An ecological perspective on interest groups and economic stagnation

There has been a great deal of public policy concern about the negative impact of interest groups, particularly since Olson portrayed them as the cause of the slowdown of mature economies. While his thesis remains the dominant academic and popular perspective, it has not been strongly confirmed. That is because such political-economic theorists committed a fallacy of reasoning in moving from individual-level motives to explaining macro-level outcomes. Firms initially have no difficulty finding productive niches as an economy evolves, but by the time economics reach maturity, the ecological-style rules have created so many interdependencies and their accompanying rigidities that few options remain for sustaining aggregate growth. It is this much more fundamental process that produces sclerosis, and so the policy remedies that flow from more traditional analyses are likely to exacerbate, rather than resolve, many macro-economic problems.