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The Logic of Collective Action: Public Goods and the Theory of Groups is a book by Mancur Olson Jr. published in 1965. It develops a theory of political science and economics of concentrated benefits versus diffuse costs. Its central argument is that concentrated minor interests will be overrepresented and diffuse majority interests trumped, due to a free-rider problem that is stronger when a group becomes larger.
The book challenged accepted wisdom in Olson's day that:
The book argues instead that individuals in any group attempting collective action will have incentives to "free ride" on the efforts of others if the group is working to provide public goods. Individuals will not "free ride" in groups that provide benefits only to active participants.
Pure public goods are goods that are non-excludable (i.e. one person cannot reasonably prevent another from consuming the good) and non-rivalrous (one person's consumption of the good does not affect another's, nor vice versa). Hence, without selective incentives to motivate participation, collective action is unlikely to occur even when large groups of people with common interests exist.
The book noted that large groups will face relatively high costs when attempting to organize for collective action while small groups will face relatively low costs, and individuals in large groups will gain less per capita of successful collective action. Hence, in the absence of selective incentives, the incentive for group action diminishes as group size increases, so that large groups are less able to act in their common interest than small ones.
The book concludes that, not only is collective action by large groups difficult to achieve even when they have interests in common, but situations could occur where the minority (bound together by concentrated selective incentives) can dominate the majority.
Olson's original logic of collective action has received several critiques, based either on a different interpretation of the observations on minority interest representation, or on a disagreement on the degree of concentrated interest representation.
Lohmann [1] agrees with puzzling observations made by Olson, which she classifies as economic and political puzzles. Economic puzzles are cases of general welfare loss in favour of a minority benefit which is smaller in sum. An example she gives is a quota on sugar imports in the United States, which generates 2261 jobs at the expense of a general welfare reduction of $1,162 million (Hufbauer and Elliott, 1994). Then the implicit price for a job in the sugar industry is above $500,000, allowing for significant room for Pareto improvement. Political puzzles are cases where minority trumps majority. An example she gives is the rural bias in urbanized countries, such as the Common Agricultural Policy in the European Union.
Lohmann claims that Olson's free-rider problem is insufficient to explain these puzzles. Instead, she argues they are due to uncertainty (information asymmetry among actors) when special interest groups evaluate how political actors promote their interests. She states that everyone can be considered a special interest. Because everyone is (relatively) sure how well their interests are represented, they give more weight to their interest representation when evaluating political actors than to the general benefit. Lohmann argues that it could be politically viable to focus on separate narrow interests at the expense of general benefits.
Trumbull [2] rejects the observation by Olson and Lohmann that concentrated interests dominate public policy. He points out that historically, diffuse interests nearly always found ways to be represented in public policy, such as the interests of retirees, patients or consumers. Trumbull explains this with the role of legitimacy of interest groups that promote policies. He argues that diffuse interests have a legitimacy premium when they manage to mobilize, while concentrated interests are viewed with suspicion. He describes the concept of legitimacy coalitions, which are coalitions between state policymakers, social activists or industry to promote certain policy. By having to form a coalition, the interests are more broadly represented. An example of such a coalition is the post-war neo-corporatist system.
Marwell and Oliver [3] use mathematical and computational models to show that a number of the assumptions made by Olson are unrealistic, and if they are relaxed, the behavior of a system of rational agents changes dramatically. One assumption is that the "production function" of goods is linear. If this function instead accelerates, then a critical mass of early contributors can encourage a large number of others to contribute. Another assumption is that the cost of the good is a function of the size of the group that would benefit from it. For many public goods, this is not true, and Marwell and Oliver show that when the interest group is larger, there is a larger chance that it will include someone for whom it is rational to provide the good, either in part or in full.
James Q. Wilson argues that Olson's idea does not include all political constellations and thus cannot be a holistic solution in explaining collective actions. For this argument Wilson explains that costs and benefits are subcategorized in diffuse and concentrated costs and benefits. Olson's constellation in his point of view is merely such that deals with diffuse costs and concentrated benefits. [4]
Logrolling is the trading of favors, or quid pro quo, such as vote trading by legislative members to obtain passage of actions of interest to each legislative member. In organizational analysis, it refers to a practice in which different organizations promote each other's agendas, each in the expectation that the other will reciprocate. In an academic context, the Nuttall Encyclopedia describes logrolling as "mutual praise by authors of each other's work". Where intricate tactics or strategy are involved, the process may be called horse trading.
Autocracy is a system of government in which absolute power over a state is concentrated in the hands of one person, whose decisions are subject neither to external legal restraints nor to regularized mechanisms of popular control.
Public choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science". Its content includes the study of political behavior. In political science, it is the subset of positive political theory that studies self-interested agents and their interactions, which can be represented in a number of ways – using standard constrained utility maximization, game theory, or decision theory. It is the origin and intellectual foundation of contemporary work in political economy.
In the social sciences, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them or under-pay. Examples of such goods are public roads or public libraries or services or other goods of a communal nature. Free riders are a problem for common pool resources because they may overuse it by not paying for the good. Consequently, the common pool resource may be under-produced overused or degraded. Additionally, it has been shown that despite evidence that people tend to be cooperative by nature, the presence of free-riders causes cooperation to deteriorate, perpetuating the free-rider problem.
Collective action refers to action taken together by a group of people whose goal is to enhance their condition and achieve a common objective. It is a term that has formulations and theories in many areas of the social sciences including psychology, sociology, anthropology, political science and economics.
In philosophy, economics, and political science, the common good is either what is shared and beneficial for all or most members of a given community, or alternatively, what is achieved by citizenship, collective action, and active participation in the realm of politics and public service. The concept of the common good differs significantly among philosophical doctrines. Early conceptions of the common good were set out by Ancient Greek philosophers, including Aristotle and Plato. One understanding of the common good rooted in Aristotle's philosophy remains in common usage today, referring to what one contemporary scholar calls the "good proper to, and attainable only by, the community, yet individually shared by its members."
Rent-seeking is the act of growing one's existing wealth by manipulating the social or political environment without creating new wealth. Rent-seeking activities have negative effects on the rest of society. They result in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality, risk of growing political bribery, and potential national decline.
The tyranny of the majority is an inherent weakness to majority rule in which the majority of an electorate pursues exclusively its own objectives at the expense of those of the minority factions. This results in oppression of minority groups comparable to that of a tyrant or despot, argued John Stuart Mill in his 1859 book On Liberty.
Rebellion, uprising, or insurrection is a refusal of obedience or order. It refers to the open resistance against the orders of an established authority.
The concept of balancing derives from the balance of power theory, the most influential theory from the realist school of thought, which assumes that a formation of hegemony in a multistate system is unattainable since hegemony is perceived as a threat by other states, causing them to engage in balancing against a potential hegemon.
Club goods are a type of good in economics, sometimes classified as a subtype of public goods that are excludable but non-rivalrous, at least until reaching a point where congestion occurs. Often these goods exhibit high excludability, but at the same time low rivalry in consumption. Thus, club goods have essentially zero marginal costs and are generally provided by what is commonly known as natural monopolies. Furthermore, club goods have artificial scarcity. Club theory is the area of economics that studies these goods. One of the most famous provisions was published by Buchanan in 1965 "An Economic Theory of Clubs," in which he addresses the question of how the size of the group influences the voluntary provision of a public good and more fundamentally provides a theoretical structure of communal or collective ownership-consumption arrangements.
Mançur Lloyd Olson Jr. was an American economist and political scientist who taught at the University of Maryland, College Park. His most influential contributions were in institutional economics, and in the role which private property, taxation, public goods, collective action, and contract rights play in economic development.
Government failure, in the context of public economics, is an economic inefficiency caused by a government intervention, if the inefficiency would not exist in a true free market. The costs of the government intervention are greater than the benefits provided. It can be viewed in contrast to a market failure, which is an economic inefficiency that results from the free market itself, and can potentially be corrected through government regulation. However, Government failure often arises from an attempt to solve market failure. The idea of government failure is associated with the policy argument that, even if particular markets may not meet the standard conditions of perfect competition required to ensure social optimality, government intervention may make matters worse rather than better.
In economics, a privileged group is one possible condition for the production of public goods.
In social dynamics, critical mass is a sufficient number of adopters of a new idea, technology or innovation in a social system so that the rate of adoption becomes self-sustaining and creates further growth. The point at which critical mass is achieved is sometimes referred to as a threshold within the threshold model of statistical modeling.
A collective action problem or social dilemma is a situation in which all individuals would be better off cooperating but fail to do so because of conflicting interests between individuals that discourage joint action. The collective action problem has been addressed in political philosophy for centuries, but was most clearly established in 1965 in Mancur Olson's The Logic of Collective Action.
The collective action theory was first published by Mancur Olson in 1965. Olson argues that any group of individuals attempting to provide a public good has difficulty doing so efficiently. On the one hand individuals have incentives to "free-ride" on the efforts of others in certain groups and on the other hand the size of a group is of high importance and difficult to optimally determine.
Advocacy groups, also known as interest groups, special interest groups, lobbying groups, pressure groups, or public associations use various forms of advocacy in order to influence public opinion and ultimately policy. They play an important role in the development of political and social systems.
Networked advocacy or net-centric advocacy refers to a specific type of advocacy. While networked advocacy has existed for centuries, it has become significantly more efficacious in recent years due in large part to the widespread availability of the internet, mobile telephones, and related communications technologies that enable users to overcome the transaction costs of collective action.
The concept institutional sclerosis was first introduced by American economist and social scientist Mancur Olson, in his book The Rise and Decline of Nations, published in 1982. Olson argues that the number of interests groups within a society has a sclerotic effect on economic growth. It seeks to explain economic growth and performance of societies across different countries by focusing on the role of institutions - specifically interest groups.