How Oligarchies Collapse

Mancur Olson’s greatest work that relatively few people know about is his book on how institutions pervert themselves to collapse.  I suspect that my takeaway from this departs from the usual interpretation of the work a bit, though, given my own proclivities.

Every institution operates on coalitions and coalitions involve payoffs via an agenda setting mechanism.  The “minimum winning” coalition logic, in turn, is predicated on information:  giving the potential supporters exactly their price and nothing more, essentially giving everyone in your coalition the minimum offers that they cannot refuse.  Of course, the minimum winning coalition logic operates on two planes:  you minimize the payoffs and you minimize the numbers.  At the end of the day, your coalition will be reduced to the absolute minimum of the cheapest supporters that you can get.  The problem, however, is how do you know what the minimum size of the requisite coalition is and how do you know the minimum you need to pay them?  It is worth remembering that, in experimental work in game theory, the Ultimatum Game rarely produces the expected outcome:  people are so “irrational” that they reject disrespectful offers even if they have little or no leverage.  But, at the same time, they are rational enough to know their own bargaining power:  if you screw them, you lose your share too.  The answer that works is not to dismiss the rejection as “irrational,” but to understand the logic behind their thinking that may not fit our notion of “rationality.”

This is the sense in which institutional collapse fits with the critique of Vox that folks like Nathan Robinson become relevant.  The agenda setters may think they know who they need in the minimum winning coalition and what their minimum price is.  But what if they refuse?  Vox-ites can call them names, ridicule them, and declare them irrational.  But their rejection means that the Vox-ites’ share of the prize goes up in smoke too.  Who is irrational now?  If the “irrationals” are effectively indifferent between maintaining the institutions and demolishing them, as they see no additional gain that accrue to them from keeping the status quo, it is not up to them to hold up the decrepit edifice.  It is up to those who benefit the most from the status quo to pay up or shut up.  If the Vox-ites think that the status quo is so great, they should ensure that those who round out the coalition are invested in keeping things as they are, not indifferent.

This is especially pertinent on this election day:  both Democratic and Republican coalitions saw the same collapse due to wonkish overconfidence.  Sanders and Trump movements should not have taken place, if not for the kind of narrow-mindedly rational and manipulative agenda setting by their respective elites that left so many voters unwilling to put up with the status quo.  That the Democratic elites survived their collapse, for now, should not comfort them:  the same distrust and unease among their coalition persists.  The justifiable demonization of Trump may allow them to paper over their cracks for now, but it won’t be lasting without fundamental rethinking.

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