Institutional sclerosis

Institutional sclerosis is a theory the American economist and social scientist Mancur Olson introduced in his 1982 book The Rise and Decline of Nations, arguing that as a stable society ages it tends to accumulate an ever growing number of narrow interest groups, cartels and lobbies, and that this accumulation gradually stiffens the society's economic and political institutions in a way that slows its capacity to grow and adapt. Olson's central claim was that individually rational organizing by interest groups seeking favorable rules for themselves produces a collectively harmful outcome for the wider economy, since each group's successful lobbying adds another layer of rigidity, regulation or protection that a competitor group must then also seek to match. He used the theory to help explain why some long stable, institutionally dense societies grow more slowly over time than younger societies with fewer entrenched interest groups, and why a major shock, such as a lost war or a revolution that sweeps away existing interest group structures, can sometimes be followed by unusually fast subsequent economic growth once that sclerotic buildup has been cleared away.