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The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities Paperback – September 10, 1984

ISBN-13: 978-0300030792 ISBN-10: 0300030797 Edition: 8.11.1984

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The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities + The Logic of Collective Action: Public Goods and the Theory of Groups, Second printing with new preface and appendix (Harvard Economic Studies)
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Product Details

  • Paperback: 276 pages
  • Publisher: Yale University Press; 8.11.1984 edition (September 10, 1984)
  • Language: English
  • ISBN-10: 0300030797
  • ISBN-13: 978-0300030792
  • Product Dimensions: 8.5 x 5.4 x 0.7 inches
  • Shipping Weight: 10.4 ounces (View shipping rates and policies)
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (36 customer reviews)
  • Amazon Best Sellers Rank: #96,662 in Books (See Top 100 in Books)

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Customer Reviews

Well: power groups emerge and make a society rigid.
Maarten de Kok
Anyone seriously interested in knowing the way the world works will want to give this theory substantial consideration.
David
His clear and powerful conveyance of concepts have kept the ideas with me.
Sam Maverick

Most Helpful Customer Reviews

124 of 127 people found the following review helpful By David on January 5, 1999
Format: Paperback Verified Purchase
Olson does a stellar job "proving" his theory using accepted scientific standards. His main thesis is that stable societies, over time, will be stifled by a steady growth of groups each committed to obtaining a disproportionate amount of society's goods. This theory, composed of only nine implications, is parsimonious with wide explanatory power. It helps to explain the post-war growth of coutries such as Japan and Germany, while providing a reason why the growth rates of the United States, and especially Great Britain, have been stagnated. Perhaps the most interesting chapter of the book is the last, in which Olson merges both Keynesianism and monetarism to form a new theory of macroeconomics. By using his theory, he is able to better explain involuntary unemployment than either of the more popular schools of macroeconomic theory. I was amazed at how many phenomena, such as slavery and the Indian caste system, can be at least partially explained by Olson's theory. Anyone seriously interested in knowing the way the world works will want to give this theory substantial consideration.
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40 of 41 people found the following review helpful By Sam Maverick on August 9, 2001
Format: Paperback
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.
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22 of 22 people found the following review helpful By Matthew P. Arsenault on March 11, 2007
Format: Paperback Verified Purchase
Olson seeks to explain why some nations achieve high rates of economic growth while others suffer bouts of stagflation. He contends that the number and strength of "distributional coalitions," coupled with the length of economic and political stability will influence a nation's rate of economic growth. As such, Olson's hypothesis is two fold. First, Olson argues that states with lower levels of "distributional coalitions" often have higher rates of economic growth. Second, states which have experienced prolonged periods of disorder or armed conflict will have lower numbers of interest-group, or collusion organizations.

Olson's explanation builds upon his early work in The Logic of Collective Action, which holds that "...large groups, at least if they are composed of rational individuals, will not act in their group interest" (18). Rather, the rational actor will seek to further his or her self-interest, and will subsequently free-ride when possible. Olson expands the scope of this logic to encompass not only the rationality of the individual, but the rationality of the firm in explaining The Rise and Decline of Nations.

As the power of the firm expands, the firm seeks to maximize its own utility at the expense of a societal common good. In order to simplify a complex argument, we can think of Olson's theory in this way. An organization or firm will not expend its energy to create a benefit to society writ large, as it, and its members, will only receive a fragment of that benefit in relation to the costs incurred. On the other hand, if the same firm seeks to maximize its utility, it will seek to obtain a larger slice of the social "pie." In so doing, it may lower the benefits of society as a whole, but will significantly expand its own gain and that of its members.
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28 of 30 people found the following review helpful By D. W. MacKenzie on April 19, 2008
Format: Paperback
Most people recognize that there is something wrong about special interest groups. While most people think of special interest groups in terms of fairness, Olson examines efficiency issues. Special interest groups, or distributional coalitions, hinder economic growth in industrialized nations. Special interest groups slow the pace of change in industry. We will reorganize production and adopt new technologies more slowly as more coalitions form for the purpose of transferring wealth.

Distributional coalitions are mainly a problem of wealthy nations. Paradoxically, poor nations can experience strong growth due to the fact that they have little to redistribute. Poor nations can therefore develop rapidly. The examples of postwar Japan and Germany fit Olson's thesis well. Japan and West Germany were devastated and left poor by the War, but developed rapidly afterwards. As Japan and Germany became affluent, distributional coalitions formed to retard further economic development.

Olson does not explain the stagnation of so called third world nations. Why is it that Japan and Germany were able to "take advantage" of their postwar poverty, while many other nations remain "too poor" to support extensive distributional coalitions? Distributional coalitions actually abound in poor nations. The Rise and Decline of Nations does not explain all of history, but this is definitely part of the formula. Its examples are a little dated, but there is some great stuff here.
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