The Tinpot and the Totalitarian: An Economic Theory of Dictatorship

I use basic tools of economic theory to construct a simple model of the behavior of dictatorships. Two extreme cases are considered: a “tin-pot” dictatorship, in which the dictator wishes only to minimize the costs of remaining in power in order to collect the fruits of office (palaces, Mercedes-Benzes, Swiss bank accounts), and a “totalitarian” dictatorship, whose leader maximizes power over the population. I show that the two differ in their responses to economic change. For example, a decline in economic performance will lead a tin-pot regime to increase its repression of the population, whereas it will lead a totalitarian government to reduce repression. The model also shows why military dictatorships (a subspecies of tin-pots) tend to be short-lived and often voluntarily hand power over to a civilian regime; explains numerous features of totalitarian regimes; and suggests what policies will enable democratic regimes to deal with dictatorships effectively.