from: Czada, Roland/
Hans (eds), 1998: Institutions and Political Choice. On the limits
of rationality. Amsterdam: VU Press, pp. 229 - 256 (first published 1991,
Interest Groups, Self-Interest
and the Institutionalization
of Political Action1
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,
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
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
Game theory and the
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".
problem of institutionalization
Political associations and the formation
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
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,
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
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
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
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
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,
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 and political action
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
"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
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
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
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
in the US nuclear power sector
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
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. -
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.
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
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
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
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
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
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).