Power, Conflicts, and Subordination

Researchers in the economics of development have been struggling for the past fifty years to find theoretical explanations for the economic backwardness characteristic of an important number of territories around the world. Several countries seem trapped in vicious circles whereby poverty self-sustains under-development. And while the channels linking low wealth to poor economic performances are multiple and highly complex, a recurrent feature of under-developed polities is their weak institutional setting. In the absence of strong and credible institutions, one needs to depart from the neoclassical paradigm to understand how some countries are entrapped in high poverty. An assumption that is both critical for the theoretical reasoning, and dear to economists, gets violated: property rights are not enforced. The consequences of lifting this hypothesis are dramatic since the traditional institution to operate economic transactions, the market, can no more be fully relied upon. Indeed, instead of being secured by a Leviathan or some other third party, transactions and property claims need to be backed by power. As a consequence, rather than integrally allocating scarce resources to production, agents need to divert some production factors to accumulating power. The aim of this thesis is to improve our understanding of the allocation of scarce resources under weak institutions. We distinguish two distinct ways to acquire power. Depending on the contexts, an agent can either produce such power himself, or else he may purchase the services of other agents serving his cause. The two first chapters of this manuscript are devoted to the latter situations where an agent (patron) offers a material good to another agent (client) in exchange for power, status, or support. In the last two chapters the purchase of power is ruled out by assumption, but the agents are allowed to devote resources in producing power. More precisely, the first chapter aims at a better understanding of the conditions under which unequal rank or power positions may get permanently established through asymmetric gift exchange when a gift brings pride to the donor and shame to the subordinated recipient. In this chapter only two players are assumed to interact, the patron and the client. The central result obtained is that an asymmetric gift exchange equilibrium can occur only if the importance attached to social shame by a recipient is smaller than that attached to social esteem by a donor. Moreover, an income transfer is more likely to be traded against social esteem, status, or power when the weight put on these attributes by the donor or patron is higher. In that chapter, co-written with Jean-Philippe Platteau, we also show that the recipient's productivity may take on a rather wide range of values in the domain of feasibility of asymmetric gift exchange, and that, contrary to a commonly prevailing view, it is even possible that his productivity would be identical to that of the donor. Finally, the conditions are spelt out under which the recipient's effort is more likely to be reduced upon entering into asymmetric gift exchange relationships. In the second chapter, I develop a setting where such power enables the patron to maintain his position and to extract rents. In that setting, instead of directly deriving utility from power and status, autocrats barter political and economic concessions for support to remain in power and extract rents. Contrary to the most of the existing literature, instead of viewing the favors' beneficiaries, i.e. the elites, as an exogenous entity, I allow the ruler to decide whom to coopt provided the subjects are heterogeneous in the potential support - their strength - they could bring to the regime. While the ruler can select the elites on the basis of their personal characteristics, an alternative strategy consists in introducing some uncertainty in the cooptation process. The latter strategy allows the ruler to reduce the clients' cooptation price since in the event of a revolution the likelihood of being included in the future elites is lower. I show that weak rulers are more likely to coopt the society's strongest individuals, while powerful ones diversify the composition of their clientele. Moreover, when agents value more future discounted outcomes, and when power is more dispersed across subjects, the ruler is more likely to randomly coopt subjects. In the third chapter, co-authored with Giacomo De Luca, patron-client relationships are assumed away. Agents enter in contests for scarce resources by producing power rather than acquiring it through the purchase of support and subordination. Landless subjects intent to obtain land by violent means, while landlords invest resources in defending their property. Our task is to track the effect of land inequality on conflict intensity. A fundamental distinction with the existing literature lies in the nature of inequality under consideration. We investigate how land inequality extit{across landlords only} influences the intensity of the fight against a rebel group constituted by landless individuals. We show that conflict intensity is non-monotonic in land inequality. In particular, the most severe conflicts occur for intermediate land inequality levels. Moreover, a Pareto improving transfer of land from the smaller to the larger landlord may exist. The last chapter is perhaps the most abstract piece of the present thesis, making it the most general part of the manuscript as well. In that paper we explore, together with Giacomo De Luca, the existence of deterrence equilibria in a general equilibrium model of guns (power) and butter (goods) production. If fighting entails sufficiently low destruction, war is the unique equilibrium of the game. If, however, conflict generates sufficiently large damages, only mixed strategy equilibria survive, in which players randomize over their deterrence and war strategies. War, therefore, always occurs with positive probability for any positive investment in weapons.(DOCSESG00 ) -- FUNDP, 200