A theory of revolutionary organizations

This paper models a revolutionary organization committed to a project of radical social change over a long time horizon, and therefore, engaged in selling promises to both customers and workers in exchange for current effort and support. To build customer trust and provide members incentives, the organization structures itself as a producer cooperative and sets up a parallel sector that yields cash revenues and provides short-term benefits. This parallel activity, if successful, may represent a temptation away from revolution, but it is subject to competition from other providers or from the state. The main result is that, unlike a profit-maximizing firm, the cooperative reacts to increased competition by shrinking the parallel sector and specializing in revolution; hence, reform expands at the expense of revolution only if the parallel sector approaches monopoly. We find supportive historical evidence in a survey of socialist revolutions and social democracies, nationalist movements, and Islamist insurgencies.