If you look at standard political theories regarding autocratic societies, the idea already exists that large protests may follow severe economic downturns. In the standard theory, however, the grievances that spark political violence are major imbalances of wealth – a “haves and have nots” scenario. However, after reviewing the Arab Spring and other major protests in the Middle East, School of Public Policy Assistant Professor Michael Dorsch and his colleagues recognized that the catalyst isn't simply the divide between rich and poor, but the inability for the average person to excel financially due to unfair policies that lead to monopolies and other barriers to success.
“In standard theories, people stand up to an autocrat and demand democracy,” said Dorsch. “They want to take over fiscal policy and transfer wealth from the rich to the poor.
When we saw what was happening in the Middle East, we didn't view that as an accurate description. We are modeling factors that are more about economic freedoms: the freedom to be an entrepreneur, to engage in an competitive economy not dominated by special interests – by the autocrats and their monopolies, gained with unfair advantages.”
In particular, Dorsch and his colleagues look at what is called “rent-seeking,” a common practice that lines the pockets of friends and relatives of autocrats. In economics, a rent is a payment that one can secure that has nothing to do with producing anything. Presumably, in a competitive economic system, one is paid based on what one produces and what it is worth; for example, a service, a commodity, or an information good like a book or a newscast. “In some situations, people can sell what they produce for an inflated price – above what it's worth. And it's obtained in an unfair, sneaky way,” says Dorsch. “So, if a t-shirt producer who is the cousin of the autocrat says 'we're not going to allow any other vendors to produce,' this creates a monopoly that allows them to set prices.” The rent is the difference between what the product is worth and the inflated price they set.
Such uncompetitive practices certainly happen in democratic societies as well - Dorsch pointed out that the U.S. sugar industry is controlled by a small number of families in the southern U.S. whose interests are protected by their connections in Washington. However, in a well-established democracy, the possibility exists to “vote the bums out,” as Dorsch says, if they aren't performing according to their constituency's satisfaction. In an autocracy, though, people don't have that option. “Their choices are to riot in the streets, stage mass protests, and maybe even coups by the more elite people.” The majority of the population are subject to the leader's whim and related policies are out in the open, blatantly preventing anyone who doesn't have the right connections from succeeding.
Making it even more difficult for the average person to follow autocratic policies, many countries ruled by autocrats also have low levels of media freedom, preventing the revelation of pro-monopoly, price-fixing policy.
Dorsch and his colleagues are using data from every autocratic country since 1960. There is, unfortunately, a lag in data reporting time, so many important macroceconomic statistics from the revolutions in the Middle East are not yet available. However, at first glance, their theory also seems consistent with what happened with the fall of the former Soviet Union and how Eastern European countries under Soviet rule rebelled against it. “These revolutions, while for political freedom, were also very much for economic freedom,” he said. “There were mass votes against communist management of the economy and for free-market economies.”
Using information gathered by various think tanks and research institutes, like GDP, and instances of regulatory processes that produce rent-seeking environments, Dorsch and his team are now reviewing more and more examples of economic-sparked political violence. “We're looking at instances of revolutions, severe riots, and coup d' etats,” he said. “We isolate those that seem to happen during severe macroeconomic contractions and look at other macroeconomic factors – for example, if there was evidence of anti-competitive, excessive monopolies and which factors seem to be the most common accoutrement to the instances of instability.”
Dorsch's previous research has explored topics such as the political economy of special-interest legislation in the U.S., the role of social mobility in the political economy of taxation, and the economics of pro-environmental behavior. His work has been published in interdisciplinary journals such as Public Choice, Economics & Politics, and Social Sciences Quarterly.