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Revolution or Reform? SocialismÆs Dilemma as Rational Choice Problem

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  • Mario Ferrero

    (Department of Public Policy and Public Choice, University of Eastern Piedmont, Alessandria, Italy)

Abstract

The long-standing socialist dilemma between revolution and reform is modeled as a rational choice problem faced by political producers intent on selling promises to their constituencies. To control the customer trust and worker incentive problems inherent in this exchange, revolutionaries are driven to organize their party as a producer cooperative and to set up a parallel commercial, or reform, sector. Once it has come into being, the commercial sector represents a permanent temptation away from revolution. As reform is subject to market competition, increases in competition will drive the cooperative to expand the reform sector if the latter, driven by a dominant trust/incentive factor, is large to begin with. The opposite reaction obtains if the reform sector is kept small because it is so pro?table as to threaten the pursuit of revolution. The modelÆs predictions turn out to accord well with the broad pattern of divergent national developments within the socialist movement of the 20th century.

Suggested Citation

  • Mario Ferrero, 2004. "Revolution or Reform? SocialismÆs Dilemma as Rational Choice Problem," Homo Oeconomicus, Institute of SocioEconomics, vol. 21, pages 251-282.
    • Handle: RePEc:hom:homoec:v:21:y:2004:p:251-282
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    Cited by:

    1. Mario Ferrero, 2013. "A theory of conversion to exclusive religious and political faiths," Chapters, in: Francisco Cabrillo & Miguel A. Puchades-Navarro (ed.), Constitutional Economics and Public Institutions, chapter 19, pages 345-360, Edward Elgar Publishing.
    2. Mario Ferrero, 2020. "A theory of revolutionary organizations," Economics of Governance, Springer, vol. 21(3), pages 245-273, September.
    3. Mario Ferrero, 2005. "Radicalization as a reaction to failure: An economic model of Islamic extremism," Public Choice, Springer, vol. 122(1), pages 199-220, January.
    4. Francisco Cabrillo & Miguel A. Puchades-Navarro (ed.), 2013. "Constitutional Economics and Public Institutions," Books, Edward Elgar Publishing, number 14863.
    5. Pierre-Emmanuel Ly, 2007. "The charitable activities of terrorist organizations," Public Choice, Springer, vol. 131(1), pages 177-195, April.

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