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Book Ultee Chapter 2 In the present chapter we review systematic studies of societies conducted before sociology got its name. We begin by stating Hobbes' question of the extent to which life in particular societies is peaceful or marked by bloodshed, and Hobbes' answer to it. A long-standing question in sociology is called Hobbes' problem. Hobbes' question says: `How is it possible that people live together peacefully?' The answer Hobbes gave: `only a sovereign state will avert a war of all against all'. Sociologists use the expression the problem of order to designate one of their master questions. Hobbes' answer to this question can be contrasted with two varieties of answers One type assumes an invisible yet omnipresent and omnipotent god. The Bible was God's word and proved His existence. Other explanations postulated final causes and hidden substances. Those philosophical answers are vague and unfinished. Hobbes answer, in contrast to these two types, is informative and testable, and therefore scientific. According to Hobbes' solution to the problem of order, every human being has particular desires and aversions. Every individual needs food and liquid, and longs for wealth, knowledge and honor. All people try to avoid the situations they dislike, and they attempt to reach their goals. Persons, when left to themselves, will pursue with all available means their own interests, even if this is at the expense of others. This condition Hobbes refers to as the state of nature. In the state of nature the way people seek to attain their goals results in killing, subduing, dispelling, repelling or resisting others. This situation Hobbes signifies as a war of all against all. Under these circumstances, so Hobbes holds, life will be lonely, poor, nasty, brutish and short. According to Hobbes, wealth, knowledge and honor not only are ends, but are also means to attain more distant goals. They do not simply provide ways to save one's life momentarily but they offer assurance for a future enjoyable life too. According to Hobbes, people differ less in bodily strength than in wealth, knowledge and honor. That is why in the state of nature, people threaten one another with violence. According to Hobbes, people in the state of nature eventually forego physical force. Endowed with reason, they see the necessity of a deal that bans violence. However, such a pledge is not followed spontaneously. It must be implemented. When closing this covenant, an organization is erected, and all people agreeing to refrain from violence. This structure is called the state, and the person embodying it the sovereign. People will perform the acts which now are penalized, less frequently than in the state of nature. Civil war will not occur, nor cases of violence like murder, injury, burglary or robbery. The problem of order after Hobbes Hobbes' solution to the problem of order threw up several questions. Locke came to add two questions to Hobbes' original question. The first question might be called the question of oppression, the second that of rebellion. The question of oppression is about the conditions under which a sovereign employs force against his subjects. The question of rebellion is about the circumstances under which the members of a society use violence against their sovereign. Will every person acquiesce to any which ever law to raise taxes, or might people rebel against handing over a part of their possessions to a state? Locke on the separation of powers According to Locke, the mere presence of a sovereign is not sufficient to bar violence from a society. After all, this person can be arbitrary and the sovereign may even punish people who adhere to all the laws of a country. Locke went on to ask under which conditions oppression within states will be stronger and rebellion less likely. According to Locke, oppression and rebellion are less probable in a situation in which the legislative tasks of a state are separated from the administration of its laws. In a state in which legislation is separated from administration, fewer infringements of laws go unpunished, while law-abiding citizens are less likely to be penalized. Otherwise judges could acquit friends and convict enemies. In addition, rebellion of the population against the state will occur less frequently. Montesquieu on the separation of powers Locke’s (two) separation of powers lasted until 1748, when Montesquieu substantiated the hypothesis that the separation of powers should be in three units. He held that in states with a separation between the executive, judicial and legislative branches, fewer people who trespass laws go free and fewer lawabiding citizens are penalized. In addition, Montesquieu stated that in such societies, violence of persons against other persons, of the state against its subjects, and of citizens against the state, is less likely. Bentham on the judiciary According to Bentham, people seek pleasure and avoid pain, and they perform those acts that gratify most and distress least. The penalties for acts forbidden by law, increase the burden of a crime. Bentham on the executive Thus Bentham's hypothesis says that the more intensively, longer, and more speedily a society's judges have punished a crime, and the more likely a society's members who committed this crime have been arrested and convicted, the less frequently this act will be performed by this society's inhabitants. Heavier punishments by judges only do so if the chances of being caught by the police are sufficiently high. Hobbes' problem of order involves the violence which people use against each other. However, when states exist, three other types of violence are possible: states may oppress their subjects, people may rebel against the state, and states may wager war against each other. Finally, rebellion comprises revolution and revolt. Utilitarian individualism Utilitarian individualism Answers to questions on the macro level involve assumptions about individuals. That is why it is called individualism. And because the main proposition on individuals holds that individuals maximize their utility, it is called utilitarian individualism. The core of utilitarian individualism in a schematic way. a) each feature of every society is the outcome of certain acts performed by its inhabitants under certain circumstances; b) these individuals have specific goals, c) they have a particular but always limited amount of means, d) and these individuals employ their means in such a way that they approach their goals as closely as possible (they choose the act which maximizes their utility); e) the circumstances under which people act, affect the extent to which they reach own their goals in the short run, f) and the extent to which they reach them in the long run, as well as the extent that other reach their goals. Hobbes' elaboration of the core of utilitarian individualism in a state of nature a) One feature of societies is the extent to which life for its members is peaceful or marked by bloodshed; b) the first priority of the members of a society is to avoid death and injury; their next one is to assuage hunger and quench thirst; and their third one to secure wealth, knowledge, and honour; c) almost all members of a society possess physical force; d) threatening others with and using physical force against others, e) in the state of nature in the short run helps persons to realize their priorities, f) and in the long run causes every member of society to die a premature and violent death. Hobbes' elaboration of the core of utilitarian individualism with a sovereign state a) One feature of societies is the extent to which life for its members is peaceful or marked by bloodshed; b) the first priority of the members of a society is to avoid death and injury; their next one is to assuage hunger and quench thirst; and their third one to secure wealth, knowledge, and honour; c) almost all members of a society possess physical force; d) threatening others with and using physical force against others, e) in sovereign states in the short run has as a consequence that persons no longer realize their priorities to the extent that they might in the state of nature, f) and penalization by the sovereign has as a long-run effect that life in sovereign states is more peaceful than in the state of nature. Book Ultee Chapter 4 As argued in chapter 1, sociology has three main questions. In this chapter we expound the sub-questions of one main question, the problem of inequality. In its most simple form, the problem of inequality runs: "who gets what and why?" Multiple sociologists looked at this question: Rousseau, Ferguson & Millar, Marx & Engels. According to this tradition, societal phenomena - like cohesion, rationalization and above all inequality - are to be explained by the way people make their living. Changes in their means of subsistence determine the course of history - hence the name historical materialism. Engels and Marx used it to predict that the societies in which they were living were to show ever-increasing inequalities. Rousseau held that in the early days of humanity the members of this species made their living by collecting fruits and hunting game and that they later on did so by working fields. This shift from one mode of existence to another resulted in the institution of land ownership and persistent inequality. Millar, in his turn, broadened the problem of inequality. He was not only concerned with inequalities between masters and servants but also with distinctions of rank in general: men ranked above women, fathers above children, and rulers above subjects. The propositions of Engels and Marx above all involved the then European societies with their freedoms of labour and property and a highly developed division of labour. After Rousseau had named the origin of inequality and Ferguson and Millar had investigated how in the past various inequalities had developed, Engels and Marx indicated what in the future were to happen with the inequalities between capitalists and workers. Since property in these societies mostly took the form of individual ownership of factory halls and machines, also called capital goods, Engels and Marx referred to the way of living paramount in these societies as the "capitalist mode of production" According to them the growth of the total amount of capital in a society, is accompanied by more and more riches on the side of the owners of capital and increasing poverty among the members of the working class. They tagged this hypothesis the general law of capitalist accumulation. According to the rules of law in a capitalist society all its members have equal chances, but in actual fact the disparities in the condition of capitalists and the condition of workers widen. The core of historical materialism Why does the capitalist mode of production, with the passage of time, lead to increasing disparities in the standard of living between a society's members? An answer to this is stated in the core of historical materialism: a) Whatever mode of production prevails in a society, b) every inequality in that society, c) rests on some form of compulsion resulting from this mode of production; d) this compulsion leads to a certain type of strife, e) and sometimes this strife results in the abolition of the old mode of production with its ensuing forms of compulsion and the disappearance of old inequalities, f) and under certain circumstances in the coming of equality. Classic historical materialism Engels & Marx applied the core of historical materialism to European Societies. The elaboration of the core of historical materialism by Engels & Marx says: a) In societies with capital goods as the most important means of production and universal freedom of property and of labor (capitalist societies) that consist of inhabitants owning capital goods and of other inhabitants without such property having to live from employing their labor force (capitalists and workers), b) wages of workers fall and profits of capitalists rise c) because of the threat that capitalists dismiss workers and replace them by machines; d) this threat results in violence by workers against capitalists, e) and to the extent that workers become conscious of this compulsion and unite, they win this strife and abolish private ownership of the means of production, and f) if the means of production become common property, the distribution of consumer goods among the inhabitants of this society will proceed according to their needs. The so-called centralization hypothesis by Marx & Engels: a) In capitalist societies b) the growing amount of capital gets concentrated in the hands of fewer capitalists c) because owners of small amounts of capital go bankrupt in the wake of price cuts by owners of large amounts of capital. The elaborations of Engels and Marx are known as classic historical materialism. Revisionism Eduard Bernstein (1850-1932) also elaborated the core of historical materialism. Bernstein held that as long as workers do not have the freedom to form trade unions, as long as the voice of a worker in parliamentary elections does not count as much as that of a capitalist, and as long as parliament cannot dismiss the members of a cabinet, the wages of workers will drop compared to the profits of capitalists. That is, wages fall in a relative sense. Bernstein's revision of the theory of Engels and Marx holds: a) In capitalist societies without freedom of assembly, general suffrage for parliament, one vote for each inhabitant in elections for parliament and accountability of cabinet members to parliament, b) workers do not become absolutely poorer, but they do become less well off in a relative sense; c) workers improve their condition in an absolute sense, since the substitution of labor by machines, goes together with an increase in the skills of workers, whereas skilled workers are less easily compelled to accept lower wages than unskilled workers; workers become relatively poorer since skills cannot fully counter the threat that labor will be replaced by machines; d) under these conditions the struggle of workers against capitalists becomes focused on the extension of political rights; this strife is not wholly violent and from time to time successful; and as these rights expand, it becomes syndicalist and parliamentarian, thus taking on peaceful forms; e) the more workers unite into trade unions and labor parties, the more they gain through gradual reforms various social rights; f) and with the extension of social rights, income disparities between workers and capitalists will narrow. Legislation offering people a secure existence (old age pensions, insurance against unemployment etc.) is an example of a reform making for smaller income disparities. This legislation creates a third source of income: apart from income as a result of capital ownership and income from labor now there is income according to social rights. Bernstein also furnished an alternative to Marx' elaboration about a second inequality in capitalist societies: a In capitalist societies b the number of small capitalists does not decrease; it increases c because the growing demand for consumer goods gives rise to new sectors of production, with large capitalists in old sectors offering little competition to small capitalists in new sectors. Since Bernstein revisioned the classic historical materialism as proposed by Engels & Marx this branch of historical materialism is called revisionist historical materialism. In the United States companies had grown in size, as measured by their amount of capital, but they were owned less and less by one single person or family and more and more by various shareholders. An analysis of the yearly financial reports of the larger companies indicated that the number of shareholders had risen. A larger amount of capital became dispersed over more persons. These findings brought Berle & Means (1932, 1968) to elaborate as follows the core of historical materialism: a In capitalist societies b capital gets dispersed over an increasing number of shareholders c because workers invest a part of their higher wages in shares. In 1941 Burnham went one step further. The growth of companies not only made original owners raise additional capital by the emission of stock, but also had them yield tasks to other persons. In addition, a conflict of interests was created between shareholders and directors. Burnham proposed the following elaboration: a In capitalist societies with some inhabitants owning stock in companies and others deciding how to deploy the capital of these enterprises (shareholders and directors), b dividends paid to shareholders fall and salaries and perks for directors rise c because of the risk that directors might leave their company. No socialism in the United States A final elaboration of the core of historical materialism concerns the question of why there is no socialism in the United States. This question was raised by Sombart in 1906. According to Sombart, something was wrong with a third elaboration of classic historical materialism. It runs: a In capitalist societies b all inhabitants with respect to the freedom of labor and the right to own property are equal before the law; in actual fact, the longer these laws persist, the more difficult it becomes for workers to start their own enterprise and accumulate capital; c this is the case since established capitalists corner newcomers. Feudal societies, societies of the type that in Europe preceded capitalism, were both de jure (according to law) and de facto (in actual fact) closed. Capitalist societies were de jure open. They recognized universal economic freedoms such as those of enterprise, occupation and property. Those wishing to set up shop no longer required permission from guilds, people with a creed different from the state religion now were allowed to practice law, and purchase of land ended being limited to nobles. Yet de facto little had changed since the introduction of universal economic rights. The class of capitalists with the passage of time became more and more closed to persons from the working class. Sombart provided an alternative to this classic elaboration: a In capitalist societies without a feudal past and with uncultivated land not yet private property b more workers start their own business, making them upwardly mobile; c they do so because dismissal is less of a threat in these societies; d and since the workers of these societies experience upward mobility, their struggle against capitalists takes on peaceful forms. The United States did not have a feudal past. This de jure open society also was de facto open. In this situation, according to Sombart, no socialism could arise in the United States. Mobility as a subquestion of the problem of inequality Sombart's question is that of whether persons during their whole life belong to one and the same class (the capitalist class, the working class) or whether they move from one class to another. How much mobility (upward mobility, downward mobility) of individuals between the classes of a society does occur? According to Engels and Marx small capitalists would disappear as a result of competition by large capitalists (something impossible without downward mobility from the small proprietors to the workers), while Bernstein maintained that small owners, as a consequence of the rising standard of living of workers, become more numerous (which must involve upward mobility from the working class to the small owners). Questions on inequality thus can be divided into two parts: questions of disparity and questions of mobility. Questions about disparities at one point in time, do not make questions about mobility in the course of time superfluous, and the other way around. Both are part of the problem of inequality. Book Ultee Chapter 5 Sociologists often use the expression the problem of order to designate one of their master questions. Structural functionalism is a second important tradition within contemporary sociology. The main question of this tradition sometimes is called Hobbes' problem. Hobbes' question says: `How is it possible that people live together peacefully?' Emile Durkheim is the genuine initiator of what later came to be called structural functionalism. Durkheim's studies show that the problem of order belongs to an overarching one. That problem may be termed the problem of cohesion. The question `How is it possible that people live together peacefully?', has been understood in two ways. One reading stresses the word `peacefully'. It is clarified by adding: `... and why do societies not fall apart into groups hostile to one another?' Durkheim also dealt with the question: “why do societies not consist of peaceful but unattached people, persons whose lives barely touch one another?” Durkheim held that if the inhabitants of a society use more violence against each other, this indicates that this society is less cohesive. Durkheim also held that a higher incidence of suicide, the severest form of violence persons may use against themselves, indicates less societal cohesion too. When limited cohesion of societies is equated with violence against others, sociologists speak of the problem of order When limited cohesion of societies is equated with violence against themselves, sociologists speak of the problem of cohesion. The core of structural functionalism The core of Durkheim's structural-functional answer to the problem of cohesion runs as follows: a Every society displays a certain degree cohesion b in as far as it consists of certain intermediary groupings (possesses some structure), c and certain generally shared norms and values (which is to say, has a culture); d and to the extent that the members of a society are more strongly integrated into these groupings, they are more likely to live up to these norms and values, e which results in a more cohesive society. General concordance – idea by Comte; according to him order is impossible without consensus. According to Tocqueville, one of the regularities of human society is that in societies where people are equal before the law, the people stay civilized as long as they master the art of forming associations. Yet Durkheim also was concerned with the effects of intermediary groupings. a A low incidence of suicide indicates strong cohesion; b families, religious associations, and political organizations are instances of intermediary groupings, c one such norm is (legal or public) disapproval of suicide, a norm generally prevailing in (almost) every society; d and the stronger the integration of the inhabitants of a society in families, religious associations and political organizations, the more these persons follow the interdiction to take one's life, e which lowers their chances to commit suicide. Example 1 (14) The more the inhabitants of a society are integrated in any whatsoever of its intermediary groupings, the lower their chances of suicide. (15) A religious association is an intermediary grouping. ------------------------------------------------------------------------------------------------(2) The more strongly persons are integrated in a religious association, the lower their chances to commit suicide. Example 2 (14) The more the inhabitants of a society are integrated in any whatsoever of its intermediary groupings, the lower their chances of suicide. (16) A family is an intermediary grouping. -----------------------------------------------------------------------------------------------(7) The more strongly persons are integrated in a family, the lower are their chances to commit suicide. Integration in groupings that do not fully disapprove of suicide Durkheim now brings in one auxiliary assumption, namely the assumption that the intermediary grouping has to disapprove suicide: (18) The more strongly persons are integrated in any intermediary grouping of some society, the more likely they are to follow the norm of this grouping on suicide. (19) All intermediary groupings of a society disapprove of suicide. ------------------------------------------------------------------------------------------------(14) The more the inhabitants of a society are integrated in any whatsoever of its intermediary groupings, the lower their chances of suicide. If the norms of some intermediary grouping under particular circumstances approve of suicide, then stronger integration does not lead to lower, but to higher chances of suicide. Parsons' socialization- and internalization hypothesis According to Durkheim, a society consists of intermediary groupings. Stronger integration in them would lead to higher chances of following their norms. Parsons accepts Durkheim's proposition and he attaches a proposition of himself: “To the extent that the members of a society have been socialized more strongly into its norms and values, and to the extent they have internalized them, these persons more strongly live up to these norms and values.” Durkheim’s theory of anomie According to Durkheim, a society's suicide rate is not only lower when its members are more strongly integrated in its intermediary groupings. It is lower too when the elements of its culture are more attuned to one another. A society has values about the goals which its members should pursue and norms about the means with which they should pursue these goals. However, sometimes societies lack a culture which makes the goals held up to its members agree with the means they should employ. Durkheim names this situation anomie. A lack of such norms makes persons aim for things far beyond their means, which in the long run makes for higher chances of suicide. So his elaboration is: To the extent that the norms and values of a society attune the goals and means of the members of this society to one another, the more the members of this society live up to its interdiction of suicide. If the goals of persons go far beyond their means, their chances of suicide are higher. Example: after the crash of the stock exchange in Paris in 1882, the suicide rate for the whole of France rose. According to Durkheim not only a crises in the ordinary sense of the word contribute to suicide, a `happy crisis' does so too. A society may be anomic in more than one respect. Apart from economic anomie, he pointed towards domestic and conjugal anomie. The higher suicide rate of widowed men compared with married men is an effect of domestic anomie. The higher suicide rate of divorced man compared with married men is a consequence of conjugal anomie. Why the word structural is used, will have become clear in what has been said: a society displays cohesion to the extent that it has a structure. The word functionalism is already suggested by Durkheim's delineation of sociology as the science of the emergence and functioning of societal institutions. Book Ultee Chapter 9 We now have arrived at the problem of rationalization, the third main question of sociology. In the present chapter we break down the problem of rationalization into its constituents. The last couple of centuries, sweeping and profound changes have occurred in a number of human societies. They sometimes are referred to as `the Rise of the West'. Perhaps the diffusion of highly efficient ways of making material goods in massive quantities comes most to the mind. The driving force behind this upheaval, supposedly is the triumph of scientific thinking and technical ingenuity. An important consequence of this overall rationalization, is the vast increase in the standard of living. The uniqueness of the western world According to Weber, an important question is what is unique for the West? What explains the fast rationalization in this part of the world? Weber's answer to this question sometimes is referred to as the interpretative tradition. According to Weber, rationalization happened within Western societies in most areas of life; not only in fields where it might be expected but also art & religion. However, rationalization is not a process which proceeds in all areas equally fast, The partition of the problem of rationalization Weber believed to have ascertained that Western civilization, deviates in numerous respects from other highly developed civilizations like old Babylon. So, which are these characteristics supposedly making the Western World unique? Technological progress – the Western World at the beginning of modern times lagged in technology Only later the West gained an ever larger lead. Rise of science – made the technological developments possible and is the second unique feature of the West. Only in the West the things can be found which are typical for science in the contemporary sense of the term: mathematical foundations, logical proofs, and empirical experiments, Professionalized arts – Western painting consequently applied perspective and only in the West, music was composed in a note script. They professionalized. States – they differed from those elsewhere in the fact that they had trias politicas. Production process – material goods were produced differently in the West. Production within the enterprise became separated from household consumption. Goods are produced in companies which have been formed by paying in capital, and which are being conducted by profit expectations. Weber brings these five differences down to one denominator with the thesis that in the Western World rationalization processes have progressed further than elsewhere. Weber's problem of rationalization comprises a larger number of questions. This partition of an overarching problem within sociology is depicted in figure 10.1. Weber was not the first person to wonder why certain forms of what he called rationalization had progressed so far in the West. Simmel (1858-1918) had argued that the invention and employment of money as a means of exchange, advances trade. But Weber points out that despite the introduction of money the economy remained traditional. Sombart (1863-1941) proposed that population growth contributed to the rise of Western capitalism. However, Weber shows that population increased strongly in China from the middle of the 17th to the end of the 19th century, without the economy changing much. Weber held that all these explanations invoke possibilities to produce goods more efficiently. However, according to Weber, supplementary hypotheses are necessary which inform on the strength of the urge to utilize these opportunities. An interpretative answer Weber showed that the shift in Northwestern Europe from catholicism to protestantism, involved a more frequent utilization of the rights of entrepreneurial capitalism. These findings raise the question of how a religion contributes to a more efficient production of goods The core of Weber's answer to the question of the utilization of the freedoms of entrepreneurial capitalism now is as follows: a Every highly developed pre- and early modern society, b has a certain religion c with a certain world-view; d this world-view for the members of this society fixes within certain limits a certain ultimate goal of salvation, e and provides them with an urge to reach this goal with certain means (fixes within certain limits some way of life as the right one), f and certain ways of life contribute more, and others less, to utilizing various opportunities to produce material goods more efficiently. The full-blown theory The protestant world-view is to a particular degree activist, and it provides believers with a drive to a practical-rational way of life. The world-view of medieval catholicism was less activist, with all consequences thereof. The duties of the estates have been fixed by God, and citizens and farmers ought to accept their lot. Little activist too is the world-view of confucianism, with effects resembling those of catholicism That of hinduism is least activist, or in other words, most passivist and quietist. It exhorts a way of life in which people resign themselves to what happens. If a religion avails of such means of salvation, a practical- rational way of life gets unfolded to an even lesser extent than among catholicism and confucianism. So to summarize, the conclusion of Weber's argument is: To the extent that the world-view of a religion is more activist, this religion provides its adherents with a more practical-rational way of life, and a stronger urge to utilize more efficient ways of producing goods. People with a religion which maintains that a person's occupation is this person's calling and people can administer the world, stand a higher chance of being an entrepreneur. The more activist the world-view of a certain religion, the stronger the urge of its adherents to a practical-rational way of life; if the freedoms of entrepreneurial capitalism prevail, people have more opportunities to produce goods more efficiently. Although Weber stressed the effects of technology and law to the rise of capitalism in the Western world, these factors were external circumstances to a practical-rational way of life. Yet, to utilize these opportunities, an inner urge is required. This inner urge can be provided by the world-view of the religion you adhere. World-views not only motivate, they legitimate too. That is why the expression `the interpretative tradition' is quite an appropriate name for a theoretical tradition within sociology. Book Ultee Chapter 12.5 In chapter 2, we mentioned the hypothesis of Smith that to the extent markets are more free, the production of goods and services more closely approaches optimality. According to the economic theory of collective decision making, free markets sometimes fail. They are effective and efficient when it comes to producing private or individual goods. In contrast, collective goods are not produced optimally by free markets. Individual or private goods - goods whose ownership is exclusive and whose utilization is rivalizing. Exclusive means that it is up to the owner to exclude others from using this good or not. Rivalizing means that the claims of some persons to utilize a good, narrow the utilization of this good by others. When somebody has bought an apple, this person does not have to share this good with someone else, and if the first person has eaten this apple, the other cannot consume that apple any more. Collective goods - goods which, once they have been made available to one person, can be made available to other persons without additional costs. Their ownership is not exclusive and their utilization not rivalizing. The utilization of this good by later persons, does not reduce the claims of the first person. Nowadays in most lecture halls of universities some seats remain unfilled. There is space available and the quality of the lectures for the original students would not decrease. In addition, there are collective ‘bads’: other people beside car-drivers, are affected by the exhaust of motor vehicles. The production of a goods brings with it effects for other persons, or externalities. Characteristic of free markets is that it rests on the exchange of exclusive property rights and rivalizing rights. However, collective goods to not involve rivalizing utilization. That is why, according to the new political economics, free markets miss out when it comes to producing collective goods. However rational persons may be, and however strong their interests in a collective good are, they will not succeed in optimally producing this good. According to the economic theory of collective decision making, the laws of a state pertain to collective goods, and their production is optimal only if the legislative powers are chosen by general suffrage and if offices or bureaus are charged with executing these laws or if services supervise their adherence. Individual rationality vs. collective rationality The hypothesis of the new political economics seems paradoxical: “rationality does not lead to rationalization”. The puzzle is solved when it occurs to us that rationality of individuals and rationalization of societies are different things. Individual rationality when producing a collective good does not lead to collective rationality. This is because every separate person maximizes his utility, no one of the involved persons in the end has an optimal quantity of a collective good. If individuals are rational, then the production of collective gods will be sub-optimal. The prisoners dilemma The main question is, how rational prisoners will act in this situation. The common interest of both men is to keep silent. A concludes that whatever B does, confession is the rational course. If B does not confess, my best option is to confess. If B confesses, it is best for me to confess once more. B concludes that whatever A does, it is wise to confess. So, what happens? Both suspects confess and each suspect goes to jail for ten years. Although they were rational, they did not realize their collective interest. If two people cannot deliberate together, individual rationality leads to collective irrationality. It must be added that the prisoners' dilemma is something of a bad example. The prisoners dilemma applied n-persons dilemma – A situation in which there are many persons making decisions independent of one another. In a situation in which many persons make independent decisions, a lot of persons have an interest in a collective good. Yet they do not succeed in producing this good optimally. Why not? Because it is profitable for every person that the collective good is produced without having contributed to its production. If no one else contributes to the production of a collective good, it is not wise to contribute. If everybody else contributes, it is not wise to contribute, because a person can utilize it anyway. If the production of collective goods remains a matter of individual decision, only a few persons voluntarily will contribute to the production of collective goods. This reasoning makes clear that those involved act like parasites, hitchhikers or free-riders. Free riders – Persons who try to utilize a collective good without contributing to the costs of it. But this has as an effect that others with a strong interest in this good, will postpone their decision, which is called the `after you'-effect. Olson proposed that as groups become larger, the production of collective goods declines. Avoidance of the prisoner dilemma In societies like the Belgium, Germany, and the Netherlands, the way out of this dilemma, has been sought in `the free consultation of the social partners'. A limited number of interest groups negotiate voluntarily and without obligation with each other on the production of collective goods. However, game theory makes clear that even with a limited number of interest groups, negotiations will be slow and difficult. Now, what if negotiations are not voluntarily? Suppose the parties decide on making unanimous decisions on the production of collective goods. It will be clear that under this condition decisions rarely will be taken. Conclusion We have seen that decisions on the production of collective goods lead to suboptimal results if they are being left to the markets, free negotiations, or decision by unanimity. If one wishes to produce collective goods, a less strict rule has to be applied that the rule of unanimity: the rule of a majority