This does not mean that material effects are absent or unimportant, just that you can’t hold everything equal. Take the Christianity example: there are huge boons to well-being and productivity and [everything else I talked about] in belonging to a church. Many of these are psychological themselves, but let’s only focus on material aspects. These come from “the church”, but you’d have to show me some really extreme evidence to convince me that those were the primary or only reason they joined. The religious aspect, however you think about that, seems more than a little important.
— Lou Keep, The Use and Abuse of Witchdoctors for Life
Douglass North, Elinor Ostrom, Daron Acemoglu, Ronald Coase and colleagues, broadly construed. See also: Market design, economic inequality, capitalism’s end game, democracy, insurgency.
What are the effects of the social arrangements we construct for ourselves? We tend to talk openly about constructing or intervening in a limited subset of these, say “a robust free press”, and “competitive markets”. Our lives are, however, the site of intersections of a whole swag of co-evolved systems; manners, notions of honour, legal systems, clientilism, slavery, freedoms, states (democratic or otherwise), property rights, religions… For all that it is not clear how to measure these things, it is clear that they make huge differences to our society and how it works… Variation across the globe is also suggestive that they are contingent; The world you grew up in is not the only possible one. (Unless you are Francis Fukuyama circa 2000). To this last point, I recommend, as a technocratic 21st century global citizen, sitting down for an afternoon to discuss politics with a hunter-gatherer from a tiny polity somewhere in the world. Or a Red state Republican. Or a West Java metal-head. See how much shared vocabulary you don’t have.
I’ll probably file social capital, whatever that is, here, since whatever use the term does reliably seem to have have is about institutional function.
Henry Farrel, Why Coases’s penguin didn’t fly:
Coase wanted to explain why we saw firms at all, given the benefits of market exchange. Why did we need miniature hierarchies with bosses and subordinates, if we could just buy and sell our services on markets instead?
His answer was transaction costs. Some transactions are too messy or awkward to be easily handled by putting out to the marketplace. Those are the transactions that are handled in-house through hierarchy. Other transactions, which are more straightforward, can be contracted for with outside providers, through market processes. Finally (although he doesn’t really discuss this) the balance can change over time, as new technologies emerge that make transactions more or less easy to carry out through hierarchy or markets.
This is a powerful insight, which provided a platform for the work of Oliver Williamson and many other organizational economists, as well as Benkler. Yet it has buried within it a crucial assumption — that change is driven by efficiencies. […]
[This highlights] an important problem which isn’t really discussed by Coase, and hence is not discussed by Benkler — power. Power relationships often explain who gets what, and which forms of organization are taken up, and which fall by the wayside. In general, forms of production that are (a) more efficient, but (b) inconvenient or unprofitable for powerful actors, are probably not going to be taken up, since those powerful actors will block them. Yet if one starts from an efficiency perspective, it is very hard to build power relations in, since one believes that change in practices and institutions is not driven by power relations but by efficiency.
[…] if you are an economist, as Coase is, you really ought start from the assumption that individuals are self interested. If self interested actors have the power to block changes that would hurt their self interest, they are going to do so. Therefore, the kinds of efficiency driven processes of change that Coase (and Benkler) talk about are only going to happen under very unusual conditions.
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