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Et Tu, Brute? Wealth Inequality and the Political Economy of Authoritarian Replacement

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Abstract

What motivates elite factions to seek to replace an authoritarian incumbent? In this article, I provide a political economy theory of authoritarian replacement. I argue that high wealth inequality fosters authoritarian replacement, but that the effect is conditional on overall wealth being low. At low wealth, elite factions have an incentive to control the state to appropriate income. As wealth grows, elites shift their focus toward securing their wealth and thus prioritize finding credible commitments and stability within authoritarianism. I test these hypotheses using data from 1960 to 2008 and employ multistate survival analysis. A case study of Trujillo’s rise in the Dominican Republic illustrates the mechanisms of the theory. The evidence supports the main theoretical expectation that replacement is more likely when the level of wealth is low but wealth inequality is high.

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Notes

  1. I am indeed aware that the most accurate conceptual concept would be “intra-elite” inequality, as the struggle for power is among elite groups, not the poor versus the rich. But I make the assumption that “intra-elite” and “class” inequality, while being theoretically different, closely mirror each other in practice. I develop on these arguments further in the theory section.

  2. In my tests, democracy and democratic breakdown are included to account for the full scope of transitions that countries can experience. This conforms with the multistate survival model used in the empirical section of this paper. Including all transitions reduces coefficient bias. However, no theoretical contribution is offered in this paper for democratization or democratic breakdown. This will be explained in more detail in the methods section.

  3. An updated version of the dataset to 2015 is available at Harvard Dataverse.

  4. I do not introduce a formal model explicitly; the formula below will be useful only as an analytical tool to describe how wealth grows in the long run.

  5. Note that, in the case of the Dominican Republic, lower levels of repression after 1905 were aided by the USA taking over the country’s customs that year and by the signing of the American-Dominican convention in 1907. A more peaceful environment was beneficial to both countries.

  6. A similar and related argument is that as the economy grows wealthier, elites find that alternatives to generate wealth emerge that do not require state capture.

  7. The results obtain if a simple multinomial logistic model is used. Tests are available from the author.

  8. The choice to use the multistate survival model is predicated on the fact that it can account for all possible transitions rather than focus on only one of the potential outcomes. As Metzger and Jones (2016) argue, not including all possible transitions in the analysis can lead to biased estimates. Using the multistate survival model reduces potential biases when analyzing relationships that are part of a broader set of potential outcomes.

  9. The multistate model is estimated using a discrete-time stratified Cox procedure. I provide a description of the particulars of the model and the dataset structure in the Appendix.

  10. Regime change in GWF includes reshuffling coups, which could be argued to not lead to a coalition change behind the dictator. I have included additional tests in the Appendix (see Tables A3 and A4) using data from the CHISOLS project (Mattes et al. 2016), which captures changes in the source of leader support in democracy and autocracy.

  11. The dataset can be found at https://stat.unido.org

  12. The economic elite is broadly defined as top centile of an economy.

  13. Data accessed in February 2022. It can be found at https://data.worldbank.org/indicator/NE.GDI.FTOT.CD

  14. An in-depth description of the variable is included in Appendix A1, including the World Bank’s own detailed definition.

  15. I use the GDP measure to ensure that countries in the authoritarian replacement sample are by and large at the lower end of the GDP per capita distribution, and are thus not wealthy at the beginning of the measure.

  16. Our variable cannot capture all forms of wealth that elites may have, such as financial assets, stocks, and savings. Neither does it account for foreign ownership of assets. However, I contend that these omissions do not harm the validity of our measure. The level and growth of these assets tend to be highly correlated with the ones in the measure, and foreign ownership, while important, appears to have a small impact on our measure overall. I provide as evidence of our logic the correlations with Piketty’s private wealth data for a subsample of countries. These are all above 0.9 and are detailed below.

  17. These are the USA, Canada, China, Russia, the UK, Australia, Czech Republic, Japan, Mexico, South Africa, Netherlands, South Korea, Denmark, Germany, France, Greece, Italy, Spain, Norway, Finland, and Sweden. Within-correlation scores are stable across groups, with the exception of South Africa and, to a lesser extent, Greece. The correlation stays high if each or both countries are excluded from the test.

  18. The USA, Canada, Australia, Japan, Netherlands, South Korea, France, Germany, Italy, Spain, and Sweden. Within-correlation scores are stable across all groups.

  19. I do not include multiple interactions with square or cubic splines, which overly constrain the data.

  20. The results of the Cox proportional hazards model are presented in log-odds, not hazard ratios.

  21. The curve for all other regimes is a weighted average. No CIs are shown as statistical significance has been defined in Fig. 3a; survival curves are sufficient to show substantive significance.

  22. In fact, since the USA controlled the DR customs since 1905 and most of the government’s tax revenue came from tariffs, taxing firms to extract rents was barely possible. Hence, contracts, licenses, and concessions were the only way to extract rents profitably.

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Acknowledgements

I would like to thank Ernesto Calvo, Sebastián Vallejo Vera, Mark Lichbach, Pablo Beramendi, Erik Wibbels, Diego Romero, Jeremy Springman, Shawna Metzger, and participants at MPSA and APSA panels for their helpful comments and suggestions. I would also like to thank the editor and three anonymous reviewers, whose suggestions greatly improved the article.

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  1. Department of Political Science, Purdue University, 230 Beering Hall, 100 University St, West Lafayette, IN, 47907, USA

    Joan C. Timoneda

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Appendix

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Timoneda, J.C. Et Tu, Brute? Wealth Inequality and the Political Economy of Authoritarian Replacement. St Comp Int Dev 58, 557–583 (2023). https://doi.org/10.1007/s12116-022-09377-6

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