Introduction: The Anatomy of Late Capitalism
This article deconstructs the naive belief in self-regulating market harmony, using Mancur Olson’s theory as an analytical tool. It provides insight into why, under stable conditions, distributional coalitions—rather than abstract nations or classes—become the key actors. Readers will discover how particular interests lead to institutional sclerosis and why rational individual decisions aggregate into systemic irrationality that stifles economic growth.
Olson’s Paradox and Barriers to Interest Group Mobilization
At the heart of the theory lies the paradox of collective goods: individuals in large groups tend toward passivity, hoping to benefit from the efforts of others (free-riding). Since public goods are available to everyone, a rational individual avoids the costs of involvement. This mechanism explains the logic of everyday social structures, such as housing associations, where the diffusion of responsibility paralyzes decision-making processes.
This phenomenon is accompanied by the rational ignorance of citizens. The cost of acquiring reliable knowledge about complex regulations outweighs the individual benefit of possessing it. This asymmetry of incentives favors small, tight-knit interest groups with strong motivations for active mobilization at the expense of the silent and uninformed majority.
The Olson Cycle: From Growth to Institutional Sclerosis
Political stability, paradoxically, cements arrangements that hinder development. The Olson Cycle describes four stages of state evolution. Following a shock (war, revolution), a "clean slate" stage of rapid growth occurs. Over time, however, distributional coalitions crystallize, learning to capture political rent rather than create new value. This leads to the third stage—institutional sclerosis and stagflation, where a dense network of connections blocks innovation. The cycle closes with a violent crisis that destroys the old systems.
In this context, institutional inclusiveness is crucial for the system's survival. It allows for a distinction between earned wealth and rent derived from privileged access to power, preventing the self-destruction of capitalism.
The Global Rent-Seeking Game: From Lobbying to AI Algorithms
Olson distinguishes narrow cartels from encompassing organizations. The latter, representing a large portion of society, must internalize the social costs of their demands, which promotes stability. Globally, these mechanisms take various forms: from informal wasta networks in rentier states to professional lobbying in the US and multi-level regulatory capture in the European Union.
Today, AI algorithms are changing the dynamics of mobilization, becoming tools for precision lobbying as well as the potential exposure of abuses. However, critiques of Olson suggest the theory can be overly pessimistic—the example of the "Asian Tigers" proves that a strong state can harness group interests to serve a national strategy. Corporate boards now face a challenge: whether to remain operators in the rent-seeking game or to help build institutions focused on long-term growth.
Summary: The Logic of Reform and the Status Quo Trap
In a world saturated with distributional coalitions, any promise of reform that does not assume someone will actually lose their privileges is, by definition, a sham. Logic mercilessly exposes political narratives that promise to simplify the system while maintaining all industry-specific tax breaks.
Faced with ossified structures, can we develop mechanisms to bottle the genie of destruction? Perhaps the key lies in creating conditions where group interests align with the common good. Ultimately, the question is: can we see through the game before we are pulled into it?
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