Political Regime, Economic Structure, and Political-Economic Empowerment

Abstract

words) In this paper I develop a most simple model that determines equilibrium of political and economic empowerment in dependence of prevailing inequality of economic opportunities, economic actors' political organization, and the structure of the economy. Assuming that income inequality can be high or low, political organization democratic or authoritarian, and the economic structure predominantly rent-extracting of primary resources or rent-creating in secondary and tertiary economic sectors, I compare the various equilibriums. The model confirms the natural intuition that equality, democratic organization, and capital-accumulation-based rent-creation is ultimately most favorable for equilibrium of high political-economic empowerment. However, the model also shows that democratic organization does not generally lead to greater political-economic empowerment. If an economy is rent-extracting and confronted with high inequality of economic opportunities, democratic organization becomes less meaningful and political- economic empowerment may be greater in an authoritarian society based on rent-creation and little redistributive conflict. Category: Positive Political Economy