Revolution or Reform? SocialismÆs Dilemma as Rational Choice Problem

Mario Ferrero

Homo Oeconomicus, 2004, vol. 21, 251-282

Abstract: The long-standing socialist dilemma between revolution and reform is modeled as a rational choice problem faced by political producers intent on selling promises to their constituencies. To control the customer trust and worker incentive problems inherent in this exchange, revolutionaries are driven to organize their party as a producer cooperative and to set up a parallel commercial, or reform, sector. Once it has come into being, the commercial sector represents a permanent temptation away from revolution. As reform is subject to market competition, increases in competition will drive the cooperative to expand the reform sector if the latter, driven by a dominant trust/incentive factor, is large to begin with. The opposite reaction obtains if the reform sector is kept small because it is so pro?table as to threaten the pursuit of revolution. The modelÆs predictions turn out to accord well with the broad pattern of divergent national developments within the socialist movement of the 20th century.

Date: 2004
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