Having seized state power, the Bolsheviks pursued twin goals: to gain exclusive control of the state and the expansion of its capacities. The chapter reviews the various meanings and dimensions of "state capacity" and illustrates unique aspects of the capacity of communist states during the Cold War. Secrecy contributed to both twin goals, but beyond a point there was a tradeoff. Secrecy was costly, and the costs fell on state capacity. More secrecy increased the security of the communist regime but began to erode state capacity. The existence and management of the secrecy/capacity tradeoff was hidden from the public by secrecy itself.

This chapter throws light on the cost of procedures for assuring secrecy in doing Soviet government business. Their burden was like that of a cascading transaction tax. As a tax, the secrecy tax could be avoided or evaded, but systematic violations were exceptional. The costs of secrecy procedures can be measured by examining their long paper trail. It turns out that they could be a large share of total paper-based activities. To the extent that measurement across countries is possible, the Soviet costs of secrecy appear to have been heavier than in modern liberal-democratic states by an order of magnitude. The readiness of the Soviet authorities to sacrifice capacity for secrecy shows the importance of secrecy to their system of rule.

This chapter investigates the behavioral cost of secrecy. Soviet secrecy affected government business not only by its procedures, but also by impeding cooperation among government personnel. The late 1940s provide a natural experiment in history that illustrates the downward slope of the secrecy/capacity tradeoff. Unexpectedly, Stalin ordered a sharp intensification of the regime of secrecy. This created new penalties for government officials who shared secret government information with each other, even when sharing the information was essential for their normal business. The shock sent a ripple of fear through the Soviet bureaucracy. As the wave reached them, we see how officials stopped working with each other in their regular jobs and turned their efforts to protecting and insuring themselves against heightened risks. Normal business did not stop, but it slowed down before recovering.

Nearly all Soviet business was government business, and nearly all government business was secret. No one could be selected for a white-collar or management role unless the KGB cleared them for access to government secrets at the level corresponding to the role. This gave the KGB oversight of the selection and promotion of the Soviet state's responsible personnel. The KGB used the evidence held in its secret files to discriminate against candidates whose life experience and personal attributes gave grounds for suspicion. The evidence was called kompromat ("compromising evidence"). The chapter uses evidence from Soviet Lithuania to illustrate kompromat-based discrimination at work. Vetting based on kompromat valued loyalty over competence and conformity over diversity and originality. Discrimination on these lines protected the government's secret business at the expect of the human capacities of the state.

On the evidence, partly qualitative and partly indirect, Soviet society was characterized by low trust. The chapter discusses whether this was a product of communist policies and institutions and, if so, was intended or unintended. By its nature, the Soviet police state drove its enemies underground. To identify and neutralize them, the secret police used undercover informers. A few documents from the Lithuanian KGB archives show how the KGB developed productive informers and illustrate the role of trust in the relationship between case officer, informer, and target. The purpose of winning trust was to carry out covert deception. However, the penetration of society by informers was an open secret. Private citizens learned to distrust strangers, especially those that sought familiarity. Secret surveillance reduced trust, harming citizens' willingness to cooperate with the state. Low trust raised the costs of secret surveillance.

In most modern societies, even if public opinion is underinformed about some issue of state, there is usually an informed elite. In the Soviet state, no one was entitled to know anything beyond their immediate sphere of responsibility. The outcome was a chronically underinformed leadership. The chapter describes the mystery of Soviet defense outlays. The enormous efforts of Western observers to penetrate the mystery suggests its significance. The evidence of hindsight suggests that by the last years of the Soviet state, not even its top leaders knew the scale of defense spending. For many years, secrecy had deprived the Soviet leaders of their ability to control allocations to defense, something that ought to be a key strategic decision of any state. It signals a long-term loss of state capacity.

This chapter sets out the evolution of secrecy in post-Soviet Russia. The regime of secrecy collapsed, and was then gradually restored, but not to the previous degree. Behind this lies a technological transition from the centralized communication technologies of the twentieth century to modern peer-to-peer information sharing through decentralized social networks. In a largely privatized economy, comprehensive censorship is no longer possible. Twenty-first-century authoritarianism has adapted. Where secrecy is no longer effective, its place has been taken by disinformation. The chapter describes the authoritarian transition from Secret Leviathan to Leviathan of a Thousand Lies. Secrecy today has less scope than before, but it still hides the core of autocratic power. The secrecy/capacity tradeoff is still at work.