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Mancur Olson

(1932—1998)


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(1932–98)

American economist with huge influence on political science. His first name was pronounced with a soft ‘c’. He wrote three big books—big in ideas although not in bulk. The most influential was the first, The Logic of Collective Action (1965). Olson pointed out that all lobbies aim to change policy, and a policy is, in the technical sense, a public good: it is jointly supplied (everybody gets it) and non‐excludable. Some policies are, indeed, more public than others: environmental or income‐tax policy affects everybody, whereas a tax break or protection for a particular industry benefits only those in that industry, although it is still a public good from the point of view of those in the industry. There is always a temptation to free‐ride on public goods. Almost always, the good will either be provided even if I do not contribute to the lobby for it, or will not be provided even if I do. Only in the case where the beneficiaries are few and the benefit per beneficiary large is it at all likely that my individual decision to contribute or not will make any difference to the chances of the lobby's success. Classical pluralists had argued that there were as many, and as intense, interest groups as there were interests, and that the interplay of those groups was the essence of democracy. Those groups that succeeded represented the largest and/or most intense interests, and therefore all was as it should be. Olson showed that this could not be so. Each lobby must overcome its own free‐rider problem. The fewer the potential members of the group, and/or the greater benefit per member from the desired policy, the fewer will be the free‐riders. Normally there are fewer producers than consumers in any industry, and among the producers, fewer capitalists than labourers. Therefore, expect trade associations to be the strongest lobbies; trade unions weaker; and consumers the weakest of all. In turn, therefore, expect policies to be biased in favour of producer interests such as industrial protection and against consumer interests such as free trade.

In The Rise and Decline of Nations (1982) Olson went on to argue that the older the traditions of free association in a polity were, the more ‘sclerotic’ would be its policies, because producer interests would have the strongest hold over policy. Therefore polities like Britain, the northern USA, Australia, and India were growing slowly, whereas those like Japan or Germany (whose special interests had been destroyed by war and conquest), the US south and west, or the newly industrializing countries of Asia were growing rapidly. When growth rates changed in the 1990s, with Anglo‐Saxon capitalism doing better than Rheinish or Asian capitalism, some said that Olson had got it wrong; others that policy‐makers had listened to Olson and broken up their producer‐group lobbies. Certainly, the UK, Australia, and New Zealand did so. In Power and Prosperity (2000), Olson shifted ground. He first showed that it is better to be ruled by a stationary bandit than by a roving bandit. Even a Stalin or a Saddam Hussein has a rational interest in allowing his citizens to continue to lay enough golden eggs to be taken in future years, rather than in plundering and moving on. And the wider the suffrage, the more ‘encompassing’ becomes the interest of the rulers in the wealth and growth of the polity they rule. So the fast‐growing countries are now those that have got good institutions, where investors have reasonable confidence that they will not lose their returns through default or expropriation. And the former Soviet empire was exposed as a place where, after Stalin's reign of terror ended, business could continue only by the cooperation of special interests, thus explaining its low or negative growth after the collapse of communism.

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Subjects: Politics.


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