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In the shadow of the Gulag: worker discipline under Stalin

Marcus Miller () and Jennifer Smith ()

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: An ‘efficiency wage’ model developed for Western economies is reinterpreted in the context of Stalin’s Russia, with imprisonment – not unemployment – acting as a ‘worker discipline device’. The threat of imprisonment allows the state to pay a lower wage outside the Gulag than otherwise, thereby raising the “surplus” left over for investment: this externality provides a reason for coercion over and above the direct productivity of those in custody. Just how credible the threat of imprisonment was under Stalin is documented using archival data now available; but the enormous scale of random imprisonment involved is, we argue, attributable not to economic factors but to Stalin’s insecurity in the absence of a legitimate process for succession. We develop a model of demand and supply for industrial labour in such a command economy. To get more resources for investment or war, the state depresses the level of real wages; to avoid incentive problems in the wider economy, the harshness of prison conditions can be intensified. This is the logic of coercion we analyse.

Keywords: Labour discipline; asymmetric information; efficiency wage; Soviet Union; Stalin (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-tra
Date: 2015
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