A Theory of Collective Action [Mancur Olson]

Start Date: 12 April 2019

End Date: 13 April 2019

Goodreads link.

Source: Amazon India Kindle edition.

Notes:

  • The latest read in my attempt to go through an Econ 201 (501?) syllabus. After Elinor Ostrom, Deirdre McCloskey, Hirschman, and Adam Smith, this was next on the list. It’s insightful, but doesn’t have the same felicity with words as the earlier ones did.
  • The theory is so mathematical in nature that reading this inflight was not the best idea. I should have done it at leisure, with a pen and register next to me, so I could trace his graphs and equations myself. So it goes.

Specific passages that caught my attention:

Any group that must organize to obtain a collective good, then, will find that it has a certain minimum organization cost that must be met, however little of the collective good it obtains. The greater the number in the group, the greater these minimal costs will be. When this minimal organizational cost is added to the other initial or minimal costs of a collective good, which arise from its previously mentioned technical characteristics, it is evident that the cost of the first unit of a collective good will be quite high in relation to the cost of some subsequent units.

The basic theory.

The greater effectiveness of relatively small groups—the “privileged” and “intermediate” groups—is evident from observation and experience as well as from theory. Consider, for example, meetings that involve too many people, and accordingly cannot make decisions promptly or carefully. Everyone would like to have the meeting end quickly, but few if any will be willing to let their pet concern be dropped to make this possible.

I had never thought of meetings as a collective action problem. How insightful.

When the number of participants is large, the typical participant will know that his own efforts will probably not make much difference to the outcome, and that he will be affected by the meeting’s decision in much the same way no matter how much or how little effort he puts into studying the issues. Accordingly, the typical participant may not take the trouble to study the issues as carefully as he would have if he had been able to make the decision by himself. The decisions of the meeting are thus public goods to the participants (and perhaps others), and the contribution that each participant will make toward achieving or improving these public goods will become smaller as the meeting becomes larger.

A formal statement of what Parkinson did as satire. I think Olson did reference Parkinson.

Then, there was this short zinger about people working for status or recognition:

The existence of these social incentives to group-oriented action does not, however, contradict or weaken the analysis of this study. If anything, it strengthens it, for social status and social acceptance are individual, noncollective goods.

And:

It is in the nature of social incentives that they can distinguish among individuals: the recalcitrant individual can be ostracized, and the cooperative individual can be invited into the center of the charmed circle.

Of course, there is always the case where the actions of one individual end up affecting the reputation of their entire group – a halo or horns effect for caste or religion or nationality. I wonder which sociologists have written about that.

There is, however, one case in which social incentives may well be able to bring about group-oriented action in a latent group. This is the case of a “federal” group—a group divided into a number of small groups, each of which has a reason to join with the others to form a federation representing the large group as a whole. If the central or federated organization provides some service to the small constituent organizations, they may be induced to use their social incentives to get the individuals belonging to each small group to contribute toward the achievement of the collective goals of the whole group.

The large, “latent” group, on the other hand, always contains more people than could possibly know each other, and is not likely (except when composed of federated small groups) to develop social pressures that would help it satisfy its interest in a collective good.

On the incentives for unions to spread beyond only one employer:

Once a local union exists, there are, however, several forces that may drive it to organize all of its craft or industry, or to federate with other local unions in the same craft or industry. Market forces work against any organization that operates only in a part of a market. Employers often will not be able to survive if they pay higher wages than competing firms. Thus an existing union often has an interest in seeing that all firms in any given market are forced to pay union wage scales.

This seemed very poignant, when talking about how workers would not attend union meetings while complaining about low membership:

In fact the workers were not inconsistent: their actions and attitudes were a model of rationality when they wished that everyone would attend meetings and failed to attend themselves.
Then this, which will inevitably set up a 2×2 matrix:
The foregoing argument is not meant to label any government activity good or bad; it is intended instead to show that it is the provision of collective goods and services, not the public or private nature or other characteristics of the institutions that provide these services, that largely determines whether economic freedom must be curtailed.
And this, but I can’t remember any more why I found it insightful:
The consistent critic of anarchism must, however, attack with equal force all of those who suppose that large groups will whenever the need arises voluntarily organize a pressure group to deal with the state, or a labor union to deal with an employer. Bentley, Truman, Commons, Latham, and many of the pluralist and corporatist thinkers are fully as guilty of the “anarchistic fallacy” as the anarchists themselves. The anarchists supposed that the need or incentive for organized or coordinated cooperation after the state was overthrown would ensure that the necessary organization and group action would be forthcoming. Is the view that workers will voluntarily support a trade union, and that any large group will organize a pressure-group lobby to ensure that its interests are protected by the government, any more plausible?

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