The essay is a very concise reply to the often-made criticism of economics and markets that human beings are social.
At a large scale, tribal solidarity does not suffice. We do not know how to coordinate to deliver the goods and services that we enjoy without using market prices. We do not know how to motivate people to choose occupations that serve the needs of the larger community except through self-interest.
Because the essay is concise, read the whole thing.
As in ecology, the main theoretical/methodological disasters seem to arise when ideas that are fundamentally scale dependent are applied across all scales or specifically at the wrong scales. Time, space, biological relatedness, and ‘cultural similarity’ – these are critical principal scale parameters.
Arnold, I liked this piece! I reminds me a bit of Nick Szabo’s post on social scalability (which tries extend these ideas to cryptocurrencies, though I wasn’t totally convinced there).
It did feel a little incongruous when you wrote, “To enable large societies to coordinate economically, there is no better institution than the market,” immediately after listing hierarchical societies and religion as past coordination mechanisms that had been improved upon with democracy and markets. While I agree that markets are the best mechanism we know of, it’s not obvious that we won’t have better economic coordination mechanisms in another thousand years.
Socialists want to base society on a tribal model in which people are bound by mutual concern and reciprocal obligation. In a tribe of no more than 150 individuals (Dunbar’s number), this model works well; people can easily keep track of whom they owe and how much they owe. In a tribe of millions, however, tracking obligations is far more difficult.
Suppose, however, that some sort of token is used to certify that the holder has provided a good or service to another. A token’s holder could then exchange it for another good or service provided by a third party.
While tokens solve the problem of determining whether an obligation has been incurred, there is the issue of determining the value of each obligation – assuming we want comparable exchanges. We also have the additional complication of subjectivity: different people in different circumstances will place different values on a given good or service.
These problems go away if people are free to exchange – and free not to exchange – their goods and services for tokens. The millions of transactions that occur will reflect the relative values that people place on that which is being exchanged at any given moment.
In other words, to create the socialist ideal of societies based on mutual respect and obligation, we would need to either artificially recreate the market system or simply allow free markets to emerge. Free market prices send information around the world, allowing countless people, though unknown to each other, to cooperate with each other and coordinate their actions.
Again and again, leftists have destroyed institutions that they see as oppressive, but which they don’t truly understand. And again and again, they’ve been dismayed by the results and have tried to artificially recreate what they destroyed. With few exceptions, what was destroyed emerged from countless years of voluntary interaction; and what they tried to build in its place was based on government’s coercive power.
Beware the definition of tribe.
The original definition was associated with village. Villages are congested, like cities, to provide structured queues for goods, thus pricing is inherent as long as queue size and scarcity are equivalent.
That may be too narrow a conclusion.
Without being too pedantic, most scholarship indicates that human groups, in their familial, tribal and even clan organizations were originally, and extensively, peripatetic even after the development of grain culture.
Those forms of organization, from their nomadic origins, may be more widely be viewed as the more likely origins of the organization and operations(Pentatucal, e.g.) of more permanent settlements rather than the “nature” of the settlements shaping tribal (inter alia) formats.
Notes on the Essay:
Hierarchies are considered as “orders” (rankings) of Power.
“Finally, a few hundred years ago, we began to seek alternatives to fixed hierarchies as means for organizing ourselves. Democracy and market capitalism emerged.” A.K.
Various forms of exchanges of goods, services and relationships developed in differing types of social groups, resulting principally from differentiations in individual (or group- family, e.g.) activities (whether by choice or assignment). Among those forms were “markets” (common exchange practices); there were others, many compulsive, some “cooperative.” All that falls under the broad heading of systems of distribution.
Survival, and even more crucially “advancement” and avoidance of subjugation or extinction , required most social groups to develop practices for the accumulation of preservable or durable (and transferrable) assets for future consumption or production (even as weapons for warfare & conquests). Such purposes for assets is a plausible example of the basic nature of “Capital.”
Whether “markets” serve as means (principal or otherwise) of accumulation , in addition to exchanges, of assets – as “capital,” may be open to debate. Perhaps the term “Market Capitalism” is intended to connote the exchanges of “capital” (qua Capital) for capital functions (deferred consumption or production) in accord with the participants’ determinations (however formed).
Excellent. I wish there was a political party that had this as part of its platform.
Alas, however, my churlish nature is such that I cannot forego minor nitpicking.
Chimpanzees do in fact cooperate. Cooperative hunting described:
http://pin.primate.wisc.edu/factsheets/entry/chimpanzee/behav
Violent reactions to other groups may not have been a typical result for all hunter-gatherer groups. In Japan, for example, it was relatively rare: http://blogs.discovermagazine.com/d-brief/2016/03/30/jomon-origins-of-violence-warfare/#.Wu3NQ4jwbIU
Relatively peaceful large societies predate 10,000 BC. Evidence for stable long-distance trade has been dated as far back as 150,000 BC. (see page 3 at: http://shodhganga.inflibnet.ac.in/bitstream/10603/175076/13/09_chapter%201.pdf ) and communities built around deep sea fishing date back to 42,000 BC : http://www.sci-news.com/archaeology/42000-years-of-deep-sea-fishing.html
An additional comment:
What has come to be designated ” democracy” probably developed much more than “a few hundred years ago.
Its development appears as particular responses in the form of dispersal of power, away from the oligarchic structures of hierarchies, to a broad range of the members of a society. Democracy, in so far as it is a condition, is one in which the powers in a society are dispersed over segments of its members (if not all). The term has been extended as a label for the **processes* by which those dispersed powers are re-aggregated and then exercised for particular objectives of sufficient commonalities of interests of members (which may even be no more than coalitions of minorities). Thus, Democracy, in most of its intended uses refers to processes, not a condition.
A nice article–it may have the defects of sounding like it would be more effective if we could see the rest of the longer conversation in which it is a smaller part.
I would like to see the notion of “tribal band” defined and operationalized rather than simply used as if we all pretty much agree on what that term means.
I think the notion of “tribal band” and tribalism assumes too much. The bigger issue is strangers and “social distance.” We don’t open our wallet for the total stranger who approaches us and says he just lost his own wallet. Yet we entrust our care and safety to paid strangers (bus drivers, EMTs, nurses, law enforcement officers, airline pilots) we don’t know a lot about.
So…the emphasis has to be placed out how we manage, even imperfectly and with some reservation or residual caution, to interact with strangers through exchange.
At the limit, we undergo surgery at the hands of someone we don’t know and may have never met!
Institutional trust? For example, I don’t know the EMT, but I know the reputation of the hospital with which she is associated, and I have legal recourse should something go wrong.
And when it comes to “tribal” patterns of organization, it’s probably a mistake to assume that the “tribe” or “tribal band” exists to facilitate co-operation. Probably it is more accurate to view the “tribe” as a something that exists for mutual defense against outsiders. The tribal band provides for the defense of economic resources (often at least in part privately owned and/or managed) against opportunistic use by outsiders.
The tribe helps to deter outside predators through the promise of vengeance from kinsmen and ensuing blood feuds. Or at the least, the tribe allows high status specialists to emerge who can perform ritual and judicial functions (religion, settlement of disputes).
At any rate, the discussion is becoming too abstract. Without a specific documented historical example (legimate and not bogus or romanticized) we can’t go much further.
Nice article but it sounds a little bit like my HR department lecturing the workers in 2012 that the company knows it is not 2009 anymore. (So work for us now that we pretend to care about you.) This view of community and religion is the other side of the coin of Marx Religion is ‘Opium of the Masses’. (Community and religion have done a lot of good of the years but there is a reality to Marx point.)
1) There was a lot of tribalism in religion and led to a lot historical nasty choices about tribal religion.
2) In terms of 1950/1960s boom, it was not trust or religion that drove up workers wages but private labor unions and fairly intense strikes.
3) Wasn’t creative destruction of the global economy that buried a lot of communities that had tons of trust. You don’t seem to mind St. Louis economy has diminished over the decades.
Anyway, in terms of trust and community, I find the strikes by red state teachers as the most interesting realities in the Trump era. (And didn’t school teachers get paid less in the 1950s and 1960s while contributing to community. Of course we did have a obvious sex discrimination labor market that benefited local schools.) These states had significant decreases in wages in The Great Recession and now the teachers seem not to trust of Red State Governors and care about a paycheck. Hearing libertarian economist calling for more society trust sounds a bit like Betsy DeVos calling to ending the teacher strikes to support the community.
From that comment one may be reminded of Raymond Aron’s “Opium of the Intellectuals.”
However today we might regard Marxism(s) (distinct from Marx’s own scholarship and thought) as the “Cocaine of the Intellectuals.” Note that they both have to be manufactured.
One suggestion — it might be worth mentioning that not only do markets provide a solution to the problem of how to cooperate with strangers, but there’s also evidence that markets lead people to treat strangers more fairly:
http://evonomics.com/do-markets-make-us-fair-trusting-joseph-henrich/
It appears that trusting strangers doesn’t come completely naturally — it has to be learned — but the learning doesn’t seem difficult and people pick it up readily just by participating in markets.