The Company of Strangers

A Natural History of Economic Life - Revised Edition

Paul Seabright

• Publisher: Princeton University Press
• Year: 2010
• ISBN:
  9781400834785
• Topic: Economics
• Subtopic: Economic History
• Index: Economics

The Company of Strangers shows us the remarkable strangeness, and fragility, of our everyday lives. This completely revised and updated edition includes a new chapter analyzing how the rise and fall of social trust explain the unsustainable boom in the global economy over the past decade and the financial crisis that succeeded it.
Drawing on insights from biology, anthropology, history, psychology, and literature, Paul Seabright explores how our evolved ability of abstract reasoning has allowed institutions like money, markets, cities, and the banking system to provide the foundations of social trust that we need in our everyday lives. Even the simple acts of buying food and clothing depend on an astonishing web of interaction that spans the globe. How did humans develop the ability to trust total strangers with providing our most basic needs?

PART I

Tunnel Vision

CHAPTER 1

Who’s in Charge?

THE WORLD’S NEED FOR SHIRTS

This morning I went out and bought a shirt. There is nothing very unusual in that: across the world, perhaps 20 million people did the same. What is more remarkable is that I, like most of these 20 million, had not informed anybody in advance of what I was intending to do. Yet the shirt I bought, although a simple item by the standards of modern technology, represents a triumph of international cooperation. The cotton was grown in India, from seeds developed in the United States; the artificial fiber in the thread comes from Portugal and the material in the dyes from at least six other countries; the collar linings come from Brazil, and the machinery for the weaving, cutting, and sewing from Germany; the shirt itself was made up in Malaysia. The project of making a shirt and delivering it to me in Toulouse has been a long time in the planning, since well before the morning two winters ago when an Indian farmer first led a pair of ploughing bullocks across his land on the red plains outside Coimbatore. Engineers in Cologne and chemists in Birmingham were involved in the preparation many years ago. Most remarkably of all, given the obstacles it has had to surmount to be made at all and the large number of people who have been involved along the way, it is a very stylish and attractive shirt (for what little my judgment in these matters may be worth). I am extremely pleased at how the project has turned out. And yet I am quite sure nobody knew that I was going to be buying a shirt of this kind today; I hardly knew it myself even the day before. Every single one of these people who has been laboring to bring my shirt to me has done so without knowing or indeed caring anything about me. To make their task even more challenging, they, or people very much like them, have been working at the same time to make shirts for all of the other 20 million people of widely different sizes, tastes, and incomes, scattered over six continents, who decided independently of each other to buy shirts at the same time as I did. And those were just today’s clients. Tomorrow there will be another 20 million—perhaps more.

If there were any single person in overall charge of the task of supplying shirts to the world’s population, the complexity of the challenge facing them would call to mind the predicament of a general fighting a war. One can imagine an incoming president of the United States being presented with a report entitled The World’s Need for Shirts, trembling at its contents, and immediately setting up a Presidential Task Force. The United Nations would hold conferences on ways to enhance international cooperation in shirt-making, and there would be arguments over whether the United Nations or the United States should take the lead. The pope and the archbishop of Canterbury would issue calls for everyone to pull together to ensure that the world’s needs were met, and committees of bishops and pop stars would periodically remind us that a shirt on one’s back is a human right. The humanitarian organization Couturiers sans Frontières would airlift supplies to sartorially challenged regions of the world. Experts would be commissioned to examine the wisdom of making collars in Brazil for shirts made in Malaysia for re-export to Brazil. More experts would suggest that by cutting back on the wasteful variety of frivolous styles it would be possible to make dramatic improvements in the total number of shirts produced. Factories which had achieved the most spectacular increases in their output would be given awards, and their directors would be interviewed respectfully on television. Activist groups would protest that “shirts” is a sexist and racist category and propose gender- and culture-neutral terms covering blouses, tunics, cholis, kurtas, barongs, and the myriad other items that the world’s citizens wear above the waist. The columns of newspapers would resound with arguments over priorities and needs. In the cacophony I wonder whether I would still have been able to buy my shirt.

In fact there is nobody in charge. The entire vast enterprise of supplying shirts in thousands and thousands of styles to millions and millions of people takes place without any overall coordination at all. The Indian farmer who planted the cotton was concerned only with the price this would subsequently fetch from a trader, the cost to him of all the materials, and the effort he would have to put in to realize an adequate harvest. The managers of the German machinery firm worry about export orders and their relations with their suppliers and their workforce. The manufacturers of chemical dyes could not care less about the aesthetics of my shirt. True, there are certain parts of the operation where there is substantial explicit coordination: a large company like ICI or Coats Viyella has many thousands of employees working directly or indirectly under a chief executive. But even the largest such company accounts for only a tiny fraction of the whole activity involved in the supply of shirts. Overall there is nobody in charge. We grumble sometimes about whether the system works as well as it could (I have to replace broken buttons on my shirts more often than seems reasonable). What is truly astonishing is that it works at all.¹

Citizens of the industrialized market economies have lost their sense of wonder at the fact that they can decide spontaneously to go out in search of food, clothing, furniture, and thousands of other useful, attractive, frivolous, or life-saving items, and that when they do so, somebody will have anticipated their actions and thoughtfully made such items available for them to buy. For our ancestors who wandered the plains in search of game, or scratched the earth to grow grain under a capricious sky, such a future would have seemed truly miraculous, and the possibility that it might come about without the intervention of any overall controlling intelligence would have seemed incredible. Even when adventurous travelers opened up the first trade routes and the citizens of Europe and Asia first had the chance to sample each other’s luxuries, their safe arrival was still so much subject to chance and nature as to make it a source of drama and excitement as late as Shakespeare’s day. (Imagine setting The Merchant of Venice in a supermarket.)

In Eastern Europe and the countries that used to belong to the Soviet Union, even after the collapse of their planning systems, there has been persistent and widespread puzzlement that any society could aspire to prosperity without an overall plan. About two years after the break-up of the Soviet Union I was in discussion with a senior Russian official whose job it was to direct the production of bread in St. Petersburg. “Please understand that we are keen to move towards a market system,” he told me. “But we need to understand the fundamental details of how such a system works. Tell me, for example: who is in charge of the supply of bread to the population of London?” There was nothing naive about his question, because the answer (“nobody is in charge”), when one thinks carefully about it, is astonishingly hard to believe. Only in the industrialized West have we forgotten just how strange it is.

COOPERATION WITH NOBODY IN CHARGE

This book is about the human capacities that have made such cooperation possible, about their advantages and their dangers. One way to capture their paradoxical quality is to think of them as embodying a kind of tunnel vision. By “tunnel vision” I mean the capacity to play one’s part in the great complex enterprise of creating the prosperity of a modern society without knowing or necessarily caring very much about the overall outcome. We may be—and often are—interested in broader questions about the point and purpose of it all, but the answers to such questions have comparatively little effect on our ability to do our jobs well. Our activities are part of a network; we can play our part just by knowing how to behave toward our neighbors in the network. Sometimes we rationalize this to ourselves by thinking that someone else is taking care of the network as a whole; if so, we are usually mistaken.

Tunnel vision is not the same thing as the profit motive, though a concern for profit to the exclusion of all else is one rather unattractive form that tunnel vision can take. Nor is it the same as self-interest. Economists have often found it convenient to assume that individuals are purely self-interested, if only to contrast the egoism of their motivation with the unwitting benefits created for others by the pursuit of that motivation. In truth human motivation is much richer than this simplification allows—but it cannot escape tunnel vision even so. We all have a strong component of self-interest, and we also care about other things: the welfare of our families and friends, the physical and moral health of our communities, the future of our world. Sometimes this concern expresses itself in strong views about the way in which the production or distribution of economic resources should be organized, as when we protest against the closure of a local hospital. But the altruism of our gesture is no guarantee that we have thought through its wider implications: single-minded obsessiveness can be just as prevalent among those whose goals are not narrowly selfish ones, such as crusaders for a charitable cause, as among profit-oriented businessmen. More often, we neither know nor care very much about the details. If I work in a furniture factory, it is more important to me to have a good working environment, pleasant colleagues, and reasonable pay than to know how the furniture I produce will be used to decorate the homes of those who buy it. I may, of course, derive job satisfaction from understanding how my work contributes to the activities and aspirations of others. People can often strengthen their sense of their own worth by understanding how their work fits into some larger frame of things; this was an important message of the book Working, in which the American writer Studs Terkel interviewed people from all corners of life to find out how their jobs affected them.² But Terkel’s book also showed how solitary this satisfaction can be for many people in modern occupations; it may affect their happiness without making much difference to the quality of their work. It is both an admirable and a melancholy fact that training and the standardization of working methods are designed to reduce the impact of personal idiosyncrasy on the job.³

Tunnel vision, then, covers a range of states of mind, from a mere capacity for detachment at one end to an obsessive single-mindedness at the other. As we shall see in later chapters, our understanding of the way modern economies work shows us two things. First, that modern society needs tunnel vision: the prosperity that the world’s citizens rightly demand rests upon institutions that are not only compatible with tunnel vision but even encourage it. Secondly, that tunnel vision is also dangerous: it is the source of many of the gravest threats to our security and happiness. How can this be? To begin uncovering the answer we must go back to shirts.

How should we react when we ask about some activity—“Who’s in charge?”—and receive the answer “No one”? It clearly depends on what kind of activity is in question. If I were an airline passenger, I would be concerned to discover that no one was in charge of the airplane. But it is good to know there is nobody in charge of creating modern English poetry. What is surprising is that supplying shirts to the world is—in this respect—closer to poetry than to piloting an aircraft. Why? What explains why these different activities provoke these particular responses?

The details of the answer will occupy most of this book. But here’s a start. First of all, the passengers in an aircraft share more or less the same clear goal: they want to get to their destination quickly and, above all, safely. Some of them may be more willing than others to travel slowly to avoid turbulence, but compared with the overriding shared goal of safe arrival, all differences of emphasis between them are minor. Secondly, in the event of danger all the passengers and crew are in the same—as it were—boat. If I don’t like the way the left-hand side of the aircraft is tilting, I can’t just go and sit on the right. The right-hand side of the aircraft will be traveling in the same direction as the left. In other words, the activities and fates of the passengers are interconnected in an inextricable way: such interconnections may make tunnel vision quite dangerous. However, some of this interconnection of our destinies may actually be welcome: if I don’t have a parachute, I shall be somewhat reassured to know that the pilot doesn’t have one either.

Thirdly, there is enough uncertainty in the aircraft’s environment to make us unwilling to trust any purely mechanical set of rules for coordinating its flight—such as those embodied in the autopilot. Even sophisticated fly-by-wire technologies can cope only with conditions precise enough for the programmers to foresee in detail, but there are others (such as the failure of the autopilot itself) where only the presence of someone in charge will do. The relative importance of the unforeseeable explains why there are driverless trains but not yet pilotless passenger airplanes,* and this difference is significant for many aspects of social life.

Fourthly, although being in charge of an aircraft is a complex responsibility that requires considerable training and experience, it is still simple enough for one person to be capable of discharging it in most circumstances. This is because of the relative simplicity of the overall goal, the limited number of controls to be operated, the limited number of ways of operating them, and the relatively limited number of signals to which the operator needs to respond. The job of being in charge is within a single individual’s capacity.

These four features together imply that the task of flying the aircraft is simple enough for one person but too complex and unforeseeable for a machine. (There are many such tasks—cleaning a hotel room and weeding a flowerbed, to name but two.) But why does this mean one person has to be in charge? Why can’t everyone be in charge together? The moment one asks this question it becomes obvious what the answer is: if backseat driving is a nuisance, backseat flying is potentially disastrous. Trying to reach agreement on how to fly the aircraft would involve arguments and delays that the passengers, in their desire to reach their destination safely, simply cannot afford.

Creating poetry is very different in a number of obvious ways, of which only some matter for the question we are concerned with here. First of all, there is no clear goal that poetry is trying to achieve, for all that literary critics may try to impose an order upon it. That’s not just an accident or an unfortunate omission: poetry would not be valuable if it lost the subversive, unsettling quality of an activity whose goals are always open to question and renewal. Individual poets who are not free to reinvent and rediscover their own activity cease to be poets and become speechwriters. If the poetry of any era or culture has a pattern, it is not one that can be planned and imposed but one that emerges from the interplay of many individual voices.

Secondly, because the voices are many and individual, the connections between them are subtle and detachable. Poets influence each other, certainly; but if the poet laureate writes a bad poem, it’s a bad poem, not a collective disaster.

Thirdly, even if there were reasons to wish to do so, being in charge of a nation’s or a culture’s poetry is a task of such complexity that no individual could discharge it except by simplifying it to a point of crudity. That is why cultural commissars set up by dictatorships always begin by giving themselves some clear task: poetry should aim to restore national pride or uplift the toiling and exploited masses. Then they realize that monitoring the pursuit of this task is going to be very difficult if there is no limit to the number of people who can write poetry, so the next thing they do is to stipulate that all poets must be members of a writers’ union. Even without invoking any rights of free expression, it takes very little imagination to see that commissars are bad for poetry.

There may also be a more subtle reason why a single individual could not be in charge of a culture’s poetry. One reason why so few critics of art or literature have also been great artists or writers is that the breadth and flexibility of vision that make a critic—the ability to see virtues in opposing styles and movements and to understand something of the roots of their opposition—tends to be incompatible with the single-minded energy that creates great works. Creativity seems to require more tunnel vision than criticism can usually afford.

What about the production of the world’s shirts? The goal of this activity cannot be summed up simply in the phrase “producing shirts.” The quality, the design, the variety of styles, the durability of the cloth, and the location of the different people with their different tastes represent a whole array of dimensions along which decisions must be taken on behalf of all the 20 million people a day who buy shirts—dimensions that are at least as important as the sheer quantity of shirts produced. There is no agreed-upon goal. This, incidentally, is a first step toward understanding why the Soviet Union was a...