How Autocracies Unravel

In a recent study, researchers Georgy Egorov and Konstantin Sonin explore the recurring pattern of autocratic regimes unraveling. They argue that institutional autocracies, such as Russia, gradually deteriorate as leaders repress opponents and surround themselves with loyal but incompetent advisors. This downward spiral ultimately leads to the collapse of the regime.

Egorov and Sonin's model of autocratic devolution consists of two elements. The first involves the leader's fight to remain in power. When challenged by an opponent, the leader faces a decision: to spare the rival or engage in repression by arresting, exiling, or executing them. Repressing opponents eliminates the threat they pose, but it also raises the stakes for the leader. If the leader is ever toppled, they are more likely to face repression themselves. This creates a cycle of repression begetting more repression.

The second element of the model focuses on the leader's selection of advisors. The leader can choose between loyal but less competent individuals or highly competent but potentially disloyal advisors. Leaders who have repressed opponents tend to surround themselves with loyal cronies, even if they lack the necessary skills for their positions. This creates a mutually reinforcing process where bad advice from yes-men leads to more repression and paranoia, further tightening the circle of loyal cronies making important decisions.

The model suggests that the descent into ineptitude is a natural outcome of autocracies. The decision to repress opponents is a temptation that most authoritarian rulers succumb to, even if they initially exercise leniency. Over time, leaders realize that as they eliminate more opponents, they become more dangerous if someone were to take over. This realization seals their own fate, making them too dangerous to be kept around.

Understanding the actions of autocrats allows for a unified picture of why they make big mistakes while chasing small prizes. The model also reveals that the initial success of an autocratic regime does not guarantee better decision-making in the future. In fact, the maturity of the regime often leads to worse decision-making.

To sustain long periods of stable rule, authoritarian countries often ensure that power does not rest with one individual for too long. For example, in China, the previous three presidents ruled for only a decade each, preventing the repression spiral from getting out of hand. However, the removal of presidential term limits under Xi Jinping may indicate a change in this pattern, potentially leading China down the same path of autocratic unraveling.

As for the fate of Russian President Vladimir Putin, Egorov does not possess a crystal ball. Putin may try to cling to power by making the regime more repressive, or there could be a coup initiated by leaders and a fed-up populace. Regardless, the research emphasizes the important lesson that autocracies tend to decline over time.
The unraveling of autocracies, as detailed by researchers Georgy Egorov and Konstantin Sonin, provides a stark warning for the US business market and newly formed companies.

This research highlights the dangers of centralizing power and decision-making, and the pitfalls of surrounding oneself with yes-men. For new businesses, this serves as a reminder to prioritize competence and diverse perspectives over loyalty in their advisory teams. Companies that fail to do this may find themselves in a similar downward spiral, with poor decision-making leading to their eventual downfall. Moreover, the instability and unpredictability of autocratic regimes can create a volatile business environment. For US companies looking to expand internationally, understanding the political landscape is crucial. The potential for sudden regime change or policy shifts in autocratic countries can pose significant risks. Therefore, businesses need to be prepared and have contingency plans in place. In a global economy, the unraveling of autocracies is not just a political issue, but a business one too. It underscores the importance of good governance, not just in politics, but in the business world as well.

Original Story By: Kellogg School of Management at Northwestern University
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