Seeing Civil Society and Finding Social Cooperation in All Walks of Life

Perhaps the most fundamental insight of economics is how individuals separated by interests, knowledge, location, language, ethnicity and religion can come to cooperate with one another through the international division of labor to produce goods and services that satisfy individuals that they often never meet and certainly will not come to know in any deep sense.  As Adam Smith put it: "In civilized society he stands at all times in need of the co-operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons." (WoN, Bk 1, Chap 2, p 18)  As Smith says just a few pages earlier, the number of individuals we rely on for the accommodation of even the simplest products that we take for granted "exceeds all computation."

This is the "miracle" of social cooperation under the division of labor that is brought about through the market economy, and which provides the foundation for peaceful and prosperous co-existence.  David Hume and Adam Smith recognized this, but so did Voltaire and Montesquieu.  Modern economics sometimes clouds this aspect (the doux commerce thesis) of our understanding of the role the market economy plays in modern civilization with the emphasis on equilibrium solutions, optimizing behavior, and market structure.

It is not that technical arguments in economics about the efficiency of exchange and production, or even theorems such as the law of one price, or the marginal productivity theory of wages are "wrong", they are in fact extremely important logical demonstrations of the central tendencies of an unhampered market economy.  But the core vision of the economist is the recognition of social order, when the untrained eye sees only chaos.  This is the meaning behind such as exaltations as "Paris gets fed", or discussions of the "common woolen coat" or more recently the story of "I, Pencil."  The market economy is a process of reconciling the competiting and often divergent interests of a great multitude.  Coming to understand and appreciate how thereconciliation process through the market is obtained is the main didactic function of economics to the citizenry.

As I tell my undergraduate students, if they allow themselves to be startled by the mundane, I can open a world of understanding to them that previously remained beyond their grasp.  Trolling the internet this morning, I came across Morgan Ashcom's report on Customary Law and the Mosh Pit. The story fascinated me because (1) as the father of two teenage sons, 1 of whom is an aspiring muscian and who attends such concerts it was a peek into his world, and (2) it is precisely this sort of willingness to be amazed by the mundane and why that I would love to instill in my students.  I will be using Morgan's example again and again in my classes (unfortunately probably beyond when the mosh pit is typically experienced by the teenagers and young adults who jump in).

BTW, Morgan has a portrait project which is fascinating.  It tries to capture well-known academics in their everyday lives, rather than just in their work environments.  Deirdre McCloskey has a wonderful book entitled How to Be Human Though an Economist, and that is an important issue to remember.  Morgan's photos show the human side of great thinkers.  Walter with his bike, Pete with his cigars, Loren with his wine, etc.  Fascinating stuff.  Right here on our blog, one could see Dave with his fiddle, Chris with his Broncos, Steve with Rush, and Fred with sailing.  These guys have real lives beyond the books they write, and the lectures they give.  And most importantly, not only do they study the profound nature of civil society and social cooperation, they participate in it through their daily activities with their families, in their communities, and (lets never forget) with their buying and abstaining from buying in the market economy.

Comments

[Jeremy]

The anarcho-capitalism shirt in the sixth picture (worn by Pete from Bureaucrash) seems quite fitting with the theme.

[sean andrews]

So which customary laws are important? Which are valuable? Certainly the US/Western understandings of property and the market are not shared universally--now or ever--and are and have been imposed, first by direct imperialism and now indirectly through international institutions. These customary laws, therefore, MUST be voided, from above, by international institutions in order for the property arrangement privileged by the Austrian assumptions about human interaction, the state, etc. to reign in those territories and for the fantastic bounty of the heavenly bodies that are Multinational corporations to have any hope of reaching these poor, unpolished, uncultured rubes.

Yet what you pretend to be saying is that customary laws are more valuable: so what if these customary laws don't adhere to the Austrian vision of human interaction? Carol Rose's work on this has been useful. cf: this comment from her article responding to Michael Heller, and speaking about the history of US ideas about property, particularly in relation to the native people who lived here before them:

"Our law has been particularly hostile to most forms of collective property, particularly those in Ostrom’s CPR range. This too is an interesting puzzle. My own view is that some of this hostility is a historically self serving myopia. Out leading case about Native American property claims is Johnson v. M’Intosh, where it might have been possible to recognize property in native tribes; but the Marshall Court, while not completely dismissive of all Native American claims, ignored the possibility of collective ownership. The logic seems to have been that the tribes were not cognizable sovereign governments (hence public property was not possible), not did individual persons in the tribes have recognizable common-law claims to property. Those two possibilities, individual property and governmental property, appeared to exhaust the Court’s idea of what counted as “property,” illustrating Heller’s point that our categories have seriously—and unjustly—limited our property imagination. While probably not so intended by Marshall himself, any excuse to ignore native property proved to be highly convenient for settlers."**

She goes on to describe the reasons for this as having a more rational basis than, perhaps they did. The governance by customary norms, rather than formal government was seen as “mired in swamps of medieval feudalism, hierarchy, and rigidity; in particular, they thought that customary law was incompatible with democratic forms of government, in which communities pass laws for themselves not by looking to the past, but rather by looking to the open actions of democratically-elected representatives.” In the Law & Economics tradition, this is very interesting because, although they wouldn’t call it such, these sorts of “customary norms” are what they usually rely on as an unstated basis for their claims. The arrangement that she cites as an example of this kind of arrangement is that of certain native lobstering communities using low level violence against outsiders and community norms amongst themselves. Of these norms, she notes that they are often xenophobic, misogynistic and “hardly seem paragons of democratic rule and equal opportunity.”
This may very well be the case, but ironically, there is a sort of convergence with theories which purport to represent such a paragon, namely, those of Nozick and his “minimal state.”

The difference is that Nozick simply assumes these community norms exist—the nasty processes that might ensue around discovering what someone’s “natural rights” might be is left up to some undiscussed mechanism. Instead, we can focus merely on the “resources” which the community might have to police itself, without the need for a state. In this, he spends far more time trying to create equations and scenarios for how people can be compensated for various transgressions of their property. There is, in this, no real sense of where these scenarios will come from, how they will be negotiated or by whom they will be enforced: it is a basic, economic framework which, though unstated, assumes much of the Coasian model of economic allocation of resources in the absence of a government. However, if it were to actually function, in practice, it would likely have to look more like the “customary commons” mentioned above, which was conveniently declared suspicious in the supposedly more democratic era of the United States western expansion.

In short, it seems a bit late in the game to say we should do away with the state and just let the people police the property they own themselves--though I suppose Russel Means and the Lakota Nation would agree to this, if only they could get those pesky white folks off their land and get recognized as representatives of the tribes in question.

**the cite is from Carol M. Rose, "Left Brain, Right Brain and History in the New Law and Economics of Property," Oregon Law Review 79 (2000). p. 485.

[Rafe Champion]

Sean, there are no simple answers to the questions that you raise, but you might like to consider the role of the extended moral order as sketched by Hayek in his last book, The Fatal Conceit. http://www.the-rathouse.com/HayFatalConceit.html
One of the most exciting outcomes of 20th century scholarship in political economy and the evolution of classical liberalism is the synergy of the leading principles of classical liberalism in generating prospertity, freedom and peace. This does not permit an immediate end to poverty, tyranny and war but it points the way to win/win outcomes in situations where other schools of thought can only envisage win/lose or negative sum outcomes. A big claim to make in a short comment, but just keep on trucking with the Austrians and classical liberalism for a while and see what you can find!

[Dave Prychitko]

Pete -- can you cut, paste, and post this over on our EWOT blog. The students over there should read it.

[sean andrews]

I've read Fatal Conceit and find it, well, conceited. The extended moral order is just a different word he uses for "society" because he's afraid of sounding like a socialist. Other than that, it seems completely ahistorical and makes ANY other cultural or social ordering than his ideal incorrect and anachronistic. This was precisely the kind of position I'm critiquing.

I'd also mention that, whatever the different indexes tell you, the recent round of liberalization has certainly not affected everyone equally--neoliberalism has exacerbated the already unequal societies in South America and the prosperity of Asia has largely taken place in strong states like South Korea or US satellites like Japan, both of which were given preferential trade tariffs and subsidies of one kind or another by the US for the early post-war era. In other words, simply imposing the liberal model--which should, if Austrians were true to their convictions about freedom, excite more than a little outcry since it is imposed from above--wholesale is inadequate in and of itself.

[Rafe Champion]

Thanks Sean! This may not be the place to work through these issues because we may have to agree to disagree about too many things, like the appropriate social and economic indicators to use. I would really like to know what framework of institutions and traditions (what kind of moral order) you think is required to achieve sustainable improvements for the poor of the developing world. By sustainable I mean something other than a kind of "Robin Hood" redistribution a la Zimbabwe which makes some people happy in the short term but does not deliver in the medium to long term.