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, Mancur 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 is in Chapter 1; the remaining chapters contain empirical and historical evidence of the theory’s relevance to labor unions, pressure groups, corporations, and Marxian class action.
The existence of a large group with a common interest does not automatically give rise to collective action. There must be an individual incentive to join in or there must be compulsion. This proposition, together with the notion that small groups are qualitatively different from large ones, forms the core of this extremely stimulating book… The range of phenomena it helps to explain and the number of existing ideas it overthrows are very considerable. Having set out his theory of groups and organizations…the author demonstrates its explanatory power by examining the growth of trade unionism, the concept of economic freedom, Marx’s class theory, orthodox theories of pressure groups, special interest groups and, lastly, the unorganized groups. Economic analysis is blended with political theory and sociology with great success. The result is an important contribution to social science.
Olson’s book is a significant and valuable contribution to the economist’s attempt to come to grips with organizational problems.
This superb little volume is worthy of the attention of all social scientists. It can lead to a healthy and challenging discussion and perhaps to a reappraisal of pressure groups in American society.
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.
- 198 pages
- 5-1/2 x 8-1/4 inches
- Harvard University Press
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