Thursday, September 07, 2006

6:16 PM

From the Debate on PostGlobal by a reader named daniel:

It also surprises me that people who approach this problem economically seem remarkably, well, stupid. People talk about economic incentives to get tribes to enter into larger relationships, become part of larger national entities--and if the transaction costs of entering such a relationship are too high, well then the process breaks down and we have tribes opposed to one another again. I find this economic view stupid--even cowardly and degenerate--precisely because the concept of transaction costs is highly subjective and precisely because most people are cowardly and self-indulgent they will protest that virtually the cost of everything is too high. For example you have John married to Sally and then wanting to divorce Sally because the costs are too high to stay married to Sally when really all Sally expects is that John get off his lazy ass and get a job. I suppose what I am trying to say--and from the artistic perspective--is that the costs of sustaining a society are always too high and that precisely is life. Artists have always known to integrate disparate elements is an incredibly difficult task and entails much suffering and sacrifice, but that is the price paid for artistic achievement--for culture creating power. Economists have a different view, I suppose--which is strange because economics is the dismal science and should be allowed to be quite truthful (actually there is much truthful economics and I am only taking a shot here at a particular perspective). To be absolutely clear, economists might want to keep transaction costs down so different parties easily unite and do not complain transaction costs are too high, but they can never really keep such costs down because uniting, developing, creating society always entails suffering and self-sacrifice. Quite simply you can propose all the economic solutions you want, but to get tribal identities to be more amenable, to get people to work together, you have to expect them to be quite self-sacrificing--and just perhaps their children will have better lives (but they too must be prepared to be noble and self-sacrificing in turn for the future).

Pasted from here

Proud's response:

I agree with Daniel that for the purposes of abstraction in building models economists sometimes employ amorphous concepts such as "transaction costs" that might be perceived as "subjective". I also agree with him that in this case trying to approach this problem with the classical understanding of "transaction costs" might be problematic. However I disagree that an economic viewpoint is completely useless.

A more basic economic concept such a "constrained maximization" might be a more useful tool. Recognizing, as Daniel has in his last statement, that there are private gains when entities (individuals, clans, tribes, nations etc) get together, as well as costs or sacrifices, is enough to build a powerful economic framework to understand the problem. If the pain from Sally's nagging and the costs of having a job are not at least equally compensated for by the joy John derives from his association with her, then perhaps he should move on -- the same would apply to Sally, if the pain she feels from nagging John and enduring his laziness are not compensated for in some way in the relationship, then she should divorce him. At the risk of harping at the point; if artists are not rewarded by "culture creating power" that is at least commensurate with the "suffering and sacrifice" they endure, I doubt if they would be any – though some might claim the opposite. The point that I am trying to make is that in your recent post Daniel, you are too quick to judge economics harshly when in fact the spirit of your own points are very economic in nature.

It helps to know the benefits and costs that motivated people to associate in order to come up with a solution when some centripetal forces drive them apart. It seems to me that while many people emphasize similarity; difference -- and its associated virtues such as different specialized skills, diversity of thought and ideas etc -- also had a role in bringing societies together. Thus I think it is rather absurd that people advocate breaking down multi-ethnic or multi-tribal societies into more "homogeneous" groupings for homogeneity's sake. In addition, from what a lot of readers have been saying and the extremely broad definition of "tribe", encompassing religious, ethnic, language and even economic cleavages, I doubt that it could be possible to create a satisfactorily homogeneous society.

Daniel, the observation that you make that in "the most successful of these larger entities--the successful democracies--are actually breaking people down into individual units--so you can say we have the double process of uniting various tribes then breaking everything down into individuals" is precisely the problem that Robert Putnam identifies in his book Bowling Alone and associated research on social capital.

that's my opinion though