Mark Harrison's paper "Secrecy, Fear, and Transaction Costs: The Business of Soviet Forced Labour in the Early Cold War" will soon be published in Europe-Asia Studies, the leading area-studies journal.
Harrison notes that many people today think that modern dictatorships, such as that of the Chinese Communist Party, have the upper hand over constitutional democracies when it comes to effective decision making. The actual costs of decision making in an autocracy, however, are usually invisible because the decisions are made behind closed doors; the process is secret. The Archives of the Soviet Communist Party and State and collection [as below] at Hoover detail the hidden costs of dictatorial decision making.
Harrison’s paper tells the story of an event that took place in 1949. After World War II, the Soviet state entered its most secretive phase, with the disclosure of state secrets being punished more and more severely. One of the Soviet state’s most important secrets was the location of its labor camps, including those of the Soviet Gulag, which operated as government-owned businesses, meaning that they had to receive supplies, deliver products, and manage their financial accounts according to secret government plans. As that secrecy became guarded more and more closely, camp bosses found it increasingly difficult to do their everyday business. To turn over goods and money, even within the planned economy, they risked severe punishments for disclosing the fact that they existed.
The historical files reveal how Gulag officials tried to manage their mounting anxiety, expending considerable efforts, for months and then years, at working around their dilemmas. Camp commanders put their efforts into spreading responsibility and securing the collusion of higher official in workarounds. Higher officials conducted endless committee meeting and drafted many alternative solutions, none of which was ever adopted. In the end, rather than solve the problem, they normalized it.
Harrison’s case study throws light on the quality of Soviet decision making and the process of growing secrecy, which was driven by Stalin, including the lengths to which he was willing to go to cover his system of rule in the blanket of secrecy.
Mark Harrison is a professor of economics at Warwick (University) and a research fellow of the Hoover Institution at Stanford University. The research for this paper was carried out in the Archives of the Soviet Communist Party and State collection of the Hoover Archives.
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