The Logic of Collective Action: Public Goods and the Theory of Groups, Second printing with new preface and appendix

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This book develops an original theory of group and organizational behavior that cuts across disciplinary lines and illustrates the theory with empirical and historical studies of particular organizations. Applying economic analysis to the subjects of the political scientist, sociologist, and economist, Mr. Olson examines the extent to which the individuals that share a common interest find it in their individual interest to bear the costs of the organizational effort. The theory shows that most organizations produce what the economist calls "public goods"—goods or services that are available to every member, whether or not he has borne any of the costs of providing them. Economists have long understood that defense, law and order were public goods that could not be marketed to individuals, and that taxation was necessary. They have not, however, taken account of the fact that private as well as governmental organizations produce public goods. The services the labor union provides for the worker it represents, or the benefits a lobby obtains for the group it represents, are public goods: they automatically go to every individual in the group, whether or not he helped bear the costs. It follows that, just as governments require compulsory taxation, many large private organizations require special (and sometimes coercive) devices to obtain the resources they need. This is not true of smaller organizations for, as this book shows, small and large organizations support themselves in entirely different ways. The theory indicates that, though small groups can act to further their interest much more easily than large ones, they will tend to devote too few resources to the satisfaction of their common interests, and that there is a surprising tendency for the "lesser" members of the small group to exploit the "greater" members by making them bear a disproportionate share of the burden of any group action. All of the theory in the book

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Editorial Reviews

Edward C. Banfield
There is now a considerable body of literature which attempts to apply economic analysis to political problems. In my opinion, Olson's is one of the most successful and provocative of these attempts. Olson's central insight is novel and illuminating to political scientists and he shows that by the use of it he can give familiar facts (about labor unions, farm organizations, and other interest groups) new meaning. I believe that his work is going to force the jettisoning of much of what has been said about interest groups and the revision of the rest. It should also have an influence on the many political scientists who work in the field of organization.
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Product Details

  • ISBN-13: 9780674537514
  • Publisher: Harvard University Press
  • Publication date: 1/28/1971
  • Series: Harvard Economic Studies Series, #124
  • Edition description: Revised Edition
  • Pages: 192
  • Sales rank: 291,115
  • Product dimensions: 5.36 (w) x 8.16 (h) x 0.55 (d)

Table of Contents


I. A Theory of Groups and Organizations

A. The purpose of organization

B. Public goods and large groups

C. The traditional theory of groups

D. Small groups

E. "Exclusive" and "inclusive" groups

F. A taxonomy of groups

II. Group Size and Group Behavior

A. The coherence and effectiveness of small groups

B. Problems of the traditional theories

C. Social incentives and rational behavior

III. The Labor Union and Economic Freedom

A. Coercion in labor unions

B. Labor-union growth in theory and practice

C. The closed shop and economic freedom in the latent group

D. Government intervention and economic freedom in the latent group

IV. Orthodox Theories of State and Class

A. The economists' theory of the state

B. The Marxian theory of state and class

C. The logic of the Marxian theory

V. Orthodox Theories of Pressure Groups

A. The philosophical view of pressure groups

B. Institutional economics and the pressure group—John R. Commons

C. Modern theories of pressure groups—Bentley, Truman, Latham

D. The logic of group theory

VI. The "By-Product" and "Special Interest" Theories

A. The "by-product" theory of large pressure groups

B. Labor lobbies

C. Professional lobbies

D. The "special interest" theory and business lobbies

E. Government promotion of political pressure

F. Farm cooperatives and farm lobbies

G. Noneconomic lobbies

H. The "forgotten groups"—those who suffer in silence


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  • Anonymous

    Posted September 22, 2001

    Problem of Free Rider

    Cost/Benefit When we look at cases of organizations like labor union, pressure group or firm, Even if members share the common interest, it doesn't guarantee they will act on that interest. To achieve the purpose, one should pay the cost. But 'a goal or purpose is common to a group means that no one in the group is excluded from the benefit or satisfaction brought about by it achievement.' So if one could get the benefit without cost, he would let others bear the burden. Public Good/Taxing: Everybody's business is nobody's business let's take example. The state provides public good like the defense, police protection, law system, which 'must be available to everyone if they are available to anyone'. It can't be free to provide those services. The burden is charged as tax. But tax evasion is as old as human history. It's the reason why the tax has been defined as 'compulsory payment'. Likewise 'collective good' of organizations cause the same free rider problem. Size matters: Individual acts on the function of cost and benefit: The lower cost to get the collective good, the more willing to bear the cost. The smaller is the size of group, the larger is the share of collective good one gets in relation to total cost. Even though only one member with greatest interest pays all the cost, he will do so as long as benefit exceeds cost. This kind of group can provide collective good without relying on coercion or incentive apart from the collective good itself. But without arranging the share of burden (group-oriented act), the amount of collective good can't be optimized (exploitation). 'Accordingly, the larger the group, the farther it will fall short of providing an optimal amount of a collective good.' Moreover, the larger is the group, the less likely noticeable is the effect of individual's contribution. So here the leviathan comes in: Coercion and incentive. Once there is the formal organizing, the larger the better, for it leads to lower cost to each. But organizing itself should be obtained at cost. 'These are the costs of 'communication among group members, the costs of any bargaining among them, and the costs of creating, staffing, and maintaining any formal group organization.' These costs put on the total cost of getting collective good. And it makes the supply of collective not optimized. This reinforces the need of coercion/incentive. Inclusive/Exclusive Group: If the nature of collective good is fixed (scarce) in supply, members doesn't resist to newcomers. In this case, members become competitor or rival to each other, for the availability of collective good is exclusive to each member. 'The firms in an industry would be an exclusive group when they sought a higher price in their industry by restricting output.' Here the monopoly is the ideal to participant. But in nonmarket situation, the opposite is true, for collective good is not fixed in supply. In other word, it's inclusive. In such a case, if permitted, the group tends to expand upto the point that benefit equals cost. When seeking lower taxes, or tariff, firms would make 'an inclusive group, and would enlist all the support they could get. Privileged/Intermediate/latent Group: Privileged group refers to the small group providing collective good for sure without organizing or coordinating. Intermediate group refers to the small group where nobody gets the benefit sufficient to motivate him to provide the good himself but it's not big enough to demotivate completely. Latent group refers to the large group where the problem of free riders is salient. Case Study-Unions are for collective bargaining: We take it for granted that labor union is by nature big organization. But contrary to common guess, the first labor unions in Britain and States began not as large, impersonal, metropolitan organizations (latent group) but as small, committed, local organizations (privileged group). It was better to be the privileged group with member's devotion and sacrifice (n

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  • Anonymous

    Posted February 1, 2009

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