The Logic of Collective Action

Citation

Olson, M. (1971). The Logic of Collective Action: Public Goods and the Theory of Groups (Rev. ed.). Harvard University Press.

Chapter Summary

The book is short: an introduction and six chapters in about 170 pages, preceded by a 1971 preface and followed by an appendix and an index; the preface and appendix belong to the revised edition. Its first publication was in 1965. The publisher states the plan plainly: all of the theory is in Chapter 1, and the remaining chapters contain empirical and historical evidence of the theory's relevance to labor unions, pressure groups, corporations and Marxian class action.

Introduction

A four-page opening that sets out the question the book takes up: to what extent individuals who share a common interest find it in their individual interest to bear the costs of organizing to pursue it.

Chapter 1: A Theory of Groups and Organizations

The theoretical core, and the longest chapter at nearly fifty pages. Its sections cover public goods and large groups, the traditional theory of groups, small groups, exclusive and inclusive groups, and a taxonomy of groups. The publisher summarises the central argument: most organizations produce public goods, goods available to every member whether or not he has borne any of the costs. Large private organizations therefore need special, and sometimes coercive, devices to obtain resources, just as governments need compulsory taxation. Small and large organizations support themselves in different ways. Small groups can act more easily, but tend to devote too few resources to their common interest, and "lesser" members tend to exploit the "greater" ones.

Chapter 2: Group Size and Group Behavior

A short chapter of about thirteen pages that follows up the role of size, with sections on problems of the traditional theories and on social incentives and rational behavior.

Chapter 3: The Labor Union and Economic Freedom

The chapter on labor unions, about thirty pages. Its sections discuss labor-union growth in theory and practice, the closed shop and economic freedom in the latent group, and government intervention and economic freedom in the latent group.

Chapters 4–5: Orthodox Theories of State and Class; Orthodox Theories of Pressure Groups

Two chapters that examine orthodox theories, against the background of the theory of Chapter 1. The first includes sections on the Marxian theory of state and class and on the logic of that theory. The second covers institutional economics and the pressure group (John R. Commons), modern theories of pressure groups (Bentley, Truman, Latham) and the logic of group theory.

Chapter 6: The "By-Product" and "Special Interest" Theories

The longest of the later chapters, about thirty-seven pages, named for the by-product and special-interest theories. Its sections take in labor lobbies, professional lobbies, the special interest theory and business lobbies, government promotion of political pressure, farm cooperatives and farm lobbies, non-economic lobbies, and "the forgotten groups", those who suffer in silence.

Appendix

A ten-page appendix, added with the 1971 edition.

Key Concepts

Chapter 1: The theory

• Public goods: goods or services available to every member of a group whether or not that member helped bear the cost.
• Large and small groups: groups that sustain themselves in entirely different ways, since small groups can act on common interests more easily.
• Exclusive and inclusive groups: a distinction treated in Chapter 1, which also offers a taxonomy of groups.
• Special and coercive devices: the means large organizations need to obtain resources when benefits go to all members.

Chapters 2–6: Tests and applications

• Social incentives: a source of motivation that Chapter 2 discusses alongside rational behavior.
• The forgotten groups: the title of the last section of Chapter 6, on those who suffer in silence.
• By-product and special-interest theories: explanations of how organizations serve members' interests in Chapter 6.

Critical Analysis

Strengths

• Compact and cumulative. The book is under 200 pages, and one chapter carries all of the theory. A reader can master the argument first and then watch it applied.
• Applications across organization types. The empirical chapters run through labor unions, Marxian class analysis, pressure group theory, and business, professional, farm and non-economic lobbies, so the theory is tested against very different kinds of group.
• Discipline-crossing aims. The publisher presents it as a theory of group and organizational behavior that cuts across disciplines, applying economic analysis to subjects of the political scientist and sociologist.
• Clear logic, easy to extend. The argument rests on a few terms that readers can apply to cases of their own, such as an interest group, a union or a campaign.

Limitations

• Contested assumptions. Gerald Marwell and Pamela Oliver argue that Olson assumes a linear production function for goods and that cost depends on group size, and that where those assumptions fail a critical mass of early contributors can stimulate wider participation.
• Not the whole of political arrangements. James Q. Wilson argues that the model mainly describes cases of diffuse costs and concentrated benefits, and Susanne Lohmann and Gunnar Trumbull offer different explanations of why concentrated interests prevail or fail to.
• A mid-century evidence base. The empirical chapters concern labor unions, farm and business lobbies and the pressure-group literature of the time, and later organizations and movements are not covered.
• Narrow scope. The evidence concerns organizations such as unions and lobbies; readers interested in other kinds of collective action must look to later literature.

Where It Fits in the Course

Olson's book is the shortest and the oldest in the political economy list, and a natural first reading for a unit on interest groups and collective action. Capitalism: A Very Short Introduction is a short non-technical introduction for readers with no economics background, and International Political Economy and Comparative Political Economy are textbooks. Olson supplies a theory of why shared interests do not automatically produce organization, which can be read against the textbooks' discussion of interests.

Political Economics by Persson and Tabellini treats special-interest politics in a formal modelling framework, so Olson's verbal argument is a useful preparation for it. Varieties of Capitalism is an edited volume that treats the firm as the central actor, a different perspective on organized interests.

How to Use This Book

It is for students of political economy, political science, sociology and economics who want the original statement of the free-rider problem. No technical prerequisites are needed beyond comfort with a sustained argument.

A practical plan:

• Core: the introduction and Chapter 1, then Chapter 2 on size. These contain the theory and can be read in one or two sittings.
• Applications: read Chapter 3 on unions and Chapter 6 on lobbies selectively, choosing the type of group relevant to your course; Chapters 4 and 5 are most useful if you are interested in Marxian or pluralist theories of groups.
• Appendix: the 1971 addition, worth checking after Chapter 1.
• Apply it. Choose a group such as a trade association or a campaign, identify the collective good it seeks, ask who benefits whether or not they contribute, and what devices the group uses to obtain resources.