This book develops an original theory of group and organizational behavior that cuts across disciplinary lines and illustrates the theory with empirical and historical studies of particular organizations. Applying economic analysis to the subjects of the political scientist, sociologist, and economist, Mancur Olson examines the extent to which the individuals that share a common interest find it in their individual interest to bear the costs of the organizational effort.
The theory shows that most organizations produce what the economist calls "public goods"--goods or services that are available to every member, whether or not he has borne any of the costs of providing them. Economists have long understood that defense, law, and order were public goods that could not be marketed to individuals, and that taxation was necessary. They have not, however, taken account of the fact that private as well as governmental organizations produce public goods.
The services the labor union provides for the worker it represents, or the benefits a lobby obtains for the group it represents, are public goods: they automatically go to every individual in the group, whether or not he helped bear the costs. It follows that, just as governments require compulsory taxation, many large private organizations require special (and sometimes coercive) devices to obtain the resources they need. This is not true of smaller organizations for, as this book shows, small and large organizations support themselves in entirely different ways. The theory indicates that, though small groups can act to further their interest much more easily than large ones, they will tend to devote too few resources to the satisfaction of their common interests, and that there is a surprising tendency for the "lesser" members of the small group to exploit the "greater" members by making them bear a disproportionate share of the burden of any group action.
All of the theory in the book is in Chapter 1; the remaining chapters contain empirical and historical evidence of the theory's relevance to labor unions, pressure groups, corporations, and Marxian class action.
American economist and social scientist who, at the time of his death, worked at the University of Maryland, College Park. Among other areas, he made contributions to institutional economics on the role of private property, taxation, public goods, collective action and contract rights in economic development. Olson focused on the logical basis of interest group membership and participation. The reigning political theories of his day granted groups an almost primordial status. Some appealed to a natural human instinct for herding, others ascribed the formation of groups that are rooted in kinship to the process of modernization. Olson offered a radically different account of the logical basis of organized collective action. In his first book, The Logic of Collective Action: Public Goods and the Theory of Groups (1965), he theorized that “only a separate and ‘selective’ incentive will stimulate a rational individual in a latent group to act in a group-oriented way”; that is, members of a large group will not act in the group's common interest unless motivated by personal gains (economic, social, etc.). He specifically distinguishes between large and small groups, the latter of which can act simply on a shared objective. Large groups, however, will not form or work towards a shared objective unless individual members are sufficiently motivated. In 1982, he expanded the scope of his earlier work in an attempt to explain The Rise and Decline of Nations. The idea is that small distributional coalitions tend to form over time in countries. Groups like cotton-farmers, steel-producers, and labor unions will have the incentives to form lobby groups and influence policies in their favor. These policies will tend to be protectionist and anti-technology, and will therefore hurt economic growth; but since the benefits of these policies are selective incentives concentrated amongst the few coalitions members, while the costs are diffused throughout the whole population, the "Logic" dictates that there will be little public resistance to them. Hence as time goes on, and these distributional coalitions accumulate in greater and greater numbers, the nation burdened by them will fall into economic decline. Olson's idea is cited as an influence behind the Calmfors-Driffill hypothesis of collective bargaining. In his final book, Power and Prosperity, Olson distinguished between the economic effects of different types of government, in particular, tyranny, anarchy and democracy. Olson argued that a "roving bandit" (under anarchy) has an incentive only to steal and destroy, whilst a "stationary bandit" (a tyrant) has an incentive to encourage a degree of economic success, since he will expect to be in power long enough to take a share of it. The stationary bandit thereby takes on the primordial function of government - protection of his citizens and property against roving bandits. Olson saw in the move from roving bandits to stationary bandits the seeds of civilization, paving the way for democracy, which improves incentives for good government by more closely aligning it with the wishes of the population.
The blinders neoclassicists wear are large indeed. This book was written in 1971, and the neoclassical understanding of collective action has, as far as I can tell, not been substantially advanced since then—in over 40 years, the essential conclusions haven't changed. This would not be a problem, of course, if those conclusions were correct; but they aren't. Indeed they are wrong at a fundamental level; they are almost literally reversed from the truth.
Here is the basic argument: 1. The interests of a group are not the same as the interests of its individual members. [This is true; moreover, I don't think it was recognized by most people before Olson. So that could be marked as the significant achievement.] 2. Individuals act in their own self-interest. [Fundamental neoclassical assumption; and herein lies the problem.] 3. Therefore, groups do not act in their own self-interest.
The logic—and the title did say "logic" after all—is absolutely valid. The problem is that the argument should actually run the other way: ~3. Groups act in their own self-interest. 1. The interests of a group are not the same as the interests of its individual members. ~2. Therefore, individuals do not act in their own self-interest.
That answer has been staring them in the face all along... and yet even now in 2013 most economists still fail to recognize it. Humans are neither selfish nor altruistic; we are tribal. We identify ourselves with a group, defining those inside as good and those outside as bad. The definition of the group can vary a great deal; it might be Americans, or White people, or Christians, or Red Sox fans, or economists, or University of Michigan alumni; and indeed most people will identify in varying degrees with many different groups at once—and much of the conflict in our lives comes from being torn between such identifications. (The rest probably comes from conflict between the groups we identify with and that one special group that contains only ourselves.) Actually, even neoclassicists have been forced to accept the most extreme examples: They speak of "households" and "firms" as though they were indivisible entities, even though a household contains several individuals and a firm may literally contain millions. Why does this work? Because they are indivisible, at least in terms of their tendency to act in their own self-interest. A corporation is far more likely to act in its own self-interest than any individual human being would be. Households are also not strictly selfish, but they are at least close to it sometimes; whereas, anyone who would stop feeding their own child because they ceased to be amusing we would all immediately and rightfully recognize as a horrible and defective human being. (Yet this is how you would behave, if you actually acted in your own self-interest independent of that of your "household", that is, your family.) True, they might be punished for it; but then again they might not (most child neglect goes unreported), and in any case, this does not factor into a normal human being's decision process. We do not ask ourselves, "Would the police punish me if I stopped feeding my children?"; indeed, we do not even ask, "Should I feed my children?"; we simply feed our children, whenever it is possible, without hesitation. Indeed, we will go to great lengths to feed our children, even if it harms ourselves substantially. That makes perfect sense in terms of evolutionary psychology—indeed, it would be completely baffling if it were not true, and might force us to radically redefine our understanding of evolution. But it is completely ignored when we assume that human beings are rational self-interested economic agents. Olson even slips into arguing for group cooperation himself sometimes, apparently without realizing it: "[…] a more detailed analysis of the kind outlined above could help to explain the apparent tendency for large countries to bear disproportionate shares of the burdens of multinational organizations, like the United Nations and NATO,[...]" Once you start saying that The United States acts in its interests, you have already committed to an enormous scale of group cooperation. (Moreover, I also question whether he is even correct that this would be something to explain; it is not obvious to me that the disproportionately large amount of money the US gives to the UN offsets its disproportionately small amount of soldiers, for example. It could just be comparative advantage, or even the US bearing too little a share.)
Throughout the whole book, Olson seems completely unable to fathom why anyone would every do anything for anyone other than themselves. He says things like "If the groups, or at least the economic groups, are often interested primarily in their own welfare, it could only be so because the individuals in these groups were primarily interested in their own welfare." Why? In fact, that is one thing we know doesn't work—as Olson himself goes on to say: "But if the individuals in any large group are interested in their own welfare, they will not voluntarily make any sacrifices to help their group attain its political (public or collective) objectives)." Olson goes to great lengths to prove that cooperation requires altruism, but simply dismisses the idea that altruism could actually exist. He likewise dismisses the notion that people have an innate instinct for cooperation as "meaningless", when in fact it is the consensus conclusion of modern evolutionary theory. It's even formalizable; you can actually quantify the human instinct for altruism, and it's quite notable that the figure considerably exceeds the calculation we would get from simple kin selection, C < rB. If you're anything like me and most people, you've paid more than rB to give someone else B on many occasions in your life, and will probably continue to do so many times in the future. You probably haven't paid more than B, which would usually be bad—though some people do so, and it may not always be bad. You are probably even unlikely to pay exactly B, though at times you may. Instead, you pay pB,where p is a discount factor, functioning akin to r—but no longer equal to your genetic relatedness. Instead, it might be called your "cognitive relatedness", or to use a simpler and more evocative term, your solidarity. Usually p far exceeds r, though in some cases it might be less—e.g. if you have had a terrible falling-out with your sibling and now avoid all contact with them. I also suspect that for identical twins, even though r = 1, p < 1. Identical twins usually care about each other a great deal, but it seems unlikely that they value each other exactly equal to themselves. p = 0.99 seems like a reasonable guess. The reason we call it an "instinct" is of course that it is, and this has a rather precise definition in evolutionary biology—a genetically encoded, evolutionarily selected behavior pattern that is triggered in response to certain environmental conditions. We have a moral instinct in exactly—exactly—the same sense in which we have a hunger instinct and a sexual instinct. One of the more important unsolved questions in modern evolutionary psychology (and moral science generally) is how much of human moral behavior is genetic and how much can be changed by environment; but there is no serious dispute about the fact that both are important—and that means that by definition we have a moral instinct. Yet Olson doesn't seem to understand this instinct in the slightest, which makes him seem like he thinks all humans are psychopaths. And indeed, The Logic of Collective Action is a book about how people would behave if they were neoclassical rational agents, which is to say, omniscient psychopaths.
Don't get me wrong, there are some useful insights in this book. It's worth studying the ways that individual and collective decisions can be at cross-purposes. There are good reasons to have enforcement mechanisms in your system of policy, just in case people are tempted to act against the interests of your group in favor of themselves (or in favor of another group!). It's worth considering the fact that many forms of cooperation, from international treaties on down to class projects, are far below their optimal levels, and trying to find ways we might fix that. His analysis of how the most stable groups provide both collective and non-collective goods simultaneously is also useful; it goes far to explain why churches hold bake sales and lobby politicians. His explanation of why the lobbying groups for oil companies and utility companies is so powerful is sound. His concept of "selective incentives" can be adapted, I think, to include our concepts of in-group and out-group and social belonging. But if we were really atomistic individuals, acting always in our own self-interest, there would be virtually no cooperation at all; even enforcement mechanisms are costly, and if we were all the psychopaths we are imagined to be, we wouldn't even be willing to punish people who do bad things, because that takes effort and time (and in a modern economy, money). In reality, of course, we are very willing to punish people, even at rather substantial cost: Heinrich et. al. (2006) "Costly punishment across human societies." Science 312(5781): 1767-1770. The few neoclassical economists who acknowledge this fact at all make ridiculous excuses for it, like "People enjoy punishing others for wrongdoing; they gain utility from a sense of righteousness." Okay, that may be true to some extent... I doubt it's the main motivation, but even if it is: Why is that true? Because we have a moral instinct. Yes, sometimes it feels good to do the right thing; but why does it feel good? Moral instinct. That is literally the only plausible explanation. Psychopathy is at a selective disadvantage. (Given that this is the case, you may wonder how there are psychopaths at all. It's probably due to frequency-dependent selection: In a world of moral individuals, it can be adaptive to be a psychopath. But a population of psychopaths would rapidly self-destruct. Under frequency-dependent selection, the two traits converge to an equilibrium where they are equally adaptive.) Only at the very end of the book does he acknowledge any motives other than self-interested calculation; and as neoclassicists are wont to do, he immediately declares them "irrational". I do appreciate that he at least mentions the possibility, because I've seen others who refuse to even do that.
There are of course limits to human altruism; and that is well worth studying. Many people are apathetic in large groups, and it's worthwhile to try to figure out why that is and what can be done about it. People are not always altruistic to everyone, and they do not always do their fair share. The tension between self-interest and group interest—and between different types and scales of group—is fundamental to economics, and indeed to human nature. But you're never going to understand how that works if you pretend one side doesn't even exist.
This is one of the seminal social science works of the 20th century. Olson argued (contrary to the conventional academic wisdom up to that time) that "unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational, self-interested individuals will not act to achieve their common or group interests." (Emphasis his.) It makes no rational sense for an individual to join an organization and work hard to achieve some aim, if the aim will be provided anyway. If something is a collective good (a public good), everyone will enjoy its use regardless of effort put in to obtain it. It is much easier to form a group around lobbying for a noncollective benefit; the benefits will accrue to a smaller group, thus the cost of action will be viewed as worth it. This leads to the perhaps paradoxical result that small groups are capable of exploiting large groups. Example: The entirety of individual taxpayers have not banded together to engage in collective action to further their interests, but business lobbies have, and have successfully obtained billions of dollars worth of tax credits for themselves.
Separate chapters discuss labor unions (a most interesting discussion of coercion in public vs. private groups, and Olson's conclusion that it is the provision of collective goods or services rather than the public or private nature of the organization providing them, that determines whether economic freedom is curtailed), Marxism (most revolutions are carried out by quite small groups), pressure groups, and special interest groups.
Olson’s main argument is: Individuals will not act in the interest of a group unless there’s some form of coercion, or the group is relatively small. An economist by training, Olson disregards that humans are capable of altruistic behavior and that there are intangible benefits that individuals seek by being loyal to a certain group. Guess the soft science of studying the great lengths many of us are willing to go to in order to belong to a group was not popular in the 1960's. Not quite a terrible book, just one about how to explain collective action through a strictly economic lens. Didn’t appreciate those hieroglyphic equations, though.
Within a fairly small space the author puts forward a theory that spans economics, political science, and group psychology. He then applies this to liberal economies, Marxist theory, and past and present America (i.e. unions, lobbies, agricultural coops). He breaks a few myths and common misunderstandings, and puts forward an explanation of the strengths and weaknesses of all of these cases that is very compelling. Notable is the attention given to explaining (with data) the history of the American labor movement from the viewpoint of what precisely made American unions powerful and what didn't really matter.
The style is very direct, clear, and methodical, but it is also engaging. Certainly provokes a lot of thought for such a slim piece.
An absolutely essential text concerning how club goods and public goods get provisioned, whose conclusions are now so widely accepted that it is hard to understand how illuminating they were when first enunciated.
Basic argument: 1) The fact that a goal is common to a group means that no one in the group can be excluded from its benefits. 2) The logics inside small groups and large groups are quite distinct. 3) "Certain small groups can provide themselves with collective goods without relying on coercion of any positive inducements apart from the collective good itself. In some small groups, each of the members, or at least one of them, may find that his personal gain from having the collective good exceeds the total cost of providing some amount of that public good" (34). Even in the smallest group, the collective good will tend to be underprovided, and in general, "The larger the group, the farther it will fall short of providing an optimal amount of a collective good" (36) 4) "The larger the group, the more agreement and organization it will need" -- and the more difficult that agreement and organization will become. (46) 5) "Only a separate and 'selective' incentive will stimulate a rational individual in a latent group to act in a group oriented way.... These 'selective' incentives can be either negative or positive, in that they can either coerce by punishing those who fail to bear an allocated share of the costs of group action, or they can be positive inducements offered to those who act in the group interest." (51) 6) These selective inducements can include "material" benefits, as well as social status enhancements and other psychic goods. "Organizations that use selective social incentives to mobilize a latent group interested in a collective good must be federations of smaller groups." (63)
"An inclusive collective good is by definition such that the benefit a noncooperator receives is not matched by the corresponding losses to those who do cooperate." (40)
Key insights: 1) In small groups, there is a tendency for the smaller players essentially to free ride on the efforts of the big players, who have enough invested in the total outcome. This explains why the responsibility for global public goods are always born by the one or two biggest players in the system, if they are provided at all. 2) In order to get people to contribute to collective efforts, you either need to coerce them, or offer them private benefits. This explains, on the one hand why organizations like AARP or the NRA offer insurance at cut rates to members - it gives people a private incentive to join. And, on the other hand, why unions typically push for a "closed shop" (coercion) so that non-members can't free-ride on the collective bargaining efforts of the union members. "Large organizations [cannot] support themselves without providing some sanction or some attraction distinct from the public good itself, that will lead individuals to help bear the burdens of maintaining the organization" (16). 3) Taxation is necessarily coercive. "Despite the force of patriotism, the appeal of the national ideology, the bond of common culture, and the indispensibility of the system of law and order, no major state in modern history has been able to support itself through voluntary dues or contributions" (13). 4) There is no "instinct" for joining.
Critical questions: 1) What happens when the very wealthy are able, essentially, to procure privately or on a club basis supposedly "public" goods at a cheaper rate than whatever rate they would be taxed at (including personal security & legal adjudication). This particularly equilibrium will lead to a dynamic where the wealthy opt out, and make war (from ideological to perhaps literal) on the public sector. This is what I have elsewhere described as "plutocratic insurgency." 2) In the case of addressing climate change, Olsen's "Logic" means that only a situation of coercion, led from the center, can possibly lead to an actual participation of all in the abatement of GHGs. Resilience and preparation efforts provide private benefits, which is why there will be cooperation on this front, but GHG abatement is completely non-excludable, and therefore only those who are coerced will participate, and only the hegemon can coerce. Alas, there is no political will in the United States to assume any of this burden even domestically, let alone to try to compel others to join the abatement effort. You combine this with the fact that the "gain" from abatement goes entirely to others (i.e. future generations) it becomes clearer why there will be no success in any attempts to create binding GHG emissions limits and standards. "In a large group in which no single individual's contribution makes a perceptible difference to the group as a whole, it is certain that the collective good will NOT be provided unless there is coercion or some outside inducements that will lead the members of the large group to act in common interests." (44) Climate change, of course, is a problem where the collective good is scaled at the level of largest "latent group" there is, namely the 7B members of humanity as a whole. So any individual's reduction of consumption will make an imperceptible difference. And, since there are no conceivable "positive inducements" that can be made available for agreeing to GHG reductions, only coercion will possibly make people do individually what they collectively need to do.
ONLY HOPE: redefine the "group" not as the 7B members of humanity, but rather as the top 7 GHG emitters? [EU, NAFTA, China, Japan, India, Russia, Brazil, account for ~85% of emissions] (Maybe, but it would have to be run through the WTO, because otherwise any rules that only bound those five players would necessarily create huge arbitrage opportunities for businesses seeking to move polluting industries to non-bound countries/regions.) But as we've seen even from treaties like NATO or SEATO, even 6 players may be too many to get people to be willing to contribute. We would need a massive change of social status so that the "GHG czar" in each country was the most prestigious and respected person, who others would be willing to defer to.
It was not Marx, but Lenin and Trotsky, who provided the theory for this sort of revolution. See Lenin's What Is to Be Done 24 for an account of the communist's need to rely on a committed, self- sacrificing, and disciplined minority, rather than on the common interests of the mass of the proletariat.) 列宁党建学对马克思的修正
Is a clearly identified common interest sufficient to motivate individuals’ group-oriented actions? In The Logic of Collective Action, Mancur Olson challenges the conventional wisdoms of his contemporaries that individuals automatically participate in movements or organizations seeking to solve problems at the collective level. If individuals of a large latent group are instrumentally rational, he argues, they would not take actions to contribute to collective interest, unless they are coerced or offered selective incentives. His theory purports to explain variations in mobilization level between small and large groups (special interest theory), and among large latent groups with different organizational structures (by-product theory). If this is the case, then, mobilizers and organizers that address collective issues should moderate their overemphasis of collective goals and consider three strategies, namely, federalizing, coercing, and providing selective interests. This essay will further explain and assess Olson’s arguments.
To begin with, what is the scope of Olson’s argument? In general, it explains the failures of collective actions of large groups, in a methodologically individualistic way. Thus, it could be applied to a great variety of cases from labor unions and Marxist class actions to lobbying interest groups. He does so by explaining small or large group collective behaviors through an analysis of individual incentives. While seeking to provide a universally applicable explanation, however, Olson explicitly admits that it is not very useful in addressing cases of fundamentally irrational groups, such as those that are ideologically-driven (162), or smallest groups whose costs are fully covered and whose interests are consumed by the monopoly, in which private and public interests are tightly connected (49), or groups so small that self-purchase of the collective goods is still profitable for individuals (43), or purely philanthropic organizations that do not pursue the interest of groups they represent (64). As such, three assumptions are essential. Firstly, individuals in the groups are primarily rational ones, who are self-interested and focus on the calculation of their own cost and benefit. Secondly, groups should be minimally large to render the separation of private and collective interests meaningful. Thirdly, while they may not be essentially selfish, these groups should at least be in pursuit of some common interest of their own.
In light of the scope of its argument, the theory of the logic of collective action depends on three key concepts. Firstly, individual incentive of voluntary associations to movements or organizations is the key explanatory factor of the inefficiency of large group collective action. A lack of such incentives may include bargaining or withdrawals from contributing. The main feature of individual incentive is that it is rational, focusing on personal welfare, which includes both economic and noneconomic interests, such as monetary, social, erotic, and psychological incentive. But Olson excludes moral considerations from the list of incentive, claiming that such incentives are unprovable and untestable (61). Moreover, there is a conflict between private and collective interest, they are not mutually exclusive in individual incentives. An individual could well concern about both personal and collective welfare, the issue here is that they are not purely selfish and individualist as to ignore collective goods, but still find no reason to contribute to them.
This leads to the second concept, public goods, such as national defense and clean air, or the success in political struggles by labor unions, are characterized by their nonexcludability and nonrivalrous consumption. One individual’s share of the goods does not decrease that of another person’s, and once they are provided, these goods are available to everyone in the group. In cases of pure public goods, then, no matter individuals contribute to the provision of such goods or not, everyone in the group can get access to them as the contributors do. Insofar as individuals’ contribution does not influence their share, and that to contribute means cost to them, instrumentally rational person, therefore, would reasonably not be motivated to put efforts in collective goods provision. This is usually called as “the free rider problem”. Public goods provisions are characteristically organizational, because private goods can always be provided by individuals, while the provision of public good inevitably requires organized collective action. The following explanations are effective only when group common interests are considered as a form of public goods for its members, so that the pursuit of common interest through organization follows the same logic of public good provision and faces the issue of mobilizing the free riders. Furthermore, the distinction between inclusive and exclusive collective goods is important. For inclusive collective goods, typically nonmarket, the ideal is to include as many new members as possible, while industries or market groups tend toward decreasing the number of members in the groups, turning collective goods (such as higher product price) into monopoly, namely, non-collective ones.
Thirdly, group size determines the operation of collective actions, as Olson argues, “the larger the group, the less it will further its common interest” (35). Unlike conventional wisdoms that small groups and large groups are equally coherent and differ only in degree, Olson insists upon a qualitative distinction between them. He distinguishes between privileged, intermediate, and latent groups, which fundamentally differ in terms of the need and cost of organization, as well as their modes of collective actions. He assumes that the larger the groups, the higher the minimum organization costs and the less noticeability of individual non-contribution would be. Therefore, in small privileged groups, despite continuous bargaining, members are generally willing to cover the relatively low burden of organization in order to receive the collective goods . In intermediate groups, while the share of the benefits is insufficient to motivate self-purchase, whether one contributes or not will be noticed by other members, thereby no allowing purely atomistic rational actions. In large latent group, in contrast to smaller groups, the organization cost is too high and non-contribution is unnoticeable, so that individuals make decisions under no social pressure, not willing to cover the burden. Therefore, only in the context of large latent groups are individuals act purely rationally and independently, according to which organizers should offer selective interest, either coercing individuals or providing them with non-collective services that distinguish contributors from non-contributors, or divide the large groups into smaller federations with special interests, so as to guarantee enrollment.
The two organizational strategies, provision of selective incentive and mitigation of group size, are translated by Olson into the by-product theory and special interest theory. Olson’s theories particularly concern lobbies in American politics. The by-product theory explains the mechanisms of organized latent groups, such as labor unions and professional associations, showing how successful lobbying groups are typically organized for purposes other than the attainment of collective goods, and members in them are usually coerced to join. The large enrollment ensured by selective incentives subsequently empowers the organizations in economic lobbies, which should be seen as the by-products of non-collective functions. The special interest theory explains the phenomenon that the pressure system in American politics is essentially the politics of small business groups. The business community is divided into a series of generally oligopolistic industries, which are small enough to voluntarily organize themselves in pursuit of an active lobby, corresponding to the high degree of organization and participation in intermediate groups.
In assessing the argument Olson provides, one should acknowledge its elegant coherence and empirical insights. However, several problems could potentially decrease its explanatory force. Firstly, regarding the issue of organization cost, his assumption that the larger the group, the higher the cost of organization and collective good provision seems problematic within the scope of his discussion. Besides merely the cost of mobilization of enrollment and participation, organizational cost could also mean the cost of providing certain services, national defense, for example, whose provisions are unaffected by the number of consumers. Unlike cases where number of participants matters, such as mass social movements, when number of participant is of less significance in collective good provision, large latent groups could indeed well enjoy collective goods provided by a small number of its member. While Olson admits that in large group there tends to be an “exploitation of the great by the small” (169), his assumption about the relationship between organizational cost and group size fail to be consistent with this scenario.
The discussion above leads to the second problem, even in cases where the fulfillment of common interest depends on a large number of participants of collective actions, through what mechanisms of action do large enrollment and individual memberships directly translate into strength and support for the supply of collective goods? Olson’s theory addresses lobbies that organize groups of large number of members, without sufficiently discussing the inevitable heterogeneity of large latent group. The empirical examples that Olson provides, such as the success and failure of labor lobbies, present an individualistic explanation of group-level actions and behavior, revealing a correlation between large enrollment through coercion or inducement in large groups, on the one hand, and the successful outcome of the lobbies, on the other. However, such a correlation between large membership and collective success, analytically speaking, is not causality. At least two more detailed questions need to be asked. The first one concerns non-contributive membership. Could an individual get coerced into a group or enjoy the benefit of collective actions without making positive contribution? As such, coercion and inducement are insufficient for the production of goods. The second question addresses intragroup diversity. To what extent can the enlargement of enrollment be free from a consideration of heterogeneity? In social movement studies, however, social resource mobilization theory fills this gap by considering how different types of member could potentially bolster or undermine the collective effort, as well as the positive or negative role that group diversity may play in mobilization and collective good provision.
Following the second problem, the mechanism of large group mobilization seems always to be accompanied by the role of leadership on the part of organizers, which is usually the determining factor of variations in mobilization level in cases with same degrees of individual incentives, is not adequately elaborated in the book. While the introduction of this factor does not undermine the theory’s coherence, it is an important mediating causal invariable in explaining willingness of participation. There are several potential lines of elaboration. For example, does it make a difference in the attainment of collective interest, if the non-collective goods as selective incentives are the product of jointness of supply by members, instead of mainly relying on organizers’ provision? What are the roles that organizers’ reputation in incorruptibility, members’ trust on leaders, and the availability of organizers’ strategies other than selective incentives play (such as political power, possession of economic resources, etc.)?
The book that first exposed and explained the concept of "concentrated costs and dispersed benefits," Olson's central thesis is that smaller groups are able to affect political change much more effectively than large groups. The reasons he gives includes lower costs of organization, greater benefits (or selective incentives) per member, and individuals participating within small groups are generally the more passionate and interested ones. Additionally, with large groups, in order to maintain high membership, if the incentives provided are not strong enough, coercion is necessary. The example he foremost provides is that of unions. Before the Wagner Act, unions could not provide enough incentives for membership. The goals they stood for, either shorter hours without diminishing wages or higher wages without increasing working hours, could not be achieved since workers outside the unions would be willing to work without such goals. Contemporary works, if one wishes to continue reading in this direction, building upon Olson is: Bootleggers and Baptists (2014) by Smith and Yandle and Tyranny of the Minority (2009) by Bishin.
Fantastic little book. The first chapter or two lays out a very simple logic of how groups work. This is basically the Nash equilibrium argument. Olson then shows that the larger the group, the more the argument applies. What is truly breathtaking is how one can take such simple premises and go so far with them. Eventually, these trivial premises completely decimate any "politics is how class x keeps their power on class y" kind of argument it a wonder to see. After showing how group interest is insufficient to explain group behavior, he then proposes an alternative and defends by using historical examples, especially around the rise of agriculture but also labor union, doctor etc etc. This is one of those MUST reads for everyone. There are some equations in the first chapter but don't let that scare you.
This is a classic book for understanding cooperation in contributing to public goods. Olson extends and makes accessible Samuelson's arguments about the provision of public goods.
The main contribution (IMO) is identifying the conditions under which public goods *will* be produced. When an individual will gain more from the public good than the entire cost of the good, then that individual will provide it. E.g., if Exxon kept crashing ships into the rocks at this one harbor, then they would likely find it worth it to build a lighthouse there, even though others would also benefit from the lighthouse. When this situation obtains, then the groups is a 'privileged' group. Otherwise, everyone has the incentive to free ride and let other provide the good. If everyone acts rationally, then the good is not provided (or is under-provided) even though everyone would be better off if it were provided. Olson calls these 'latent' groups and claims that they will be much more common as group size increases.
The ideas of this book have been highly influential and important. If you are interested in this topic, I highly suggest reading Hardin's Collective Action and Marwell and Oliver's The Critical Mass in Collective Action. They both take issue with Olson's assertion that large groups are less likely to provide public goods and provide additional insights into when and how collective action does (and doesn't) work.
Mancur Olsen’s ideas about why groups form, the difference between small and large groups that are exclusive or inclusive, and effects such as free-riding ware explained in his book, The Logic of Cooperation.
While a bit dense and overly infused with formulas and math, his theory is extremely useful. He explains that even though organizations share common interests and goals, they may not behave collectively to satisfy those goals.
Exclusive groups have fewer members and each member receives more benefit per person. Large groups create more benefits, specifically public goods, which everyone benefits from.
The freerider is someone (or an organization or state) that receives the benefit of public goods (like security or funding), which may be sponsored by a benefactor member. A good example of this is how the U.S., the benefactor to NATO, will pull the lions share for the other member states. Even if they under contribute (free-ride), they still get the benefit of the NATO security blanket.
Two additional examples are the Office Coffee Club and the Stag Hunt. In each situation a social contract is needed to ensure continued contribution and success.
Some additional ideas are when team building smaller teams are better at taking action and larger teams are better for determining reactions.
A seminal work in public choice. In The Logic of Collective Action, Olson originates what has become the standard story that the public choice economists tell about the role of special-interests in politics. Namely, that a small group is inherently at an advantage against a larger group in arguments over public policy. Although in total the amount at stake is the same for each group, the individual members of the small group have much more at stake than the individual members of the large group so they have an incentive to spend more time and energy trying to effect government policy to their benefit.
Read the first third of the book. Had to put it down to finish another Library book. When I picked it up again, I thought to myself, "good god, I really don't want to read any more of this." Any book that I'm that repulsed to pick up again has to get one star.
I'd advise you to read a wikipedia article about the book instead.
Read this as a supplement (not a requirement) for a community development class. I don't think it would hurt anyone studying in this field to read this book. It's short enough, and easy to understand, but brings home some important concepts about collective action and capacity building that were not in my case, so easily understandable in our text.
"However similar the purposes may be, critics may object that attitudes in organizations are not at all like those in markets. In organizations, an emotional or ideological element is often also involved. Does this make the argument offered here practically irrelevant?"
"A most important type of organization-the national state-will serve to test this objection. Patriotism is probably the strongest noneconomic motive for organizational allegiance in modern times. This age is sometimes called the age of nationalism. Many nations draw additional strength and unity from some powerful ideology, such as democracy or communism, as well as from a common religion, language, or cultural inheritance. The state not only has many such powerful sources of support; it also is very important economically. Almost any government is economically beneficial to its citizens, in that the law and order it provides is a prerequisite of all civilized economic activity. But despite the force of patriotism, the appeal of the national ideology, the bond of a common culture, and the indispensability of the system of law and order, no major state in modern history has been able to support itself through voluntary dues or contributions. Philanthropic contributions are not even a significant source of revenue for most countries. Taxes, compulsory payments by definition, are needed. Indeed, as the old saying indicates, their necessity is as certain as death itself."
"If the state, with all of the emotional resources at its command, cannot finance its most basic and vital activities without resort to compulsion, it would seem that large private organizations might also have difficulty in getting the individuals in the groups whose interests they attempt to advance to make the necessary contributions voluntarily."
"A farmer who placed the interests of other farmers above his own would not necessarily restrict his production to raise farm prices, since he would know that his sacrifice would not bring a noticeable benefit to anyone. Such a rational farmer, however unselfish, would not make such a futile and pointless sacrifice, but he would allocate his philanthropy in order to have a perceptible effect on someone. Selfless behavior that has no perceptible effect is sometimes not even considered praiseworthy. A man who tried to hold back a flood with a pail would probably be considered more of a crank than a saint, even by those he was trying to help. It is no doubt possible infinitesimally to lower the level of a river in flood with a pail, just as it is possible for a single farmer infinitesimally to raise prices by limiting his production, but in both cases the effect is imperceptible, and those who sacrifice themselves in the interest of imperceptible improvements may not even receive the praise normally due selfless behavior."
-Mancur Olson, the Logic of Collective Action
"Unions are for 'collective bargaining,' not individual bargaining. It follows that most of the achievements of a union, even if they were more impressive than the staunchest unionist claims, could offer the rational worker no incentive to join; his individual efforts would not have a noticeable effect on the outcome, and whether he supported the union or not he would still get the benefits of its achievements."
-Mancur Olson, the Logic of Collective Action
"Small, local unions may exist without compulsion in industries where the workplaces are very small. Occasionally, too, some large unions may be able to survive if they can manage very attractive insurance schemes, or offer other adequate noncollective benefits. It is even possible that for brief periods unions could survive even . . . because of emotions so strong that they would lead individuals to behave irrationally, in the sense that they would contribute to a union even though a single individual's contribution would have no perceptible effect on a union's fortunes, and even though they would get the benefits of the union's achievements whether they supported it or not. But it does not seem to be the case that large, national labor unions with the strength and durability of those that now exist in this country could exist without some type of compulsory membership. No doubt ideological motives could provoke occasional outbursts of organization, but it is unlikely that many large unions could last longer or accomplish more than the Locofocos or the Knights of Labor, without at least some measure of coercion."
-Mancur Olson, the Logic of Collective Action
"Wicksell's old-fashioned liberalism is reminiscent of John Maynard Keynes' attitude toward conscription during World War I. Keynes opposed conscription, but he was not a pacifist. He opposed conscription because it deprived the citizen of the right to decide for himself whether or not to join in the fight. Keynes was exempt as a civil servant from conscription; so there is no need to question his sincerity. Apparently his belief in the rights of the individual against a majority of his compatriots was very strong indeed."
"It is not in fact true that the absence of the kind of class conflict Marx expected shows that Marx overestimated the strength of rational behavior. On the contrary, the absence of the sort of class action Marx predicted is due in part to the predominance of rational utilitarian behavior. For class-oriented action will not occur if the individuals that make up a class act rationally. If a person is in the bourgeois class, he may well want a government that represents his class. But it does not follow that it will be in his interest to work to see that such a government comes to power. If there is such a government he will benefit from its policies, whether or not he has supported it, for by Marx's own hypothesis it will work for his class interests. Moreover, in any event one individual bourgeois presumably will not be able to exercise a decisive influence on the choice of a government. So the rational thing for a member of the bourgeoisie to do is to ignore his class interests and to spend his energies on his personal interests . . .
"This is not to deny that a theory of irrational behavior leading to class action might in certain cases be of some interest. Class differences resulting from sociological factors might lead individuals irrationally and emotionally to act in a class-oriented way. A theory of class action that emphasized emotion and irrationality, rather than the cold and egotistical calculation Marx often emphasized, would be at least consistent . . . He would have had to argue that the individual bourgeois were so unselfish and dedicated that they would neglect their individual interests to further the goals of their class."
"It does not follow that the results of pressure-group activity would be harmless, much less desirable, even if the balance of power equilibrium resulting from the multiplicity of pressure groups kept any one pressure group from getting out of line. Even if such a pressure group system worked with perfect *fairness* to every group, it would still tend to work *inefficiently*. If every industry is favored, to a fair or equal degree, by favorable government policies obtained through lobbying, the economy as a whole will tend to function less efficiently, and every group will be worse off than if none, or only some, of the special-interest demands had been granted. Coherent, rational policies cannot be expected from a series of separate *ad hoc* concessions to diverse interest groups."
"Since relatively small groups will frequently be able voluntarily to organize and act in support of their common interests, and since large groups normally will not be able to do so, the outcome of the political struggle among the various groups in society will not be symmetrical. Practical politicians and journalists have long understood that small 'special interest' groups, the 'vested interests,' have disproportionate power. The somewhat too colorful and tendentious language with which the men of affairs make this point should not blind the scholar to the important element of truth that it contains. The small oligopolistic industry seeking a tariff or a tax loophole will sometimes attain its objective even if the vast majority of the population loses as a result. The smaller groups-the privileged and intermediate groups-can often defeat the large groups-the latent groups-which are normally supposed to prevail in a democracy. The privileged and intermediate groups often triumph over the numerically superior forces in the latent or large groups because the former are generally organized and active while the latter are normally unorganized and inactive."
"The anarchistic assumption that in the absence of the oppressive state a natural, spontaneous unity would spring up to take its place is now regarded as evidence of hopeless eccentricity. The consistent critic of anarchism must, however, attack with equal force all of those who suppose that large groups will whenever the need arises voluntarily organize a pressure group to deal with the state, or a labor union to deal with an employer. Bentley, Truman, Commons, Latham, and many of the pluralist and corporatist thinkers are fully as guilty of the 'anarchistic fallacy' as the anarchists themselves. The anarchists supposed that the need or incentive for organized or coordinated cooperation after the state was overthrown would ensure that the necessary organization and group action would be forthcoming. Is the view that workers will voluntarily support a trade union, and that any large group will organize a pressure-group lobby to ensure that its interests are protected by the government, any more plausible?"
-Mancur Olson, the Logic of Collective Action
"A small group is powerful in matters relating to a particular industry, because then it is normally the only organized force, but it is less formidable when questions which divide the entire nation are involved, for then it must take on organized labor and other large organized groups. The business community in the aggregate is for this reason not uniquely effective as a pressure group."
I really enjoyed this book as I always appreciate a different perspective that goes against conventional wisdom. There are some good ideas about how groups function based on their size that are worthwhile considerations for anyone contemplating getting something done in the public Arena.
Kept coming across Mancur Olson in passing and wanted to read something by him. Challenging reading for the illogical and non-economist (both of which I qualify as). Still enjoyed quite a few interesting ideas throughout but don't wish to give a rating.
I kind of read this book by accident. The author, Mancur Olson, is often mentioned by an author I like, Ashwin Parameswaran, on the topic of "crony capitalism." I saw this book in a used book store and picked it up. It turns out, however, that this particular book is completely unrelated to the work mentioned by Parameswaran. To me it is pretty much a garden-variety exposition of the economic problems associated with collective goods (though perhaps it was groundbreaking when published).