March 29, 2022 Reading Time: 3 minutes

You often hear the question at fancy receptions and dinner parties, at barber shops and office break rooms. Why don’t the people of X simply rebel and replace their evil or “greedy” leader Y? 

Why not indeed? Obviously, despite Y’s evil extractions, the expected costs of rebelling must exceed its expected benefits.

Nowhere do “the people” have homogenous interests. Some benefit from Y’s regime, while many others believe that Y will not extract unbearably high costs from them personally. Those expectations may seem irrational to outsiders, but may reflect local knowledge, though perhaps distorted by Y’s dismisinfoganda

Oppressed populations may also remain passive because they expect to suffer less under Y than under likely alternative leaders, or the chaos of living in a “failed” state.

Coordination costs and free riding also help to explain why oppressed populations do not rebel. Even completely disarmed populations could easily overtake Y if only they could mass rush his (or her) security detail. But even if a sufficient crowd could be assembled at the right time and place, everyone would have an incentive to be in the middle of the crowd, where it is safer, waiting for others to lead the charge into the machine gun nests.

The masses could also afford to simply pay off Y’s security detail but because of the free rider problem they cannot credibly commit to making the promised payment after the deed was done. And they cannot pay upfront, because of the substantial risk that Y and/or the leader of the security detail would simply expropriate it.

Because nobody can force people in the mob to charge or to contribute to a bounty on Y’s head, a military unit of some sort usually takes the lead. So instead of a popular rebellion, a coup occurs, and evil leader Z displaces Y. In some slightly more civilized places, ballots replace bullets in leadership competitions, but the results are often similar, with new leaders and cronies just as greedy as the ones they replaced.

Engaging in violent rebellion or peaceful political activity expected to end with a similar or worse leader will not seem rational to most people. But their rational expectations can be managed in some instances.

In the 18th century, for example, the colonists of mainland British North America managed to replace their leaders in London with a less rapacious batch under stricter constitutional controls. America’s 19th century economic growth miracle was a direct result

How did the colonists pull it off? They changed the usual expected cost-benefit analysis by establishing parallel governance institutions before the shooting started. The colonists therefore did not expect to fight a costly war simply to replace King George with another king, or a distant Parliament with another legislative body in which they would also have no direct representation. They expected to replace the British government with something akin to the parallel governance institutions that they had already created. That is largely what they got, even after making adjustments in 1787-88.

The colonists’ parallel governance institutions included paramilitary forces (militia units), fiscal resources (bills of credit), and elected representative bodies (tax and other compulsory laws). The details were messy and complex, but even pacifist and politically conservative Pennsylvania eventually developed the parallel governance institutions needed to fund and prosecute large-scale rebellion.

The Declaration of Independence emanated from a colonial extralegal body that met in Philadelphia called the Second Continental Congress. Without that institution, the Declaration would have been seen as little more than another political pamphlet, one palpably inferior to Thomas Paine’s Common Sense. But having been duly passed by delegates to that quasi-legal legislature, the Declaration took on the veneer of law.

Although not countenanced by British law, parallel rebel governance structures proved sufficiently legitimate to function effectively enough to prosecute the war. Money issued by quasi-legal rebel legislatures, composed of delegates elected in quasi-legal rebel elections, had some value because they were backed by quasi-legal rebel taxes and property confiscations. The initial legitimacy of the rebel institutions increased the probability of rebel success sufficiently to draw yet more Americans into the rebellion, which further increased the legitimacy of the new governance structures.

Of course the Ys of the world do not allow parallel governance institutions to form, let alone flourish. Ironically, only in the United States and a few other relatively good places to live do people retain sufficient liberty to develop alternative governance systems capable of replacing existing ones, should that ever become necessary. You know, in the highly unlikely event that foreign policy disasters combine with massive macroeconomic disturbances and undeniable evidence of massive fraud and corruption at the highest levels of government.

Robert E. Wright

Robert E. Wright

Robert E. Wright is the (co)author or (co)editor of over two dozen major books, book series, and edited collections, including AIER’s The Best of Thomas Paine (2021) and Financial Exclusion (2019). He has also (co)authored numerous articles for important journals, including the American Economic ReviewBusiness History ReviewIndependent ReviewJournal of Private EnterpriseReview of Finance, and Southern Economic Review. Robert has taught business, economics, and policy courses at Augustana University, NYU’s Stern School of Business, Temple University, the University of Virginia, and elsewhere since taking his Ph.D. in History from SUNY Buffalo in 1997. Robert E. Wright was formerly a Senior Research Faculty at the American Institute for Economic Research.

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