Why do both left and right political parties typically propose progressive income taxation schemes in political competition? Analysis of this problem has been hindered by the two-dimensionality of the issue space. To give parties a choice over a domain that contains both progressive and regressive income tax policies requires an issue space that is at least two-dimensional. Nash equilibrium in pure strategies of the standard two-party game, whose players have complete preferences over a two-dimensional policy space, generically fails to exist. I introduce a new equilibrium concept for political games, based on the fact of factional conflict within parties. Each party is supposed to consist of reformists, militants, and opportunists: each faction has a complete preference order on policy space, but together they can only agree on a partial order. Nash equilibria of the two-party game, where the policy space consists of all quadratic income tax functions, and each party is represented by its partial order, exist, and it is shown that, in such equilibria, both parties propose progressive income taxation.

Revolution is viewed as a two person game, between Lenin and the Tsar, who compete for support of coalitions of the population. The payoff is the probability of revolution, which Lenin seeks to maximize and the Tsar to minimize. Lenin's strategies are income distribution proposals; the Tsar's strategies are lists of penalties which members of the population will pay should they join Lenin and their bid for revolution fail. The probabilities of revolution depend on the strategies which the two revolutionary entrepreneurs propose. There is an equilibrium pair of strategies; the task is to study what properties it has. In particular, it is shown that various tyrannical aspects of the Tsar's strategy, and progressive aspects of Lenin's strategy need not flow from ideological precommitments, but are simply good optimizing behavior, given their respective goals in this game. Thus apparently ideological positions of Lenin and the Tsar are provided with microfoundations of a sort. The paper thus aims to: (i) study revolutions as strategic games, and more generally to (ii) be a case study of the rational evolution of apparently ideological behavior. 1. INTROI)UCTION REVOLUTIONS HAVE BEEN VIEWED by social scientists and historians, for the most part, as largely inexplicable events. According to the logic of collective (Olson [4]) the free rider problem should prevent each participant from joining in a revolutionary struggle. The side payments which might overcome such self-interested behavior are generally not offered in revolutionary situations. Rosa Luxemburg wrote of the psychology of the mass strike which made revolutionary events possible (Luxemburg [2]): contemporary students of rational action might characterize that psychology as the adoption, by the participants, of assurance game in contrast to prisoner dilemma game (Sen [7]). In the assurance game, an agent would rather cooperate (in this case revolt) if others do, rather than take a free ride. Economists, when they consider revolutions at all, view them as exogenous events, perhaps because they are so difficult to explain from rational self-interested behavior. Sociologists and political scientists have described which classes tend to be revolutionary (as opposed to reformist) in historical situations (for instance, Paige [6]), Skocpol [8], Stinchcombe [9]); these works show that any understanding of the formation of revolutionary preferences must be deeply rooted in the specifics of how the people involved earn their livelihood and how they interact. The present paper does not study these sociological aspects of the revolutionary situation; indeed, the sociology is taken as given and is embedded in various probability functions which are postulated. Nor do different production classes exist here, in the sense of groups of agents relating differently to the means of production. (I will, however, refer to different income classes in the paper.) Revolution is treated here as an allocation problem, a redistribution problem. The key actors upon whom attention will be focused are not the masses of people,

Both the class position of agents and their status as exploiters or exploited is endogenously determined as they optimize against asset constraints which limit their capacity to produce revenue. The Class Exploitation Correspondence Principle (CECP) asserts that class and exploitation status are related in a classical way. It is further shown that the class structure associated with a labor market can be generated isomorphically by a credit market, demonstrating the functional equivalence of these markets. Morever, these results hold in models of precapitalist, subsistence economy, showing that the phenomena of Marxian exploitation and class are applicable in economic mechanisms other than capitalist ones. The possibility for a general theory of exploitation is thereby suggested.

In the first part of the paper, a model is proposed which places the Marxian and Sraffian conceptions of a capitalist economy in a general equilibrium framework. A central concern of these writers is that the economy be reproducible; this is incorporated formally into the equilibrium definition. Capitalists maximize profits subject to a capital constraint and workers are paid a subsistence wage. Equilibrium existence theorems are proved. In the second part, the welfare properties of the equilibria are examined-which, in the Marxian tradition, involve the notion of exploitation. It is shown that the possibility of exploitation is necessary and sufficient for all equilibria to sustain positive profits, if a certain technological condition holds. Finally, the notion of a subsistence bundle is dispensed with, and a Marxian determination of workers' consumption is proposed. In addition to placing the formal Marxian model into a general equilibrium context, the specification of production here is more general than the usual Leontief or von Neumann technologies: production sets are assumed to be only convex.

The ethic of priority is a compromise between the extremely compensatory ethic of outcome equality and the needs-blind ethic of resource equality. We propose an axiom of priority and characterize resource-allocation rules that are impartial, prioritarian, and solidaristic. They comprise a class of rules that equalize across individuals some index of outcome and resources. Consequently, we provide an ethical rationalization for the many applications in which such indices have been used (e.g., the human development index, the index of primary goods, etc.).