Collective Action Problems / Civil Society Organizations
Term: Collective Action Problems / Civil Society Organizations | Book: Lipstick on a Pig (financial bailouts): book profile and conceptual summary
Definition and core idea
A collective action problem arises when a large group of people share a common interest but, because of the cost of coordination, scattered information or the incentive to free-ride, cannot easily cooperate to achieve it.
Explanation and elaboration
Depositors or borrowers may each have an interest in stability, fairness and appropriate access to banking services, yet individually have little power to influence the rules of the financial system. Civic organisations can reduce the cost of gathering information, drafting a shared demand, representation and follow-up.
The effectiveness of organising depends on trust, resources, leadership, the decision-making mechanism and the ability to sustain participation over time. This is linked to the “free rider”: a person may want to benefit from the collective result without taking any share in its cost and effort.
Notes and limits of interpretation
Separating claim from fact
Civic organisations too may suffer from weak representation, shortage of resources or capture by influential groups; the existence of an organisation does not by itself guarantee public representation.
Relations to other concepts
Review questions
- What problem does this concept clarify?
- Who benefits and who is harmed?
- What evidence is needed to test this claim in a real case?
- Which part is the author’s position and which part needs independent evidence?