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Re: Douglass North: new book

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  • Robert J. Chassell
    Really, this should be entitled `romantics, feudalists, and exchange . Here is part 4 of my notes on Douglass North s new book, Understanding the Process of
    Message 1 of 4 , Nov 29 8:46 AM
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      Really, this should be entitled `romantics, feudalists, and exchange'.

      Here is part 4 of my notes on Douglass North's new book,
      "Understanding the Process of Economic Change", except these are not
      notes but are thoughts inspired by North as well as by David Brin.
      (Part 3 was the day before yesterday, 2005 Nov 27.)

      My conclusion comes from these points, all of which can be
      investigated (and all of which I think are more or less believable,
      `suggestive' in my jargon).

      * [North says this on page 71.]
      Because of their evolutionary heritage, people are predisposed to
      personal exchange, but institutions may provide appropriate
      incentives to engage in impersonal exchange.

      * In the US one-hundred sixty years ago, people went to stores and
      engaged in exchanges with people whom they often knew. That is to
      say, exchanges in many `markets' were personal.

      * However, in the US in the past half century, a higher and higher
      portion of exchanges have come to occur in supermarkets and the
      like. In these, people do not know whom they will meet on the
      check out counter. The exchanges that many people experience have
      become more impersonal.

      * Also, in the US over the past two centuries, a higher and higher
      portion of the working population have come to exchange their
      labor for income in a hierarchy rather than in a market as an
      independent proprietor or in their own family.

      * More and more people in the US see the effort they apply and the
      production they achieve as more or less unrelated. They see
      rewards as going to senior management rather than to those who did
      the work.

      Consequently, for many people, current impersonal exchanges occur
      without proper incentives and mostly in hierarchies. Such exchanges
      are disliked.

      David Brin has talked of hateful responses to modernity: on the left
      hand, the romantic, on the right hand, the feudalist. I see these as
      attempts to return to a world in which exchanges are personal.

      My impression is that in their ideals, romantics seek a world in which
      everyone knows everyone else, a family, or `small town' world. Each
      gives to others "according to his ability" and receives from others
      "according to his needs". (This kind of world does not scale; it
      cannot grow.)

      In practice, many romantics are willing to accept a world of mostly
      personal market exchanges, as in the US of 1830. At that time de
      Toqueville said in "Democracy in America", Part II, Chapter 10,
      section 5,

      ... an American finds it very easy to change his trade, suiting
      his occupation to the needs of the moment. One comes across those
      who have been in turn lawyers, farmers, merchants, ministers of
      the Gospel, and doctors. ...

      (This kind of world does scale, because it permits some to engage in
      impersonal, market exchanges.)

      The key for romantics' success is a world that stops technology which
      may push people towards impersonal exchanges. In practice, this means
      stopping all technological advance, since no one can predict the future
      very well.

      Feudalists are another group. As far as I can see, they seek a world
      in which social relations are based on a hierarchy with them at the
      top. Such a hierarchy is like that of naval ranks: a captain has a
      higher rank than an ensign. It is the hierarchy of a corporation.

      (This kind of world scales dramatically. When impersonal, market
      exchanges are limited, you have the former Soviet Union. When
      impersonal, market exchanges are permitted, you have the US in the
      first half of the 20th century.)

      Since technological advance means that competitors may become
      successful (eventually, if not immediately), feudalists will seek to
      stop technological advance.

      All in all, very grim thoughts.

      Robert J. Chassell
      bob@... GnuPG Key ID: 004B4AC8
      http://www.rattlesnake.com http://www.teak.cc
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