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

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According to Mancur Olson, one of the world's leading experts on the dynamics of collective action, social and economic groups generally form to promote collective goals in respect to personal interests. Ideally-sized groups work well only because its overall interests can be shown to mesh with those of the individual. On the other hand, large groups tend to function less cohesively because the individual does not have the same opportunity to realize personal gain or recoognition as in a small group. Small groups tend to be more able to involve the interests of the individual in defining the good of the whole, but, at the same time, less able because of financial restrictions to offer financial security to its members. As you can see, Olson has presented a number of trade-offs for his reader to consider when settling the issue of what degree of collective action best suits our economic needs. By the way, being a lone-wolf is not an option because according to Olson's theory, there is no social or economic benefit to be derived from standing alone. Somewhere, somehow we, as members of the human race, must attach ourselves to a group; it all comes down to how comfortable one is in relation to the size of the organization and personal benefit to be derived from it. When reading this book, I thought of Hillary Clinton's present position within the Democratic Party. Using some of Mancur Olson's observations, it might be said that egotistically, Hillary and Bill has grown too big for the party to handle. Though she wields consider influence within its ranks, many Democrats are starting to resent her influence as being inordinate. A collective action by a dominant subgroup called the Obama camp is clamoring for her to leave the field and surrender the nomination to their champion. According to Olson, such a dynamic of inner group dissatisfaction and turmoil often happens when its numbers become too large and its membership too active. As proof of that, which of the two main parties has been actively signing up new members to the fold? Of course the Democrats, and very new member enlisted becomes a potential delegate for either candidate. I would go one step further and suggest that collective action works as long as people work together in harmony or step aside and let a certain subgroup take over in the interests of the whole. If neither of these scenarios work, the group effort becomes fractured, which is where I think the Democrats might be heading before too long if they can't, at least, agree to disagree. For the Republicans, the story is slightly different. There is no evidence of unhappiness in the ranks but there is, in its place, a palpable lack of enthusiasm and optimism. I highly recommend this little book for what it says about the irrefutable logic of how groups of any size work in relation to the needs of the individual.

In this influential work, Mancur Olson is dismissing the 'classical' group theories, as he calls them. Rational individuals will rarely contribute to a common (or collective in the economics-lingo) good, because their contribution will be insignificant and the good will be produced whether the individual provides the good or not. With his stringent logic, the late Olson reminds his readers that groups of all kinds consist of individuals, and that these individuals usually follow there own interest, which not necessarily correspond with the organization's.

The book's explanatory powers are tremendous. Why large groups very rarely if ever are able to organize, and at the same time why some small groups exercise extraordinary amounts of power is Olsons main point of interest. In the very interesting last chapter he describes which features an organization, be it a farmer union, a labor union, a profession lobby or a special interest group, must inhibit to attain members.

The best trait of the book (at least for this reviewing economist) is the persuasive logic with which the arguments are hammered home, and the instructive examples that are used to illustrate the point just made. One little objection should be Olson's (human) tendency to arrogance when he is most pleased with his own conclusions. However: still an excellent read, 40 years after it's first printing.

A very short book that lays out, well, the logic of collective action very effectively. The counterintuitive fact that the smaller lobby groups tend to dominate the wider public is mechanically explained, and once you turn your mind to it, a lot of what goes on in politics becomes much clearer measured against Olson's theory.

This book is based on Olson's Ph.D. dissertation in 1963 at Economics Department of Harvard entitled 'A General Theory of Public Goods.' So, this is the book written 40 years ago, but I think still valuable, or at least very interesting.
You can learn what public good is and why it is not provided (or provided only by government). But textbooks do not explain what the difference is between small and large groups in terms of provision of public goods. This book explains it in a way that is understandable to people with minimal knowledge on economics.
If you are interested in questions like: Why do many people write a book review for Amazon.com without any monetary compensation?; Why do many people contribute to development of free software?; or Why DO your roommates clean a shared living room (= public goods)?; this book is worth your time and money.
Olson wrote an article entitled 'An Economic Theory of Alliances' with Richard Zeckhauser in 1966. If you would like to know only his theory and are not interested at all in how he applied it to many examples, I think this article is enough for your purpose.
Economist Todd Sandler wrote a book titled 'Collective Action: Theory and Applications' in 1992. Mancur Olson wrote a forward to this book, saying that the book is very well written on the same topic of 'Logic of Collective Action.' So if you are interested in recent development in this area, it would be time-efficient to read this Sandler's book.

Mancur Olson's The Logic of Collective Action is one of the best arguments I have read on the theory of groups. Given its age (it was originally written in the 1960s), it does not include much of the later scholarship on the subject.

However, it is a great introduction to collective action, as the basic argument has not changed: groups in which the benefits from collective goods cannot be denied to people are very difficult to organize. Organization will more lilkey come about when there is one (or a small number of) individual whose cost of action is lower than his own expected benefits; this leads to an exploitation by the small of the large, which is an interesting and counterintutive situation.

Olson provides a wide array of examples, which are of course old but nonetheless relevant. Examples include farming organizations, trade unions, business pressure groups, medical associations, etc. Overall, I found this book to be very interesting and easy to read, as the economics hardly ever go beyond basic math. For people who like rational arguments, it will be a pleasure to read this. The most interesting portion of the book, in my opinion, is the author's argument why Marxism does not work in practice in the way that Marx predicted.

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 (noncollective good cf. Owen), for it launched in hostile environment. But once a local union exists, a few factors drive it to organize the whole industry and to be large, national union.
1. In market economy, employers should compete each other, so they can't survive with higher wage.
2. Employers could find source of strikebreakers, were industry-wide organization.
But when it comes to large, national union, there should be the problem of free rider. Workers can't hate collective good like wage raising, better work condition, job security. But the strike, weapon to get it, means the cost, and that, strikebreakers are legally free to cross picket line and would enjoy better paying than ever. And bargaining with employer cannot help being collective not individual or restricted to union member. So here comes the compulsory membership i.e., closed shop or union shop. 'Compulsory membership and picket lines are therefore of the essence of unionism'. This explains away why the early history of union was flooded with violence between/among workers and employers. The decline of labor union in States could be illuminated in the same way; 'No Closed Shop'. Without coerced participation, there is no means to support the union. For individual efforts wont change the whole picture. To attract members, unions relied on noncollective benefit such as insurance, welfare benefit, seniority rights. But the advent of welfare state deprived them of incentive to offer.

It continually amazes the curious mind how few books are written about important matters. It would seem groups are a fecund area for study, a kind of natural playground for better minds, but this is not the case.

'The Logic of Collective Action' is one of the thankfull exceptions to this rule. Although now somewhat dated in discussions of labor matters as a whole, I found this book to be nearly dead on in its critiques of larger groups, especially on point of larger socialist ideas concerning the proper workings of groups. The discussion on when and where groups fail is one of perfect Voltairian pitch- measured, intelligent, thorough, and agressively objective.

Although a left-wing economist, everyone from a a free-marketer to a marxist and everywhere in between can find solace in the even handedness and range which Olson rangfes his examples. He appears to have read every significant book and thought ever produced on structural matters from the range of economists open to him at the time. This is something of a marvel of a feat considering the disrepute objective scholarship has taken recently.

Comparative economics should start with this book.

This is not the first Mancur Olson's book i have read (the other was an spanish translation of "The Rise and Fall .."). Mancur Olson seems to have the idea that economics provides concepts and methods to explain most of the social phenomena and social institutions. Like Gary Becker, he faces the risks that arise when an specific core of concepts developed to explain some specific social problems, about markets and firms for instance, are applied to other topics. The result is a new approach to the explanation of association-making problem that provides, too, more concepts for empirical research. Sociologists and other social scientists should not feel this kind of proposals as an "invasion". Economics is a social science too, an some developments from other social sciences could become part of this one (against the fans for, only, mathematics and econometrics).

The cases studied at the second part of the book - taken from the american history - suggest that his theory (explained in the first part), what is a subtle derivation taken from the neoclassical economics, could have an empirical proof.

The followers of theses ideas are expecting other scholars could contribute with a complete empirical study, based on this theory. I belong to this group. By the way, i will look for these studies in Amazon.com.

While this is an excellent book on group theory, it lacks sufficient empirical evidence supporting the conclusions the author comes to. Comes to astoundingly simple conclusions through the weirdest contortions...

I once read that Olson was on the short list of people being considered for the Nobel Prize at the time of his death. Certainly, this list is not so short: at least three of my college professors were rumored to be.... Enough of that, though....

This work takes a simple premise and expands on it to explain processes that at the outset seem contradictory. Organisations exist, in economic logic, to seek either economic rent or ideological satisfaction. Olson in this book works through organisational logic and explains group behavior in a clear, concise fashion. This behavior influences economic performance and politics at all levels.

Moreso than other books which in part relate to the same areas (including Olson's the Rise and Decline of Nations and a few by Douglass North) this is THE key text for this issue, and a must read for anyone who is into political economy.