Tuesday, March 6, 2007

#3 - Social Consensus as a Precondition for Economic Activity

When I was a boy, I often went to the park to play “sand-lot” football. Soon after school had restarted and the Fall season settled into its rythm, a number of us kids would gather after school on a big grassy field in a nearby park and play football. About fifteen to twenty boys aged roughly eight to twelve; only boys, never girls! Weather permitting (never something assumed lightly in Seattle), we would gather about 4 o’clock and play till dark or dinner time, which ever came first.
There were no grown-ups around to be "in charge”. The “field” was simply an open grassy part of the park, no lines or markers, no “permission” to be sought or granted. There were no regular “teams”. The sidelines and goal lines would be marked out with strategically place jackets or sweaters or bikes. Since there were no goal posts, we simply did away with field goals. We didn’t even have referees. Any one who wanted to just came; the sides were made up of whoever showed; and everybody played.
There were, of course, a full measure of bruises and bloody noses; but nobody ever got really hurt. There were also occasional scuffles and even sometimes real fights, with blows. But only between two; and if the combatants themselves didn’t cool down after the first furious exchange, then the others would pull them apart, and we would all get on with the game. And we all had a great time.
How to explain such a Normal Rockwell scene? The observer of libertarian or free-market bent might say, “See! Get government out of the way and things work themselves out.” A more dirigiste observer might say, “Just imagine how much better we could make it by getting the boys a proper field, nice uniforms, organizing teams and practice sesseions , etc.” Each would be wrong; and not only because they miss our basic objective, to have fun by playing football, not to play football and hopefully have fun. Playing football was the only activity, but not the only objective, not the only benefit. They would also be wrong because each seriously underappreciates HOW we kids were able to have fun and play football.
We shared quite a lot in common besides a love of football. We knew each other. We lived in the same neighborhood. Some went to the Catholic school; some went to the public school. We all lived within a few minute’s walk or short bike ride of the park. Family incomes certainly differed, probably significantly, but nobody was crushingly poor or flagrantly rich. Many of us knew each other’s families, where he lived, his brothers and sisters, what his father did. We also shared attitudes and assumptions about things like fair play, unacceptable or inappropriate conduct, minimum standards of mutual respect. And, of course, each of us understood that you can’t play football alone. It is more fun for me when every one enjoys the game; if other kids don’t also have fun, they will stop coming; and then it will stop being fun for me as well. In short, we certainly all liked to play football, but we also shared a general consensus about what kind of conduct was acceptable and what was not.
That social consensus formed a sort of base platform for the football. It was never articulated or discussed or even thought about. It was simply there. But because it was there, we were able to enjoy those autum afternoons in the park.
I think there is a similar kind of social platform necessary for economic activity. It takes place within, and in a sense “upon”, an underlying social consensus. Large portions of this consensus are outside what we usually think of as “economics”, both the activity as well as the science. And so, as disciplined “experts”, we put them outside our “terms of reference”.
This practice leads to several pitfalls. First, we drift into talking about “the economy” as though it were a sort of insulated domain, with its own separate dynamics largely independent of other forces within the society. Then we start counting and measuring economic variables without much regard to other things, rather like an army not counting “collateral damage” among civilians as casualties. But the real damage starts when we start intervening and proposing with our eye on the “economic” indicators but not also on these other “extraneous” dimensions. And we are soon deep in the Sorcerer’s Apprentice problem.

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