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Why do some economies do better than others? How does society encourage the kind of market economy that generates continually increasing incomes. POWER AND PROSPERITY: OUTGROWING COMMUNIST AND CAPITALIST DICTATORSHIPS Mancur Olson Basic Books, , xxviix + pgs. Mancur. Anderson, William L. Review of Power and Prosperity, by Mancur Olson. The Quarterly Journal of Austrian Economics 5, No. 7 (Summer ).

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Socially contrived markets, on the other hand, are the markets that need the support of the state to exist. Olson has here missed the central point. Both parties gain by violating the law and. Once again, a “public good” is involved.

This isn’t the same as equal distribution of wealth, but that people generally have opportunities available to them to achieve prosperity regardless of their social beginnings.

What is remarkable about this argument is that it identifies a reason for autocrats and warlords to improve social welfare. A far higher implicit tax rate is put on the more able people in the more productive roles.

Mises Review

Rather, much more significant is that he meets Austrians most of the way on the most vital contemporary economic issue. And this is not the only area in which Olson, going his own way, arrives at views of great value to Austrians. Olson saw in the move from roving bandits to stationary bandits the seeds of civilization, paving the way for democracy, which improves incentives for good government by more closely aligning it with the wishes of the population.


Everything that one produced above subsistence went to the state, for “investment” as it saw fit. In essence, everyone had to work for a subsistence wage, during his or her primary hours of labor. Jay Green rated it it was ok Aug 29, Stephanie rated it really liked it Jan 22, He fully recognizes that the key to prosperity lies in secure individual property rights. Hence as time goes on, and these distributional coalitions accumulate in greater and greater numbers, the nation burdened by them will fall into economic decline.

Oct 30, Jason Reeves rated it it was amazing. Not unlike a mafia don, a “Stationary Bandit” had every interest in seeing his people prosper and every interest in providing them protection from roving bandits. Kancur had purged all Communist party insiders during the infamous Cultural Revolution. So that’s the system that prevailed everywhere for a long, long time. A bit like Thinking Fast and Slow, but with a lot less rambling and almost zero cross referencing in the main text, this is a book that’s meant to summarise a career’s findings.

Trivia About Power And Prosper Whatever external aid it may have received, the Soviet socialist economy was manifestly inefficient.

And they are not prisoners. Olson shies away from libertarianism: In his final book, Power and Prosperity, Olson distinguished between the economic effects of different types of government, in particular, tyranny, anarchy and democracy. Stephen rated it really liked it Oct 05, What of public goods?


Muhammad Mubarak rated it liked it Oct 21, The chance to earn even small increases over basic subsistence set the skilled mancru to work. Olson argued that a “roving bandit” under anarchy has an incentive only to steal and destroy, whilst a “stationary bandit” a tyrant has an incentive to encourage a degree of economic success, since he will expect to be in power long enough to take a share of it.

The incentive to free-ride will remain. Olson parts company with those in the Rothbardian tradition in thinking that governmental action is needed to secure this key to prosperity. Amber rated it it was ok Jun 07, His points are valid so far as they go, but Austrians cannot help thinking that Mr. Thus, he will moderate his thievery to maximize his profit. And that’s because the basic problem will not disappear.

Review of Power and Prosperity by Mancur Olson | Mises Institute

Want to Read saving…. In his first book, The Logic of Collective Action: Jennifer rated it it was amazing May 18, To see what your friends thought of this book, please sign up. How does society encourage the kind of market economy that generates continually increasing incomes?