¹ Knorr, Klaus and Verba, Sidney, eds., The International System (Princeton 1961).Google Scholar

² In particular, see Brodie's, BernardStrategy in the Missile Age (Princeton 1959)Google Scholar and Schelling's, ThomasStrategy of Conflict (Cambridge, Mass, 1960)Google Scholar for some of the more theoretical discussions. On the other hand, Schelling, Thomas and Halperin, Morton, Strategy and Arms Control (New York 1961)Google Scholar is a good example of applied theory of strategic interactions.

³ Olson, Mancur Jr., The Logic of Collective Action (Cambridge, Mass. 1965).Google Scholar

⁴ Differences in formulation between ourselves and Olson, ibid., will be discussed in Sections II and III.

⁵ Increasing tax collections, after all, was one of the major policy objectives in the Alliance for Progress and is a standard policy prescription given by the International Monetary Fund.

⁶ Space does not permit anything approaching a full presentation of the theory which will be employed in deducing the specific hypotheses. Fuller treatment of the model appears in Frohlich, NormanOppenheimer, Joe, and Young, Oran, Political Leadership and Collective Goods (Princeton 1971)Google Scholar and Frohlich, and Oppenheimer, , An Entrepreneurial Theory of Politics, unpubl. Ph.D. diss. (Princeton University 1971)Google Scholar [hereafter cited as Entrepreneurial Theory]. Here only a brief descriptive sketch of some of the assumptions and relevant variables is presented. The description of the theory presented here is done in a relatively non-technical fashion and all mathematical manipulations and symbolization have been omitted. Although the authors feel that the basic model can be applied to numerous political situations, not very many specific applications have yet been constructed. And in no case have the results yet been subject to empirical test. Such situations, of course, are not rare. For example, the models of deterrence and strategic interaction were not subject to great empirical testing until after their initial adoption for policy purposes. But such testing, we feel, is important and should have relatively high priority in future empirical work.

⁷ More technically, an individual behaves rationally if he conforms to the following three conditions in choosing among alternatives: 1) the individual evaluates alternatives in his environment on the basis of his preferences, 2) his preference-ordering is transitive, and 3) he always chooses the alternative he prefers.

⁸ The interested reader, who wishes to see how alternative assumptions might be used to construct choice models, is referred to Valavanis, Stefan, “The Resolution of Conflict When Utilities Interact,” Journal of Conflict Resolution, 11 (June 1958) 156–69.CrossRefGoogle Scholar The article is suggestive of some of the difficulties which can be encountered through the employment of such assumptions.

⁹ The derivation of a cardinal utility scale with these characteristics was performed by von Neumann, John and Morgenstern, Oskar, Theory of Games and Economic Behavior (2nd ed., Princeton 1946)Google Scholar, and was summarized in Luce, Duncan and Raiffa, Howard, Games and Decisions (New York 1957)Google Scholar, chap. 2.

¹⁰ The choice may be from among the lesser of two evils. Thus, for example, it is conceivable that the rational individual in a prison chooses suicide rather than torture. In Leviathan, Thomas Hobbes discusses rational choice under coercion at length in chap. 21.

¹¹ Samuelson, Paul makes a similar distinction in “A Diagrammatic Exposition of a Theory of Public Expenditure,” Review of Economics and Statistics, XLVII (November 1955) 350–56.CrossRefGoogle Scholar

¹² Banfield, Edward C., Political Influence (New York 1961)Google Scholar, chap. 8, and Wagner, Richard H., “Pressure Groups and Political Entrepreneurs,” Papers on Non-Market Decision Maying, 1 (1966), 161–70Google Scholar (a review of Olson, fn. 3).

¹³ Albert, and Breton, Raymond, “An Economic Theory of Social Movements,” American Economic Review, LIX (May 1969), 196–205Google Scholar; also Salisbury, Robert H., “An Exchange Theory of Interest Groups,” Midwest Journal of Political Science, XIII (February 1969), 1–32.CrossRefGoogle Scholar

¹⁴ Wittvogel, Karl, Oriental Despotism (New Haven 1957), especially pp. 25–27 and 34–43.Google Scholar

¹⁵ Schapera, Isaac, Government and Politics in Tribal Society (New York 1956).Google Scholar (Pages are cited from the Schocken paperback edition, 1967.) An interesting comparison between tribal chiefs and Plunkitt of Tammany Hall may be made in this regard: see p. 75 of Schapera and p. 28 of Riordon, William L., Plunkitt of Tammany Hall (New York 1963).Google Scholar

¹⁶ Sayre, Wallace and Kaufman, Herbert, Governing New York City (New York 1960)Google Scholar. Here also, the modern-day entrepreneur can be compared with Plunkitt. See p. 542.

¹⁷ The original distinction between public and private goods was implicit in the definitions made by Samuelson (fn. II). There, and in an earlier article, “The Pure Theory of Public Expenditure,” Review of Economics and Statistics, XLVI (November 1954), 387–89Google Scholar, he laid the ground work for the development of collective good theory.

¹⁸ A far more detailed discussion of these distinctions is found in Entrepreneurial Theory (fn. 6), chap. 2. There the problem of mixed cases, and the nature of the dimensions are discussed. The collective-individualistic distinction was also introduced in Samuelson's articles (fns. 11 and 17). The distinction was first developed into a broad theoretical work of importance to political scientists by Mancur Olson (fn. 3). But it is clear that in his work, Olson was aware that the distinctions made by Samuelson needed further refinement. Olson was able to deal with the four types of exchanges by differentiating between what he called “exclusive” and “inclusive” groups. Exclusive groups are groups which in our terminology receive private goods collectively, while inclusive groups receive public goods collectively. The first attempts to improve upon the Samuelson definitions are by Head, J. G., “Public Goods and Public Policy,” Public Finance, XVII (November 1962), 107–219.Google Scholar A fuller discussion of the relevant literature can be found in Entrepreneurial Theory (fn, 6), and in Shoup, Carl S., Public Finance (Chicago 1969).Google Scholar

¹⁹ A discussion of the types of cases in which such an assumption is most likely to be successful would lead us too far astray for the purposes at hand.

²⁰ Entrepreneurial Theory (fn. 6).

²¹ Suboptimality (and therefore optimality) are defined in terms of Pareto's familiar criterion. An optimal situation is one in which no individuals can be made better off without at least one individual being made worse off (side payments included).

²² For a particularly lucid, and brief, formal discussion of this problem, the reader can consult Olson, Mancur Jr. and Zeckhauser, Richard, “An Economic Theory of Alliances,” The Review of Economics and Statistics, XLVIII (August 1966), 266–79CrossRefGoogle Scholar, reprinted in Russett, Bruce M., ed., Economic Theories of International Relations (Chicago 1968) 25–45.Google Scholar Page references are to the Russett volume.

²³ Note however that this problem can arise in situations involving externalities.

²⁴ For a fuller analysis of free-rider problems see Frohlich, and Oppenheimer, , “I Get By with a Little Help from My Friends,” World Politics, XXIII (October 1970) 104–20.CrossRefGoogle Scholar

²⁵ ibid.

²⁶ For a fuller discussion, see Frohlich and Oppenheimer, “Governmental Violence and Revenues,” in Herbert Hirsch and David Perry, eds., Political Microviolence (New York, forthcoming).

²⁷ These applications can be found in Frohlich, Oppenheimer and Young (fn. 6), and in Entrepreneurial Theory (fn. 6).

²⁸ This analysis which antedates the current four-fold typology of exchange relationships can be found in Frohlich, Oppenheimer and Young (fn. 6), chap. 3.

²⁹ Other discussion of some of the points developed in Olson and Zeckhauser's work include van Ypersele de Strihon, Jacques, “Sharing the Defense Burden Among Westera Allies,” Review of Economics and Statistics, XLIX (November 1967), 527–36CrossRefGoogle Scholar, and “Explaining the Difference in the Relative Defense Burdens Borne by the NATO Allies,” International Studies Quarterly, XII (No. 4, 1968).Google Scholar Also see Olson, and Zeckhauser's, “Collective Goods, Comparative Advantage, and Alliance Efficiency,” in McKean, R. N., ed., Issues in Dejense Economics (New York 1967).Google Scholar

³⁰ Olson and Zeckhauser (fn. 22), 41.

³¹ Ibid., 43–45.

³² Ibid., 45.

³³ Frohlich and Oppenheimer (fn. 26).

³⁴ In Entrepreneurial Theory (fn. 6), we have shown that the price set by the leader for egress will be such that each individual will either buy guaranteed egress, or none at all. Chapters 8 and g deal extensively with taxation.

³⁵ Here our formulation diverges from Olson's in The Logic of Collective Action (fn. 3). Rather than viewing taxation solely as a mechanism used to engineer the collective supply of valuables, we view the supply of valuables as a potential buttress to a profitable taxation apparatus. Both directions in the relationship are possible.

³⁶ The discussion of opposition and political competition here is necessarily abbreviated. For a fuller discussion of the mechanisms and relationships which obtain, the reader may refer to chapters 3 and 4 of Frohlich, Oppenheimer, and Young (fn. 6) and chapter 11 of Entrepreneurial Theory (fn. 6). The sketch above, at least superficially, resembles the analysis by Downs, Anthony, An Economic Theory of Democracy (New York 1957).Google Scholar There he described the motivation of the politician as vote maximizing. Our formulations are quite different. The politician is assumed to maximize expected profits. This means, for example, that an opponent may well find permanent installation as an opponent to the established leadership a profitable venture, even if he never wins the leadership position. Other differences are discussed in Frohlich, Oppenheimer and Young (fn. 6).

³⁷ Interest groups are infamous for their donations to political parties to have certain issues avoided or taken up.

³⁸ Such a donation may be analytically similar to a tax payment where the programmatic purchase by the individual is the avoidance of a negatively valued private good.

³⁹ Note that we here assume the competition is a two-way struggle between the faction and the government. This is done to simplify the analysis and the presentation. Of course, although we are discussing donations here the members may also be taxed by the leadership and the opposition. In this analysis, however, we will focus on the basis for voluntary support for the competitors.

⁴⁰ In a similar fashion, an outside power attempting to increase the disposable resources available to the government by ending “petty graft and corruption” in the machinery of the state runs the risk of alienating the lower level operatives of the state from the leadership. Some compensating support may be generated among those who bear the cost of the “graft,” however.

⁴¹ Military interventions in one particular state may be undertaken in part for their effect on other interests of the intervening power. We will not treat these effects here. Rather we will concentrate on internal consequences of the intervention and how these might affect future interactions between intervenee and intervenor.

⁴² Here we will discuss the potential revenue which the leadership of the faction's replacement could command were it successful in coordinating the expectations of potential followers. Later we will discuss some of the problems that the leaders must overcome to realize this revenue potential.

⁴³ The difficulties of instituting such a policy should not go unnoticed. Chief among these is the difficulty of insuring that the opposition supported by the outside power does not attempt to capture the support of those in the society who favored the movement removed by the intervention by including its undesirable policy stances in its programs. And of course the difficulty of supporting an opposition movement to a government which is being supported, in itself, is a nice feat.

⁴⁴ Olson, Mancur Jr. discusses some of the factors bearing on such data in Towards a Social Report (Washington 1969).Google Scholar See also Jackson, Raymond, “A ‘Taxpayer's Revolution’ and Economic Reality,” Public Choice, X (Spring 1971), 93–96.CrossRefGoogle Scholar