Mancur Olson
Encyclopedia
Mancur Lloyd Olson, Jr. (ˈmænsər or ˈmæŋkər; January 22, 1932 – February 19, 1998) was a leading 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
, 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, only a benefit reserved strictly for group members will motivate one to join and contribute to the group. This means that individuals will act collectively to provide private good
s, but not to provide public good
s.
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.
To honor Olson's many contributions to the fields of Economics and Political Science, the American Political Science Association
introduced the Olson Award to the best PhD dissertation in Political Economy.
Social Scientist
Social Scientist is a New Delhi based journal in social sciences and humanities published since 1972....
who, at the time of his death, worked at the University of Maryland, College Park
University of Maryland, College Park
The University of Maryland, College Park is a top-ranked public research university located in the city of College Park in Prince George's County, Maryland, just outside Washington, D.C...
. Among other areas, he made contributions to institutional economics
Institutional economics
Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the...
on the role of private property
Private property
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...
, taxation, public goods, collective action
Collective action
Collective action is the pursuit of a goal or set of goals by more than one person. It is a term which has formulations and theories in many areas of the social sciences.-In sociology:...
and contract rights in economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
.
Olson focused on the logical basis of interest group membership and participation. The reigning political theories of his day granted groups an almost primordial
Primordialism
Primordialism or perennialism is the argument which contends that nations are ancient, natural phenomena.Primordialism can be traced philosophically to the ideas of German Romanticism, particularly in the works of Johann Gottlieb Fichte and Johann Gottfried Herder. For Herder, the nation was...
status. Some appealed to a natural human instinct for herding
Herding
Herding is the act of bringing individual animals together into a group , maintaining the group and moving the group from place to place—or any combination of those. While the layperson uses the term "herding", most individuals involved in the process term it mustering, "working stock" or...
, others ascribed the formation of groups that are rooted in kinship
Kinship
Kinship is a relationship between any entities that share a genealogical origin, through either biological, cultural, or historical descent. And descent groups, lineages, etc. are treated in their own subsections....
to the process of modernization
Modernization
In the social sciences, modernization or modernisation refers to a model of an evolutionary transition from a 'pre-modern' or 'traditional' to a 'modern' society. The teleology of modernization is described in social evolutionism theories, existing as a template that has been generally followed by...
. 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
The Logic of Collective Action
The Logic of Collective Action: Public Goods and the Theory of Groups is a book by Mancur Olson, Jr. first published in 1965. It develops a theory of political science and economics of concentrated benefits versus diffuse costs.-Overview:...
, 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, only a benefit reserved strictly for group members will motivate one to join and contribute to the group. This means that individuals will act collectively to provide private good
Private good
A private good is defined in economics as "an item that yields positive benefits to people” that is excludable, i.e. its owners can exercise private property rights, preventing those who have not paid for it from using the good or consuming its benefits; and rivalrous, i.e. consumption by one...
s, but not to provide public good
Public good
In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
s.
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
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
; 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
Calmfors-Driffill hypothesis
The Calmfors–Driffill hypothesis is a macroeconomic theory in labour economics that states that there is a non-linear relationship between the degree of collective bargaining in an economy and the level of unemployment...
of collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
.
In his final book, Power and Prosperity, Olson distinguished between the economic effects of different types of government, in particular, tyranny, anarchy
Anarchy
Anarchy , has more than one colloquial definition. In the United States, the term "anarchy" typically is meant to refer to a society which lacks publicly recognized government or violently enforced political authority...
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
Civilization
Civilization is a sometimes controversial term that has been used in several related ways. Primarily, the term has been used to refer to the material and instrumental side of human cultures that are complex in terms of technology, science, and division of labor. Such civilizations are generally...
, paving the way for democracy, which improves incentives for good government by more closely aligning it with the wishes of the population.
To honor Olson's many contributions to the fields of Economics and Political Science, the American Political Science Association
American Political Science Association
The American Political Science Association is a professional association of political science students and scholars in the United States. Founded in 1903, it publishes three academic journals...
introduced the Olson Award to the best PhD dissertation in Political Economy.
Selected works
- The Logic of Collective Action: Public Goods and the Theory of Groups, Harvard University Press, 1st ed. 1965, 2nd ed. 1971. Description and chapter-previews links, pp. ix-x.
- The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities, Yale University Press, 1982. Description and chapter-preview links.
- Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships, Oxford University Press, 2000. Description and chapter-preview links.
- "The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force," (with Martin C. McGuire) in The Journal of Economic Literature, 1996, 34(1), pp. 72-96.