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Institutional Evolution and the Political Economy of Governance

Alexander Ebner

in The Institutions of the Market: Organizations, Social Systems, and Governance

This chapter examines the co-evolutionary relationship between markets and states as a path-dependent process that reflects the social construction of institutional change. It reviews the major ... More

This chapter examines the co-evolutionary relationship between markets and states as a path-dependent process that reflects the social construction of institutional change. It reviews the major contributions to the governance approach, as originally provided by the new institutional economics and subsequently extended in the transdisciplinary discourse of the new institutionalism. Oliver E. Williamson's transaction cost approach to governance is examined, offering insights into the notion of private ordering as a governance device. Douglass C. North's theory of the institutional evolution of markets and states and, Mancur Olson's collective action approach to governance are then considered.Less

The Logic of Logic, and Beyond

Lee Cronk and Beth L. Leech

in Meeting at Grand Central: Understanding the Social and Evolutionary Roots of Cooperation

This chapter examines Mancur Olson's arguments, which he articulated in The Logic of Collective Action, and compares them with those of his supporters and detractors. It also reviews the social ... More

This chapter examines Mancur Olson's arguments, which he articulated in The Logic of Collective Action, and compares them with those of his supporters and detractors. It also reviews the social science literature on cooperation, focusing primarily on the theoretical and empirical research on collective action that grew out of Olson's challenge. According to Olson, the members of a group have interests in common. His logic was an economic logic, based on the behavior of firms in the marketplace in their quest for profits. Olson extended this logic of the market to human social behavior. The chapter considers Olson's solutions to the problem of free riding and the possibility that no group would ever form, including coercion, small groups, selective benefits, and the by-product theory of public goods provisioning. Finally, it describes some major extensions of and challenges to Olson's path-breaking model.Less

Cooperation, Coordination, and Collective Action

Lee Cronk and Beth L. Leech

in Meeting at Grand Central: Understanding the Social and Evolutionary Roots of Cooperation

This book investigates a wide range of ideas, theories, and existing empirical research relevant to the study of the complex and diverse phenomenon of human cooperation. Issues relating to ... More

This book investigates a wide range of ideas, theories, and existing empirical research relevant to the study of the complex and diverse phenomenon of human cooperation. Issues relating to cooperation are examined from the perspective of evolutionary theory, political science, and related social sciences. The book draws upon two bodies of work: Mancur Olson's The Logic of Collective Action (1965) and George C. Williams's Adaptation and Natural Selection (1966). Olson, an economist, and Williams, an evolutionary biologist, both argued that a focus on groups would not provide a complete understanding of collective action and other social behaviors. This introductory chapter discusses some important definitions relating to cooperation, with particular emphasis on collective action and collective action dilemmas, along with coordination and coordination problems. It also provides an overview of the chapters that follow.Less

Making Olson work: rejuvenating ‘supply-side’ explanations

Darren Halpin

in Groups, Representation and Democracy: Between Promise and Practice

This chapter scrutinizes the argument of Mancur Olson regarding collective action. His thesis has been instrumental in fostering pessimism about the democratic potential of groups. This chapter ... More

This chapter scrutinizes the argument of Mancur Olson regarding collective action. His thesis has been instrumental in fostering pessimism about the democratic potential of groups. This chapter argues that while his predictions are right, for representation groups, his reliance on a dominant and wide-spread self-interested rationality is a weakness in his framework. Instead, this chapter argues that the reason they work is not to do with the rationality of joiners, but the way the group constructs and legitimizes a passive form of group affiliation. Thus, Olson works as much because of a supply-side, as a demand-side, phenomenon.Less

Creative Insecurity: Olson’s Nemesis

Mark Zachary Taylor

in The Politics of Innovation: Why Some Countries Are Better Than Others at Science and Technology

This chapter completes the explanation of creative insecurity theory and presents cross-national statistical data to support it. It describes how military and economic threats from foreign rivals can ... More

This chapter completes the explanation of creative insecurity theory and presents cross-national statistical data to support it. It describes how military and economic threats from foreign rivals can counteract domestic political resistance to innovation. External threats raise the benefits of S&T progress and the costs of technological stagnation. Therefore, higher levels of external threats cause a society to alter its calculus regarding the relative costs and risks of technological change. Indeed, as the threat balance shifts more and more toward the external, even many technological losers may recognize that their interests are better served by accepting the costs of S&T progress and government actions that support it.Less

Theorizing Fiscal Policy Coordination

Charlotte Rommerskirchen

in EU Fiscal Policy Coordination in Hard Times: Free Riders on the Storm

Fiscal policy coordination is marred by a classic collective action problem; it pays to be egoistical. Member states have an incentive to under- or over-stimulate their economies (what this chapter ... More

Fiscal policy coordination is marred by a classic collective action problem; it pays to be egoistical. Member states have an incentive to under- or over-stimulate their economies (what this chapter terms growth and stability free riding), despite a common interest in coordinated policies. Building on Mancur Olson’s premise on collective action failure, the chapter develops three research questions that guide the empirical investigation. These relate to the group latency of EU membership, the evidence for collective action, and finally the provision of incentives to keep free riding at bay. The theme running through this chapter is that the interdependence of EU economies requires cooperative solutions to common problems.Less

The Essential Contributions of the New Institutional Economics

in The Political Economy of Pipelines: A Century of Comparative Institutional Development

This chapter investigates transaction cost economics and includes a review of the restrictions on transacting imposed by requirements for common carriage and third-party access (TPA). It evaluates in ... More

This chapter investigates transaction cost economics and includes a review of the restrictions on transacting imposed by requirements for common carriage and third-party access (TPA). It evaluates in detail the concepts of the new institutional economics. The cost of transacting with pipelines once demanded vertical integration. Common carriage was never used for gas pipelines in the United States. A digression on common carriage and TPA is ineluctable if an economic analysis of the different pipeline transport markets in the world is going to make sense. Mancur Olson attracted a number of implications that seem to be significant in how groups press to shape pipeline regulation and markets. His implications from the logic of collective action appeared to be confirmed often enough. The notion of property rights to point-to-point pipeline transport capacity was central to understanding modern pipeline markets.Less

Regime Change and Corruption: A History of Public Utility Regulation

Werner Troesken (ed.)

in Corruption and Reform: Lessons from America's Economic History

This chapter examines the history of public utility regulation in the U.S. focusing on regime change and corruption. It suggests that the move to public ownership in the early twentieth century and ... More

This chapter examines the history of public utility regulation in the U.S. focusing on regime change and corruption. It suggests that the move to public ownership in the early twentieth century and the move away from public ownership seventy-five years later were both associated with gains in service quality. This chapter also discusses Mancur Olson's view that change in any direction reduces corruption because of the ossification that all bureaucracies incur after some time.Less

Rivers, policies, and interests

S. Nazrul Islam

in Rivers and Sustainable Development: Alternative Approaches and Their Implications

Chapter 13 examines the determinants of river-related policies and considers ways of making further progress toward the Ecological and Open approaches to rivers. It shows that there are broadly two ... More

Chapter 13 examines the determinants of river-related policies and considers ways of making further progress toward the Ecological and Open approaches to rivers. It shows that there are broadly two types of obstacles impeding adoption of the Ecological and Open approaches. These are, first, paucity of required knowledge, and, second, vested interests favoring the Commercial and Cordon approaches. External influence from developed countries, until now, has mostly favored the Commercial and Cordon approaches in developing countries. Informing and engaging the public is the main way in which both the obstacles of paucity of knowledge and vested interests can be overcome. Moving the discussion of river policies to the public arena is therefore important.Less