Abstract Why do dictatorships favor harsher punishments than democracies? We use arational choice approach to explain the stylized facts of Stalin’s dictatorship—preference forharsh sanctions, higher incarceration rates, greater use of capital punishment, low tolerancefor theft of state property and workplace violations. They are shown to be explained by thepreferences of a rational dictator, who does not internalize the social and private cost ofpunishment.
The formerly secret Soviet archives yield the stylized facts about crime and punishmentduring the quarter century of Stalin’s rule, which we date to 1928–1953. In addition to ex-tremely high incarceration rates, these facts include forced labor camps in place of prisons,presumption of guilt, criminal offenses as political crimes, high rates of capital punishment,zero tolerance for crimes against state property, and criminalization of work place violations.Stalin’s law enforcement represents a case study of a dictatorial objective function unfil-tered by collective leadership or intermediaries. The mining of the archives has establishedbeyond a shadow of doubt the tight personal control Stalin exerted over repressive policies(Khlevnyuk 1996; Baberowski 2003; and ISG 2004: introduction). The archives rule out the
E. BelovaHoover Institution, Stanford University, Galvez Mall, Stanford, CA 9435-6010, USAe-mail: [email protected]
P. Gregory (�)Department of Economics, University of Houston, Houston, TX 77204-5882, USAe-mail: [email protected]
“Stalin as an uninformed pawn” interpretation of repression (Getty 1985). Stalin’s repres-sion policies, therefore, allow us to penetrate directly into the mind of a dictator, exercisingstrict control over a large society, military, and economy.
In this paper, we adapt an economic theory of crime framework as formulated by Polinskyand Shavell (1992, 2000) to explain the facts of Stalinist justice. We are not the first toemploy such models for this purpose: Becker (1968: 184) used communist countries as anillustration for a central point of his seminal article: “There was a tendency. . . even todayin many Communist and underdeveloped countries, to punish those convicted of criminaloffences rather severely, at the same time that the probability of capture and convictionwas set at rather low values.” In other words, a “rational” Stalin offset low apprehensionprobabilities with severe penalties.
Section 2 presents the empirical findings and stylized facts. Section 3 presents the theoryof crime and law enforcement and our extension of the standard model. In Sect. 4 we usethe model to explain the logic of Stalin’s law enforcement policies and draw some generalconclusions in Sect. 5.
2 Specifics of Stalinist law enforcement
2.1 Preference for harsh sanctions
The most notorious feature of Soviet law enforcement in general, and especially that ofthe Stalin period, is its strong preference for harsh sanctions—long incarcerations and ex-ecutions. Even labor discipline violations and managerial miscues were subject to harshpunishment. Fines were rarely used. In contrast, democracies have a strong preference forfines relative to prison sentences or executions. Fines in civil cases are mostly transfers froma wrongdoer to the wronged party. Only criminal fines are transfers to the state. In a so-cialist dictatorship, most crimes are against the dictator (the “owner” of all assets) and areinterpreted and punished differently.
Figure 1 shows that Stalin’s Russia used fines infrequently relative to custodial sentencesand corrective labor sentences. Custodial sentences were used to punish political crimes,theft, and “more serious” violations of labor discipline, like unauthorized job changes. Cor-rective labor sentences were used to punish minor labor offenses such as tardiness, slacking,and poor work. They were comprised of two components—a reduction in pay and the possi-bility of being sent to remote locations or commandeered to construction projects. Notably,near the end of the Czarist period, less than ten percent of criminal convictions resulted inprison sentences. More than 90 percent were sentenced to “corrective punishments” otherthan prison.1
The high frequency of the death penalty, euphemistically called the “highest measure ofsocial defense”, is the starkest evidence of the preference for harsh punishment. From 1940to 1953, the Soviet Union executed an average of 19,000 people per year. If we add in theGreat Terror of 1937–1938, executions rise to almost 54,000 per year. Executions sloweddown in the last eight years of Stalin’s rule to 918 per year (if we accept the unlikely claimof no executions in 1948 and 1949). These high rates of capital punishment representeda break with the Czarist past, despite its waves of political assassinations and rebellions.Between 1901 and 1912, 4,191 persons were executed, yielding an annual average of 349(ISG 2004: 607).
1Statistichesky Ezhegodnik Rossii (1913): IV, 5.
Public Choice (2009) 140: 463–478 465
Fig. 1 Fines, corrective labor, and custodial sentences
Table 1 USSR criminal statistics
Number Per
100,000
1. Institutionalized population in camps, colonies and prisons, 1953 2,621,000 1,558
2. Institutionalized population plus special settlers (excluding children) 4,301,000 2,605
At the time of Stalin’s death in 1953, the institutionalized population was over 2.5 million,or 1,558 prisoners per 100,000 population (Table 1). This incarceration rate was ten timesthat of the United States for the same year.2 On the eve of the October revolution in 1917,there were fewer than 100,000 persons incarcerated in a country of roughly the same size.3
The Soviet incarceration figure does not include deportees to remote regions. Such “specialsettlers” technically were not imprisoned, but they were forbidden to leave their settlements
2Available from http://www.ojp.usdoj.gov/bjs.3Statistichesky Ezhegodnik Rossii (1913): IV, 9.
and were deprived of rights of citizenship. If we add adult special settlers, the 1953 insti-tutionalized population rises 67 percent to a rate of 2,605 per 100,000 population. Annualprison sentences (1940–1953) were 710 per 100,000, five times the US rate for the sameperiod.
2.3 Criminalization of economic behavior
The Stalinist regime criminalized managerial failures, engineering mistakes, industrial ac-cidents, and work discipline violations. Such actions are not criminal offenses in marketeconomies, but materialize as losses to business owners, as firings, or as judgments in civilsuits. Only rare and extreme cases, such as security fraud, bribery, theft of company assets,insider trading, serious vandalism or hooliganism, and the like are punished by criminalsanctions.
Throughout Stalin’s rule, managerial errors and accidents were investigated as possi-ble criminal acts punishable as treason. Counterrevolutionary acts were defined to include“weakening. . . the fundamental economic, political, and national gains of the proletarianrevolution. . . undermining state production, transport, trade, monetary relations or the creditsystem, or likewise cooperative trade, done with counterrevolutionary purposes,” or “failureto perform defined duties or their intentionally negligent fulfillment, with the purpose ofweakening state authority” (Cunningham 2000). Such a broad definition expanded the poolof potential counterrevolutionaries. Even if we exclude the dekulakization (1930–1932) andGreat Terror (1937–1938) campaigns, treason convictions averaged 53,000 per year between1929 and 1953. In most societies, treason convictions are rare, numbering in the tens or hun-dreds. It is difficult to break the 53,000 average into “economic” and “political” crimes (of-ten the distinction was blurred), but economic counter-revolution accounted for a substantialportion, perhaps a third.4 For rare years in which occupational data are available (such as1950), almost half of those arrested by state security worked in state enterprises or planning(Mozokhin 2006: 424–426). Managers and officials could also be convicted for lesser “oc-cupational violations” or “nonfulfillment of state obligations” by regular courts. Between1937 and 1953, 2.1 million people were convicted of occupational crimes by regular courtsfor an annual average of 125,000 (ISG 2004: 613–615).
Work-discipline violations were turned over to the criminal courts starting in 1940 afterearlier being subject to administrative sanctions, such as loss of housing or ration cards.The landmark June 26, 1940 decree criminalized workplace offenses by mandating shortprison terms for workers changing jobs without permission and imposed “corrective labor”sentences for unauthorized absences, slacking, and tardiness. Other decrees criminalizingwork place behavior followed shortly thereafter, and the number of criminal convictionssoared. Justice ministry statisticians had to add explanatory notes to explain the signifi-cant increases. These laws remained on the books until after Stalin’s death. For the period1940–1953, there were 11 million convictions for unauthorized job changes (annual aver-age 791,000) and 13 million convictions for labor discipline violations (annual average of933,000). The number of jail sentences of one year or less was 3.6 million (the prescribedsentence for job changing) and corrective labor sentences (the penalty for disciplinary vio-lations) were 16 million (ISG 2004: 616–617).
4According to the statistics published by the newly established NKVD for its first half year of existence (fromJuly 11, 1934 to year end), 43,191 of its cases were for economic offenses, for a total of 31 percent of totalinvestigations (see: Mozokhin 2006: 321–323).
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2.4 Zero tolerance for theft of state property
Soviet criminal codes punished theft of state property more severely than of private property.Their most unusual feature was zero tolerance, whereby harsh prison terms were levied evenfor petty theft, such as stealing small amounts of bread or taking vegetables from a schoolgarden. The August 7, 1932 law stated that socialist property is “sacred and untouchable”5
and imposed minimum ten-year sentences for the theft of even small amounts. The “mod-erate” law of August 10, 1940 punished “petty theft at enterprises or institutions by prisonterms of one year if its character does not require a more severe punishment” (ISG 2004:408). The landmark decree of June 4, 1947 required mandatory seven-year sentences irre-spective of the size of the theft. More severe penalties were left to the discretion of judgesand prosecutors for large, repeated, or organized thefts. Secret instructions made the lawseven harsher, such as the death penalty for cattle theft (ISG 2004: 134–135). Crimes againststate property explain much of the high incarceration rates in Table 1. The average annualrate of convictions for theft of state property (1937–1953) was a quarter of a million. (Thecomparable figure for private theft was 100,000.) Of the 14 million prison sentences issuedbetween 1940 and 1953, four million were for theft of state (socialist) property.
2.5 Preference for Type I errors
The Anglo-Saxon presumption of innocence and “proof beyond a shadow of a doubt” incriminal cases is designed to minimize the risk of convicting an innocent party (a Type Ierrors, or finding an innocent person guilty). In democracies, courts favor the Type II errorof letting guilty persons go free. Totalitarian courts, on the other hand, are more likely tomake Type I errors as they tend to be biased towards convicting the innocent to avoid lettinga guilty party go free (Gregory and Harrison 2005: 739).
Bolshevik judicial philosophy argued from the first days of power that the judicial sys-tem should err on the side of convicting the innocent. As the first secret-police head, FeliksDzerzhinsky, argued: We must “defend the revolution and defeat the foe even if in doingso our sword might by chance fall on innocent heads” (Legett 1981: 69). Stalin pronouncedhis “five percent rule” on June 2, 1937, almost two months before the Great Terror demand-ing that Soviet citizens should report enemies even if they are right only five percent of thetime (Khaustov et al. 2004: 209). The preference for Type I error is evident in the state-ments of Stalin’s chief repressor, NKVD minister Nikolai Yezhov: “A certain number ofinnocent people will be annihilated” and “if during this operation an extra thousand peoplewill be shot, that is not such a big deal” (Jansen and Petrov 2002: 84–85). Judicial proce-dures provided almost no safeguards for those accused of political crimes. Under the Lawof December 1, 1934, evidence need not be gathered if the accused confessed, there wasno right of appeal, and the sentence was carried out immediately. Most political enemieswere sentenced by extra-judicial tribunals (the most notorious being the troikas), where theaccused rarely appeared in person and had no right to representation. Typically two accusa-tions (often written by paid witnesses) were sufficient to prove guilt, if the accused did notconfess (Gregory 2009: Chap. 4).
5USSR Collection of Laws, 1932, no. 62, item 360.
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3 Theory of crime under a socialist dictator
The economic theory of crime asserts that people respond to the incentives created by thecriminal justice system and that society chooses an “optimal” level of crime by selecting theresources devoted to apprehension and by setting punishments (Becker 1968; Becker andStigler 1974; Ehrlich 1972, 1996; Polinsky and Shavell 2000). Society does not aim to riditself of crime altogether but to achieve an “acceptable” level of crime (Anderson 1999).The standard theory of optimal law enforcement introduces a benevolent law enforcer, whominimizes net losses from crime by choosing two variables: the level of investment in lawenforcement, e, and the legal sanction, s (or punishment) as a combination of prison termand fine. In this paper, we expand the Polinsky and Shavell (2000) model to a society ruledby a dictator. In their model, social losses are the sum of the harm from crime and social andprivate costs of law enforcement, less the criminals’ gains, assuming that all individuals arerisk neutral. We use the model’s simplified version, which does not separate the sanction intofines and imprisonment. Polinsky and Shavell’s democratic law enforcer considers not onlythe costs of punishment and apprehension, but also the offenders’ gains, their disutility frombeing punished, and costs associated with punishment, such as expenditures on guards, andthe building and maintenance of prisons. In other words, democracies internalize the cost ofpunishment and care about citizens’ welfare—even that of criminals.
Our model adopts the following assumptions: constant harm per crime, h, which bringsabout a gain, g, to the offender. The gain is the probability of being caught times the valueof the crime to the individual. (Subsequently, small letters refer to individuals; capital let-ters to aggregates.) The value of the gain varies across individuals and is distributed inthe population with a probability mass function z(g), such that limg→±∞ z(g) = 0 andlimg→∞ gz(g) = 0. The total costs of law enforcement are E and the probability of ap-prehension is p. E depends upon the law enforcement budget. Every individual is fullyrational, well informed, and risk-neutral, committing a crime only if the gain from crimeexceeds expected punishment: g ≥ ps. The total quantity of crime is: N = ∫ ∞
gz(g)dg.6 We
assume that every apprehended individual is convicted and receives a sanction, s, which isa combination of socially costless (fine) and costly (imprisonment) punishment; α is thesocial cost of punishment per apprehension (which includes but is not limited to the costof imprisonment); λ is the private cost of punishment for those convicted, such as disutilityfrom prison confinement.
The democratic law enforcer minimizes the social loss from crime,7 which has the fol-lowing components: direct harm from crime, H , cost of enforcement, E, individual andsocial cost of punishment, I and C respectively, and gains to criminals, G. Of these, onlygains to criminals, G, enter the loss function with a negative sign.
L = H + E + C + I − G = E + [h + p(λ + α)]∫
g>ps
z(g)dg −∫
g>ps
gz(g)dg. (1)
To convert this model to a Stalinist law enforcer, we consider a dictator, who values directharm (H), social costs (C), and law-enforcement costs (E), but discounts criminals’ gainsfrom crime and their disutility from punishment.
6Generally, it is reasonable to assume (as in Becker 1968: 173) that the amount of harm increases with the
quantity of crime (or “the activity level”). Thus, H ′ = dHdN
> 0.7Typically the law-enforcer problem is formulated as maximization of social welfare, but loss-minimizationhas more intuitive appeal in the given context.
Public Choice (2009) 140: 463–478 469
Not all dictator law enforcers will be the same. Some will have a high discount factor;others a lower one. Following Wintrobe (1998) and others, we assume that dictators gen-erate power to stay in office by combining loyalty and repression. A dictator who relies onloyalty pays more attention to private costs of law enforcement and private gains to crim-inals. A dictator (like a Stalin), who generates power primarily through repression, placeslittle value on private costs and criminals’ gains. A dictator who relies exclusively on loyaltywill be little different from a democratic law enforcer. We use the coefficient β (which runsfrom zero to unity) to measure the extent to which the dictator law enforcer discounts theprivate costs of punishment, I , and gains from crime, G. Thus (1) can be re-written:
L = H + C + E + β(I − G) = E + [h + p(βλ + α)]∫
g>ps
z(g)dg − β
∫
g>ps
gz(g)dg. (2)
Solving (2) for optimal sanction s yields:
s∗ = h
βp+ λ + α
β. (3)
The coefficient β represents a democracy-dictatorship continuum. With β = 1, we have thestandard solution for costly punishment: s∗ = h/p + λ + α that fully and equally accountsfor the utility of every member of society, including criminals (Polinsky and Shavell 2000:Sect. 6). As β approaches zero, we have the Stalin-like law enforcer who fully discounts I
and G.8
4 Explaining Stalinist law enforcement
The model predicts that as a state tends towards complete dictatorship, the dictator increas-ingly disregards individual costs of punishment and the criminals’ gains. A β = 0 dictatorconsiders only the sum of direct harm, H , social costs C, and law enforcement costs, E.A β > 0 dictator takes account of private costs of crime (I ) and the private gains of crimi-nals (G) depending on the value of β . Although β varied in the course of the Soviet period,it reached its lowest value under Stalin, especially so in the late 1930s, during the years ofGreat Terror. This model provides insights into the stylized facts of the first section.
4.1 Preference for harsh punishment
Under a full-fledged democracy (β = 1), the optimal sanction equals the expected value ofthe crime (h/p) plus the social cost per crime, α, plus the individual cost, λ. The intuitionbehind this formula is that the sanction should offset the expected harm and compensate forsocial and private costs. Under a Stalin-like dictatorship, the optimal sanction s∗ approachesinfinity as β approaches zero:
s∗ = h
βp+ λ + α
β.
A dictator who fully discounts the private costs of punishment and the private gains ofcriminals is expected to impose extremely harsh punishments for each type of crime under
8Note that although the magnitude of sanction is increasing in harm with β → 1, it is still lower than withβ → 0.
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the motto: Why not hang them all? This formula applies to various types of crimes, rangingfrom political opposition, to managerial crimes, to theft of state property and to workplaceviolations. In all cases, the dictator is expected to apply extremely harsh punishment for thattype of crime.
Stalin applied capital punishment widely and without hesitation not only to those whomhe perceived to be his political enemies but also to offenses, such as theft or mismanagement,where the dictator wished to make an example. The capital punishment of political enemiesis a fairly obvious result of the model. Although capital punishment produces the highestindividual cost, it does not enter the loss function as for the dictator the harm of an overthrowor an assassination is infinite. Moreover, the returns to a successful assassination are higherunder dictatorship, so the supply of assassins may be greater (Frey 2007). This implies that,ceteris paribus, Stalin faced greater cumulative harm, H , with respect to political crimes.Although execution costs him a unit of labor, it removed an enemy permanently.
The Stalinist system preferred the harsher penalty of incarceration to fines. Our modeldoes not differentiate explicitly between costless (fine) and costly (imprisonment) sanctions,but they can be added in an ad hoc manner: The social cost of punishment per apprehensionα can be viewed as proportional to the sum of costs of imprisonment and those of collectingfines:
α ≈ μ(t) + δ(f ),
where costs of imprisonment μ is a function of the length of imprisonment term, t , and costsof collecting fines δ is a function of the size of fine, f .
The standard theory of law enforcement states that fines should be used wherever possi-ble because they, unlike imprisonment, are transfers rather than social costs (Becker 1968).In modern democratic societies, the penitentiary system is an expensive enterprise for thestate. The burden of non-monetary punishment falls almost entirely on the loss-minimizinglaw enforcer, while collecting fines, although not costless, lowers social cost (Shavell 1985).A high fine combined with a low probability of detection can yield an expected penaltylarge enough to deter crime at a low social cost.9 A rational democratic law enforcer, whenchoosing the proper combination of fine and imprisonment, will therefore exhaust the de-terrent and punishment effects of costless sanctions such as fines before turning to morecostly forms of punishment such as imprisonment.10 In terms of our model, when β → 1,the optimal sanction is s∗ = h/p + λ + α, where social costs of punishment α → δ(f ).
Despite the clear preference for imprisonment, Stalin used “corrective labor” sentences,essentially as a mix of fines (forced deductions from pay) and administrative punishments(forced relocations or working at hazardous enterprises). Forced labor camps, euphemisti-cally called “corrective labor” camps, replaced conventional prisons. These camps werelocated strategically in remote regions or adjacent to factories, where prisoners could fulfillstate plans while working at subsistence wages. As long as the value they produce exceedssubsistence wages plus the costs of guarding and maintaining the camp, incarceration rep-
9Fines may also create problems, such as the inability of criminals to pay sizeable fines or the temptation ofthe law enforcer to prosecute the innocent, or to set too high punishment for the sake of revenue.10Modern societies are unwilling to apply maximal sanctions because of the threat of rent-seeking behaviorby enforcers. Friedman (1999) stresses that “the legal system may become a mechanism to be used by somepeople to expropriate other people.” High fines may also tempt the government “to prosecute the innocent forthe sake of revenue” (Rasmusen 1996).
Public Choice (2009) 140: 463–478 471
resents a good deal for a dictator who does not worry about the private and social costs ofthe undertaking anyway.11
Nevertheless, as most property belongs to the state, fines would not be transfers betweenprivate parties but transfers to the dictator who has more direct means of raising revenue thanfines.12 Fines require a bureaucracy that was needed elsewhere for managing the plannedeconomy. In terms of our model, therefore, with β → 0, the optimal sanction s∗ → ∞,where the social costs of punishment approach the costs of imprisonment, α → μ(t).
4.2 High rates of incarceration
It follows directly from the model that dictators will resort to more severe sanctions, thatis dominance of prison sentences over fines, which inevitably lead to higher incarcerationrates than in democracies. Evaluation of harm, costs, and gains tend to differ according to thepolitical system and among actors. Although both the democratic and dictator law enforcercalculate the total harm from crime (H), the costs of law enforcement (E), and the socialcosts (C), institutional differences dictate different evaluations of each. The most importantdistinction is in the interpretation of total losses from crime. Stalin perceived a high level ofcriminal activity, which leads to a high level of total harm (insofar as harm increases withthe level of criminal activity; see Becker 1968: 173). Moreover, what for the democratic lawenforcer is harm to society is, for the dictator, primarily harm to himself and to the assets thathe owns in the name of society. Crimes subject to incarceration happen to be any activitythat harms the dictator sufficiently to warrant imprisonment. What the dictator considers asharm, such as his overthrow, may be regarded as an act of heroism by society itself.
As we noted above, the dictator can also lower E by incarcerating prisoners in laborcamps as opposed to conventional prisons—an arrangement suited to a planned economy.Offsetting these lower costs would be the limited amount of private law enforcement com-pared to private-property systems, wherein individuals protect their own property. Althoughlow-level whistle-blowing was not particularly encouraged, managers were forced to reportwrongdoing within their enterprises:13 “Directors who fail to turn over workers and em-ployees guilty of willful leaving of enterprises or absences without legitimate reasons arethemselves to be turned over to the courts to accept their legal responsibility.”14
The fact that the dictator’s preferences differ from those of society is evident in Stalin’smany conflicts with judges and prosecutors operating at the local level, who were moresubject to community influence. They resisted, often at great personal risk, mandatory sen-tencing guidelines for petty theft. They had to be monitored closely by Stalin’s top justice
11The recent literature on the Soviet Gulag suggests that it was abandoned shortly after Stalin’s death in1953 because it was, according to the leadership’s calculation, making a loss (see Gregory and Lazarev 2003:193–197).12The 1947 anti-theft law, for example, called for the confiscation of property, but the value of the property ofthieves was insignificant in a society without private assets. As stated by a report from the justice department:“Only an insignificant part of losses (12–13 percent) is actually recovered by confiscation. The personalproperty of the accused is usually not enough for full recovery of losses which often constitute large sums”(ISG 2004: 564–567).13Archival research has indicated that there was indeed some whistle-blowing against corrupt party officials(Belova 2003). However, the state did little to protect propaganda-inspired whistle-blowers, which discour-aged private law enforcement. In some cases, however, it is hard to differentiate between actual whistle-blowing and denunciations, when informers could be motivated to extract personal rents at the expense ofarrested neighbors or co-workers.14ISG 2004, Doc.115, electronic version.
472 Public Choice (2009) 140: 463–478
officials, who on at least one occasion themselves tried in vain to soften his position withrespect to petty theft (ISG 2004: 564–569). If prosecutors and judges—official representa-tives of the dictator felt this way—one can imagine the general population’s preferences.15
Archival records show that lower level justice officials and production managers resisteddisproportionately harsh sanctions. Regression analysis of sentencing by categories (Appen-dix A) shows that prison sentences increased by less than total sentences, while non-prisonsentences increase more than proportionally. Moreover, lighter sentences, such as “less thanone year” and “corrective labor,” increase by more than total sentences.16
We gauge the effect of differing preferences by calculating the percentage of criminalconvictions that would not have been incarcerable crimes in a democratic society (Appen-dix B). Almost three-quarters of convictions under Stalin would not have been consideredcrimes in a democracy (largely due to the criminalization of managerial and workplace be-havior), even if we include prison terms for petty first-time theft. The number of “ordinary”prisoners in 1953 who would have been imprisoned in democratic societies was 303 per100,000 adults in 1953. Hence, it is the idiosyncratic “crimes against the state” that yieldthe remarkably high incarceration rates for Stalin’s Russia.
4.3 Criminalization of economic behavior
The criminalization of managerial mistakes and worker discipline violations reflects boththe dictator’s preferences and the fundamental character of a planned economy. If all assetsare the property of the dictator, they belong, according to a common expression from thelate Soviet period “to everyone and hence no one.” There were no private owners to insurethat assets be used to their best advantage and to bear the consequences if they were not.Workers were in short supply; they had little fear of unemployment and relative wages dif-ferentials were limited. There was only one general rule to govern economic behavior: “Theplan is the law.” Any plan failure was, therefore, a potential violation of the law. The planitself was multidimensional, with production, delivery, accounting, and investment compo-nents. It was a virtual impossibility to fulfill each and every aspect of the plan, but it was theresponsibility of law enforcers to punish those violating it. Prosecutors, judges, and state se-curity officials had to decide which, if any, of the many plan violations were serious enoughto warrant criminal punishment, some up to the “highest measure of social defense.” Localprosecutors and judges had to decide whether to accept worker excuses or sentence themto corrective labor. Given that no one could know what was the “correct” managerial actionor whether worker tardiness was indeed due to a broken streetcar, criminal punishment foreconomic crimes became a high-stakes lottery that depended on luck, connections, and otherunknowns.
If we assume that just about any of the 2.5 million managers was a potential target, theprobability of being “caught,” p, was relatively low, given that the total quantity of actsdefined as criminal, N , was high: In 1937, the most risky year for managers, 109,000 man-
15Differences between the democratic law enforcer and justice officials are not limited to dictatorships.Becker (1968) predicts that judges avoid convictions when punishments are set too high.16Column (4) in Appendix A shows that a one percent increase in the total number of convictions is associatedwith only a 0.912 percent increase in prison terms and a 1.036 increase in non-prison sentences. Lightersentences such as “Less than one year” and “Corrective Labor” have coefficients of 1.14 and 1.21 respectively.At the same time, the numbers of death sentences and long prison terms remain practically unchanged whenthe total number of sentences changes. Their corresponding regression coefficients are insignificant.
Public Choice (2009) 140: 463–478 473
agers were convicted for economic crimes (Mozokhin 2006: 336),17 and p was thereforejust around four percent. In a more normal year (1934), p was about one percent (Mozokhin2006: 322–323). Such relatively low apprehension probabilities, were offset by high sanc-tions, such as death penalties or long Gulag sentences for industrial accidents, livestockplagues, or train wrecks. With a labor force of 125 million, virtually all of which violatedstrict labor discipline at one time or another, the probability of a conviction was also low.18
4.4 Zero tolerance of theft of state property
Theft of property is a criminal offense in most societies. Wherever private property dom-inates, theft harms private owners not the state. Petty theft is usually punished by fines,restitution, or probation because of its presumed minimal harm and the substantial costs ofcriminalization. To the contrary, Stalin adopted a zero tolerance approach to any theft ofstate property. His anti-theft laws required mandatory prison sentences irrespective of themagnitude of the theft.
The extremely harsh sentences for petty theft of state property are explained both bythe dictator’s sanction formula, which generally calls for harsh punishment, and by Stalin’sfear that petty theft could cascade into significant harm due to contagion (Lih et al. 1995:50)—a notion also applied to Western justice systems (Grogger 1998). Those in closestcontact with enemies are likely to be infected by criminal behavior. Theft of products froma state or collective farm or industrial enterprise could come to be regarded as “somethingeveryone does.” If one state farmer steals and gets way with it, this may justify anotherstate farm worker in stealing. Petty theft by millions of workers can cumulate into hugelosses for the dictator, and with millions committing petty crimes (and few being broughtto justice), people observe that the probability of apprehension is low. An extreme penalty(seven years for stealing a kilo of wheat) is therefore required to offset the low probabilityof being caught.
The archives contain an unusual draft decree proposed by Stalin’s three top justice of-ficials in April of 1947 urging him to reduce the mandatory seven-year sentence for theftto one year, citing examples of war veterans, invalids, war widows, and students sentencedto the Gulag for the pettiest of thefts (ISG 2004: 568–569). Despite this unusual coalition,Stalin held firm to a policy of long mandatory sentences. To him, extreme penalties werejustified. For an absolute dictator, small individual losses can cumulate into large losses ifunchecked by extreme penalties.
4.5 Preference for Type I over Type II errors for political crimes
We have Type I (convicting the innocent) and Type II (letting the guilty go free) errors incriminal justice because it is in the criminals’ interest to deny wrongdoing and to concealevidence of their crimes. The justice system therefore must examine evidence, interrogatearrested parties, and conduct investigations to try to get to the “truth.” A democratic law
17We use the suppressed 1937 census to estimate the number of managerial personnel. The number of man-agers was 676,000, but within each enterprise, the deputy director and two of the top engineers would alsohave been susceptible to charges of economic crimes. This yields a pool of managers that could be chargedwith economic crimes of approximately 2,500,000 (Vsesoiuznaia perepis’ naselenia 1937 goda, 2007: 147).18In 1940, there were 2.1 million convictions for labor discipline violations for a conviction probability of1.6 percent (ISG 2004: 615), assuming every workers had some violation.
474 Public Choice (2009) 140: 463–478
enforcer (β → 1) considers the gains from crime as well as individual disutility of pun-ishment. A full-fledged dictator (β = 0) does not, and this affects attitudes towards Type Iand II errors.
According to our model, if an innocent person is convicted, social losses increase (thereare no individual gains from crime but a positive individual loss). The social and privatecosts of executing an innocent party are considerable. However, if a democratic law enforcermistakenly lets guilty parties go free, society has incurred harm but at least the criminal’sgains. A dictator law enforcer who lets a guilty party go free suffers harm, but there is nooffset because no value is placed on the criminals’ gain. For this reason alone, the democraticlaw enforcer wishes to avoid Type I errors, and the dictator law enforcer wishes to avoidType II errors.
The democratic law enforcer would be expected to devote considerable resources to gath-ering evidence and putting in place court procedures that guard against convicting innocentparties. The dictator law enforcer, on the other hand, should be relatively indifferent to costlyprocedures designed to clear innocent parties. Indeed, in the United States, the death penaltyis the most expensive form of punishment and has the most procedural protections.19 Stalin’sdeath penalty procedures were quite lax. There was little gathering of real evidence. Hecould not convict most of his enemies on the basis of hard evidence (which usually did notexist). Despite a massive intelligence network, the archives reveal no evidence of real plotsagainst him. His political enemies were instead those who had the potential to harm himin the future and, especially after he became dictator, they had every incentive to concealthemselves. Stalin had to identify political enemies by feel, past behavior, and by denun-ciations, all of which generated considerable statistical noise. Gregory et al. (2006) havedemonstrated that, in this situation, a rational dictator would indeed intentionally convictinnocent parties.
Given the fact that there was no real evidence to be gathered, Stalin created a confession-based system, starting with the Law of December 1 (1934) which dispensed with evidenceif the guilty party confessed. The confession-based system saved considerable law enforce-ment expenditures, placed a premium on security agents who knew how to extract confes-sions, and shifted the legal burden to the defendant. Presumption of guilt reduced the cost ofprosecution and it allowed for the strategic targeting of virtually any individual. During masscampaigns against political enemies, such as in 1930–1932 and 1937–1938, Stalin set asidethe limited protections of socialist legality and used in their place “extraordinary decrees,”the backbone of which was the troika tribunal which rubberstamped at high speeds indict-ments of state security and provided a veneer of legality. Regular courts appeared lenient inStalin’s eyes, while troikas were too harsh from a normal judge’s perspective. Troika mem-bers typically had no background in law and were heavily indoctrinated. Simply put, troikasduplicated the dictator’s preferences. By the end of the 1940s, judges were sufficiently trans-formed to adopt the dictator’s new methods; regular courts could replace troikas.
19The cost of a death penalty was around $2 million per execution, and the average annual inmate cost ina state prison was some $20,000 in 1996 (American Civil Liberties Union, Capital Punishment Project, TheHigh Costs of the Death Penalty, White Paper: 4–6). A death-eligible defendant is entitled to two court-appointed lawyers, jury selection is more thorough, and cases last longer because there are more appealsand the courts may appoint numerous experts to assist them as well. This information is from Federal DeathPenalty Cases: Recommendations Concerning the Cost and Quality of Defense Representation, prepared bythe Judicial Conference of the United States, Subcommittee on Federal Death Penalty Cases, Committee onDefender Services (May 1998). Available at: http://www.uscourts.gov/dpenalty.
The economic theory of crime applies to democracies with well-defined property rightsand a law enforcer who internalizes the social welfare function. In this paper, we apply thesame line of reasoning to the law enforcement decisions of a dictator whose objectives differfrom the population’s. We use a democracy-dictatorship continuum to yield different optimalsanction conditions, which explain the stylized facts of Stalin’s law enforcement policies,especially harsh punishment. Our model is static and does not deal with the cyclicality ofrepression.20 We show that the stylized facts of Stalinist law enforcement are what one wouldexpect from a rational dictator, seeking to minimize a loss function which does not recognizethe social costs of crime and the private gains of criminals. In this sense, our results transcendStalin by suggesting that another dictator faced with the same circumstances and constraints,would behave in much the same manner. Although we have less data for other dictatorialregimes, we do catch glimpses of the same phenomena, such as the high incidence of deathpenalties (China and Cambodia), the use of labor camps instead of prisons (North Korea),and severe penalties including execution for economic crimes (China). The use of a commonmodel also shows similarities between political systems, such as high sanctions to offset lowapprehension probabilities. We find as well that even in an absolute dictatorship, there arelimits to the dictators’ control of law enforcement. Judges and prosecutors, operating closerto the population, tend to substitute their judgments unless restrained by severe pressure.
We have not touched upon the benefits and costs of harsh law enforcement to a dic-tator whose objectives are to make his subjects more loyal, less dangerous, hard-workingand well-disciplined. The fact that Stalin was not assassinated or overthrown does not aloneprove that his policies reduced this probability. The same result might have been achievedwith less harsh repression. Stalin’s preference for harsh punishment and Type I errors didhave lasting effects on economic activity. Arbitrary Type I errors reduced the benefits frombeing a loyal agent. The most reliable way to stay out of trouble was to “revert to the mean,”that is, to reduce visibility by blending in. Though many of Stalin’s political victims couldnot revert to the mean because of earlier transgressions (such as past membership in now-banned parties), the best strategy for others was to avoid risk, not take positions of responsi-bility, and not distinguish oneself from the crowd. Even a conscientious worker had to fearanonymous denunciation by jealous co-workers. Also, given that many victims of politicalterror were selected by chance, there were few benefits to real political loyalty. Instead ofdevoting effort to economic activity, participants in the economy and society devoted effortto avoiding repression.
Acknowledgements The authors wish to thank the Editors and two anonymous referees for their valuablecomments and assistance, which significantly improved the contents of this paper. We also wish to thank theNational Science Foundation (Economics) for its support of this project. Thanks go as well to the HooverInstitution Archives and its able archivists for their assistance. We wish as well to thank Valery Lazarev forhis suggestions and comments.
20Cyclicality of repression, as well as extra-judicial tribunals, have been dealt with in other papers (Gregoryet al. 2006; Gregory 2009).
5 to 10 years 103,126 78,642 0.763 0.024 (0.455)More than 5 years 122,220 99,557 0.815 0.026 (0.461)More than 10 years 19,094 23,917 1.253 −0.319 (0.880)Total 1,127,085 551,484 0.489 1.036 (0.064)**
aThe coefficient β represents the response to changes in total convictions from the regression: � log(y) =α + β ∗ � log(x) + ε, where x is the total number of convictions and y is the number of sentences of aparticular type. Robust standard errors are in parentheses. *marks 10 percent significance. **mark 5 percentsignificance
Appendix B: Calculation of ordinary criminals
The breakdown of criminal sentences into a large number of categories allows us to dis-tinguish between ordinary crimes and “socialist” crimes; e.g., activities that would not beconsidered as crimes in most other societies. Our results are summarized in the accompany-ing table:
Type of criminal convictions, 1937–1955
Total number of Percentconvictions (million) of total
1. Ordinary crimes (murder, rape, illegal abortions, bodily harm, banditry,general theft, hooliganism, theft of personal property)
6.9 20.3
2. Theft of state or collective property 4.6 13.53. Work-related violations (unauthorized absences, arbitrary leaving, oc-cupational violations, arbitrary use of collective land, non-fulfillment ofagricultural work obligations)
20.8 61.2
4. Acts of disobedience (resistance to authority, speculation, violation ofresidency requirements)
1.0 2.9
5. Miscellaneous 0.7 2.16. Cumulative total (1937–1955) 34.0 100.07. Criminal sentences that would have been issued in other societies (in-cluding even first-time petty theft) (1 + 2)
11.5 33.8
8. “Socialist” crimes not considered criminal offenses in other societies(3 + 4 + 5)
31.5 73.2
Source: ISG 2004: 613–615
Public Choice (2009) 140: 463–478 477
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