Power And Prosperity: Outgrowing Communist And Capitalist Dictatorships

Power and Prosperity is an example of economics at its best. First of all, it takes a balanced or neutral approach to its subject matter. The author is not out to prove the superiority of either markets or government. Governmental power is a double edged sword to Olson. Government power promotes prosperity by restraining 'roving bandits' or special interests. Government power is also susceptible to the influence of special interests. Olson also discusses the merits and faults of markets. Markets are ubiquitous and can lead to prosperity, but often do not. Government has a role in this. That is, he finds blame for this in the most negative aspects of government. Olson does not assume market efficiency either. He explains it, as well as some possible limitations to markets. This is also a highly insightful book. Much of his analysis derives from his earlier work on "the logic of collective action'. He also uses some transaction costs and basic supply and demand/substitution effect reasoning to explain historical events. Students in my comparative classes had more trouble with this book than any other, but it is still manageable. Reading it might be difficult for those who lack an education in economics. But I am not sure if there is an easier way to say what it says, and what it says is most interesting. The concepts the author employs makes a greater understanding of different economic systems and historical periods possible. This is penetrating analysis. It is also highly relevant. Much of this book focuses on the Soviet Union. One could say that the USSR is a done deal- it failed so forget about it. It is, however, important to understand why it failed so as to avoid repeating such errors in the future. This is what the Author is driving at with in his use of the Soviet example. There were reasons for the failure of the Soviet system that also apply to problems in other nations- not to mention Russia today. The misuse of power has the potential to prevent prosperity as much now as it did under Stalin and Khrushchev. Does this book have faults? Certainly. Olson takes too positive a view of Stalin's industrialization program (not that he praises Stalin). Olson dismisses complete privatization, or anarchy, too easily. There is nothing wrong with arguing against anarchy. But, his arguments against privatizing the state (i.e private police and courts) are little more than an unsupported dismissal of such arrangements. If he did not want to debate that issue, he should not have taken such a strong stand. He also might have mentioned a few things about FA Hayek- especially on p136 where he wrote "a bureaucracy cannot process all the information needed to calculate an optimal allocation or put it into practice". While there are a few faults to this book, it is still excellent. It is a must read for anyone interested in either comparative economics and politics, Globalization, or the economic history of the Soviet Union.

Parts of this book are a bit slow and more theoretical than I want, but the chapter on the Soviet Union is one of the best economic essays I've ever read.It convincingly discredits the idea that a misguided ideology led Soviet planners astray, by describing how the policies appear shrewdly designed to maximize Stalin's wealth.It also provides a compelling explanation of the more recent Soviet and post-Soviet economic problems by documenting the extent to which special interests have made their industry unproductive by adopting work rules/habits designed maximize job security.I wish I could believe these problems were unique to countries afflicted with communism, but the book's reasoning suggests that many parts of our economy where bureaucracies aren't shut down if they fail to produce valuable results (much of government, businesses in industries with little competition, and I don't know what fraction of nonprofits) are equally wasteful.

This was Olson's final book. He was a profound thinker - from the Logic of Collective Action (which argued that people join groups to get more than they give) to The Rise and Decline of Nations (which argued that democratic systems gum up as interests need to negotiate the margins) to this book which looks at how power works.Like The Rise and Decline it is not an easy read. But his speculations are well worth the effort in thinking both how people operate within an organizational context and how nations operate.To get the full impact of his work you should probably read all three - but this is clearly I think his best.

This book is not only an accesible introduction to Olson's most acclaimed theses, rather it summarized the latest fruits from Olson's reflections about the origin of States and the relative virtues of democracy and dictatorship for long term economic development. I have found Olson ideas very useful as a benchmark to understand the economic and social stagnation of Venezuelan and other Oil Countries, where rich States fail to use their vast external resources to produce productive and developed societies.

I read about this book in the Wall Street Journal and then snapped up a copy. Olson writes so clearly and accessibly that you almost don't realize you're reading a book about economics. Highly recommended for people interested in the future of the world economy and world politics.