Britain and the world: the next ten years through Mancur Olson’s lens

The Olson Lens: A Refresher

Mancur Olson was not interested in moral failings; he was interested in structural ones. In The Rise and Decline of Nations he argues that the longer a country enjoys political stability the more it accumulates “distributional coalitions”: organised minorities – unions, trade associations, professional guilds, land-owning interests, regional caucuses, defense contractors, take your pick – that discover how to convert the state into a machine for providing them with rents.

Each cartel is small enough to internally co-ordinate, focused enough to lobby, and shameless enough to extract privileges that are invisible when spread across the wider population which pays for them. Over time these rent-seekers gum up regulatory arteries, stall productivity growth and leave the nation decrepit.

The remedy, alas, is usually an exogenous shock: war, financial collapse, pandemic, revolution – anything that smashes the established veto network and clears the political undergrowth.

Britain, 2025-2035: A Kingdom of Comfortable Compromises

By Olson’s reckoning Britain is a prime exhibit of advanced sclerosis. Planning laws freeze housing supply, a tax system cossets entrenched property wealth, and whole sectors – finance, utilities, defence, the National Health Service – are stitched up by comfortably ensconced cartels. Productivity has been flat-lining since the 2008 crash; public debt hovers in the high nineties as a share of GDP yet rises every Budget; the current account remains firmly in the red.

Meanwhile the first-past-the-post electoral system amplifies narrow interests: a handful of swing-seat home-owners enjoys more leverage in Westminster than millions of impoverished renters in Greater Manchester or Birmingham.

Assuming no thunderbolt, the next decade looks like this: trend growth around one per cent, debt climbing past the century mark, infrastructure fraying, defence spending climbing only if Washington scolds London hard enough.

The most likely disruptive event is neither an AI miracle nor the planning reforms that politicians keep promising and abandoning, but a currency scare – a run on gilts that forces the Treasury to slash sacred subsidies and confront the housing cartel. Short of such a panic, Britain will muddle through, steadily poorer relative to the more turbulent but nimbler economy across the Atlantic and, for a while longer, in the East.

Continental Europe: Leisurely March into Middle Age

The euro area shares Britain’s addiction to interest-group politics but benefits from a different pathology. Because Brussels is constitutionally incapable of moving quickly, each cartel must fight through 27 committees before a subsidy cheque is cut or a regulation amended. That slows down sclerosis as well as reform.

The €800-billion Next Generation EU fund is an illustrative stalemate: money exists, but disbursement dribbles out only once national ministries tick dozens of “milestones”. Add a sprinkle of German fiscal caution, plus France’s eternal fondness for dirigisme, and you get growth stuck just below one per cent, debt trending toward ninety, and no catastrophe unless the Russian army hits the Polish border or Italian spreads explode.

The United States: Boom, Bust, and the Churn that Saves It

In Olsonian terms America is not healthier than Britain; it is simply younger at heart. Corporate lobbying is vast – a record four-and-a-half-billion dollars in the first quarter of 2025 – and the Trump administration’s return to office has already promised a 20 per cent “universal tariff”.

Yet every time a cartel grows complacent, another state, or a venture-capital fund in a hangar somewhere in Austin, emerges to disrupt it. 

Federalism, immigration, deep capital markets and cultural taste for creative destruction delay sclerosis even as Washington’s balance sheet bloats. Expect violent economic mood-swings: a tariff-induced recession, followed by a stimulus binge, followed by another stand-off over the debt ceiling. Still, by 2035 the US will remain richer and faster-growing than any European peer – proof that chaos can be a competitive advantage if it stops interest groups coalescing into stone.

China: The Ageing Leviathan

China entered the twenty-first century as Olson’s counter-example: rapid growth in the absence of entrenched cartels. That grace period is now ending. State-owned enterprises, provincial cadres and the new techno-national champions form a tight triangle of interests. Local-government financing vehicles creak under mountains of off-balance-sheet debt; the workforce is shrinking; urban youth unemployment refuses to budge below fifteen per cent.

Growth will slip toward three per cent by 2030, then two-something by 2035, respectable by Western standards but a comedown from the old double digits. Without drastic privatisation or open capital markets – both anathema in Zhongnanhai – China’s “Olson clock” is ticking loudly.

Russia: War-Time Stagnation

A command economy run by siloviki is, paradoxically, both cartel and monopoly. War spending props up headline GDP while sanctions slice away technology imports and demographic decay erodes the labour pool. 

Unless the Kremlin suffers a military humiliation that strips the security apparatus of its privileges, the current coalition – defence ministry, state-banks, oil-and-gas barons – will remain unshakeable. Growth may hover around one-and-a-half per cent, but living standards will slide as barter arrangements and ersatz technology replace genuine trade.

Does War Clear the Underbrush?

History offers cruel optimism. The world wars obliterated European cartels and ushered in thirty years of unprecedented expansion. Yet war among nuclear peers in the 2020s could equally obliterate the capacity for growth. Limited wars and arms races, meanwhile, often spawn new distributional coalitions – defence contractors, veterans’ organisations – that cling to their subsidies long after the guns fall silent.

An arms build-up in response to, say, a Baltic flashpoint may stimulate orders at BAE and Rheinmetall but is unlikely to loosen the structural choke-points of planning law in England or regulation in Saxony. In Olson’s probabilistic calculus, war is neither necessary nor sufficient for rejuvenation; it is simply the most common historical occasion on which entrenched interests are broken apart, sometimes along with cities.

The View from 2035

If nothing ruptures the rent-seeking equilibrium, Britain in 2035 will still be a nation of elegant decay – splendid though underfunded museums, dismal productivity, housing as patrimony, public debt politically untouchable.

Continental Europe will be only marginally less sluggish, its sclerosis moderated by the fiscal crutch of common borrowing.

The United States will remain the outlier: hectic, polarised and debt-soaked, yet still refreshingly willing to put old industries to the sword. 

China will settle into a middle-income plateau, its technocrats congratulating themselves on stability while the young grow restive. 

Russia will trundle on, a militarised petro-state too brittle to reform and too repressive to collapse.

In other words: everybody is ageing at once, but some are blessed with a shorter memory, or a larger frontier, or a wilder electorate that smashes cartels before they calcify. Britain’s misfortune is to possess none of those release valves.

Olson would close his notebook with the same dictum he used for Italy a generation ago: “Decline by a thousand comfortable compromises.” 

Unless a panic, a war, or an unexpectedly heroic parliament tears up the cosy gentlemen’s agreements, expect not catastrophe, but the slow soft slide to provinciality – a country growing old with dignity, and very little dynamism.