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Saturday, December 20, 2014

 

Olson's Social Contract

Based on Power and Prosperity by Mancur Olson
            Moving from a state of nature to what many philosophers have dubbed a social contract requires either a tacit or an explicit concession of one's rights to the state. Exchanging these rights to protect the remaining rights that one possesses. In Power and Prosperity Mancur Olson offers us an alternate theory to the classic paradigm made famous by Locke, Hobbes, and Rousseau. Two variations of the bandit exist in this model. The roving bandit who represents anarchy in society and the stationary bandit who when materialized represented the initial example of tyranny. Implying that consent never existed, just a less predations more desirable bandit. The roving bandit does one thing, he plunders society causing no incentive for whomever he plunders to produce. Less production will achieve less consumption, thus less for the bandit to plunder. Once the roving bandit realizes he can corner the crime market in his respected region, his interests shift to those of the stationary bandit, thus our modern governments are born. This creates incentives for the bandit. Incentives to keep his plundering to a minimum. "Because of his monopoly on crime and taxation," the stationary bandit, "has an encompassing interest in his domain that makes him limit his predations because he bears a substantial share of the social losses resulting from these predations."(9) Thus, it would be prohibitive for the stationary bandit to enforce a 100% tax rate and beneficial to provide public goods. Whether we can completely abandon the bandit overtime is unclear and in my view impossible. Our best case scenario is banditry that limits its predations to a minimum. Olson concludes that there only exists two ways to generate prosperity. The first way is secure defined rights and impartial enforcement of contracts. The second is a complete absence of predation. Democracy is simply the most likely institution to fulfill this. But as Olson explains, is also open to the, "sclerosis of special interests," over time. The same special interests that are eroding our nation and allowing for the growing inequality that presently exists.    

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