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Kompromat: A theory of blackmail as a system of governance

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  • Choy, James P.

Abstract

Kompromat - widespread criminality combined with systematic blackmail - plays an important role in the governance of many non-democratic states. I model this phenomenon. Citizens have a preference for retribution, that is, for inflicting costly punishments on criminals. The state can manipulate this preference for its own benefit by tolerating crime while collecting evidence of crimes to use for blackmail. High levels of crime coexist with large expenditures on police. The rich but not the poor are allowed to commit crimes, increasing inequality. Kompromat regimes appear in states with low fiscal capacity and either very low or very high police capacity. When police capacity is high, investments in fiscal capacity and police capacity can be substitutes. States with initially similar capacities can diverge over time, and states that enter the kompromat regime can become stuck there. The possibility of kompromat qualifies previous claims that evolved retributive preferences increase material welfare.

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  • Choy, James P., 2020. "Kompromat: A theory of blackmail as a system of governance," Journal of Development Economics, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:deveco:v:147:y:2020:i:c:s0304387820301103
    DOI: 10.1016/j.jdeveco.2020.102535
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    1. Sergei Guriev & Daniel Treisman, 2019. "Informational Autocrats," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 100-127, Fall.
    2. Sabina Marchetti, 2022. "Rolling in the deep(fakes)," Questioni di Economia e Finanza (Occasional Papers) 668, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    Law enforcement; Corruption; Kleptocracy; Blackmail; State capacity; Retribution;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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