Originally published in The Review of Austrian Economics
This paper seeks to explain the persistence of entangled systems of political economy. It does so by introducing the concept of “coercive advantage.” Coercive advantage refers to the benefits, privileges, and rights conferred to certain actors engaging in political exchanges. The form of advantages obtained are varied, and may include financial transfers, capital returns, rents, and non-material benefits, such as recognition and prestige. The heterogeneity of coercive advantage is owing to the emergent complexity of political arrangements, presenting manifold opportunities for political entrepreneurship in the quest to attain such benefits. Distributional questions also come to the fore, with coercive advantages potentially reflected in upward redistribution benefiting a host of actors, such as interest group representatives, bureaucrats, and politicians themselves. A key proposition of this paper is that the arrangements giving rise to coercive advantages may register broad support under majoritarian political decision rules. Elites capturing the most lucrative rents, and other advantages attributed to coercion, may successfully co-opt non-elites into registering support for such activity. They do this by providing transfer payments, infrastructure, and other programs, together with communicating rhetorical and symbolic justifications for status quo practices. This paper considers key implications of the coercive advantage notion for political economy.