Unit 1.2- Olson´s Paradigm

Question 1

Before Olson’s paradigm, theory of groups (american pluralism) stated that:

Answer 1

If everyone in a group (of any size) has common interests, then they will act collectively to achieve them (we are rational and selfish); and
in a democracy, the greatest concern is that the majority will tyrannize and exploit the minority.

Question 2

The main idea:

Answer 2

Olson argued instead that individuals in any group attempting collective action will have incentives to “free ride” on the efforts of others if the group is working to provide public goods.
Individuals will not “free ride” in groups that provide benefits only to active participants.

Indeed unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational, self-interested individuals will not act to achieve their common or group interests.

In other words, even if all of the individuals in a large group are rational and self-interested, and would gain if, as a group, they acted to achieve their common interest or objective, they will still not voluntarily act to achieve that common or group interest.

Question 3

The free-rider problem

Answer 3

In large groups, each individual may recognize that while they would benefit from the group’s success, their personal contribution to achieving that goal is relatively small.

Therefore, they may reason that if they do not contribute, the group may still succeed without them, and they can still enjoy the benefits without any cost or effort on their part. This rational calculation leads individuals to refrain from acting, expecting others to carry the burden of achieving the group’s objective.

Question 4

For collective action we need more than rationality and self-interest:

Answer 4

1. Coercion: Forcing individuals to contribute to the group’s goal (e.g., through laws or regulations).
2. Selective incentives: Offering additional rewards or benefits to those who participate, which do not apply to those who do not contribute.
3. Small group dynamics: In smaller groups, individuals may feel more responsibility and have greater influence, making them more likely to act in the group’s interest.

Question 5

Public goods are:

Answer 5

• non-excludable (i.e. one person cannot reasonably prevent another from consuming the good) and
• non-rivalrous (one person’s consumption of the good does not affect another’s, nor vice versa).
  In the example of the Book Reade

Question 6

Tyranny of the minority

Answer 6

In the presence of selective incentives, a small, highly motivated subgroup within the larger group can become highly influential. This minority, driven by concentrated incentives, might work diligently to achieve the collective goal, potentially dominating the decision-making process or influencing the outcome. Their focused effort, fueled by the selective incentives, allows them to achieve results that align with their interests, even if the broader majority remains passive or fragmented.

Question 7

3 types of groups:

Answer 7

1. Latent (large) groups
2. Privileged groups
3. Intermediate groups

Question 8

Latent groups:

Answer 8

If one member does or does not help provide the collective good, no other member will be significantly affected and therefore none has any reason to react. They have no incentive to act to obtain a collective good because, however valuable the collective good might be to the group as a whole, it does not offer the individual any incentive to pay dues to any organization working in the latent group’s interest, or to bear in any other way any of the costs of the necessary collective action.

Only a separate and “selective” incentive will stimulate a rational individual in a latent group to act in a group-oriented way.

Question 9

Privileged groups:

Answer 9

Each of its members, or at least some one of them, has an incentive to see that the collective good is provided, even if he has to bear the full burden of providing it himself.

In such a group there is a presumption that the collective good will be obtained, and it may be obtained without any group organization or coordination whatever.

Question 10

Intermediate groups:

Answer 10

No single member gets a share of the benefit sufficient to give him an incentive to provide the good himself, but which does not have so many members that no one member will notice whether any other member is or is not helping to provide the collective good.

In such a group a collective good may, or equally well may not, be obtained, but no collective good may ever be obtained without some group coordination or organization.

Question 11

Variables and hypotheses:

Answer 11

• As group size increases, provision of the common good becomes less optimal.
• If there is a PRIVILEGED group, the good will always be provided
• If there is an INTERMEDIATE group, the good might be provided.
• If there is only a LATENT group, the good won’t be provided without coercion or selective incentives.
• Small stakeholders will tend to exploit big stakeholders (i.e. make them pay a larger share). That is, the tyranny of the minority.

Question 12

Large groups have problems providing common goods for three reasons:

Answer 12

• each group member has a lower share of the benefits;
• so it’s less likely that anybody’s benefits of helping provide the good exceed the costs;
• and organizational costs rise with group size.

Question 13

Exclusive goods

Answer 13

limited

Question 14

Inclusive goods

Answer 14

Supply is not limited

Question 15

Marxism

Answer 15

According to Olson, large groups tend to suffer from free-rider problems. This is in direct contrast to Marx’s assumption that the working class, once aware of their common interests, will naturally unite and overthrow the ruling class.

What Marx missed, however, was that the rational individuals he envisioned would not have an incentive to participate in the class revolts he predicted.

Lenin appears to have understood the problem; in “What is to be Done,” Lenin argued that communists would need to be led by a committed, disciplined, self-sacrificing minority.

Lenin recognized that ordinary workers might not have the incentive or organizational capacity to engage in revolutionary activities on their own. Therefore, this vanguard would act as a highly motivated and organized elite that could lead the broader working class, bypassing the collective action problems Marx overlooked.
This is a classic example of Olson’s idea that small, highly motivated minorities can dominate and lead larger groups, especially when the larger group lacks the organization or incentives to act on its own.