Gerard Roland (UC Berkeley) - A Theory of Power Structure and Institutional Compatibility: China vs. Europe Revisited

The literature on institutions and development has often cast societies in a light that contrasts the more inclusive, open-access, and equal ones with other less inclusive ones, but the scholarship comparing Imperial China and Premodern Europe does not fit easily in this framework. We provide a framework that reads observed institutional divergences along two dimensions of the power structure of society: in Europe, the power and rights of the Elites and People were less conditional on the Ruler's will, i.e., the Ruler's absolute power was weaker, whereas in China, the People's power and rights were more comparable with the Elites'. Formalizing the framework in a model, we show that a more balanced Elite-People relationship can be compatible with an absolutist Ruler. This is because the stronger the absolute power, the more effectively such balance will stabilize an autocratic rule, and the greater the Ruler's incentive to promote such balance. Discussion and stylized facts support the theory's relevance. Our theory helps understand the relationship between major components of inclusive institutions and the logic behind autocratic stability.

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