Markets and Trust
In his important paper on Endogenous Preferences, Samuel Bowles writes:
. . . Markets thus affect not only the demand for, but also the supply of cultural traits. Among these are reputations for trustworthiness, generosity, and vengefulness.
If markets require less trustworthiness, for instance, then you may get less of it.
. . . Thus where markets approximate the ideal complete-contracting assumptions of the standard model, the adverse consequences of lack of trustworthiness or generosity may be attenuated; but at the same time markets may militate against the evolution of these traits. Thus markets may undermine the reproduction of traits necessary for efficient market transactions in the absence of complete contracting
Notice anything peculiar about the reasoning here? Bowles follows the standard model and stipulates complete contracts, draws out a consequence of that model, and then says . . . what? That if that model both did and didn’t obtain we’d get a bad consequence, and then blames the bad consequence on the market. This is weird. Either we have complete contracts or we don’t. If we don’t, and we don’t, then we need trust. If markets enable contracts that enable gains that are impossible without markets, and trust is necessary to complete these contracts, then there may be higher payoffs to trust in market interactions than in non-market interactions, and we’d expect norms of trust to be reinforced by the presence of markets.
That members of market cultures are more trusting, by the way, seems to be a result of a set of cross-cultural experiments conducted by Bowles and others after the publication of his endogenous preferences paper.
January 31st, 2005 19:12
According to David Friedman in _Law’s Order_, norms of trust are especially strongly reinforced in subcultures that rely mostly on informal contract enforcement methods; IIRC he mentions Orthodox Jewish diamond dealers and ranchers in Shasta County, CA as examples.
Probably there’s a paper waiting for a medievalist to write it about the effect on societal trust norms of the presence of traders operating under the Law Merchant (a system of contract rules developed by merchants themselves and at first enforced mostly by informal sanction).
February 1st, 2005 00:42
Orthodox Jewish ranchers?
Oy, dude.
February 1st, 2005 11:33
This is the book to read about norms and dispute resolution among Shasta County ranchers.
I know of no books about Orthodox Jewish cowboys, although it has been my experience that Jews and cattle don’t get along. No, wait, that was Jews and pigs. Nevermind.
I really should go to synogogue more often.
For a good book about a Jewish cowboy who solves murder mysteries, let me recommend this one.
February 2nd, 2005 09:11
That’ll teach me to reread my comments more carefully.
January 11th, 2007 18:40
I am researching a book on Jewish ranchers and cowboys. For now, my focus is Texas but wish to expand later.
Any names, contacts or ideas would be most appreciated.
Steve Munday