The Political Economy of the Voluntary Sector: A Reappraisal of the Comparative Institutional Advantage of Voluntary Organizations, by Brian E. Dollery and Joe L. Wallis

Edward Elgar, 2003, 208pp, hardback, 1 84064 793 0, £49.95. Order this book

Voluntary organisations are those which are neither in the private (for profit) sector nor in the public (governmental) sector; but, as the authors recognise, this is a somewhat negative definition and it tends to mask the diversity of the category we call ‘voluntary organisations’. But a book like this has to start somewhere, and this one starts by recognising that voluntary organisations are a rational response to market failure and government failure in the provision of welfare.
The positive work begins with an understanding of the importance of altruism and ideological entrepreneurship as causes of the formation and survival of voluntary organisations (and of nonmarket failure and voluntary failure as causes of their demise). Appropriate leadership (an issue which the authors recognise has been largely neglected by economists) is shown to be essential to the success of voluntary organisations, and voluntary organisations are shown to be generators of social capital and thus of economic growth. Different ways of understanding the relationship between government and voluntary organisations are discussed, and ways in which government policy can enhance or diminish voluntary sector activity are listed. The final chapter returns to the importance of appropriate leadership both for organisations and in the policy field.

By posing the questions which economists might ask as they study the voluntary sector the authors have produced an innovative and useful piece of work which will contribute to the now considerable literature on voluntary organisations and to the current debate on how the welfare state should be reformed.

What’s needed now is a broader perspective. The public policy which this book discusses relates mainly to direct relationships between the government (or local government) and voluntary organisations, though there is also a recognition that if voluntary organisations are already operating in a welfare field then for the government to spend additional money on its own services in that field might reduce the voluntary sector’s contribution, and thus reduce total provision. Just as important is the fiscal framework within which voluntary organisations operate. For instance: people on Job Seeker’s Allowance are currently allowed to do voluntary work for part of the week. If they were forbidden to do so then voluntary organisations would have less to contribute to social capital and less to economic growth. If even a small Citizen’s Income were to be paid to every citizen then more voluntary labour would be available and voluntary organisations would release public funds from a variety of welfare fields and would thus contribute to economic growth. The wider context matters.
But maybe that’s for another book. As it is, this is an innovative contribution to what will continue to be an important debate.