REVIEW OF THE LOGIC OF COLLECTIVE ACTION
BY MANCUR OLSON

“The 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. Hayek

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.

Another 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 off unionized?

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 Olson’s theory.