Why hierarchical power breeds paranoia: Stalin, Xi Jinping, Macbeth | Niall Ferguson

[Music] Joseph Stalin ran the Soviet Union with, as is well known, an iron grip. But it wasn't just his ruthlessness that was remarkable; it was the way in which he structured governance so that it was almost impossible for any two Soviet citizens to have a private relationship that was not in some sense known to and subject to Stalin. So, he was the node through which all other nodes had to go to communicate.

Stalin, who was famously paranoid, was suspicious about any interaction between Soviet citizens, and especially between a Soviet citizen and a foreigner that he didn't know about. Really interesting feature of hierarchy that doesn't get understood, I think, nearly well enough, is that if you are a hierarchical ruler, you are right to be paranoid. It's not just that paranoid people tend to become dictators; it's more that if you're a dictator, you need to be paranoid because the real threat to a hierarchy is a successful organized social network.

A social network independent of the hierarch, of the big guy, is the real threat. One saw that, for example, in Poland. Why did Poland, of all the communist regimes, get into trouble first? Because there was a really well-organized civil society or voluntary associations, some religious, some not, that formed a network even before the Solidarity trade union came along, and that's lethal to a hierarchical system.

Which is why Stalin was right, if you want to put it this way, to be paranoid about social networking that he didn't control and didn't know about. He understood that it doesn't take too many additional edges in the network to destroy the dominance of that central node.

So, one way of thinking about this is: imagine a paramedic old structure; imagine something kind of like a Christmas tree, and there is the big guy like the fairy on top of the Christmas tree. But imagine that on this Christmas tree, the lights are just connected to the fairy; they're not connected to one another. Therefore, the fairy decides if the lights go on or off. It's a peculiar kind of Christmas tree—that's essentially a hierarchical network.

It wouldn't take too many connections, as it were, lateral or horizontal connections between the lights to reduce the centrality of the fairy on the tree, and ultimately you could end up illuminating the tree without needing the fairy altogether. So, I think that's why dictators, hierarchs, need to be paranoid.

Read the plays of Shakespeare; the suspicion that always seems to haunt any of Shakespeare's kings is that there is some kind of plot, some cabal, some conspiracy going on. If you read the history of European monarchy, very often those suspicions were well-founded. What we call social networks look like conspiracies to absolute rulers, and that's why very often in history, the terms seem to overlap.

What looks like a social network to you and me, if we're in it, looks like a plot to the king. If you want to see the advantages of a hierarchical system of government, take a trip to China, and you'll see a system which is extraordinarily hierarchical; Xi Jinping is the top man. This system is good at doing engineering projects. If this system decides on building high-speed rail networks around China, it can do it with astonishing speed.

If the system decides that it's going to build cities in the expectation that there will be a population to inhabit them, it can do that. One of the most impressive aspects of the last 30 years of human history has been the spectacular growth of the Chinese economy, and that has been in large measure the result of a highly effective hierarchical system of planning.

Of course, you would be naive if you went to China today and didn't see some of the problems with doing that. The problems of pollution have been a characteristic feature of modern Chinese life. There's also the problem of corruption; this is an everyday topic of conversation in China. A one-party hierarchical system of government isn't accountable; it's above the law, and officials have routinely skimmed off huge sums of money to line their own pockets.

None of this comes as any news to people who read Hayek's great book, The Road to Serfdom. Since the mid-20th century, classical liberal scholars have said that the planned economy is bound to be inefficient, and it's bound to lead to corruption and other abuses of power. I think most people who think that way—and I include myself in that group—were taken by surprise by the success of China's economic growth strategy.

Can this system endure through this 21st century? That is a huge question for China's leaders, and indeed for the world. If you are like me, skeptical about that level of political centralization, your car is sitting waiting for something to go wrong. Because the defect of a hierarchical system of government tends to be that it's not responsive to signals from down below. That top-down governance tends to be somewhat deaf; not only does it not necessarily get market signals, it may miss out on political dissidents, political discontent.

Or to put it differently, you've created through rapid industrialization the biggest middle class in all of history, the biggest bourgeoisie in history. If Karl Marx were here sitting next to me, I think he'd agree that that was very hard to reconcile with the system devised by Mao Zedong to centralize power in the hands of a single party. Marx would expect the bourgeoisie in China to do what the European bourgeoisie did in the 19th century: demand property rights and therefore the rule of law to protect property rights, and therefore some elements of representation in government.

So, even from a Marxist perspective, something has to change. Hierarchical systems of government over time tend at some point to suffer a loss of legitimacy, a challenge from below, and we've seen that. We saw the mystery of the Soviet Union, but we've seen it elsewhere. Much less sophisticated hierarchical systems, like the military regimes of Latin America or the presidential regimes of the Middle East, came to grief in some cases well before the Soviet Union did. [Music]