This book develops an original theory of group and organizational behavior that cuts across disciplinary lines and illustrates the theory with empirical and historical studies of particular organizations. Applying economic analysis to the subjects of the political scientist, sociologist, and economist, Mr. Olson examines the extent to which the individuals that share a common interest find it in their individual interest to bear the costs of the organizational effort.

The theory shows that most organizations produce what the economist calls "public goods"--goods or services that are available to every member, whether or not he has borne any of the costs of providing them. Economists have long understood that defense, law and order were public goods that could not be marketed to individuals, and that taxation was necessary. They have not, however, taken account of the fact that private as well as governmental organizations produce public goods.

The services the labor union provides for the worker it represents, or the benefits a lobby obtains for the group it represents, are public goods: they automatically go to every individual in the group, whether or not he helped bear the costs. It follows that, just as governments require compulsory taxation, many large private organizations require special (and sometimes coercive) devices to obtain the resources they need.

This is not true of smaller organizations for, as this book shows, small and large organizations support themselves in entirely different ways. The theory indicates that, though small groups can act to further their interest much more easily than large ones, they will tend to devote too few resources to the satisfaction of their common interests, and that there is a surprising tendency for the "lesser" members of the small group to exploit the "greater" members by making them bear a disproportionate share of the burden of any group action.

All of the theory in the book is in Chapter 1; the remaining chapters contain empirical and historical evidence of the theory's relevance to labor unions, pressure groups, corporations, and Marxian class action.

There is now a considerable body of literature which attempts to apply economic analysis to political problems. In my opinion, Olson's is one of the most successful and provocative of these attempts Olson's central insight is novel and illuminating to political scientists and he shows that by the use of it he can give familiar facts (about labor unions, farm organizations, and other interest groups) new meaning. I believe that his work is going to force the jettisoning of much of what has been said about interest groups and the revision of the rest. It should also have an influence on the many political scientists who work in the field of organization.

'This superb little volume is worthy of the attention of all social scientists. it can lead to a healthy and challenging discussion and perhaps to a reappraisal of pressure groups in American society.Public Opinion Quarterly.

Public goods and the theory of groups.

Introduction

I. A Theory of Groups and Organizations

A. The purpose of organization

B. Public goods and large groups

C. The traditional theory of groups

D. Small groups

E. "Exclusive" and "inclusive" groups

F. A taxonomy of groups

II. Group Size and Group Behavior

A. The coherence and effectiveness of small groups

B. Problems of the traditional theories

C. Social incentives and rational behavior

III. The Labor Union and Economic Freedom

A. Coercion in labor unions

B. Labor-union growth in theory and practice

C. The closed shop and economic freedom in the latent group

D. Government intervention and economic freedom in the latent group

IV. Orthodox Theories of State and Class

A. The economists' theory of the state

B. The Marxian theory of state and class

C. The logic of the Marxian theory

V. Orthodox Theories of Pressure Groups

A. The philosophical view of pressure groups

B. Institutional economics and the pressure group--John R. Commons

C. Modern theories of pressure groups--Bentley, Truman, Latham

D. The logic of group theory

VI. The "By-Product" and "Special Interest" Theories

A. The "by-product" theory of large pressure groups

B. Labor lobbies

C. Professional lobbies

D. The "special interest" theory and business lobbies

E. Government promotion of political pressure

F. Farm cooperatives and farm lobbies

G. Noneconomic lobbies

H. The "forgotten groups"--those who suffer in silence

Index