The Rise and Decline of Nations: Economic Growth, Stagflation and Social Rigidities Paperback – 1 Jul 1984
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From the Back Cover
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 on the world.
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Top Customer Reviews
In the "Rise and Decline of Nations" Mancur Olson revealed the teacher in himself with a lucid readable account that left the mathematics in the footnotes. It was one of those books that Samuel Britten would give to his bright nephew who wants to know what it is all about without doing the difficult math.
His thesis can be simply expressed as follows: societies that are governed by an encompassing interest will function better than societies that are governed by exclusive interests, whether these be tyrants, kings, oligarchs or representative democratic institutions corrupted by narrow interests. It is the inexorable development of the influence of powerful but minority groups that threatens to bring down the efficiency of governments in countries that have been stable for a long time. There is much to say for this interpretation of the evidence. But Olson says more than this. Why, he asks, does this occur?
Why does a successful and vital democratic system become hollowed out from inside? Olson points to the tragedy of the commons. Reviewers on Amazon seem to have missed this central point. Olson shows with rigorous logic why this occurs, and why it is inevitable. An average voter generally feels that his voice is tiny in the sea of a wider electorate.Read more ›
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.Read more ›
Mancur Olson starts with a three chapter summary of his "Logic of Collective Action," where he explained how stability breeds special interest groups (e.g. cartels, guilds, unions, oligopolies etc.) and how those groups acquire influence in an economy. Some of the most basic observations are
1. Bargaining power will never be perfectly symmetric, i.e. there will be winners and losers;
2. The longer the period of stability, the more these special interests will flourish;
3. Smaller groups can organize better than bigger ones;
4. Cartels are bad for growth;
5. Smaller ones are worse than big ones (for example a union that represents every worker must in the end take account of what's good for society at large, but a small one needn't);
6. These "Distributional Coalitions" slow things down because they only have one or two levers to pull and must satisfy the needs of all their members,
6b. the easiest lever to control is price, because it's observable, rather than quantity;
7. Special interest groups fight progress that might make them redundant;
8. In order to form, cartels must include everybody who can produce a good / provide a service, but then they concentrate on excluding everybody else;
9. As these special interest groups accumulate they make the economy and society progressively unworkable.
Armed with these basic findings from "The Logic," Olson takes you on a truly amazing voyage where he applies the lessons learnt.Read more ›
Most Recent Customer Reviews
Easy to read - easy to digest - easy to understand - a brilliant book - relating how through group behaviour our system becomes ever increasingly difficult to navigate with initial... Read morePublished on 12 Oct. 2009 by P. Buss
Mancur Olson is one of the intellectual giants of our time. His Nobel Prize was awarded for ground breaking work which he presented in his prior major work, "The Logic of... Read morePublished on 8 Jan. 2006 by Benjamin Rossen
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