|
Exchange and Politics
The discussion of the prisoner's dilemma and the
distinction between small groups and large groups suggests
that economists are likely to have little to say about
small-group situations. In fact, they have written very
little, for example, about nomadic tribes or the
interactions within the family. The realm of the economist
has been large-group situations in which individuals
interact with others who they do not know well or at all. In
these situations, the assumption of self-interest seems to
serve quite well even if it is not literally true. The area
in which the analytical tools of economics have been most
useful has been the area of exchange.
In small groups, the role of exchange is replaced with
gift-giving. A member of a family who has no food will be
given food by those who do. But gift-giving usually has
strings attached. People who receive gifts are expected to
reciprocate, to give back something in the future. This
reciprocity helps bind small groups together.
Exchange does not bind people together in the same way.
Two people exchange only when both benefit. Neither incurs a
social obligation as a result. In fact, where social
obligations exist, exchange may not work well. Most people
are uncomfortable negotiating a purchase from or sale to a
close friend.
Exchange allows for extremely complex interactions among
strangers. When you use a pencil, for example, you benefit
from efforts of many thousands of people who in some way
contributed to getting that pencil to you. Wood had to be
grown, cut, and shaped. Graphite had to be mined,
transported, and processed. Iron had to be mined, refined,
and molded. The paint and eraser each required their own
processes. All of the many people involved are probably
total strangers to you.
Most of economics is devoted to discussing exchange, but
economists also spend time examining other topics. Of those
other topics, the one that has drawn the most research is
the study of government. However, the economic theory of
government is less advanced than the theory of exchange for
at least three reasons. First, specific individuals are
often very important in government, and economics does not
deal well with specific individuals. In monarchies and
dictatorships, for example, the decisions of one individual
may outweigh the decisions of all others. Economics seeks
regularities in social life, and those regularities are more
likely to occur when no one individual has appreciable
effects on the group.
A second reason is that only fairly recently did
economists realize that their analytical tools could be used
to explain behavior in government. Economists usually assume
that people are motivated by self-interest, but for many
years they implicitly assumed that once the government
employed a person, his motivations changed to unselfish and
his knowledge became infinite. No economist ever stated this
assumption; rather, this was a hidden assumption in
discussing the role of the government. This assumption
allowed economists to treat the government as a solution to
problems. If, for example, the private market did not
perform well, the government could remedy the problem. It
was only in the 1960s and 1970s that economists fully
realized that they had made what was for them a most unusual
assumption about behavior. Some of the most interesting and
informative research undertaken in the 1970s was that which
asked what would one expect if one assumes that those who
work for the government are in fact no different from the
rest of us, and that they seek only their own self-interest.
This research suggested that the government might often make
a bad situation worse.
A third reason is that the assumption of self-interest
may not work as well in politics as in exchange. Politicians
can and do make use of people's small-group responses. For
example, many people feel loyalty to nation, party, or
political personality. This loyalty can alter behavior from
what it would be if based only on self-interest.
Copyright
Robert Schenk
|