by Thomas R. Wells
Collective action problems pit individual selfishness against the collective interest in areas as diverse as pollution, trade, peace, and public roads. The invisible hand of the market can't reach them. Instead we need politics. The European Union used to be good at this. But not any more.
An example. Public goods like roads and schools and police are worth far more than they cost. We would all be better off as individuals if we each donated some portion of our gains from them into a collective fund for providing them. Unfortunately, we would each be even better off if we were able to escape paying our fair share while everyone else paid theirs. Then we would have our cake and be able to eat it too, to drive on the roads that other people paid for. But then only suckers would contribute, and so the roads wouldn't get built and we would all travel very slowly and inconveniently.
Collective action problems are mitigated rather than solved. The main approach is the one recommended by Hobbes in his classic statement of the problem: we call our donations ‘taxes' and appoint someone with a big stick to come along and make sure everyone pays. Introducing an external power ('the government') with the power to punish anti-social behaviour changes the pay-offs attached to our choice of whether to contribute to the public good. Now individual rationality lines up with rational collective choice and the roads get built.
There are however two alternative approaches to the Big Stick. We can institutionalise cooperation, for example by making it easier to make binding promises to each other. Or we can moralise it, by taking up a 'team' perspective and acting on the maxim, 'Act as I would wish others to do'.
