After this morning’s post, I’ve learned someone has indeed done the political economy of the Bolivian prison. The article is by David Skarbek:
Cooperation among prison inmates is especially unlikely because criminals have high discount rates, lack the ability to exclude noncooperators from their community, and cannot migrate away from predatory groups.
Nonetheless, San Pedro Prison has not deteriorated into a predatory environment in which a single group abuses others. On the contrary, inmates have secure, long-term property rights in their housing and other valuable resources and engage in extensive economic exchange; and outsiders voluntarily associate with and even live among the prisoners.
…The primary factors that facilitate establishment of a self-governing community are an increasing division of labor, economic exchange, residual claimants with secure property rights, and well-established markets that people expect to persist.
Interesting and persuasive. I am cautious for a couple of reasons. One is that (understandably) it is not based on primary data collection. Another is because this is the answer (well-established property rights and markets create anarchic order) is what one might expect from those of of the libertarian persuasion. I’m open, but unconvinced.
Basically, the idea is that a ruler or cabal can have incentives to keep order, mainly through coercion, if they expect to capture more production over a longer horizon than through disorder. The ruled have incentives to comply, because it’s better than the chaotic alternative.
It’s not so different than Skarbek’s story, except that one is a cooperative order, and one is an autocratic one. An unstable order, I’d argue, vulnerable to many shocks.