Stationary vs Roaming Bandits 10/9/12 9/10/2012 11:55:00 AM
The VALUE of Political and Economic Order
-Stationary versus roaming bandits. Olsen Reading (Prof Details)
Olsen was an economist who contributed to our understanding of
the theory of collective action People want to act in groups but
their individual desires trump their ability to work time and time
Olsen’s starting point: No society can satisfactorily work if it does
not have a peaceful order & other public goods and services
Anarchy does not work well. (I.e Somalia)
In small groups, order can emerge by voluntarily agreement as
each member can more easily receive shared benefits. The larger
the group is the more difficult it is to organize for collective action.
Larger groups in collective action cannot work without enforcement
How then have large societies through history established order
Once roaming bandits settled down and became stationary bandits
they began to provide for peaceful order. By contrast, roaming
bandits have little incentive to produce longstanding goods or
Once a bandit makes himself a ruler he provides for peace but
continually extracts a price for that service. I.e once a colonial
power settles down he must extract the largest possible surplus for
himself while providing some sort of public goods and services.
Tradeoff between oppressiveness and incentivization for production. Olsen produces tax as a form of theft. Or the tradeoff between theft
and public goods and services.
Leaders of democratic regimes are also self interested, the chief
difference being that in a democracy the political
competitiveness constrains leaders from obtaining the maximum
personal surplus from society.
o Therefore, care in raising taxes etc. etc. etc. etc. etc.
Adam Smith ref: The invisible hand. The greatest advantage of
democracy is that it prevents significant extraction of social surplus
on the part of their leaders.
(In economics, invisible hand or invisible hand of the market is the
term economists use to describe the self-regulating nature of the
How then: can democracies emerge from autocracies? A balance of forces
in society. A dispersion of forces and resources in society makes it
impossible for any set of leaders or groups to overpower all others and
establish autocracy. Ex: Much more difficult to establish a dictatorship in a
society as complex and varied as the United States or Canada.
Ex: democracy in Germany was imposed via historical influences
and the external influence of Ame