OF THE LOGIC OF COLLECTIVE ACTION
BY MANCUR OLSON
argument for liberty is not an argument against organization, which is
one of the most powerful tools human reason can employ, but an argument
against all exclusive, privileged, monopolistic organization, against
the use of coercion to prevent others from doing better. ~ F. A.
In his book, The Logic of Collective Action: Public Goods and the Theory
of Groups, Mancur Olson writes about how groups are formed. As an
economist, Olson investigates the economic incentives and disincentives
for group formation, especially political and trade organizations. His
conclusion is that individuals are led to act in a self-interested manner
that interferes with any desire to work toward a collective good.
Producers of a certain product have an interest in selling the product
for as high of a price as possible. It is in their collective good to
find ways to push prices and profits higher. An easy way to achieve higher
prices is to organize and establish set prices. However, the organization
of a trade group would require full participation of all makers of the
product within the market. If one producer refused to join the group and
sold the product for less money, that producer would come to dominate
the market. A group is unlikely to form because each individual producer
has a stronger interest in being the one who does not join and comes to
undersell the competition. There is a conflict between the individual
interests of the producers and their collective interest.
type of group is one that is seeking a benefit, but not selling. Collective
bargaining is an example Olson uses. Workers have an interest in unionizing
to drive up wages and force better working conditions. Non-joiners would
not endanger union members. However, non-joiners would gain the benefits
of the collective agreements. Consequently, each individual has an interest
in not joining but still receiving the benefits-becoming a free-rider.
Joining requires the use of resources. Why would someone join a group
when the benefits would be gained even without joining? Because so many
people would attempt to free-ride, the number of joiners would not be
significant enough to achieve the end goal.
The free-rider becomes a major obstacle, according to Olson, for the creation
of important groups. As a result, organizers seek rules that eliminate
the free-rider option. Legislation that requires union membership is a
common way to deal with free-riders. Another way to eliminate the free-rider
is to create selective incentives that individuals will want
but can only gain through membership. Selective incentives can be insurance
plans, magazine or journal subscriptions, or social pressure.
Some people object to coercive efforts, such as laws requiring union membership.
Such people claim that forced unionization violated their freedom. Olson
discounts that claim though, stating that forced unionization is no different
that forcing someone to be subject to military draft or to pay taxes for
public education. In fact, Olson believes that the only way to oppose
forced unionization is to claim unions are so harmful, or ineffective,
or unimportant that the country should not be concerned about their viability
nor tolerant of their privileges (p 90-91). The debate on
the right-to-work laws should center, not around the rights
involved, but on whether or not a country would be better off if its unions
were stronger or weaker, Olson wrote (p 89). However, there are
numerous policies the government could impose that would be efficient
and beneficial to America. The government could require a mandatory college
savings plan for parents above a certain income bracket, attendance at
civic events, and a myriad of other policies. Each would be beneficial,
but should the government require everything that is deemed beneficial?
Second, should the people be forced to relinquish all control over their
lives because a majority of the electorate has decided they would be better
Olson does make very convincing arguments about the difficulties in organizing
people. Certainly, many people do not want to invest resources into an
effort that they will gain the benefit of regardless of their effort.
Organizations do use selective incentives to lure members. The National
Education Association and National Rifle Association both use various
insurance plans, magazine subscriptions and special events to reward people
for membership. On the other hand, people seem to join for other reasons
at certain times. Prior to the 2000 Presidential election, the NRA successfully
raised membership substantially. While some may have joined for selective
incentives, it seems more likely that people joined for the lobbying efforts
against Al Gore who was known for supporting very strict gun control.
The Southern Baptist Convention has the Cooperative Program designed to
pool the resources of thousands of independent churches. The Cooperative
Program offers few selective incentives to these member churches. The
collective benefit is the ability for pooled resources to be used more
efficiently in achieving the related missions of these churches. However,
these individual churches do give up substantial control when they pool
resources. Some groups of churches have split off the Cooperative Program
and formed new groups, such as the Cooperative Baptist Fellowship, in
order to gain better control over spending. The Cooperative Program is
an example where individuals voluntarily join for a collective good, despite
losing individual control and gaining few selective benefits.
The Logic of Collective Action raises some important points in
the organization of groups. The book does not answer questions, though,
about how groups are initially formed. Neither does the book address any
circumstances, such as the Cooperative Program, that do not perfectly
fit in with Olsons theory.