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Thursday, May 08, 2008


Definition: The Theory of The Logic of Power

The theory of the logic of power is that it is adaptive and it evolves. From anarchy in the sense of privately enforced trade, to roving banditry, to stationary banditry to autocracy to the cooperation of autocrats to the emergence of democracy, power disperses. As power disperses, so does prosperity; prosperity grows. If a government holding power allows for the prosperity to disperse, power perpetuates more prosperity and thus the logic behind power and prosperity.

Unfortunately because of problems as described in The Logic of Collective Action, a government must refresh its power lest the power disperse to roving bandits in the form of special interest groups. The refreshing of power is simply to scrape away clinging interest groups that make a government lopsided or partial. In a sense, as power grows, so must grow prosperity otherwise power will stifle prosperity and issues of distributional conflict will give cause to collective action. If prosperity isn’t perpetuated, then a reverse evolution of power will occur, leading to less real power and certainly less prosperity for constituents. In this manner, anarchy would occur in the form of black markets and instable societies.

In the evolutionary chain of power, democracies that are not stable, and don’t protect property rights, may become the source of decline for a state in the form of special interest-caused sclerosis and stifled prosperity in the form of handicapped rights to speech, religion and other liberties.


The theory of the logic of power

Power is simply defined as “the ability or capacity to perform or act effectively.” Breaking this down to power in the realm of political and governmental, power might be construed as “a specific capacity, faculty, or aptitude” of a governing body to exercise power in a manner that is conducive to gaining more power in the form of progress for the government as well as progress for its constituents.

Mancur Olson writes of Power and Prosperity in a manner that is consistent with this basic definition. The logic behind this definition of power is that a stationary bandit is relatively better than a roving bandit because of the protection offered by a stationary bandit against that of a roving bandit. In turn, a stationary bandit might be able to maximize it’s earnings (banditry) through offering public goods as an exchange means for taxation (the banditry). In economics, we’ve learned that in the long run, competitive firms will operate at a zero profit so as to attain efficiency, carrying this logic over to government, if constituents are taxed at a rate that seems fair for the exchange of public goods, then the government is considered non-predatory. The second invisible hand is that an authority who expects a long term of rule, will actually work to perpetuate progress of his/her constituents because through freedom, people will work to profit maximize, and if the taxation margin is small enough, there will be little disincentive to produce, trade and progress, thus allowing longer, steady progress of the government.

Further analysis of the logic behind power takes us to special interest collective action which Olson attributes to the stifling of progress. Special interest groups will be concerned with slowing progress for the many so as to hold monopolistic power in their industry, which actually would stifle the progress of the stationary bandit; the government. In this regard, special interest groups behave as roving bandits within a society that has reached a modicum of efficiency regarding taxation and public goods. Collective action, as described in Olson’s Logic of Collective action will work to influence governments to use its power to benefit some at the cost of others, usually the majority of others. This deterioration of efficiency is what Olson calls Sclerosis.

In Power and Prosperity, Olson explores further the dynamics of prosperity of a nation, and hypothesizes that a government that is interested in prosperity will not only behave as a stationary bandit interested in maximum utility, but will also work to curb the effects of sclerosis. In this sense, prosperity of the constituents leads to the prosperity of the government. The government is the body that has power to tax, to protect and to provide public goods.

There is an incentive for government to provide and protect at an efficient level of taxation, as well, there is an incentive for constituents to pay taxes at an efficient level to afford protection and public goods. In this sense, there is a market for efficient allocation. However, there are situations that supersede this market, such as the overthrowing of government by some who may want to power that comes with being government. As well, there are troubles of considering who will succeed in government, which lead to what Olson calls the autonomous emergence of democracy. Because of the nature of autocrats overthrowing autocrats, democracy emerges much the same way special interest groups do and that is strength in numbers. Even though democracies lead to sclerotic occurrences, they also provide stability in government through pluralistic dispersion of power. (32) There is an incentive for leaders to share power in order to assure protection of that power, in much the same way constituents prefer stationary bandits to roving bandits and good governments to bad governments.

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