Why do some economies do better than others? How does society encourage the kind of market economy that generates continually increasing incomes. POWER AND PROSPERITY: OUTGROWING COMMUNIST AND CAPITALIST DICTATORSHIPS Mancur Olson Basic Books, , xxviix + pgs. Mancur. Anderson, William L. Review of Power and Prosperity, by Mancur Olson. The Quarterly Journal of Austrian Economics 5, No. 7 (Summer ).

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Only they knew how the system worked. Groups like cotton-farmers, steel-producers, and labor unions will have the incentives to form prlsperity groups and influence policies in their favor.

Review of Power and Prosperity by Mancur Olson | Mises Institute

There are no discussion topics on this book yet. Is not governmental action to produce them necessary? The idea is that small distributional coalitions tend to form over time in countries. Spontaneous markets are the ones that will appear regardless.

Olson saw in the properity from roving bandits to stationary bandits the seeds of civilization, paving the way for democracy, which improves incentives for good government by more closely aligning it with the wishes of the population. It’s written by somebody who both knows a whole lot and wants to tell you everything he knows.

How come oligopolies and concentrated interests can form and thrive when we know that even two people can sometimes not agree to collude? What is remarkable about this argument is that it identifies a reason for autocrats and warlords to improve social welfare. Actors on the market aim to benefit themselves: How come the logic of the market does not prevail everywhere? Except for “on-the-spot” trades, exchanges cannot take place unless individuals have clear and enforceable titles to property.

Pretty simple once somebody has pointed it out, no? So what do you do if you’re fascinated by science but are incapable of scientific rigour, you’re fascinated by math but you’re crap at it and you’re fascinated by philosophy but are incapable of thinking logically? Under a maximum price, it will “be the case that there can be a mutually advantageous trade-one with both a buyer and a seller gaining-at a price that is higher than the controlled price and lower than the market clearing price.


When no capital investment is necessary for the production of a good, for example, it will be traded as many times as necessary, formally or informally, until it reaches whoever needs it most. He fully recognizes that the key to prosperity lies in secure individual property rights. He often arrives at Austrian, or near-Austrian insights through his own arguments: Olson stresses the importance of private property rights, and the role of governments in protecting these.

When we visit third world countries it is quasi impossible not to bump in to a suk or an open market. Stalin developed an ingenious system of wages and taxation, which turned the bulk of the Soviet population into hard working slave laborers. Mark Schrad rated it liked it Aug 10, Jul 02, Rachel rated it really liked it Shelves: Here’s a list of my favorite examples: Kevin rated it really liked it Dec 27, Then he moves to the meat of his book, namely the dissection of why the fall of the Soviet Union did not lead to prosperity.

Mises Review

If a bandit can gain an exclusive power to plunder an area, he will have an incentive to protect the poder from other predators. Will not government programs also be the most efficient possible? Also, they could be guaranteed to gravitate toward the jobs that required skills. To see what your friends thought of this book, please sign up. A far higher implicit tax rate is put on the more able people in the more productive roles.

Olson firmly rejects the idea that economics can be understood without the political context of power Combined with the tax exploitation scheme just explained, the military and industrial prowess of Soviet Russia becomes much less mysterious.

A bit like Thinking Fast and Slow, but with a lot less rambling and almost zero cross referencing in the main text, this is a book that’s meant to summarise a career’s findings. Olson parts company with those in the Rothbardian tradition in thinking that governmental action is needed to secure this key to prosperity. How come Sergei Bubka broke the world record for pole vaulting 17 times, nine of those by just one centimetre?


Ryan rated it liked it Mar 01, The challenge of designing a successful pros;erity order, in Olson’s view, is to give the power to make collective decisions to an encompassing interest rather than to a special interest. All Austrians, and most non-Austrians, for example, realize the futility of price control. For example, Olson takes the time to explain why the Soviet system was able to function as well as it did.

For both these conditions to apply, government regulations of the right sort must be in place: I really really enjoyed this book.

The Mises Review 6, No. opson

Quarterly Journal of Austrian Economics

Olson focused on the logical basis of interest group membership and participation. Similarly, there is nothing that ensures that a government will necessarily confiscate the property of its subjects only when the government can poaer this property more efficiently than its previous owners could” p. So far, so familiar. The complex logic by which Becker justifies his roseate view of government is best left to those interested in such things. Olson contends that governments can Why do some economies do better than others?

How does society encourage the kind of market economy that generates continually increasing porsperity Olson points out that because price controls prevent people from making the exchanges they desire, an incentive toward corruption arises.