Does Political Stability Hinder Economic Development? Mancur Olson's Theory and the Third World

Political theorists have long been fascinated by the problems of political stability. Aristotle, for instance, devoted two books of his Politics to the subject.1 But the past two decades have witnessed renewed interest, stimulated by the repeated breakdown of order in many developing countries and by the growing challenge to authority in most developed ones. Recent work on political stability almost always treats it as a dependent variable. It tries to explain the underlying and proximate causes of political unrest, with the goals of predicting where revolutionary change is likely and of suggesting policies that would enable existing regimes to retain authority. This focus on the causes of instability is taken by scholars using a variety of paradigms, such as Huntington, who argues from an institutional perspective that instability results when demands exceed a political system's capacity,2 the Feierabends and Gurr, who explain instability in social psychological terms as the result of frustration and perceived deprivation,3 and Hibbs, who employs factor analytic techniques to identify the social, economic, and political dimensions associated with political instability.4 Even radical analysts share this tendency to see stability as an effect rather than a cause, in their case as the result of economic factors such as dependency or slowing industrialization.5 Surprisingly little empirical research has treated political stability as an independent variable that influences other important socioeconomic processes. One explanation for this gap in the literature may be that most scholars hold stability to be intrinsically valuable and thus are not drawn to study its effects as rigorously as its causes. Both supporters and critics of established regimes are likely to view political peace and security as goals worth attaining in their own right. There is a second factor for the lack of research on the independent effects of political stability. It is that most social scientists simply assume stability has instrumental economic value. They tend to believe it is a necessary condition for growth and prosperity, but rarely feel a need to test this proposition.6 The reason is obvious: people are encouraged to invest and trade when they are confident in the future, and few things seem more likely to undermine business and consumer confidence than the prospect of political unrest and sudden changes in the economic rules of the game. Using the language of systems theory, Holt and Turner sum up as follows the conventional wisdom about the political basis for economic development.