Mancur Olson died last month, but I confess there was a time when I thought he’d been dead for centuries. I was taking a freshman course at the University of Chicago. Our reading list winter quarter included Aristotle’s Politics, Hobbes’s Leviathan, Locke’s Treatises, Burke’s Reflections — and a book by Mancur Olson called The Logic of Collective Action. When a writer is in such company, you assume that he’s long since passed into some pantheon. So it was something of a shock when I learned that Olson was still kicking, and still producing books.
In fact, Mancur Olson (it’s pronounced “mansir”) was at the time in the middle of a distinguished career in the economics department of the University of Maryland. He was born in 1932 on a farm in North Dakota, and he retained in his writing a spare and precise tone appropriate to his upbringing. There is little artful narration in his books, but once he got started on a train of thought, he pursued it with mathematical rigor to the very end.
I’m sure he would never have claimed that The Logic of Collective Action, which was published in 1965, belonged up there with Aristotle and Hobbes, but it was a useful book to assign to college freshmen because it takes an obvious feature of the landscape and makes you think about it very hard. Olson was writing at a time when many scholars and laymen assumed that people have an instinct to join groups. If all the members of a particular group have a common interest, it was then assumed, they will pursue that interest. Folks get together in different factions, and the result is interest-group democracy.
Olson argued, however, that joining groups is rational, not instinctive; forming groups is hard, not easy; and keeping groups together is problematic. For example, individuals in a group have an interest in seeing their group succeed, but they also have an interest in not paying the costs that lead to success. It would be nice if the Anti-Tax League reduced my tax burden. But it’s not worth it for me to send in $ 250 to the Anti-Tax League, because that money would actually make very little difference to the whole cause, while the benefits, if the organization succeeds in reducing tax rates, will accrue to me whether I donate or not. Olson pointed out that small groups, on the other hand, don’t have as much of a free-rider problem. They find it easier to remain focused and active than large groups, which tend to fall apart unless the leaders are able to coerce the members. The result in the real world is that when small groups go up against big diffuse groups, the small groups often win. The arugula growers who want a subsidy get it, to the detriment of common taxpayers and consumers who are not well enough organized to stop them. Thus, special-interest sinecures gradually build up over time.
Like a lot of public-choice theory, Olson’s points seem obvious once he’s made them. But somehow they had been neglected until he came along. Olson went on to apply his own logic in a 1982 book called The Rise and Decline of Nations. He started with a series of observations about European economies after World War II. Olson noticed the obvious: that the countries badly damaged by World War II, notably Germany, thrived after the war, while Britain, presumably a victor, did not. His theory was that in stable nations special-interest groups grow like carbuncles on the national economy, gradually weighing it down with inefficiencies, subsidies, and sinecures. In countries like Germany, by contrast, the trauma of defeat had obliterated all the special arrangements — Olson called them “distributional coalitions.” Unencumbered, these countries could adopt new technologies more quickly, allocate resources more efficiently, and govern more effectively.
Olson was not merely saying that the governments in stable democracies get too big over time. He noted that the postwar German and French governments were not necessarily less intrusive than Britains, and that Britain’s decline actually began in the late 19th century, when its government was quite small. Distributional coalitions can afflict private arrangements just as surely as public ones. Nor was he saying that the government that moves most decisively is the most efficient. He argued that the Swiss have maintained high growth rates because their government is so cumbersome. Even the special interests have trouble getting measures passed. At the end of his book, Olson emphasized that he was not a pure free marketeer. He appreciated the power of markets, but he did not believe that the government that governs least governs best: “There often will not be competitive markets even if the government does not intervene. The government is by no means the only source of coercion or social pressure in society.” Olson paid homage to Milton Friedman, but also argued that recent economic history does not always support the free-market view. Some laissez-faire nations achieve only low growth rates, while more dirigiste nations show higher growth rates.
Nonetheless the policy implications of Olson’s work — which he was hesitant to draw — clearly bolster those who want to reduce the size and intrusiveness of government. In 1994, Jonathan Rauch wrote a compelling book called Demosclerosis that applied Olsons logic to the American context. Rauch showed how distributional coalitions — lobbyists, special interests, entitlements, and so on — have been accumulating in Washington and strangling democracy.
Recent history certainly bolsters the Olsonian logic. The Asian nations, after a period of phenomenal growth, seem to have become hobbled by accumulated nepotism, special-interest subsidies, and rigidities they allowed to build up in their economies. Western Europe has not maintained its rapid growth and now slogs along with high unemployment. Britain was stagnant until Margaret Thatcher disturbed public and private rigidities, and now that nation flourishes. In the United States, the situation is bifurcated. The economy thrives. Perhaps the downsizing trend of the 1980s swept rigidities away. New and youthful sectors in places like Silicon Valley are relatively unencumbered and drive economic growth. But the American political system remains bogged down with rigidities and distributional coalitions. In 1995, when they seized control of Congress, the Republicans had a once-in-a- generation chance to smash through all that, but the forces of the status quo proved too powerful, and the victorious Republicans themselves didn’t know where to focus their energy.
Maybe if they had read Olson more carefully they would have realized that the real threat to American eminence is not simply the size of government. It is the distributional coalitions. It is the rigidities and special interests, both public and private, that clog up American life. They wouldn’t have gone for all that simple-minded government bashing. They would have focused their assault on the special arrangements (including the ones that favored their own people). They also might have realized that sometimes only government is powerful enough to smash special arrangements that have evolved in the private sector.
Mancur Olson is still worth reading first of all because he reminds us that nations do decline and that America, for all its current prosperity, will eventually lose the status of top dog. In the 1970s and ’80s, there were a lot of bogus declinists — Paul Kennedy worrying about imperial overreach, a slew of Asia specialists trumpeting the Pacific century — but that doesn’t mean it is silly to worry about decline. More important, Olson reminds us that America’s preeminence rests on its ability to be dynamic and flexible, not on whether the federal budget happens to be at 20 or 25 or 30 percent of GDP He was a remarkably clear and thoughtful economist. On reflection, I am amazed that a contemporary writer so sensible ever got assigned to college freshmen.
David Brooks is a senior editor of THE WEEKLY STANDARD.
