In contrast, authoritarian regimes are known for arbitrariness and corruption, their failure to guarantee property rights and contract enforcement, and are generally plagued by inefficient public institutions, with a few rare yet remarkable exceptions, such as Singapore under Lee Kuan Yew, Oman under Sultan Qaboos, and today's Qatar, where authoritarian regimes restrict political freedoms but have created effective, high-quality institutions of governance.
It is a common assumption that the quality of institutions and the state's capacity tend to be lower in authoritarian regimes than in democracies, yet still higher than in transitional or hybrid countries, as reflected in the so-called ‘J curve’ model.
The study's authors analysed data on 15 post-Soviet countries and compared their quality of public institutions (using selected indicators from the World Governance Indicators, 2014) and political characteristics (democracy vs. autocracy according to Freedom House, 2014). Their findings do not confirm the J curve theory. With all similarities and differences, authoritarian regimes in post-Soviet countries are generally characterised by low-quality public institutions; none of them is even remotely similar to the 'Singapore miracle'; moreover, institutions tend to be better in hybrid ('partly free') regimes than in autocracies.
Melville and Myronyuk have devised the 'King of the Mountain' analytical model which demonstrates an inverse relationship between the quality of institutions and the extraction of political and economic rent: the higher the rent, the lower the quality of institutions. The King of the Mountain represents a monopolist extracting political and economic rent and having no incentives whatsoever to improve the quality of institutions. In fact, 'bad' institutions – corrupt, inefficient, non-transparent and unaccountable – are 'good' from the King of the Mountain's perspective, as they help perpetuate the elite's privileges and political status quo.
The authors refer to the so-called 'Hellman's curve', whereby the biggest threat to radical post-communist reforms does not come from 'short-term losers' of economic transition, such as resentful former state bureaucrats, impoverished pensioners, or unemployed former public sector employees (as was suggested, e.g., by Adam Przeworski and Philippe Schmitter), but instead, from 'short-term winners', i.e. members of the old and new bureaucracy who were able to take advantage of the privatisation and gain access to economic rent.
Building on J. S. Hellman's theory, Melville and Myronyuk showed that economic and political rents are inseparable in post-Soviet autocracies, where complicity in maintaining political monopoly is a precondition for having guaranteed access to economic rent. This conclusion is the main distinction between the 'King of the Mountain' and ‘Hellman's curve’ models and Melville and Mironyuk's key contribution to the debate about the quality of the institutions in post-communist regimes.
Their study further demonstrates, however, that the seemingly stable authoritarian equilibrium in the 'King of the Mountain' model is not sustainable and can be affected by a variety of external and internal factors – such as the erosion of the regime's resource base, including, but not limited to a decline in oil and gas prices, which could call monopolistic rent extraction into question and limit the resources available for redistribution to elites and the broader public to ensure loyalty. This scenario could cause the regime to become more repressive.
Another potential cause of instability arises from the fundamental problem of any autocratic rule, i.e. uncertainty in relations between the autocratic leader and the elites on one hand, and the broader public on the other – the former can withdraw their loyalty while the latter can launch mass protests.
Using a game model, the authors examine potential strategies that regimes can use in response to threats to the authoritarian equilibrium based on monopolistic rent extraction and low quality institutions.
The key strategic objective of the leader or group would be to maintain and extend their authority and monopoly. According to the authors, two policy options are available: either attempt to preserve the status quo by all means or adopt partial reforms to improve the quality of institutions. The former option would preserve the 'bad enough governance', while the latter could theoretically enable a transition to 'good enough governance' even without substantive democratisation.
Melville and Mironyuk's paper discusses the various consequences of choosing either option, taking into account the resulting balance of power between 'conservatives' and 'reformers' in the ruling elite and 'moderates' and 'radicals' in the political opposition. According to the authors, potential consequences include progressive stagnation and erosion of the regime, emergence of a strict dictatorship, followed by a riot and uprising, and then by relative stabilisation.
The authors suggest that, ironically, a partial improvement in the quality of institutions and the co-opting of new elites, while they increase uncertainty, can ultimately serve to maintain the 'King of the Mountain' regime.