Civil Society and the Iceberg Economy

I enjoyed this piece by Rebecca Solnit on what she calls the iceberg economy and the power of voluntarism:

Who wouldn’t agree that our society is capitalistic, based on competition and selfishness? As it happens, however, huge areas of our lives are also based on gift economies, barter, mutual aid, and giving without hope of return (principles that have little or nothing to do with competition, selfishness, or scarcity economics). Think of the relations between friends, between family members, the activities of volunteers or those who have chosen their vocation on principle rather than for profit.

…The shadow system provides soup kitchens, food pantries, and giveaways, takes in the unemployed, evicted, and foreclosed upon, defends the indigent, tutors the poorly schooled, comforts the neglected, provides loans, gifts, donations, and a thousand other forms of practical solidarity, as well as emotional support.

With much of this I wholeheartedly agree. But Solnit's piece is marred by an analytical framework that places cooperative charitable activities poles apart and in opposition to unprincipled, selfish capitalism. Charity and trade, however, are both species of voluntarism more closely aligned with one another than with the coercive apparatus of the state. Indeed, it is through markets that human beings achieve the most extensive cooperation. True, capitalist cooperation is not as deep as that of say the family but precisely because it is not as deep it is far wider in scope, encompassing the world. To propose the deep ties of the family as an alternative to capitalist cooperation is to understand neither and when implemented to be inimical to both.

In the introduction to The Voluntary City (note the title) Peter Gordon, David Beito and myself argued for a more inclusive framework.

The authors of this volume manifestly include non-profits in the market sector. The inclusion is important because by focusing on for-profit firms proponents of markets may have overstated the case for markets narrowly conceived. Yet by ignoring the role of non-profits, opponents of markets may have understated the case for markets broadly conceived. Alternatively put, what conventional economics refers to as market failure may actually be a limited set of problems associated with for-profit firms and markets. If the term "market" is broadened to include non-profit firms and other voluntary but not for-profit organizations, the scope of such failure may be diminished. Thus, rather than saying that the authors of this volume argue for a larger role for markets, it is more revealing to say that they argue for a larger role for civil society.

One virtue of the term civil society is that it is not wrapped up in the same baggage as the term markets; in particular, to favor civil society is not necessarily to regard self-interest as the sole or even most important motivator of human action. Unfortunately, the market/government debate has often proceeded as if it were a debate between self-interest and other-regardingness. Yet there is growing support for the view that our ancestors learned to forge connections and developed a social nature for the practical reason that such connections enhanced survival, just as did their capacity for self-interest (Ridley 1996; Wright 2000). Humans are neither purely self-interested nor purely other-regarding; humans are individuals who join groups and they possess all the skills appropriate to such a classification. It should come as no surprise then that other-regardingness is not absent from markets and self-interest is not absent from government.

Hat tip to my friends at The Browser.

Addendum: Andrew Gelman comments.

Comments

That's very thought-provoking - both Skolnit's essay and yours. I just finished Erik Olin Wright's "Envisioning Real Utopias" which takes a view more like Skolnit's about where social production/civil society fits relative to market and state - he takes a "third sector" view. Is that the (Wright 2000) referenced in your introduction? Anyway, volunteerism is a topic on which I always agree with the author I read most recently, so I guess that means I have a lot to learn.

Speaking of "volunteerism", today, finally, they are delivering my big flat screen TV. However, they also need to take out my 250 lbs old cRT. To make it work, I will "volunteer" to help getting the old one into their truck.

HC

But this argues against diversity. That's why cohesive nations rely on homogeneity or strong assimilationist pressures for certain types of civil society. They set minimum boundaries on correct behavior and severely punish those who stray outside those lines. heterogeneous cultures are always fighting about the ground rules of behavior and set limits too diffuse to be much good in promoting civil society. The US does it through educational and residential segregation.

Libertarians just assume away this problem.

It was capitalist cooperation that made our world, that accomplished all THIS:
http://www.youtube.com/watch?v=jbkSRLYSojo

Not family ties and not charity. Places where clan ties predominate over markets are plagued by nepotism and corruption. And the charitable impulse, too, can be a problem when it promotes (as it often seems to) a static, zero-sum worldview -- the idea that the poor are poor because the rich are selfishly hogging all the good stuff and so the solution to poverty is more generosity in sharing (or more forced sharing by the state).

Charity is valuable in relieving the symptoms of poverty (which, of course, is no small thing), but it has proven to be virtually worthless (and sometimes even actively harmful) in curing the disease.

Mike Hubin,

That is truly one of the most absurd comments I have seen in a long time. Do you think everyone shared and shared alike until government came along and passed the "There shalt be private property" law? What law would that be? You think there is no trade where there is no effective government? No trade ever happened between groups of primitive man?

The state may enforce societal norms and maintain order by addressing crimes against persons and property, that does not mean it CREATED all rights. To say all private property was created by and belongs to the government is to say that all people were given rights by t he government and so belong to the state.

Is it "involuntary coercion" to arrest someone for murder? Your interpretation robs the term of any meaning.

I like to break societal orders into 3 parts:

Gemeinshaft: The order of familial bonds and friendship. People cooperate altruistically.

Gesellshaft: The order of markets and exchange. People act in their self interest, but in a mutually beneficial and non-violent way.

Violent orders: The order of violence and politics. One group dominates the other. This order is not necessarily bad; without it it would be impossible to punish criminals or establish property rights, but like fire, it can get out of control.

Both statists and libertarians occasionally argue whether Gemeinshaft is more like violent or market orders. I think it is sufficiently different from either to qualify as its own category. This is related to the point Hayek makes in the Fatal Conceit:

"If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilization), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of worlds at once."

@Cliff, obviously it's involuntary coercion to arrest someone for murder, how on earth would you define coercion so as to exclude arrest? Most reasonable people would agree that it is just, that doesn't make it voluntary.

And yes, property claims in their current form are enforced by the legal system/state, but in the past they have been enforced by violence and arbitrary authority, a legacy which remains. The hereditary landlord who sells the crops harvested by their farmers is closer in spirit to the government bureaucrat collecting protection money than the charity worker.

I find plausible the claim that property is based on coercion, but not that it is based on the state. Even non-human animals claim territory as their own and the plausible assumption on the part of other animals that they will go to great lengths fighting to defend it dissuades others from intruding (this is discussed by Dawkins in "The Selfish Gene" and is likely the source of the "endowment effect"). But I'd ask what Huben thinks of Bryan Caplan's Distributive Justice in a Pure Service Economy? As higher and higher percentages of returns go to labor our world (at least the rich part of it) comes to look more like that hypothetical.

For more on property preceding the state based on self-help coercion and recognized claims, see David Friedman's A Positive Account of Property Rights.

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