Monopolies, market interdependencies and the logic of collective action: some critical comments on Mancur Olson's group theory

✍ Scribed by Hersch Fischler

• Publisher: Springer US
• Year: 1980
• Tongue: English
• Weight: 275 KB
• Volume: 35
• Category: Article
• ISSN: 0048-5829
• DOI: 10.1007/bf00140842

✦ Synopsis

Mancur Olson (1965) starts his inquiry into the logic of collective action with the def'mition of a group. A group is 'a number of individuals with a common interest' (Olson, 1965: 8). He shows that a common interest of a group means an interest directed toward a collective resp. public good for that group. Just like the group theory of politics he sees society composed of a large number of (sometimes overlapping) groups: i.e. farmers, workers, doctors, manufacturers, veterans, etc., each having its own group or common interest. With the help of the public good concept he analyzes when such groups will act in their special interest and obtains his meanwhile widely acknowledged results. Of particular interest is the result that the individuals of very large groups will not act on behalf of their common interest unless they are mobilized by selective incentives. For example the farmers have a common interest in subsidies but they will not act spontaneously on behalf of this interest because they are very many and each farmer therefore can only make imperceptibly small contributions toward the common goal.

Olson's analysis has a serious shortcoming. It departs from the wrong starting point: social or economic groups. This shortcoming can be shown very easily with the aid of the farmers example.

Subsidies to farmers are a collective good to farmers. However, market interdependencies make subsidies to farmers of interest to a larger number of people than just the, farmers themselves. Producers and dealers who sell production and consumption goods to farmers may further profit if the farmers obtain subsidies and the demand for these goods is strengthened thereby (partly because of income effects). Since they can not be excluded from these profits they together with the farmers have a common interest in the farmer subsidies. There may even be a large producer/dealer who has a very high proportion of the farmers for customers along with some * I want to thank Professor Mancur Olson and Professor Gordon Tullock for stimulating and helpful discussions of the arguments presented in this paper. Public.Choice 35 (1980) 191-195. All rights reserved.