Accounting for Secrets

University of Warwick Centre for Competitive Advantage in the Global Economy Working Paper No. 59

41 Pages Posted: 26 Jan 2012

See all articles by Mark Harrison

Mark Harrison

University of Warwick; University of Birmingham

Date Written: October 17, 2011

Abstract

The Soviet state counted people, resources – and secret papers. The need to account for secrets was a transaction cost of autocratic government. This paper finds archival evidence of significant costs, multiplied by secrecy’s recursive aspect: the system of accounting for secrets was also secret and so had to account for itself. The evidence suggests that most Soviet officials complied most of the time. Numerous instances also imply that careless handling could take root and spread locally until higher authorities intervened. The paper uses the case of a small regional bureaucracy, the Lithuania KGB, to estimate the aggregate costs of handling secret paperwork. Over the period from 1954 to 1982, accounting for secrets makes up around one third of this organization’s archived records. This figure is surprisingly large, and is the main new fact contributed by the paper. There is much time variation, some of it not easily explained.

Keywords: Accounting, Dictatorship, Norms, Secrecy, Soviet Union, Transaction Costs

JEL Classification: K42, L14, M48, N44, P26

Suggested Citation

Harrison, Mark, Accounting for Secrets (October 17, 2011). University of Warwick Centre for Competitive Advantage in the Global Economy Working Paper No. 59. Available at SSRN: https://ssrn.com/abstract=1992430 or http://dx.doi.org/10.2139/ssrn.1992430

Mark Harrison (Contact Author)

University of Warwick ( email )

Department of Economics
University of Warwick
Coventry, CV4 7AL
United Kingdom

HOME PAGE: http://warwick.ac.uk/markharrison

University of Birmingham ( email )

Birmingham, B15 2TT
United Kingdom

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