Wrestling in the china shop

Here’s political scientist Henry Farrell on Tyler Cowen’s podcast:

FARRELL: Analytic Marxism, I think, is underrated. I think it’s going to come back. Now, when I say analytic Marxism, let me be specific about that. There’s a lot of Marx which I think is flat-out wrong. And the analytic Marxist project itself drove itself into a hole. If you look at people like [Jon] Elster, the other people who are strongly committed to it, they eventually ended up figuring that if you wanted to make sense of Marx, you’re going to come to the conclusion that eventually there wasn’t much point, there wasn’t much sense to be made of it.

But nonetheless, the basic underlying idea, which is that if you bring together rationalist perspectives with a direct concern with power relations and a desire to understand power relations in the Marxist and the Weberian way, that this is something which is coming to the fore again, which is extremely valuable.

Somebody else who I think is underrated in this context is Mancur Olson. For example, if you want to understand where Elizabeth Warren is going, you want to go back to Mancur Olson’s book, The Rise and Decline of Nations, because I think what Elizabeth Warren is pursuing is very much an Olsonian view of how markets work: that drag and dross and corruption builds up and that in order to allow markets to achieve their full potential, you basically need to cleanse them at a certain point.

I picked up Olson’s The Rise and Decline of Nations on that recommendation, and want to post a few notes from it. He helpfully summarizes his own argument on page 74 (more books should do this!):

Implications

1. There will be no countries that attain symmetrical organization of all groups with a common interest and thereby attain optimal outcomes through comprehensive bargaining.
2. Stable societies with unchanged boundaries ten to accumulate more collusions and organizations for collective action over time.
3. Members of ‘small’ groups have disproportionate organizational power for collective action, and this disproportion diminishes but does not disappear over time in stable societies.
4. On balance, special-interest organizations and collusions reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive.
5. Encompassing organizations have some incentive to make the society in which they operate more prosperous, and an incentive to redistribute income to their members with as little excess burden as possible, and to cease such redistribution unless the amount redistributed is substantial in relation to the social cost of the redistribution.
6. Distributional coalitions make decisions more slowly than the individuals and firms of which they are comprised, tend to have crowded agendas and bargaining tables, and more often fix prices than quantities.
7. Distributional coalitions slow down a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions, and thereby reduce the rate of economic growth.
8. Distributional coalitions, once big enough to succeed, are exclusive, and seek to limit the diversity of incomes and values of their membership.
9. The accumulation of distributional coalitions increases the complexity of regulation, the role of government, and the complexity of understandings, and changes the direction of social evolution.

And:

The typical organization for collective action will do nothing to eliminate the social loss or ‘public bad’ its effort to get a larger share of the social output brings about. The familiar image of the slicing of the social pie does not really capture the essence of the situation; it is perhaps better to think of wrestlers struggling over the contents of a china shop. (p. 43-44)

And:

To borrow an evocative phrase from Marx, there is an “internal contradiction” in the development of stable societies. This is not the contradiction that Marx claimed to have found, but rather an inherent conflict between the colossal economic and political advantages of peace and stability and the longer-term losses that come from the accumulating networks of distributional coalitions that can survive only in stable environments. (p. 145)

Pretty much every step in this argument can be contested, starting with Olson’s core idea that collective action is harder with larger groups. Nonetheless, it was a very worthwhile recommendation.