In this extremely well written book Mancur Olson applies his Noble Price winning 'Logic of Collective Action' to the real world. It tries to give a partial answer to the question: why do some countries get rich and others do not? Well: power groups emerge and make a society rigid. The society cannot properly respond to changes anymore. The theory is applied to a very large number of nations throughout recorded histrory: from ancient China and caste India to apartheid South Africa and post-industrial-revolution England. The only country/nation throughout the entire human histry he admids he has trouble understanding with this great theory is France. Read it!

Professor Olson describes a wide range of social/economic structures and processes (unions, big government, high and rising taxes, regulation, monopolies, etc.) that characterize most economies but more so the aging economies of Western Europe (This book was written before the unification of eastern and western Europe). He then proceeds to show us what these all have in common: They each, together and with time, contribute in increasingly slowing down and stifling a nation's economy. Reading this book leads one to see that the USA is also involved in a similar progression, albeit at an earlier stage. I first read this book as an Economics student about 15 years ago. I enjoyed it tremendously. I also learned from it. His clear and powerful conveyance of concepts have kept the ideas with me. He explains the economics simply yet completely. One need not have studied Economics to follow him. I highly recommend this book. Even though the author's forescast is gloomy, his book is brilliant. Sherry S.

It surprises me that I haven't reviewed this book..... Anyway, this is one of the classic works on political economy: it builds on the Olson's earlier (and perhaps even better work) 'The Logic of Collective Action' using the logic contained therein to explain why and how different societies have prospered (and declined....) at certain stages in the world's or there own development.

Without writing a short book report for the undergraduate readers of this book, countries he examines are spread across the world; much of his thesis hinges on post-WWII comparisons of the US against Japan and Germany....

For prospective readers of Olson's work: first, I would start with 'The Logic...' BEFORE you read this, though a reading of this book would not be compromised by not having done so. His newer book 'Power and prosperity...' can be safely avoided (it's kinda expensive as it is still only out in hardcover...) having read both of these; you could then waste your political economy-budgeted money on either the works of Douglass North ('Structure and Change in Economic History';'The Rise of the West), Karl Polyani ('The Great Transformation'), or, well, Hemingway or Fitzgerald or something fun to read.....

I do highly recommend this book. Any student of foreign affarirs, politics at any level (though people who don't do IR or comparative stuff might benefit more from 'The Logic...'), economists, or students of history. Perhaps even to more general readers.....

I once read that Olson was on the short list of people being considered for the Nobel Prize at the time of his death. Certainly, this list is not so short: at least three of my college professors were rumored to be.... Enough of that, though....

This work takes a simple premise and expands on it to explain processes that at the outset seem contradictory. Organisations exist, in economic logic, to seek either economic rent or ideological satisfaction. Olson in this book works through organisational logic and explains group behavior in a clear, concise fashion. This behavior influences economic performance and politics at all levels.

Moreso than other books which in part relate to the same areas (including Olson's the Rise and Decline of Nations and a few by Douglass North) this is THE key text for this issue, and a must read for anyone who is into political economy.

Mancur Olson's The Logic of Collective Action is one of the best arguments I have read on the theory of groups. Given its age (it was originally written in the 1960s), it does not include much of the later scholarship on the subject.

However, it is a great introduction to collective action, as the basic argument has not changed: groups in which the benefits from collective goods cannot be denied to people are very difficult to organize. Organization will more lilkey come about when there is one (or a small number of) individual whose cost of action is lower than his own expected benefits; this leads to an exploitation by the small of the large, which is an interesting and counterintutive situation.

Olson provides a wide array of examples, which are of course old but nonetheless relevant. Examples include farming organizations, trade unions, business pressure groups, medical associations, etc. Overall, I found this book to be very interesting and easy to read, as the economics hardly ever go beyond basic math. For people who like rational arguments, it will be a pleasure to read this. The most interesting portion of the book, in my opinion, is the author's argument why Marxism does not work in practice in the way that Marx predicted.

This book is based on Olson's Ph.D. dissertation in 1963 at Economics Department of Harvard entitled 'A General Theory of Public Goods.' So, this is the book written 40 years ago, but I think still valuable, or at least very interesting.
You can learn what public good is and why it is not provided (or provided only by government). But textbooks do not explain what the difference is between small and large groups in terms of provision of public goods. This book explains it in a way that is understandable to people with minimal knowledge on economics.
If you are interested in questions like: Why do many people write a book review for Amazon.com without any monetary compensation?; Why do many people contribute to development of free software?; or Why DO your roommates clean a shared living room (= public goods)?; this book is worth your time and money.
Olson wrote an article entitled 'An Economic Theory of Alliances' with Richard Zeckhauser in 1966. If you would like to know only his theory and are not interested at all in how he applied it to many examples, I think this article is enough for your purpose.
Economist Todd Sandler wrote a book titled 'Collective Action: Theory and Applications' in 1992. Mancur Olson wrote a forward to this book, saying that the book is very well written on the same topic of 'Logic of Collective Action.' So if you are interested in recent development in this area, it would be time-efficient to read this Sandler's book.

As a young student I found Olson's 'Rise and Decline of Nations' a very interesting and well-written book. Recently, as an eonomist on international economic relations 15 years further down the road I picked up this book and again was caught by the clear writing and the compelling reasoning. I recently taught a graduate course on East European economic conversion and I would have put this book on the reading list if I had read it earlier. I think the text is sometimes a bit too pat and I would have liked to see more empirical evidence. On the other hand, Olson does make a good case for his theory and I like the hopeful message it conveys. His emphasis on the importance of institution building in economic and social development I think is correct. This is certainly one of the more interesting books I have read on the subject. Recommended!

Mancur Olson takes the same approach that has worked well for economists in other areas: Assume that governments are run by self-interested, profit-maximizing "autocrats." This means that the country will score broad gains if the "autocrat" is a broad democratic majority, but even a dictatorial bandit will have some advantages if the bandit has long-term stability and is therefore interested in maximizing his profits over a long rather than a short term. Olson applies this formulation with success to the Soviet Union, showing why there was considerable growth in the days of Stalin but an inevitable sclerosis set in in the later years. He argues in his final chapter that the key to a successful transition from dictatorship to democracy is the assurance of individual property and contract rights, and that in the absence of such assurance the transition is certain to be problematic.

Olson died before he believed the book ready for publication, and the final effort shows it. Although the prose is polished and extremely readable, the argument tends to be quite skimpy. For example, he argues that the reason for widespread corruption is governmental price-fixing, which he applies to the Soviet experience. I would have liked more detail here, and in particular an analysis of the American experiences with prohibition and the ban on recreational drugs. Also, Olson's theory does not fully explain why third-world democracies have not been more successful. After all, you would think that at some point the "autocrats" would secure the individual rights necessary to maximize their "profits." It will necessarily fall to others to expand Olson's arguments and to determine if this plausible-sounding approach is correct. Meanwhile, we have this fascinating outline.

Why are all the rich countries in the world capitalist democracies? Isn't a dictator the best way to turn around a country in economic trouble? Why did Germany and Japan grow so fast after the end of World War II? Why have Russia and the Warsaw Pact countries done so poorly after the end of the Cold War? And what should the rich, successful, First-World countries do to enjoy continuing prosperity?

Olson's only book written for the general public, "Power and Prosperity" addresses all these questions and more, in well-written prose, fairly free of economic jargon, and filled with easy-to-follow examples. Not too long, at less than 200 pages excluding the notes, any educated layman should have no trouble getting through the whole thing.

The book primarily focuses on how governments use and abuse power and the impact that has on economics. In particular, Olson hypothesizes a "second invisible hand" as a partner to Adam Smith's famous invisible hand of the marketplace. Olson's invisible hand represents the unintentional good that even the most selfish regimes accidentally do for the public in the process of maximizing the good of the rulers. (E.g. the King fights bandits because they reduce the take from his taxes, but he only does this up to his own point of diminishing returns.) Apparently original with Olson, this idea earned him a prominent place in academia, and it's impressive to see how far he can take it.

So if you have any interest in politics and economics, by all means read this book. Even if you don't agree with it all, the ideas in it are priceless. Skip Charles Cadwell's foreword though; it's dry and dull and doesn't add much to the book.

Reviewer: Bill Roach (Bill@BillRoach.net)

'Traditional' economics, which focuses on overpopulation and shortages of capital and other resources, tends to offer a dismal outlook for underdeveloped countries. The title of the book stems from the premise that, if the scope of investigation is expanded to include institutions and economic policy, the outlook is less dismal. That is, changes in institutions and policies can have a very favorable impact on prospects for development in poor countries.

The book is a collection of papers by scholars in Economics, Law, Business, History and Social Sciences, on the effects of policies and institutions on development. From the preface, by Olson and Kakhonen:

"The chapters in this book illustrate the intellectual advances that are broadening economics and integrating the social sciences. They illustrate these advances in almost all of the fields in which they are occurring. This book was inspired in part by the belief that just such a book on the broader economics or integrated social sciences was needed - and that it would take a number of experts in different fields to illustrate the wide range of work being done. ... It is the shortcomings of the economic policies and institutions of the capital-short countries of the world that keep investors ... from putting much capital there. ... These shortcomings also blight the productivity of the indigenous resources of the poor countries. ... governance is a decisive determinant of economic performance, and ... with the right economic policies and institutions, countries as poor as India could grow at very rapid rates and become developed nations far sooner than is usually supposed."

From Chapter 10, by Pranab Bardhan:

"The New Institutional Economics points to some very important features of institutional failures that cause or prolong underdevelopment, particularly the legal and contractual structures and rules of third-party enforcement which are necessary for most arms-length market transactions. ... In Western societies, over time, complex institutional structures have been devised ... [which include] property rights, formal contracts and guarantees, trademarks, limited liability, bankruptcy laws, and large corporate organization with governance structures to limit problems of agency and ... of incomplete contracting and ex-post opportunism."

Contributors include Pranab Bardhan, Robert D. Cooter, J. Bradford De Long, Russell Hardin, Satu Kahkonen, Eric Moberg, Joel Mokyr, Edward Montgomery, Mancur Olson, and Oliver E. Williamson.