Monday, February 07, 2011

A Economia das Revoluções

The Economics of Revolution, por

Has the price of revolution fallen? Gary North thinks so. In a brilliant analysis of the current situation in Tunisia and Egypt he observes that:
When the cost of political mobilization falls, more is demanded. When people can mobilize thousands of protesters without any centrally directed agency and without any organization that can be infiltrated and subverted, they are in a position to impose enormous political damage on any existing regime, as long as the regime really is corrupt, tyrannical, and hated.
Moreover, there are powerful network effects at play. (...). Or as Gary puts it:
When people around the world can see street protesters, this encourages thousands of other protesters, who had attempted to sit the fence, to get off the fence and go into the streets. There is safety in numbers. When they can see on television or on the web that there are thousands of people in the streets protesting, they assume that they will gain a degree of invisibility and anonymity if they join the protests. So, they leave the safety of their homes and join the protest movement. Because of social networking, this can take place so rapidly that government officials are unable to respond fast enough to put a stop to it before it is obvious that there are thousands of people in the streets.
We seem to be approaching a curiously Hayekian/Marxist moment - revolutions can take on a spontaneous order of their own, 'the People' really are revolting, without any leaders in sight. Indeed, Zbigniew Brzezinski is worried that the new revolutionary order might be about to become a global phenomenon.
Microfoundations of domino theory, por Chris Dillow:
It looks as if the Tunisian revolution might be spreading. Which raises the question: what are the micro foundations of such a domino effect?

That there are such effects is clear. They explain why the English ruling class was terrified by the French revolution; why the US was so desperate to resist Vietnamese communism; and why Georgia’s rose revolution inspired uprisings in the Ukraine and Kyrgyzstan. But what exactly is the mechanism here?
This paper (pdf) sheds some light. Consider someone pondering whether to protest. The gain from doing so is the probability of achieving your objective. The cost is the risk of being arrested or beaten up. How you weigh up these costs and benefits depends upon your belief about the strength of the government. If you think it’s strong enough to resist the protests, you might not bother. But if you think it’s weak enough to either give in or not punish protestors, you will protest.

And here’s the thing. The reaction of neighbouring governments to similar protests affects your judgment of your own government’s strength or weakness. If it is weak, you figure: “Maybe protests will work here as well.” At the margin, this gets more people onto the streets. One government’s reaction to protests has “reputation externalities” for other governments.

As it stands, there are a couple of holes here. One is the problem of collective action. To the individual, the potential costs of protesting are high - possibly death - whilst the benefits are spread over millions. So why doesn’t he just free-ride on others’ protests? If everyone does this, there’ll be no protests.

The very fact that there are protests shows that there’s something wrong with this. The answer, I suspect, is that some people - “extremists”! - gain symbolic utility from protesting. If they are not beaten up and arrested, other, less fanatical, people join them. This is why the size of protests sometimes snowballs. (A further mechanism here is Timur Kuran's theory of availability cascades: seeing others protest makes us think that protesting is a reasonable thing to do).

The second hole is: what exactly is going on the mind of the marginal protestor who sees a successful revolution in a neighbouring country? The paper seems to suggest that he has been always conducting a rational cost-benefit analysis of whether to protest or not. But I suspect what might instead be happening is a form of attention effect. The thought of protesting simply doesn’t occur to him, until he sees others - people like him doing so. And when he sees this, he figures: “I can do that.”

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