Abstract

In earlier work we presented a mathematical exposition of a theory that demonstrated that mass privatization without institutions to limit asset-stripping may not lead to a demand for the rule of law. The present note makes the same argument in terms of simple diagrams. The central idea is that economic actions (to build value or strip assets) and political positions of individuals are interdependent. Big Bang privatization may give individuals an interest in taking what they can quickly, rather than waiting for the establishment of property rights protection that would permit ...