Chapter from: Czada, Roland/ Héritier, Adrienne/ Keman, Hans (eds), 1998: Institutions and Political Choice. On the limits of rationality. Amsterdam: VU Press, pp. 229 - 256 (first published 1991, campus-Verlag, Frankfurt).

Interest Groups, Self-Interest
and the Institutionalization
of Political Action

Roland M. Czada

Institutions often constrain choices. Simultaneously they provide advantages through routinization and opportunities for strategic interaction. The individual and social benefits of interactional rules and collective organizations have been emphasized in this volume. Another view prevails however, which focuses on the losses of wealth and freedom due to unrestricted growth, stickiness, and economic malfeasance of institutions. The idea of modern man being entrapped by institutions is common to many grand theories of society and politics. One can find it in Marx;'s critique of capitalism, as well as in Weber;'s theory of rationalization, when he considers the irrational and illiberal features of the "iron cage" of bureaucracy. In contrast to many social theories, economists have often propagated an optimistic view of open societies with competitive politics and free economic markets. Nowadays, however, some of their concepts tend to remind us of somewhat aged social theories of decline. Mancur Olson (1982), who predicts social rigidities and economic losses through an increase of monopolistic narrow interest groups, represents a most notable approach of this school of thought. Applying the economic paradigm to the explanation of political choices offers new insights, yet simultaneously marks the limitations of the neoclassical approach. In particular, the belief in mutually beneficial voluntary exchanges, leading to economic equilibria and social welfare, has been shaken, and the quest for efficient institutions of capitalism has come to the fore.

Rational actors in institutional settings

The Institutionalization of action still poses unresolved problems for theoretical formulation. In a macro-to-micro perspective, rules appear to be functional, because they guide actors through otherwise uncertain environments, and restrict socially harmful individual passions. In an individualist rational choice approach, however, institutionalization has been discussed as a public goods problem. From this perspective, it may seem inconceiveable that individuals could be organized on a voluntary basis for the purpose of rule-building - rules that impose duties, obligations, and roles on them. Individualist social theories rely on the assumption that social states are no more than aggregates of individual choices - though they have different notions on the mechanisms of aggregation. The Public Choice School concentrates on problems of collective decision-making. Game theory emphasizes strategic interaction between individuals. Both approaches imply that collective or social states emerge from the transitory coupling of individual rational choices. This constitutes a market-like aggregative process which is conceived as highly adaptive and open for social change. Thus, public choice and game theories do not provide an appropriate understanding of rigid, highly regulated social systems. A perspective of political control must be added to the utilitarian notion of rational choice, if the formation and existence of societal order is to be theoretically grasped. I will start from the assumption that a theory of order that is able to avoid falling into mere functionalism or metaphysical explanations has to take collective action as its point of departure. Collective action necessarily involves the formation and maintenance of social regulations. Collective action as I will show, is essentially political; it usually involves the power to accumulate and redistribute resources from and among individuals. What does the step from classic Social Choice Analysis to the Logic of Collective Action entail? Olson (1982) combined the individualist approach with an associational concept of "social closure". According to him, freedom of association favors powerful associational monopolies with narrowly defined interests. This ends up in a downward spiral in which the rationally motivated social closure of interests causes social rigidities and economic decline. Thus he assumes a positive linear relationship of associational power, monopolistic regulations, and economic losses. In contrast, public choice and game theories tend to locate individual action in atomistic egalitarian social ecologies, and thus discover basic social rules of reciprocity at best (e.g. Axelrod 1984). The aim of this chapter is to explain collective choices pertaining to institutionalization. While tackling this, the one-directional micro-to-macro perspective of choice will be turned round. This, however, is not to abandon the idea of self-interest as being a major source of action. It will be shown that attributes of macro-structures - e.g. the institutionally determined costs of lobbying vs. corporatist concertation, associational powers, or the relieving properties of interactional rules - influence actor's choices as they refer to these structures. Often choices do not strategically depend on certain other actors' choices directly, but on rational expectations of how "impersonal" social rules or structures affect them and, additionally, determine one's own pay-offs from these choices. Public policy-making aimed at regulating social aggregates would be a case in point. To found or restructure an organization involves another kind of choice than just to accept or utilize its rules. The latter intends to avoid sanctions or to exchange goods and services directly, or through networks of generalized exchange (cf. Marin 1990). The former is to prepare or strengthen an actor for future transactions. This, however, appears to be essentially political. Institutional political choices determine an actor's future position among other actors within an organizational domain and in interorganizational networks. In the following section the contrast of compensatory mutual exchanges between complementary interests on the one hand and the political association or distributive conflict of parallel interests on the other requires elaboration in order to establish the notion of political choice.

Game theory and the
problem of institutionalization

Among the most elaborated individualist explanations of rule formation one finds Axelrod's (1984) game-theoretical work on the "Evolution of Cooperation". Doing without corporate actors, Axelrod explains the social expansion of a cooperative individual strategy - "Tit for Tat" - within a greater social population. "Tit for Tat" is a simple rule of reciprocity. It means to cooperate first, but to answer other's defections with punishment, i.e. counter-defection. In Axelrod's concept, cooperation occurs between two actors at a time. A cooperative order, then, is an accumulation of bipartite cooperative acts. In terms of individual pay-offs, "Tit for Tat" proved to be the most successful of 64 strategies in a computer-aided experiment of iterated Prisoner's Dilemma games. Cooperation on this reciprocal basis was more rewarding than any other rule of strategic interaction. Thus, the pursuit of individual interests can help to spread a rule of reciprocity that could be considered as a prelude to cooperative social order. Axelrod himself discusses bipartite compensatory exchanges as possible sources of social rules, i.e. more or less explicit arrangements involving not only individuals but also collectivities. To establish a cooperative rule, however, requires a learning-process in the course of which individuals must recognize that the restraining of their immediate interests or passions will generate positive pay-offs for them in the long run. Cooperation appears to be unstable, due to continuous temptations to betray the good will of others. Once established, a cooperative order based on Tit for Tat is also highly vulnerable to "invaders", who "travel around" and exploit the general trust involved in a cooperative rule. The problem of "invaders" could easily be solved by a public register or a penal authority for instance. Axelrod (1984:109 pp.) recommends this and several other measures to cope with the problem, for instance: extend the "shadow of the future", change pay-off-structures, or teach the people to cooperate. Thus, he acknowledges the necessity of an authority that enables institutions to undertake these measures. Axelrod's approach indicates the social benefits of a government. However, it does not explain how governance emerges. Game theory can handle the evolution of a basic rule of reciprocity, but the establishment of authoritative institutions does not fit into the game theoretical approach. Introducing a particular actor who is authorized to enforce social rules would break up the paradigm of voluntary, discourse-free, costless exchanges between atomized and equally strong actors.2 In Axelrod's view, cooperation evolves from unhappy experiences with conflict. Actors punishing each other have to bear losses and thus come out worse than those following a cooperative norm. This is why Tit for Tat can develop into a collectively stable strategy. However, it resolves an iterated prisoner's dilemma only when the actors are equally dependent on each other, and thus possess equal forces to punish. If an actor was able to compel cooperation from others, Tit for Tat would obviously lose its significance. The same holds for game theory in general: Hierarchies enable one-sided solutions imposed by one actor and thus, diminish interactional dilemmas. To assume that societal order is being derived from power dependencies is certainly realistic. Domination, however, should not be confused with a rule-system based on mutually beneficial exchanges. Otherwise a notion of politics would remain that resembles a market-place which everybody could leave as a satisfied "customer".

Political associations and the formation of power

In social life and in the reality of politics we find actors of unequal strength. Power dependencies are derived from unevenly distributed charismatic, financial, dynastic, or informational resources. These can be organized in order to increase one's power position, to win legitimacy, or to withstand external opposition. Generally this requires some form of associational action. Individuals often act as parts - members or leaders - of groups in order to improve their position vis à vis competitors. This is an essential feature of political action. "Organized groups are structures of power, and therefore within the scope of political inquiry" (Latham 1952:17). The capacity and power of corporate actors to act, e.g. labor unions or business associations, depends on group sizes, organizational resources, and not least on their ability to disrupt the productive basis of society. Putting aside these important structural aspects, however, one can say that the essential power-base of corporate actors evolves from the pooling of individual resources (Coleman 1986) and the consequential conversion of individual competences into organizational authority. Structures of authority enable inter-organizational relations on the leadership level and contribute to the solution of internal distributive conflicts. How to employ the dues and gains from membership can be decided in a more discursive, oligarchic, or autocratic manner. However, some sort of agency is needed to organize decision-making and implement decisions. Processes of consensus mobilization, social control, and bureaucratization determine the autonomy and political power of corporate actors. They cannot be understood from an exchange paradigm as employed by game-theoretical analysis. This might be one reason why "Axelrod's ... model has been taken up by biologists more enthusiastically than by social scientists" (McLean 1987:147). Game-theoretical exchange-models of interaction imply exogenously given, single, complementary interests of two actors involved at a time. Now, mutual complementary interests and joint interests can be viewed as quite different sources of cooperation. Max Weber distinguished "the rational free exchange on a market, a case of agreement which constitutes a compromise of opposed but complementary interests", from: "the pure voluntary association based on (parallel, R.C.) self-interests, a case of agreement as to a long-run course of action oriented purely to the promotion of specific ulterior interests, economic or other, of its members" (Weber 1968:41). Cooperative behavior is either based on the "rationally motivated mutal compensation of interests, or on a similarly motivated unionization of interests" (ibid).3 Moreover, one has to distinguish between complementary and parallel interests, and distinguish both of these from conflicting interests. Political and economic actors can face each other as potential exchange-partners, associates, or competitors. In reality, the recourse to these patterns of behavior is open to strategic choices. One can find them in highly volatile mixtures, depending on actors' goals, available resources, changing environments, and power-dependencies. Mechanisms of exchange and competition - the "invisible hand" of markets or process of "creative destruction" as Schumpeter called it - have been investigated by economists for a long time. How they interact with "protectionist" interest associations is still an open question which is heavily disputed by politicians and academic experts. The association of convergent interests appears to be much more a theoretical problem than explaining relations of exchange or competition. Markets can be understood without the notion of an actor, since a process occuring "behind the backs" of men translates their individual choices into social choices and, in this manner, determines the macro-level consequences of individual actions. In contrast, interest associations supersede the transitory coupling of atomized actors. They try to influence or organize self-regulatory social processes. As far as the formal association of parallel interests is concerned, a proportion of agreement and an "organ" - authority or executive body - is required in order to maintain and manage an association (with regard to its internal, as well as external relations). This is the point at which politics as a force of social integration comes into play. This line of reasoning leads back to Olson's theory of collective action. Its core argument points to social closure evoked by predominant narrow interest associations. In his view, narrow interest groups are based on collusion among their members. Using the term "collusion", Olson emphazises the social harmfulness and particularism of such groups. According to him, collusive action creates social powers and regulates social exchanges. Eventually it fosters social rigidities and standardization, and thus reduces the opportunities of choice between alternative paths of action.

Wrestlers in a china shop

Olson demonstrates that the conditions for organizing interests vary by group size: there is little incentive to join large interest-organizations, because they act independently from an individual's contribution. In small groups, however, individual membership might decide upon the supply of a collective good. Thus, the organization of small groups is encouraged by their member's individual interests, whereas large groups suffer from opportunism and free-riding. These arguments refute the pluralist belief in symmetrical organization and representation. In Weber's (1968:344 pp.) terms, this would mean that monopolistic groups - based on social closure - can be organized more easily than propagandistic expansionist ones, and hence will eventually dominate society and politics. Monopolistic group action "may provoke a corresponding reaction on the part of those against whom it is directed" (ibid:342). This holds even more so, when negatively afflicted groups have narrowly defined interests and are small in size. For small groups can easily associate and oppose monopolistic policies. The question arises as to the extent that competition among small special-interest groups contributes to allocative efficiency. Distributional coalitions that nullify or offset the effects of others, and thereby increase the efficiency and income of the society, are conceivable. Olson (1982:46 pp.) views them as an exception proving the rule. In this section I will discuss how special interest groups typically interact with each other. Thinking of narrow interest groups as "wrestlers struggling over the contents of a china shop", Olson emphasizes the zero-sum character of distributional fights for shares of a shrinking national product. Yet in the long run, he predicts, the emergence of a rigid distributional order and the stickiness of wages, prices, and social structures will result from such struggles. Olson does not consider that powerful "narrow" interest groups, by competing for their shares of the social product, usually attenuate each other's associational power. For example, as far as economic competition between cartels is concerned, one can observe rivalries of concrete and asphalt interests in the Austrian road construction sector (Marin 1986). There, associational monopolies fought against each other eventually to the advantage of the society as a whole. Now one could engage in an experiment of thought, and argue that all road construction interests would probably merge into a super-cartel sooner or later. Prices of road-construction would rise then, and both the concrete and asphalt interests could profit, whereas the general interest in useful and reasonably priced roads would suffer. Such mergers, however, increase the size and divisiveness of organizations, which no longer represent narrow interests. A road-construction cartel will eventually be threatened by persisting conflicts between subgroups of concrete and asphalt firms. Moreover, there are other special-interest groups in society which are strongly in favor of the construction of many excellent roads with a given budget. A car producers' association would certainly not accept the dead-weight-losses from collusive action on the part of road constructors, since this interferes with their specific interests in individual transport and marketing of cars. This shows that groups with narrowly defined interests cannot be further monopolized in larger and larger organizational units, because they compete with each other. In particular, organizational problems tend to increase as the level of inclusion increases. At least, Olson's theory itself rejects the idea of an autonomous trend towards highly centralized trans-sectoral encompassing associations. In distributional struggles no one can gain without others losing. This generates resentment and political divisiveness. It restricts enduring or stable political choices, and can make societies ungovernable (Olson 1982:47). Not all relations between special interest-groups, however, are distributional struggles in this sense. Overlapping interests in high prices of road-construction show that asphalt and concrete associations have an incentive to cooperate. Simple turn-taking, or any agreement on a quota of concrete and asphaltic roads to be built, would probably stabilize their inter-relationship. This scenario resembles Fritz W. Scharpf's (this volume) game-theoretical analysis of "Game TheoryBattle of the Sexes" constellations, where players have common and opposed interests at the same time. In a two-actors view, turn-taking is a way of rational "problem solving:" that appears to be fair and optimal. According to Scharpf (p.), this is the "socially most desirable decision style", since it affords both actors the highest joint outcome. In the context of interest-politics of narrowly defined groups and economic cartels, however, this kind of agreement can be most harmful for the society as a whole.4

The enforcement of rules

To establish a multitude of associational orders causes severe problems when the relations between associations are concerned. These problems are due to distributional conflicts which, like collusive associations themselves, result from self-interest in the face of scarce resources in society. Assuming a car-manufacturing association, whose members suffer from inefficiencies caused by a road-construction cartel, we approach a "zero-sum" constellation. One could also consider conflicts between a farmer's association and a cartel of farm-machinery manufacturers, between publishing-houses and a cartel of paper-mills, between car manufacturers and the rolled steel industry, and so forth. Sooner or later, distributional conflicts will arise between such groups which can hardly be solved through turn-taking or mutually beneficial exchanges. Otherwise we would have cartels of cartels of cartels..., with ultimately one cartel encompassing the whole economy. This, however, is an absurd idea in the face of distributional conflict over scarce resources. The only way for antagonistic groups to "cooperate" in order to escape from "zero-sum" distributional struggles are either to introduce compensatory side-payments, or to establish hierarchical power-dependencies between them. Compensations of groups for their losses from other's monopolistic actions will hardly be voluntary. Both compensatory transfers between social groups and the enforcement of rules regulating their inter-relations appear to be typical tasks of governments. However, a government enforcing compensatory transfers cannot emerge from a voluntary contract. As soon as one adds features of social closure and group action to individualistic contract theories of state formation, it becomes evident that strong groups have no reason to agree on the establishment of a sanctioning power that eventually constrains their freedom of action.5 On the contrary, monopolistic associations will probably urge on the universalization of rules protecting their privileged status. One should assume that the concentration and centralization of social power and ensuing translation into a legitimate political authority have emerged from monopolistic interests and differentials of group power in the face of distributional conflict. This is what Max Weber argued in "Economy and Society": "In spite of their continued competition against one another, jointly acting competitors form an "interest group" toward outsiders; there is a growing tendency to set up some kind of association with rational regulations; if the monopolistic interests persist, the time comes when the competitors, or another group whom they can influence (for example a political community) establish a legal order that limits competition through formal monopolies. From then on certain persons are available as "organs" to protect the monopolistic practices, if need be, with force. An interest group has become a "corporate body", and the participants are "privileged members" (Rechtsgemeinschaft). Such closure, as we want to call it, is an ever-recurring process; it is the source of property in land as well as of all guild and other group monopolies" (Weber 1968:343, see also Weber 1972:201). Weber shows that rule-formation and the propagation of a legal order are concomitants of rationally motivated social closure through monopolistic groups. Monopolistic interests in rule-formation aim at the strengthening of power. Therefore, striving for power is a motor for the building of economic and political structures. Simultaneously, such structures guide the use of power and, moreover, make social transactions calculable. Now, the ordering potential of group-power is completely neglected in Olson's Theory of Collective Action. On the contrary, emphasis is laid on the notion that it is entirely destructive to social life and particularly to economic markets. Weber conceives of social closure and the accumulation of power as one particular source - among others - of rational organization and the formation of law. This view contrasts sharply with Olson;'s scenario of an ever-increasing downward spiral in which growing numbers of narrow-interest associations, rigid distributional structures, and economic decline reinforce each other. In the following, I will discuss possible correlations of social closure, regulatory powers, and economic efficiency. Reality provides for an intricate, often positive relationship between "rigid" formalization and substantive rationality.6 In a Weberian tradition, effectiveness has always been considered as a concomitant of institutional regulation. This can be assumed for reasons, like the "rigidity andpredictability", "routinization", and "lower frictions" of institutionalized social interactions (Weber 1972:561 pp.). Here one comes close to some ideas of Transaction Cost Economics (Williamson 1985, cf. Schneiberg and Hollingsworth, this volume). Transaction cost-saving properties of organizations have also been neglected in Olson's theory. To consider them would certainly modify the scenario of economic decline as it results from interest groups' organizational action. Williamson (1975) discovered that in many instances industrial organization reduces the costs of economic transactions. This applies to transactions which are frequent, highly asset-specific, and threatened by uncertainty (Williamson 1985:52). Under these circumstances, the allocative efficiency of organizational rules is superior to that of exchanges on markets. Williamson's work deals exclusively with micro-economic institutions: contractual relationships and corporate hierarchies. Others extended this approach to additional forms of institutional coordination, namely "clans" (Ouchi 1980) and associations (Lindberg and Hollingsworth 1985). Frequency, uncertainty, and the involvement of human assets characterize many kinds of social relations, and probably all kinds of political relations. These issues could also be understood in terms of transaction costs (North 1981, cf. Lehner, this volume, Schneiberg and Hollingsworth, this volume). Transaction Cost Economics attribute cost-saving properties to non-market institutional rules of coordination - regardless of how they once emerged. Contrasting views on the efficiency of markets and organizations are due to the application of different time-horizons. In the short run, bipartite exchanges on spot markets minimize the costs of actual transactions, but leave future transactions in uncertainty. This impedes investments, and thus limits the development of productivity. Institutionalization, in contrast, widens the time-horizon of action and stabilizes rational expectations of individuals. Institutions make decisions more calculable, and enable actors to build complex long-term strategies. Such an investment in future transactions, however, poses collective goods problems as have been mentioned above. Thus, leaving out the dimension of associational power, Transaction Cost Economics cannot explain how institutions emerge (cf. Schneiberg and Hollingsworth, this volume, p.(?). However, it can explain why the political regulation of markets does not necessarily result in economic decline. Yet the question remains: how is the tendency towards overregulation eventually checked? Obviously, rigid organization and the disorganized transitory coupling of actors are both apt to cause losses of wealth. Accordingly, how can appropriate levels of formalization be determined by actors, wanting to minimize frictions and maximize certainty in organizational settings? Of course, selection through competitive social environments as emphasized by Schneiberg and Hollingworth (this volume, p.(?) may be an effective way to prevent ever increasing organizational rigidities. However, in politics - defined as the strife for power-share (Weber 1965) - actors seek to evade adaptive pressures from turbulent environments. In contrast to economic markets, survival of the fittest does not necessarily mean that the most efficient organization survives, but rather the most powerful one. Thus, one has to ask about the relations between associational power and the efficiency of policies. As will be shown below, the political power of associations depends on many factors: organizational size, complexity of tasks, inter-organizational networks, social embeddedness, and not the least on economic resources. The scarcity of the latter determines organizational efforts, and thus gives an incentive to calculate the costs and benefits of interest-politics. In a competitive polity, this will eventually weaken the tendency towards social closure in a declining economy. The pluralist group-school and most of its critics emphasized the associational benefits from interest politics, but ignored the transaction-costs which associations have to defray for the pursuit of monopolistic goals. To consider them, sheds some new light on the pluralist paradigm.

The regulation of competitive pluralism

In the following sections I will discuss two major points favoring social openness. The first argument is an extension of Transaction Cost Economics. It emphasizes the costs of competitive group-politics and economies of scale of associations. The second points to the rationally motivated openness of individual actors as it emanates from their multiple preferences and overlapping membership. In institutional economics of the Olsonian type, actors do not consider transaction costs. Rational Choice Theories generally assume that men choose in a sudden, timeless, logical operation - without calculating the costs of information and the institutional obstacles to the realization of their choices. Transaction Cost Economics (Williamson 1975, 1985) and Economic Theories of Regulation (Becker 1983, 1986) however suggest that the costs of institutional arrangements will probably affect actor's choices. Hence these theories link individual choices to structural attributes and performance characteristics of organizations. Interest intermediation - pluralist pressure-politics as well as corporatist networking - raises enormous costs in terms of information, mobilization and persuasion, decision-making, implementation, and (cf. Lehner, this volume). Thus, Becker's (1986) "pressure-cost" label could easily be extended to general costs of interest politics. His basic argument is that "Olson's condemnation of special interest groups is excessive, because competition among these groups contributes to the survival of policies that raise output" (Becker 1986:102). One should keep in mind that Olson himself predicts an ever-increasing number of special interest-groups competing with each other for shares of the national product. Now, Becker found that the costs of competitive interest politics are related to the dead-weight losses resulting from it. Dead-weight losses are incurred by the costs of lobbying, various restraints of transactions, the costs of collecting taxes and distributing subsidies, etc. Becker (1986) demonstrated with the aid of a formal two-group model that regulations or subsidies reducing social outputs stimulate more countervailing pressures from cost-bearers than those increasing social outputs!7 This is mainly because the potential compensation of cost-bearers decreases owing to the dead-weight losses of cartelization and redistributive schemes. For example: compensating groups suffering from other's monopoly status is only possible if monopolistic associations provide regulations to their members, enabling them to increase their productive efficiency - technical norms would be a case in point. Apart from compensatory problems, dead-weight losses diminish the cost-benefit relation of beneficiaries: they get less for constant or even increasing costs of lobbying. This is partly due to the growing opposition of cost-bearers; their engagement pays more when their losses increase. Becker's model assumes democratic governments which collect taxes and distribute subsidies. If one accounts for organizational costs of governmental redistribution and associational lobbying, then it follows that favorably affected groups tend to engage more for output-raising policies than unfavorably affected groups will be apt to oppose. On the other hand, policies that reduce output will encourage unfavorably affected groups to fight against and raise the marginal pressure costs of favorably affected groups.8 Hence, in the long run, a few distributional coalitions cannot easily obtain very large subsidies. After all, it is important to note that the activities of interest groups depend on their "individual" costs and expected benefits. Becker's concept provides a formalized model of pluralism that does not necessarily balance political powers (as in the traditional, normative pluralist hypothesis) but equilibrates the "price" of competitive policy-making. In contrast to economic markets, however, this "price" rises with an increase in competition. The more narrow-interest groups struggle against each other, the higher their individual "war-expenses" will be - as well as the "burdens of war" for a general public. One could think of Olson's wrestlers in a china shop, who expend all their energy, and yet only push up the price of china. This is by no means meant to support Bentley's (1967) mechanistic view of competitive equilibrium in the pluralist politics of distributional conflict. In contrast, our view points to the cost/benefit calculations of political actors. In democratic states, rising marginal costs of socially destructive interest-politics mark the limits of an excessively unbalanced growth of narrow interest groups.

The regulation of corporatist networks

It has been shown that inefficiencies of pluralist politics will eventually be checked by rising "prices" which single actors have to pay for competitive lobbying. This invisible-hand mechanism can, and under favorable historical conditions9 will be discerned and influenced by the corporate actors involved. Assuming overlapping membership as well as the intersection of organizational goals, narrow interest groups could eventually overcome their rivalries in order to profit from the scale-economies and increased calculability of broader coalitions.10 Here one comes close to the conception of corporatist networks (Lehmbruch 1984:74). These can be viewed as rationally motivated institutional arrangements to limit the potential threats and uncertainties of pluralist lobbying and ongoing distributional struggles. As a matter of fact, neo-corporatist institutions in industrial relations systems of Sweden, Austria, Germany, and the Netherlands have their origin in unhappy, costly experiences with conflict during the 1920s and 30s. Once established, encompassing associations and corporatist networks are always threatened by internal conflict and the opposition of sub-groups (cf. Olson 1986). This is particularly true in periods of social and technological change. At the same time, single actors have to calculate the potential risks and benefits of breaking up their membership. Lack of information about alternatives, moving costs, and personal ties generally tend to support the status quo ante of "group solidarity" (Hechter 1987). This explanation of institutional persistence adds to an exchange hypothesis, which emphazises direct material rewards from corporatist cooperation and thus, implies a notion of commutative market-like justice between the parties involved.11 It can also explain why corporatist networks tend to resist continuing temptations of participants to exploit each other in relationships of direct exchange. Even if an actor overreaches others in a single issue, this does not set off a chain of defection as suggested by "Tit for Tat" in order to enforce cooperation. The distributive justice of political associations and networks cannot be based on a rule of "Tit for Tat". Often "unequal" political transfers rather than market-like exchanges are necessary to stabilize institutions. Political transfers are apt to reduce uncertainties or elevated risks which would eventually raise transaction-costs and dead-weight losses of interest intermediation. The competition among special-interest groups for political influence, as well as the encompassing organization of more general interests or corporatist networks, can all help to prevent excessive "dead-weight" losses from interest intermediation. The operational mechanisms, however, are different in both cases. Despite their internal cleavages, encompassing associations dispose of considerable economic resources and political power. More than narrow-interest groups, they are able to change their social and political environment in a systematic manner. The shaping of the Swedish welfare state by corporatist policies of unions and employers' associations is a case in point. Indeed, this may result in a "robbers' coalition" of large encompassing groups against the state budget (Lehner, this volume). Positive economic adjustments and economic welfare would eventually suffer from such practices. In open world markets however corporatist associations have no incentive to support national policies that slow down economic productivity. Due to their large size, they must account for the social and economic effects of their policies on society as a whole, since these will eventually hurt their own members (Olson 1982:48). Both pluralist competition and organized intermediation of interests typically support policies that raise output. One can, therefore, easily explain why "corporatist" Sweden, "paternalist" Japan, and "consociationalist" Switzerland - despite differences of structures of interest intermediation - do not suffer from economic regulations; and one can also explain why "pluralist" countries like the USA do not suffer from laissez-faire12. Of course, empirical structures and practices of interest intermediation and thus their effectiveness vary across countries. This is due to different national institutional configurations including parliaments, bureaucracies, and associational systems. Also distributions of power in given institutional settings vary. Additionally, national economies are burdened with different problems stemming from their size, openness, industrial structure, ethnic or religious cleavages, paths of industrialization, etc.. Corporatism, for example, appears to have been stimulated by centralized bureaucracies in small countries with highly centralized class based associations and open economies (Katzenstein 1985, Czada 1987, 1988, Weir/Scocpol 1985, Lehmbruch, this volume). Lehner (this volume) suggests that the nature of economic problems affect the appropriateness of certain institutional solutions. In principle, pluralism and corporatism should provide efficient - though not necessarily democratic or just - allocative mechanisms. Only sectoralism, the rigid compartmentalization of narrow sectoral interests, generates endless disagreement, blockages, and socially suboptimal outcomes. Hence, Olson might be right in pointing to sectarian unionism and to the British industrial relations crisis in order to substantiate his theoretical argument. However, the sectoralist structure of British industrial relations neither comes close to competitive pluralism like in the USA nor to trans-sectoral corporatism like in Sweden or Austria (cf. Czada 1983). British unions have rejected efforts of conservative governments to abolish closed shop regulations, picketing, or their close ties with the Labour Party. They have also resisted any attempts on the part of Labour governments to establish a Social Contract between the state and both sides of industry. This might be due to the highly antibureaucratic solidarity norms of union members.13 Without bureaucratic formalization however, large groups cannot realize the scale-economies of associational action.

Scale-economies of associational action

To understand corporatism one has to scrutinize large encompassing organizations, since these are the essential units of corporatist networks. In our context, encompassingness can be partly explained by scale-economies of associational action. I have argued that the cost/benefit relations of interest-politics are part of rational corporate actors' calculations - whether they enagage in pressure politics or corporatist networks. In this context, encompassing organizations can be viewed as joint ventures, economizing interest politics in fields where overlapping interests of otherwise narrowly defined groups are concerned. A peak association representing the common interest of its member associations in spite of the latter's persisting special interests would be a case in point. The federation of corporate actors depends on scale-economies similar to those of associations of individuals. Indeed, small interest groups appear to be more efficient due to the size effects of free riding. However, they are handicapped at the same time "because small groups may not be able to take advantage of scale economies in the production of pressure" (Becker 1983:395). This argument would imply an advantage for large groups, as long as they are homogeneous with respect of a specific interest. Scale economies of association allow for low membership dues and a wide range of selective incentives - like information hotlines, news-magazines, assurance schemes, emergency services, and many others. This makes it rather attractive to join, and thus facilitates the solution of free-rider problems. For example, a car driver's association with millions of members can be a very powerful political actor. Related interest associations of the manufacturers of cars, public transport systems, or road constructors would have to burden their fewer members with enormous dues, in order to keep with the financial resources of mass associations. The scale-economies of associations become even more politically important when one considers their potential to mobilize votes in democratic elections. The importance of scale effects and administrative skills increases with the degree of an associations involvement in politics. This holds true especially for the case of interest intermediation in corporatist systems. There, governments and state bureaucracies foster privileged relations with larger groups, for these are usually well-equipped with administrative skills and expertise, not to forget resources to obtain legitimacy. This is clearly shown by the Swedish system of interest intermediation. Participation in governmental commissions, executive committees, advisory bodies, hearings, and remiss-procedures is a costly matter. Quantitative data on the participation of Swedish interest groups in government show that only organizations with sufficient employment of qualified personnel including academic experts can effectively participate in legislation and government (Peterson 1977, cf. Lehmbruch, this volume). Thus, high costs of expertise and influence prevent formally open access and communication structures from being impaired by mass political participation. Surveys have shown that politicians and leading board-officers consider representatives of well-organized large groups as most useful negotiating partners, to whom they try to give privileged access (Peterson 1977, Rothstein 1988). In turn, participation offers opportunities to compensate organizations for losses from governmental regulations. In this way, the large Swedish umbrella associations are stabilized by their participation in government, and are efficient in controlling free-riding as well as in taking advantage of scale economies of interest intermediation. Compared to Olson's "logic", this example demonstrates an effective and stable alternative of a more inclusive type of societal interest intermediation (Lehner 1987). However, there is another integrative mechanism of interorganizational relations working on an individual level. Rothstein (1988:252) reports on group representatives of Swedish public agencies developing a "sort of psychological incorporation". They increased their understanding of other interests in society and eventually felt as if they were "sitting between two chairs". Now, similar aspects of interest politics have been investigated by the pluralist "group-school" under the headings of "overlapping membership", individual "cross-pressures", and "fellow-travelling". These will be subject of the following paragraphs.

Beyond a simple world of homogeneous actors

Rational choice theories often view individuals as rather uninfluenced monads pursuing one indivisible purpose. This holds for many game theoretical models as well as for Olson's theory of collective action. The latter is based on a concept of "narrow interest organizations", each of them representing one singular interest shared identically by all members. Consequently, internal disagreement is restricted to problems of how much of a collective good should be produced and at what costs, in terms of individual membership-fees. Even large "encompassing" associations - whose emergence remains obscure in Olson's theory - are treated as not having any problems with internal cohesion and "voice", but only with regard to threats of "exit" and "free-riding" (cf. Hirschman 1970). Thus, problems of organizational governance and bureaucratization appear to be minimized due to the "monological" (Offe and Wiesenthal 1980) conception of interest associations. It is certainly not realistic to assume one-purpose "narrow-interest" associations, each of them representing a unique goal that is derived from one identical singular preference of each individual member. Individuals have manifold interests, and thus can belong to many groups in society. Realism, however, is not the only yardstick for a credible theory. One should therefore ask, whether this assumption prejudices the theory's central argument in such a way that its findings have to be taken as methodological artifacts. I will discuss this question by contrasting the pluralist concept of group-politics with Olson's (1965) economic theory of associations. There is a widespread belief that Olson;'s "Logic of Collective Action" has defeated the whole theory of pluralism. Indeed, it has demonstrated that there is not - and will not be - a symmetrically organized society. In one respect, however, pluralists have been more realistic than Olson. The elder pluralist "group-school" (Bentley, Truman;) as well as their later variants (Dahl, Lindblom;) assumed individual "cross-pressures" and "overlapping membership" as being essential elements of group-politics. I would even go further and claim that "overlapping membership" has become a most important feature of political action in highly differentiated, "post-modern" societies. An increasing number of individual and corporate actors experience preference-conflicts when faced with the social multiplicity and complexity of highly industrialized countries.14 For example: a unionized chemical worker who likes fishing down the river on Sundays and works in a chemical plant upriver during the week will probably experience a conflict of interest, if his union opposes sharper environmental regulations; and similar "cross-pressures" would also affect a shareholder of this firm, living somewhere along the river bank. Thus, overlapping preferences constitute integrative forces, which often accentuate a more general interest on the level of individual actors15. "As Arthur Bentley has put it: 'To say that a man belongs to two groups of men which are clashing with each other; to say that he reflects two seemingly irreconcilable aspects of the social life; to say that he is reasoning on a question of public policy, these all are but to state the same fact in three forms'. The phenomenon of the overlapping membership of social groups is thus a fundamental fact whose importance for the process of group politics, through its impact on the internal politics of interest groups, can scarcely be exaggerated." (Truman 1951:158). The pluralist"group-school" provided for other elements that are worth considering in a concept of political choice and associational action. Among them, one finds the notion of "fellow travellers". These sympathize with or completely share the goals of an interest group, without being due-paying members or "free-riders" of its organization. Nevertheless, "the loyalty of such "members" may be important to the successful achievement of a group's claims. Those in the dues-paying category differ from their "fellow-travellers", it is true, but both "may in varying degrees experience the conflicts of overlapping membership" (ibid.). "Fellow-travelling" stands for a rationally motivated open-mindedness that counteracts social closure and rigid structures. This also explains why group-politics, contrary to Olson's theory, does not necessarily result in "zero-sum distributional struggle;s. Pluralism is based on loosely coupled networks of narrow-interest groups who compete against one another despite their continuing overlapping interests. Usually, this sort of coupling prevents intransigent divisiveness, institutional sclerosis, or economic decline.16 " Overlapping membership can be interpreted as a means of integration, as has long been done by the pluralist "group-school". However it also implies areas of conflict between organizations. I will substantiate the argument that overlapping membership has an impact on organizational structures and competitive external relations behavior of interest groups by presenting an example from the US-nuclear-power sector. In this case, one finds a few associational actors with strong and specific interests in nuclear power operations. Despite their small size they have considerable problems of collective action that could only be solved with the aid of overlapping social networks.

Social networks and political action
in the US nuclear power sector

In the US nuclear power sector one finds less than a handful of business associatons with very strong and very specific economic interests in nuclear power operations. The associational structure overlaps with a multitude of contractual relationships between firms (e.g. electric utilities) and with rather informal social networks of manufacturers, utilities, regulatory bodies, national laboratories, and the nuclear navy in fields of research, professional training, and technical development. We are dealing with small overlapping narrow-interest groups faced by obstacles to cooperation in a sometimes hostile political environment. US nuclear-power business interests are organized in a multitude of organizations, among which are the "Atomic Industrial Forum" (AIF), the American Nuclear Energy Council" (ANEC), the "Nuclear Utility Management and Resources Council" (NUMARC), the "Institute of Nuclear Power Operations" (INPO), and others. Why is this small sector so heterogeneously organized, notwithstanding the fact that all actors strongly support nuclear power? My suggested answer points to conflicting interests in and between specific regulatory fields of the sector, and to heterogeneous political and administrative target structures. Taking all organizations involved as a promotional network, one finds rather different and even volatile preference orders within subsets of the network. NUMARC deals with regulatory questions exclusively. Within this association, electric utilities operating nuclear power plants try to work out and implement a coherent strategy vis à vis the Nuclear Regulatory Commission (NRC). Other members, namely manufacturers and architect-engineers merely have observer status in NUMARC. This prevents possible conflicts of interests when state regulations are concerned: Manufacturers would probably support statutory regulations that prescribe expensive safety equipment, because it is their business to sell such equipment. Public utilities, on the other hand, try to negotiate compromises regarding such questions with the United StatesNuclear Regulatory Commission. Among the utilities, one finds rather different views regarding the operation of nuclear power plants. Safety standards range from exemplary operations to the inefficient "black sheep" of the industry. Conflicts often arise when safety problems are concerend that can be solved by alternative technical or organizational measures. To reconcile possible conflicts and prevent non-compliance on the part of its members, NUMARC works on the basis of an 80 percent majority rule among its core membership of public utilitites. Only the "Atomic Industrial Forum" is a registered lobbying association, representing the sector's very general interests in supportive legislation. However, this compels the AIF to be cautious regarding special issues such as safety regulations, licensing, standardization, etc. Coping with the sector's internal conflicts requires a complex design of organizations, based on high degrees of overlapping membership. Actors' choices within the sector's representational structure are determined by cross-pressures. Individuals and corporate actors do have many, often contradictory and fluctuating preferences. This is why US-nuclear interests are not concentrated in one association: Manufacturers sell and utilities buy nuclear plants. Some utilities have none or only a few nuclear operations, while others rely heavily on nuclear energy. Architect-engineering firms don't like standardized reactor designs, whereas some manufacturers and utilities urge for standardization. Outside of these core-groups one finds professional associations, networks, and clans of private and public investors, assurance companies, research laboratories, and many other small special interest groups. Their preferences depend on different perceptions, rule systems, and sets of strategies. Due to their loyalty to the core groups, some of those, who are not due-paying members can be conceived of as "Fellow Travellers" of nuclear business associations. How important they are as interlocutors or "relais" (Crozier) will be demonstrated in the following paragraphs. During the eighties, after the nuclear accidents in Three Mile Island and Chernobyl, the main preoccupation of US nuclear power business executives was to improve safety standards of nuclear operations. They had to agree on a strategy that could demonstrate their efforts in order to regain the support of investors, insurance companies, politicians, and not least the general public. The establishment of new corporate actors, like INPO in 1979 and NUMARC in 1987, was an attempt to create a structure with well-defined tasks and boundaries that should enhance cooperation among the utilities and with regulatory authorities. This large-scale reorganization of trade-associations and the overall sectoral network with Congress and the administrations could hardly be viewed as a political exchange. Only economically powerful, big companies and politically influential "fellow travellers" succeeded in reorganizing the representational structure and pressing the sector's "black sheep" into an agreement for this purpose.Exchange requires mutual compensation of the actors involved. INPO, however, has even disparaged several of its members before the public, in mass media, and political circles because of their safety problems. INPO is an association whose ratings of safety and performance of nuclear power plants serve as a basis for the insurance rates of their members. Thus, INPO holds considerable leverage over individual companies. The system is based on agreement with private insurance carriers and is covered by special state legislation.17 Together with NUMARC, INPO is part of a network that pools resources in order to produce and distribute expertise and services for the nuclear power sector. This network goes beyond the state of mutual supportive relations that governed the sector during the supportive period from the fifties to the mid-seventies. Prior to the "crisis-era", individual companies often relied on bipartite "deals" with executive agencies. This practice of compromizing state regulatory functions led to the widespread opinion that the former Atomic Energy Commission was a "captured" agency. At the end of the eighties, however, the reorganized industry itself provided for a public good - namely nuclear safety. However, some of its members have long resisted the strategy of self-regulation. The former clan-like network aggregating rather general interests of the nuclear power sector had to be converted into a sort of hierarchical associational order. This required an institutionalization of action that has succeeded due to the severe political and economic crises suffered by the nuclear sector (Campbell 1988, 1989). Nevertheless, internal cleavages between sub-groups and former institutional structures determined the choice and the implementation of a new organizational structure. In the following, I will show the important role of social ties for the success of organizational reform. Major initiatives and the unification of action took place in a rather loosely coupled overlapping social network. As an early reaction to "Three-Mile-Island" the "Institute of Nuclear Power Operations" was founded, evolving from the "Three Mile Island Ad Hoc Oversight Committee" at the end of 1979. This association set out to raise the economic efficiency and safety performance of nuclear power plants. Nearly half of its professional staff was recruited from the Nuclear Navy, as for instance INPO-Director Zech Pate;, a former collaborator of Admiral Hyman Rickover. Rickover, the "father of the Nuclear Navy", had informally participated in the foundation of INPO together with Admirals Watkins (later the Secretary of the Department of Energy) and Carr (for many years commissioner and later Chairman of the Nuclear Regulatory Commission). It is said that the president of a major utility, who was also a former naval officer and leading member of the Three Mile Island Ad Hoc Oversight Committee, asked Rickover for his support in establishing INPO as a self-regulatory body, saying, "we need someone who can run INPO like you run the Navy". Rickover had widespread contacts with state administrations, National Laboratories, and parts of the manufacturing industry which built the first commercial power reactors for the US-Navy's submarines (Duncan 1990). After the accident at Three Mile Island, Rickover was an official advisor for nuclear safety and policy under President Carter, who himself had once been a naval cadet in the Rickover-Group. From then on, until his demission by President Reagan, Rickover had his office in the Department of Energy. This case demonstrates the "strength of weak ties" (Granovetter). Their importance has already been emphasized in Truman's (1952) notion of "fellow-travellers". Pluralists assumed that the varying degrees and complex overlappings of group-affiliations play an important role in group-politics and, generally, determine political action. The INPO case also shows the possible influence of state officials on the formation and activities of interest groups. Although the NRC consorts with INPO in a discrete manner, cooperative relations between state and group actors generally have been a domain of personal contacts. These, however, grew from specific meeting points of state and society, namely the Nuclear Navy and National Laboratories. Overlapping social networks of individuals also appear to have been a major cause for unitary action in the US nuclear power sector. At least this was true for the specific crisis situation investigated here.18 The question arises, why US nuclear power associations in a situation of distress "invested" in the organization of nuclear safety rather than expanding their previous pressure politics and lobbying? Olson's theory would lead us to expect the latter alternative, all the more since the core actors' interest and trust in nuclear power have remained unbroken. My suggested answer is that due to the increasing anti-nuclear opposition, competitive lobbying would have cost much more than during the 1950s and '60s. Simultaneously, its benefit became highly uncertain. Thus, investing in economic performance and higher safety standards was the only promising way to reduce the pressure of opposing parties, among them an increasing number of environmental groups,19 parts of the financial sector, and of the energy policy community. Our analysis has discerned two attributes of macro-structures influencing institutional choices: the extent of uncertainty in a given situation and the expected cost/benefit relations of alternative paths of action. Of course, actors often cannot or, if they possess superior power, need not calculate the transactional savings of organizational efforts in advance. Therefore Transaction Cost Economics hardly predicts the initial emergence and growth of interest associations. However, associations whose expenses on organization, expertise, and lobbying rise due to transactional losses will probably modify their organizational strategy. This holds particularly when opposing groups seriously attack their power-position. Olson's associational actor is based on certainty, because his theory does not consider preference conflicts, strategic dilemmas, or informational problems. In this view, even large encompassing organizations experience certainty in regard to their goals and strategies. However, there are obviously other types of voluntary associations which are based on high degrees of uncertainty and complex relations between their members. They provide complex goods by serving their members with controversial and transient solutions to intricate collective problems. Olson focuses on the first type, and conceives the second - politically the much more interesting one - as a logical absurdity. Admittingly, he does consider "encompassing", heterogeneous large groups (Olson 1986), but they merely account for public welfare because of their size: by encompassing huge parts of society they cannot externalize the social costs of their group actions (cf. Lehner, this volume). This argument, however, does not apply to small groups serving public interests in nuclear safety, like INPO in the US nuclear sector. Even more important: the "encompassingness" of organizations is not a constituent part of Olson's theory. In fact, "encompassingness" is introduced as an ad-hoc argument in order to cope with reality. According to his basic argument such groups should not even exist. Integrating the concepts of cross-pressures, overlapping membership, and uncertainty would soften the sharp contrast in Olson's theory between small and encompassing organizations. For these features belong to both small and large groups. This is clearly shown by the small networks of manufacturers and operators of US nuclear power plants. Their capacity to act is not determined by size, but by the complexity of purposes, means, and strategies of organizations. In addition to distinguishing "organizational size" in terms of the number of members, one should also consider "size" in terms of interest differentiation and the complexity of tasks. Groups with few members can involve even more complex tasks and a higher degree of structural complexity than groups with many members.20Rising complexity, however, tends to constitute motives for structural change. As tasks and distributional characteristics within the nuclear power sector became more complex, actors within the policy community urged for new specialized associations. The scope of tasks within nuclear associations narrowed as the number of associations increased. Contrary to Olson's theory, the new network of highly exclusive interest associations serves public interests in nuclear safety more than the former informal and somewhat inclusive clan-structure!


This chapter dealt with strategies of collective action pertaining to institutionalization. We found that the basic principles of political - in contrast to economic - action cannot be reduced to a logic of complementary mutual exchange. A theory of social order based on the association of individuals is certainly more realistic than models of bipartite exchanges in an atomistic society. This is not to deny the explanatory power of theories of rational choice and strategic interaction. Their premises and paradigmatic ideas of reciprocal action, however, are not adequate to the particular logic of political choice. The latter assumes that actors would try to escape dilemmas of strategic choice by involving others in associations and networks, or by establishing one-sided power-dependencies. Thus they strengthen themselves for future transactions. In doing so, actors hurt the premises of rational choice theories: - equal powers to reward or punish, - exogeneous preferences and discourse-free exchanges, - no costs of decison-making and transactions, - consequential action that is ambiguous in regard to individual re-actions, but guided by a well-defined and generally known reward-pattern. An approach based on this premises could hardly deal with some of the most important features of politics: power-dependency; uncertainty, changing reward-structures; costly transactions; efforts of collective organization and resulting institutional rigidities; discourse and social affiliations, as well as ideological commitments. Political actors interested in strengthening their power position in the face of distributional conflict have an incentive to build or join coalitions. Thus, characteristic problems of associational order and (inter)organizational relations arise. The ubiquity of powerful corporate actors would let us expect social closure, structural rigidity, and ever-increasing individual commitments. Social closure and ridigities of political representation and income-distribution have been held responsible for declining economies by many economists and politicians. In reality, however, the flexibility and adaptibility of institutions varies considerably across nations; and it is still an open question: how markets and interest associations interact, and how economic welfare is affected by these forms of governance. This chapter should have shed some light on a specific facet of this issue. Starting with Olson's "stagnation hypothesis", I have tried to explain why social rigidities are much less ubiquitous in democratic systems than predicted, or, in other words, why economies that are dominated by pluralist or corporatist group politics can be efficient in the long run. Of course one could present further explanations dealing with factors such as cultural attitudes, consensual orientations, associational hierarchies, smallness of countries, traditions of a strong administrative state, openness of the legislative process and of administrations, etc. Generally, those explanations pertain to national paths of institutionalization (cf. Katzenstein 1984, 1985, Weir/Skocpol 1985, Czada 1987, Lehmbruch, this volume). Historical explanations are certainly correct, but not fully statisfying when confronted with such deductive monological theories as Mancur Olson's "Rise and Decline of Nations". Three principle mechanisms have been identified that counterpoise social rigidities and economic decline. In general, they encourage actors to choose strategies resulting in social openness and the universalization, as well as the efficiency of social order. In particular, however, their concrete operations depend on institutional and cultural prerequisites, and do not solve the manifold problems of economic governance in an equally efficient manner. Hence, their effectiveness may vary across countries with different institutions, social cleavages, and economic problems. - Competitive relations between groups. These can and will probably be regulated in order to reduce the risks of distributional struggles and the costs of competitive lobbying. However, in the face of scarce resources, the possibilities of cartellization are also limited. Many groups suffering from distributional coalitions are rather small and well-organized. Hence, they can easily oppose the collusive action of others. Generally, one can say that in a competitive political environment and at a constant level of associability, interest groups which raise social output meet less opposition, and therefore have less problems strengthening their position in society than harmful Olsonian distributional coalitions. Moreover, the example of U.S. nuclear interest-associations has shown that group size is an insufficient indicator of associability. One has to account for the historically determined complexity of preference-structures and of applied technologies, as well as for environmental turbulences and scales of conflict in societal sectors. - Scale-economies of associations. It has been shown that group politics, even of small special interest groups, raises costs of organization, expertise, bargaining, and lobbying. Large groups can afford an effective management and a rich supply of selective services on the basis of low membership dues. Thus, scale-economies of associations provide for an inherent solution of the free-rider problem. This is particularly true when individual risks are involved that can be averted through membership. Moreover, scale-economies contribute to the professionalization, opportunitites of strategic interaction, and efficiency of associational management. The example of US-nuclear interest associations shows that autonomous associational bureaucracies can enlarge the somewhat restricted world-views of special-interest groups. Whether groups can profit from associational scale-economies, however, depends on the scale of internal conflict, ideological commitments,21 and on external threats in specific historical constellations. - Overlapping membership and the social embeddedness of political action. Individuals have multiple, often conflicting preferences which they share with different social groups. Theories starting from exogeneous singular preferences of individuals, as for instance Olson's "stagnation hypothesis", necessarily arrive at a perception of narrow interest groups interacting in a socially destructive manner. In contrast, overlapping membership as emphasized by pluralist theory mitigates social conflict. It causes individual cross-pressures and can foster a rationally motivated open-mindedness towards various interests in society. Besides, multiple preferences encourage "fellow-travelling" (Truman 1951:158) that can be thought of as a counterpart to free-riding. Fellow-travellers support goals of organizations without belonging to the dues-paying members. Expanding this argument leads to a concept of "social embeddedness" which stresses the link between institutions, interests, and values such as: sociability, approval, loyalty, compromise, justice, and status (Granovetter 1985). How "overlapping membership" and "fellow-travelling" affect national or sectoral policies depends on the recruitment, structure, and placement of elites in national systems.22According to our analysis, there is still some truth in the pluralist belief that group politics promote allocative efficiency and economic wealth. One apparently has to separate this argument from the normative assumptions of the pluralist theory of democracy. Pluralism does not fully support democracy, since freedom of association does not provide for the symmetrical organization and representation of interests in a society (Olson 1965). However, this does not render the whole theory of pluralism worthless. A bias of representation does not necessarily effect the allocative principles of competitive group-politics; though it can fundamentally change the distribution of its actual outcomes. So far, the analysis revealed an elitist organized pluralism which is economically efficient. In particular, the Olsonian critique has failed to respond to pluralist assumptions about the social nature and multiplicity of individual interests. Rising levels of welfare and social differentiation helped enlarge the wants and preferences of individuals. The concomitant increase of overlapping membership favors a kind of openness and "fellow-travelling" contrasting sharply with Olsons's implicit premise of single exogeneously given individual interests, being exclusively organized in monopolistic special interest associations. Rational choice theories commonly assume unitary actors choosing on the basis of one preference.23 Actually, one can find an ethic of absolute ends followed by politicians and political parties. This, however, tends to diminish opportunities for political choice and, in allowing no compromizes, bears premodern features of narrow-mindedness and irrationality. In his essay "Politics as a Vocation", Max Weber (1965) emphasized that struggling for one ultimate end lacks rationality, since the eventual costs of means and side-effects of such struggles can hardly be calculated. The pursuit of a singular end tends to blind political actors to the manifold social consequences of their action and tempt them into the use of bad means. Both blindness and temptation sap their abilities for strategic interaction. Rational actors have to account for the burdens of their means and consider a multiplicity of side-effects which may eventually hurt their own interests. Wrestling in a china shop - according to Olson (1982:44) the essence of group politics - is certainly not the best way to acquire more pieces of china (and especially to keep them). In situations that are characterized by high levels of mutual dependency of individuals and social groups, the ethic of singular absolute ends has self-destroying consequences. This is particularly true when propertied social groups bear a risk of losing. All the more, they will calculate the mode and costs of distributional conflict in advance. Therefore, in today's welfare states, the poor cost/benefit relation of distributive struggles and the rationally motivated openness and sociability of men usually prevent more economic damage than Olson's stagnation hypothesis would let us expect.


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1. I wish to thank Berndt Keller, Karin Tritt and Frans van Waarden for their critical comments on earlier versions of this chapter

2. Of course, these assumptions can be applied loosely. However, if economists account for real-world phenomena such as power-dependencies, normative behavior, ideological discourse, and transaction-costs, their argument hardly becomes more realistic (cf. Elster 1986).

3. New translation of Weber (1972:21). Weber explicitly contrasted the compensation of interests (Interessenausgleich) with the unionization of interests (Interessenverbindung).

4. "Problem-Solving" hardly solves problems that are caused by its possible negative external effects. Even state actors in a segmented polity can solve their interactional dilemmas at the expense of third parties. Thus, in a two actors model of politics - statist or societal - turn-taking does not provide a general solution to political conflicts over scarce resources.

5. Generally, utilitarian theories do provide for rationalist explanations of spontaneous social order. Though logically correct, they cannot explain how the state of a social contract or the institutionalization of cooperation emerges and survives in practice. Conditions of distributional conflict, transaction-costs, or individual riskaversion aggrevate the spontaneous formation of order. To meet those obstacles requires collective action at first, as well as the political control of social organizations.

6. March and Olsen (1989) with their appraisal of standard operating procedures and garbage can solutions stand close to this Weberian argument (cf. Johan Olsen's contribution in this volume, Weber 1972).

7. In the following, only well-organized special-interest groups are considered. Therefore cost-bearers are not equated with tax-payers, as in Becker's model, but rather with special-interest groups that suffer from inefficiencies caused by distributional coalitions.

8. Likewise "an increase in the dead-weight costs of taxation encourages pressures by tax-payers because they are then harmed more by tax-payments. Similarly an increase in the dead-weight costs of subsidies discourages pressure by recipients because they then benefit less from subsidies received" (Becker 1986:101). This can explain variations in tax revolts among western industrialized countries. The more taxes wear off owing to inefficient administrations and politically determined misallocations, the less resources are available to compensate tax payers for their individual losses; and the smaller are the benefits for subsidized groups in relation to their costs of lobbying.

9. Examples of these conditions would be the specific economic problems of small countries suffering from turbulences of world markets, associational structures and historically determined state regulations, which enable or even force political actors to overcome or confine excessive distributional struggles (cf. Czada 1989).

10. In a game theoretical approach this would mean that distributional conflicts lose their zero-sum character. It is questionable however, whether antagonistic interest associations conciously choose a cooperative rule in order to raise their future pay-offs from an increased social output. On could also conceive strong organizational interests in saving actual costs of conflict, e.g. rich unions with considerable strike funds as in Sweden or Germany would then be more cooperative than those who have nothing to lose.

11. Hayek (1969:185) employs the analytical distinction of "commutative" and "distributive" justice; as for the corporatist exchange hypothesis, see Lehmbruch (1984, and this volume).

12. These countries are among the richest capitalist nations (in terms of GDP per capita), albeit they differ considerably when distributive issues are concerned. In our context however, the structure of interest intermediation and its effects on productive efficiency is in the fore. The distribution of wealth depends on state policies and the relative power of interest groups which are not discussed here. Of course, these are bound to structural aspects of interest systems (cf. Schmidt 1987, Czada 1987). In reality, however, one finds similar methods of social coordination with different power relations and participants: for instance one can find corporatism with (Sweden) or without labor (Japan) and pluralist structures with strong and well organized (Australia) labor unions or with disorganized labor (USA).

13. I owe this argument to Mary Douglas who, in a personal communication, called British unions sectarian, since their cultural attitude of personal solidarity paired with isolation from their wider social environment supresses any kind of formalization and inclusiveness of problem-solving.

14. Multiple interests of individuals not only disperse across groups with the effect of overlapping membership; likewise individual motives to associate can differ considerably within groups. That is because associations accomplish more than one task and provide for many services which usually attract their members in different mixtures (Keller 1988). Mixed motives to associate contribute to associational heterogeneity. Their effect on inter-organizational politics and policy-making usually adds to overlapping membership as an integrative force of associational systems.

15. Overlapping membership appears to be a social correlate of the individual "multiple-self" (Elster 1985). Multiple selves are often mediated through multiple social belongings. When many people experience them as contradictory and are "forced" to "preference-falsification", i.e. to hide their latent preferences, sudden outbursts of public denomination can occur and destabilize societies. (See for instance Timur Kurans (1989, 1990) theory of revolutions, which is based on only two preferences or, as one could also say, belongings: public and private.) Therefore, in repressive societies, the intergrative effects of overlapping membership can rapidly change into desintegration, depending on social and political circumstances.

16. All the more in democratic systems with freedom of association, social closure does not establish such rigid and impermeable, and often mental, borders between groups as one finds in medieval guilds or indian castes. These were based on a considerable extent of coercion. Besides, they did not represent narrow interests but general ideological orientations which subdivided society in closed layers. Guilds and castes fully determined the lives of their members, and did not allow for overlapping membership. Nevertheless Olson (1982:157) calls them distributional coalitions, compareable to pluralist groups in modern western civilizations. Such historical examples fail to meet the essentials of voluntary association in modern societies. Guilds and castes did not allow for individual autonomy as it is required for rational individual choices. Though, ironically, Olson's rather unrealistic premise of one singular exogeneous individual preference being identical for all members of a group comes close to them.

17. According to the Price-Anderson Act passed in 1957, the government was committed to insure the difference between the amount of insurance available from private insurers and a $560 million limit for a single accident. In the 1980s the Price-Anderson Act was amended, making the industry's limits of liability and insurance rates depend on the performance and safety ratings provided by INPO for individual plants.

18. Campbell (1986) reports about a clan-like network that helped to promote nuclear power during its formative period in the '50s. The question arises as to the extent that such unifying networks arise from traditions of social affiliation in scattered institutional structures. Of course, social networks can also be created or used as instruments for the purpose of actual state policies. Our analysis reveals, however, that during the eighties the networks of state-officials and business representatives as well as private associations were not exposed to any official interventions from state administrations such as the NRC.

19. One should hold in mind that environmental groups, particularly those living in the neighborhood of nuclear sites, are seen as special interest groups by the nuclear establishment.

20. Although interest heterogeneity and the complexity of tasks are normally higher in large groups, size does not fully determine the dependency of collective action upon formal organization as Offe and Wiesenthal (1980) suggest. One should rather think of "size" as a twofold, output and product related, concept. On the one hand, associational problems depend on the volume and complexity of organizational "products" like nuclear monitoring, wage-contracts, or technical norms. Simultaneously, there is an input related dimension of size, the number and homogeneity of membership, which affects the production of associational goods. It would be wrong, however, to assume a linear positive relationship between these different measures of organizational "size".

21. Ideological commitments influence the costs of unitary action. They can reduce the transaction-costs of organizational order (North 1981), or, if sectarian solidarity norms prevail, restrict internal bureaucratization and inter-group coordination (cf. footnote 10).

22. To illustrate: the Swiss body of militia officers penetrates the command posts of political and economic organizations; in Austria, Sweden, and Norway one finds close ties of economic experts of unions and employers' associations caused by the small numbers of economic faculties in small countries. The role of the U.S. nuclear navy for the civilian nuclear power operations described in this chapter would also be a case in point.

23. In game theory, the "Battle of the Sexes" constellation represents an exception. There two actors have one overlapping, common preference and one exclusive, opposing preference each (Scharpf, this volume, p. 64).