of a multi-disciplinary approach. The author was one of the first economists to leverage the opening of former Soviet archives. He has led international projects that reinvented the quantitative economics of the two world wars and contributed significantly to historical Soviet studies. In 2012, he shared with Andrei Markevich the Russian National Prize for Applied Economics, which was awarded in recognition of their research. Contents 8 Acknowledgements 10 About the Author 12 Introduction 14 Adversaries, Coercion, and Conflict 15 Rational Calculation 19 Strategic Interaction 23 Increasing and Diminishing Returns 26 Scale and State Capacity 30 Surplus Extraction 32 Type I Errors 34 A Chapter-By-Chapter Summary 39 The Economics of Global War 40 Communism and Defense 42 Communism and Coercion 44 Conclusion 45 References 46 Part 1: Global Conflict 50 Chapter 1. War and Disintegration, 1914–1950 52 Introduction 52 Globalization, Empire, and War 54 War, Development, and Dictatorship 59 Waging War 63 Aftermath 68 Conclusions 74 References 75 Chapter 2. Why theWealthyWon: Economic Mobilization and Economic Development in Two World Wars 80 1. Military Superiority 82 2. Economic Superiority 85 3. Mobilization and the Economy 94 4. Why the Poor Lost 102 Conclusions 105 Appendix 106 References 110 Chapter 3. The USSR and Total War: Why Didn’t the Soviet Economy Collapse in 1942? 112 1. The Global Context 113 2. Soviet Rearmament and Wartime Resources 118 3. Where is the Point of Collapse? 123 4. The Risks of Soviet Collapse in 1942 126 Conclusion 131 References 131 Chapter 4. The Frequency of Wars 134 PART I 135 PART II 138 PART III 142 PART IV 147 PART V 150 PART VI 153 PART VII 156 References 158 Part 2: Communism and Defense 164 Chapter 5. Soviet Industry and the Red Army Under Stalin: A Military-Industrial Complex? 166 Introduction 166 1. The Concept of a Military–Industrial Complex 168 2. Collusive Lobbying: A Rationale 171 3. Evidence on the Defence Burden 173 4. Evidence on Collusion 176 5. A Prisoners’ Dilemma 180 Conclusion 183 References 183 Chapter 6. Contracting for Quality under a Dictator:The Soviet Defense Market, 1930–1950 188 Introduction 188 1. The Soviet Defense Market 189 2. The Hold-Up Problem 195 3. A Model 198 4. Bargaining Power 205 5. Collusion 207 Conclusions 210 References 212 Chapter 7. A Soviet Quasi-Market for Inventions:Jet Propulsion, 1932–1946 216 1. Introduction 216 2. The Problem of Jet Propulsion 220 3. Scale and Scope 223 4. Dictator, Army, and Industry in a Quasi-Market 236 5. Action and Reaction 240 5.1. Established Designers 240 5.2. Citizen Initiatives 245 5.3. Foreign Specialists 246 5.4. The Foreign Press 246 5.5. Foreign Commercial Information 248 6. Refinancing 249 6.1. Project Evaluation and Soft Budget Constraints 249 6.1.1. Adverse Decisions 251 6.1.2. Appeals against Adverse Decisions 254 7. The Secondary Asset Market 255 8. Closing the Quasi-Market for Inventions 259 9. Payoffs, Reputation, and Enforcement 262 Conclusions 268 Appendix 269 References 269 Chapter 8. The Political Economy of a Soviet Military R&D Failure: Steam Power for Aviation, 1932–1939 274 Problems and Solutions 279 Scale and Scope 283 Scale 283 Scope and Performance 290 Project Finance 294 Rationing, Rivalry, and Budget Constraints 294 The Financing Decision 297 Refinancing 300 Competitive Threats 301 Takeovers and Mergers 301 Defensive Measures 303 Good and Bad Projects 305 Conclusions 309 Appendix: The Besler Connection 310 References 312 Part 3: Communism and Coercion 316 Chapter 9. The Fundamental Problem of Command: Plan and Compliance in a Partially Centralized Economy 318 The Fundamental Problem of Command 320 The Soviet Economy as a Command System 322 Monitoring and Enforcement 324 Multi-Layer, Multi-Stage Monitoring 325 Enforcement Mechanisms 326 Summary 329 Command and Negotiation 330 Conclusions 333 References 333 Chapter 10. Accumulation and Labor Coercion under Late Stalinism 338 1. The Politburo Accumulation Model 339 2. Coercion: Three Experiments 344 2.1. Collectivizing peasants 345 2.2. Regimenting state employees 347 2.3. The labor camps 348 3. Coercion Failure? 351 Conclusion 354 References 355 Chapter 11. Economic Information in the Life and Death of the Soviet Command System 360 1. Falling Costs, Rising Demands 363 2. Hierarchy and Secrecy 366 3. Market Information in a Command System 371 3.1. Brands, Advertising, and Reputation 371 3.2. Customization 374 3.3. “General Knowledge” and Yardsticks 377 4. Soviet Growth, Transition, and Information 382 5. Conclusions 385 References 386 Chapter 12. Coercion, Compliance, and the Collapse of the Soviet Command Economy 390 I 396 II 402 III 405 IV 410 V 416 VI 418 VII 422 VIII 425 References 426 Appendix 432 Index 436