The Rise and Decline of Nations : Economic Growth, Stagflation and Social Rigidities Paperback
by Mancur Olson
The years since World War II have seen rapid shifts in the relative positions of different countries and regions.
Leading political economist Mancur Olson offers a new and compelling theory to explain these shifts in fortune and then tests his theory against evidence from many periods of history and many parts of the world. "[T]his elegant, readable book...sets out to explain why economies succumb to the 'British disease,' the kind of stagnation and demoralization that is now sweeping Europe and North America...A convincing book that could make a big difference in the way we think about modern economic problems."-Peter Passell, The New York Times Book Review "Schumpeter and Keynes would have hailed the insights Olson gives into the sicknesses of the modern mixed economy."-Paul A.
Samuelson, Massachusetts Institute of Technology "One of the really important books in social science of the past half-century."-Scott Gordon, The Canadian Journal of Economics "The thesis of this brilliant book is that the longer a society enjoys political stability, the more likely it is to develop powerful special-interest lobbies that in turn make it less efficient economically."-Charles Peters, The Washington Monthly "Remarkable.
The fundamental ideas are simple, yet they provide insight into a wide array of social and historical issues...The Rise and Decline of Nations promises to be a subject of productive interdisciplinary argument for years to come."-Robert O.
Keohane, Journal of Economic Literature "I urgently recommend it to all economists and to a great many non-economists."-Gordon Tullock, Public Choice "Olson's theory is illuminating and there is no doubt that The Rise and Decline of Nations will exert much influence on ideas and politics for many decades to come."-Pierre Lemieux, Reason Co-winner of the 1983 American Political Science Association's Gladys M.
Kammerer Award for the best book on U.S. national policy
- Format: Paperback
- Pages: 288 pages
- Publisher: Yale University Press
- Publication Date: 01/07/1984
- Category: Macroeconomics
- ISBN: 9780300030792
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Review by Miro
Mancur Olson along with Milton Friedman and Michael Porter may well be one of the key figures of late 20th century economics. In some respects he is more universal in his outlook than the other two as his life's work represented in this book synthesises economics and politics in a sort of evolutionary life cycle view of societies.He probably wouldn't have liked to hear it but his ideas have a nice Taoist flavour. As a society becomes more successful, advanced and stable it's institutions become more complex and invariably start to turn the favourable stability into undesirable rigidity. Legislation starts to mushroom along with the people who create and administer it and somehow the society finds that the achievements of it's youth are no longer possible.He identifies various strands in this process of sclerosis, the main one here being the activity of special interest groups. As he puts it; "the larger the number of individuals or firms that would benefit from a collective good, the smaller the share of the gains from action in the group interest that will accrue to the individual or firm that undertakes the action. Thus, in the absence of selective incentives, the incentive for group action diminishes as group size increases, so that large groups are less able to act in their common interest than small ones."In normal language, this means that somebody lobbying government for the general good is not going to get as much as somebody lobbying for a small group. A fine example of this would be the farmers in the European Common Agricultural Policy. They gain a great deal in subsidies and controlled prices, managing to spread the cost over a large number of taxpayers and consumers. No individual shopper knows how much extra they are paying for their butter etc., it's not going to be very much anyway and they're not going to hire a lawyer to fight about it.However, keep this process going on long enough and apply it to enough goods and services and you find a magical growth in prices / regulation / administration / number of lawyers and government share of G.D.P. In a sense this is the old pre-civilisation tribalism in modern guise. "If you have the power use it. " The common-good on this reading has a very local definition and is blind to the good of the society as a whole. This seems to be a cultural problem and Olson sheds light on the uncomfortable dual nature of economic liberalism. On the one hand competition is good because it promotes efficiency/ choice and lowers prices but on the other it is an anti-society instinct that easily slides out of control.The book is heavy going since it has to try to be acceptable to the economic "science" theologians. Unfortunately for Olson it is still heretical to suggest that sociological observation or any of the useful established work in psychology has any relevence to economics.In fact the economics profession itself seems to have undergone the very proccess that Olson describes as the open flexible texts of Adam Smith have turned into a rigid mass of irrelevant mathematics.