Praxeology and the economics of cooperation, trust and status

[Miklos_Hollender]

Before we’d simply jump to the conclusion that it’s a factor of how much the state leaves the economy alone, there are few things to consider. First, laws don’t come out of thin air, it’s rooted in the culture how strongly people demand Libertarian laws. Second, freedom in the Libertarian sense isn’t the same as freedom in the barbarian sense: respect for property of others, voluntary cooperation etc. generally other things than simple unrestrictedness play an important role. Freedom in the Libertarian sense is something completely different than the freedom of looters to loot or the freedom of someone who follows his whim regardless of the consequences for others (or himself).

This is a very interesting subject and the interesting thing is that people from the Moderate Left, from the Center, and from the Right seem to have largely the same ideas: the emphasis on voluntary cooperation and trust in a culture is important, and generally what inhibits it is a culture where status is everything. Status is a very special good: it’s always based on interpersonal comparisons (only relative status counts), therefore it’s zero-sum (if one gains status, all others lose relative status), therefore competing for status can be very harmful, very destructuve. Generally, there is no voluntary cooperation is status: the whole point of status is that it’s not enough that I win, you must lose as well. So catallactics doesn’t really work there. Of course competing for status is part of human nature, the question is, how can it be made the least destructive? Because if it’s made less destructive, voluntary cooperation arises almost automatically.

Articles I’ve found:

An unbiased analysis on why Arabs lose wars, points out how competing for status harms cooperation:

http://www.unc.edu/depts/diplomat/AD_Issues/amdipl_17/articles/deatkine_arabs1.html

Similarly, Steven Dutch points out the harmfulness of a “thar” system of values, which is very widespread in Arab countries but one can see some amount of it in Latin America, Eastern Europe etc. as well - I think he discovered something very important when he wrote Capitalism came from the knight and samurai moral: of having status due to adherence to an internalized code of ethics and thus merit, rather than just by birth, sex, or age:

http://www.uwgb.edu/dutchs/PSEUDOSC/TOXICVAL.HTM

Banfield - one of the few sociologists who understands time preference - points out something similar (PDF)

http://www.kevinrkosar.com/Edward-C-Banfield/Edward-C-Banfield-Moral-Basis-of-a-Backward-Society.pdf

Slate puts in their 2 cents:

http://www.slate.com/id/2174706/fr/flyout

Paleocon and “Libertarian fellow traveller” Steven Sailor seems to have a very similar opinion that the Leftist Slate:

http://www.amconmag.com/2007/2007_01_15/cover.html

and, of course, Fukuyama:

http://www.amconmag.com/2007/2007_01_15/cover.html

So - does Praxeology have something to say about this?

[Anonymous_Coward]

I don’t get it.

Isn’t ‘status’ basically a measure of how much a person will behave as an ‘irrational’ market actor?

Not exclusively so of course but it will drive a person to undertake actions which may not be necessarily in their economic best interest in pursuit of this elusive ‘status’.

Doesn’t mean that they are acting in an irrational manner in general but just that they value ‘status’ more than the multitude of options that present themselves to a person on a daily basis.

So someone buys a new Caddy every six months instead of taking the money and investing it in a company pursuing a cure for cancer or buys a mansion instead of a one bedroom condo and increases their carbon footprint a hundredfold.

I think what Praxeology would say about this is that, in the absence of a real mental defect, people act in a rational manner as viewed from within their own personal scale of preference. Others viewing their actions from the outside might assume that the person driving the gas-guzzling Hummer is an irrational market actor because of Global Warming and Peak Oil, etc, yet when viewed from within the person’s viewpoint they just want people to ‘see them’ driving around in a car that has ‘status’.

While capitalism may derive its existence from the code of conduct of the enforcement arm of the State (not very likely that!) without people being able to make these ‘irrational’ choices it would just slowly devolve into a Socialist Workers Paradise where people took nothing but what they needed for basic sustenance and nobody wanted for anything.

So of course status inhibits culture in that its pursuit comes at the cost of more rational goals as observed by those not in pursuit of status as their main goal.