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The Logic of Collective Action: Public Goods and the Theory of Groups

Mancur Olson

3.98 · Rating details · 795 ratings · 36 reviews

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 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. ...more

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Paperback, 186 pages

Published January 1st 1971 by Harvard University Press (first published 1965)

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Oct 24, 2013 Patrick rated it it was ok

The Logic of Collective Action

JDN 2456594 PDT 15:55.

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 thenin 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 ...more

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Sep 23, 2009 Lobstergirl rated it really liked it · review of another edition

Recommends it for: Desiderio da Settignano

Shelves: own, economics

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 ...more

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Oct 29, 2015 أميرة هاني rated it it was ok

Shelves: social-theory

Olsons main argument is: Individuals will not act in the interest of a group unless theres 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 ...more

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Feb 26, 2009 Jon rated it it was amazing

Brain food.

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 ...more

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Jan 02, 2013 Nils rated it it was amazing

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.

NOTES

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 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.

NOTES

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. ...more

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Jan 06, 2020 Ben rated it really liked it

Highly informative, quite dated. Main points can be gleaned in initial chapters.

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Apr 23, 2019 Dio Mavroyannis rated it it was amazing

Shelves: wtr-gen-math, wtr-econ-law, wtr-economics

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 ...more

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Dec 06, 2017 Jeremy rated it really liked it

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 ...more

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Jul 12, 2014 Mark Uberuaga rated it liked it

Shelves: saass-books, foundations-of-strategy

Mancur Olsens 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 ...more

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Mar 19, 2019 Don Lim rated it really liked it

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 ...more

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Jan 10, 2009 Jeff rated it really liked it

Shelves: economics, political-science, classic-works

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 ...more

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Jul 23, 2014 Ian Colby rated it did not like it

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.

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Sep 23, 2014 Kendra rated it liked it

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.

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Jun 21, 2012 JFN marked it as abandoned

Read the first few chapters for a project I'm working on and when I got what I was looking for I stopped. No time to go on after I'd gotten what I needed. Very thought provoking though.

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Mar 09, 2016 Greg rated it liked it

Shelves: international-relations

This is a core text in the economics of labor movements and political parties.

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Jul 03, 2007 B.lyon rated it really liked it

this book made a really good point but I forgot what it was - please remind me

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Jan 22, 2016 Lauren added it

Required Reading for Intro Political Science. Interesting... and that 's about it.

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Dec 29, 2013 Sean Rosenthal rated it it was amazing

Shelves: favorite-nonfiction, five-stars, non-fiction, economics

Interesting Quotes:

"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 ...more

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Apr 04, 2018 Rob rated it it was amazing

I was thinking of joining a professional journalists and/or a professional historians organization, but now I'm not so sure that's a good idea.

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Apr 15, 2013 Arthur Kyriazis rated it it was amazing

Mancur Olson is essential reading for anyone studying economics or any of the social sciences. He stresses that GROUP action and COLLECTIVE action is the motive force of society, and not the actions of individuals. Thus, history is not determined by individuals, but by groups and collective forces. The relationship between Prof. Olson's theories and welfare economics are obvious, as well as the relation to political science, sociology and just about everything else. Essential reading.

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Dec 17, 2012 Nick Klagge rated it it was ok

Shelves: economics

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).

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Jul 23, 2012 Nate Huston rated it liked it

Read only a portion of this book. Generally, author's thesis is that the larger a group is, the less likely it is to pursue a common good unless additional incentives are offered. This is for a number of reasons, but stems mostly from the fact that more members means less "bang" for each "buck" spent in pursuit of the common good.

This hurt my brain a little bit.

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Feb 20, 2013 Amber rated it liked it

Shelves: phd-program, library-vegas

3.75 stars
Good look at the motivations people do, or do not have, to have to create groups. I had to play catch up, as the book starts out super strong, but their are some interesting points throughout the book.

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Jul 23, 2010 Alex Brown rated it liked it

This book delves into some thought provoking questions, such as why rational actors engage in economic activity that is of no direct benefit to them, and why groups refuse to act collectively even when it is in everyone's best interest.

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Sep 27, 2008 Wendy rated it really liked it

Recommends it for: doctoral students in public administration

Recommended to Wendy by: a professor

Shelves: doctoral-readings

An interesting look at the dynamics of group behavior and effectiveness, it describes the dynamics of small groups and large, and gets it right. Olson's description of how groups work is right on the money in my experience. While not exactly entertaining, it is illuminating.

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Apr 07, 2011 Ajay rated it liked it

Shelves: economics

I'm told that this is the driest book Olson wrote, I'm really hoping that's true, because I have Rise and Decline of Nations as well as Power & Prosperity waiting for me in the next couple of weeks. It was informative though, and he does explain his theory well.

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Sep 28, 2008 Eleanore rated it really liked it

A classic example of the very best scholarship that turns conventional logic on its head and opens up a whole new field of approaches. Absolutely essential to anyone working with policy or political theory.

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Aug 25, 2007 Chris rated it it was amazing

Recommends it for: Anyone who wants to understand group behavior.

Shelves: politicalscience

Best book ever written about group behavior, which means it's the best book ever written about politics.

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Jul 18, 2012 Rohan added it

...It was...interesting. common sense though. Big groups, harder to please but more powerful. Small groups, easy to please less powerful.etc etc.

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Apr 12, 2010 Bradley rated it it was amazing

Shelves: economics

This is a book you MUST read.

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About Mancur Olson

Mancur Olson

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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 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. ...more

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