Friday, April 28, 2017

Technological change facilitates collective action but complicates social choice

Two sets of problems make collective decision-making difficult, as well understood by economists and political scientists for a long time: collective action problems and social choice problems. Collective action problems arise because of free-riding: when some good or action benefits a broad collective, individuals have an interest in waiting for the others to incur the costs of providing the good or doing the action. Social choice problems arise from the difficulties of going from individual preferences to social decisions. We know from Condorcet and Kenneth Arrow that the rankings that individuals make of different alternatives are very difficult to translate into social decisions that satisfy a minimum list of desirable conditions (or axioms). In particular, it is very difficult to come up with examples where individually transitive rankings of (at least three) alternatives can be converted by some voting rule into a collectively transitive ranking. That is a big cause of political instability in democratic societies. There are cases where the problems identified by Condorcet and Arrow can be overcome. For example, if the alternatives can be summarized into only two, then the cycles induced by majority rule disappear and a stable solution exists. If the preferences of individuals are "ideological" in some stable sense, this also facilitates stability. Experts in the theory and history of political parties explain that these organizations have over history helped to alleviate both collective action and social choice problems. By reducing the costs of political organization for individuals, they were more willing to join collective efforts to fight for common causes, overcoming the free rider problem. Also, by organizing through shared identities, they facilitated the identification of people with stable ideologies, therefore balancing the tendency of democratic politics to instability. I would conjecture that technological change has an asymmetric effect on these two phenomena. On the one hand, the Internet and social networks facilitate political organization. Party-like organizations are very easy to set up these days. The personal costs of being involved into anything are minimal. Collective action is easier. However, smaller and smaller party-like organizations are possible. Small echo-chambers are very easy to organize, and for some reason that I don't fully understand they set a premium on disagreement and small identities. Political entrepreneurs appear from nowhere when things look stable, organizing around hardly coherent "ideologies", like left-wing nationalists or pro-working class tycoons, thus complicating social choice.

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