I know how to get a free suit.
All I have to do is go to Macy’s, get a suit, charge it, and then when the bill comes,
rip it up.
Ethical issues aside, you see the main problem with this approach is that I can only do it
once.
The next time I go to Macy’s, they’ll know, because they made a note of it last
time, that I rob suits and they won’t give me another one.
But I have a clever idea.
I’ll go to Penney’s and get a free suit there.
Hang on, when I try to get my free suit from Penny’s they won’t give me one either.
Macy’s has told them that I’m a suit thief.
That’s odd.
One view of the marketplace is that it’s a dog eat dog world of hostile competitors.
The philosopher Thomas Hobbes saw the whole world that way.
Since Macy’s and Penney’s are competitors, you might expect that Macy’s would hope
that I would rob Penny’s next.
That would even things out.
But they don’t.
In fact, they share information about thieves.
They have figured out that in the long run it’s in their mutual best interests to help
each other crack down on theft.
That’s more important to them than short-term getting even.
If they didn’t share what they know, they would be cut off from a tremendous information
network about theft.
So helping the other guy isn’t contrary to their self interest at all.
Despite their being competitors, they have a strong incentive to be cooperative.
Even more interesting is that they came up with this system on their own.
It wasn’t a grand design by enlightened rulers, a top-down plan.
Rather it was a bottom-up system that evolved organically by the merchants as they figured
out how to manage their affairs.
Long before the advent of the department store, merchants realized that cooperation among
competitors was an absolute necessity.
So many mechanisms in their world depend on trust and reputation issues.
Not just in their world though, in mine and yours.
When I first told you my plan for getting a free suit, you might have objected that
I ought to be afraid of being jailed.
And that seems to require a government with a top-down plan.
But even if the fear of jail were taken out of equation, I would still have good reason
to pay my bill.
The same networks of trust and reputation that the merchants depend on are things that
I depend on as well, to have a job, a home, a car; to be able to buy plane tickets or
go to a restaurant.
In an important way, we are all merchants.
We all trade with each other.
Not only are we capable of cooperating, we generally do.
Society is full of these organic or spontaneous orders.
Everything from language to fashion.
From Internet memes to prices in a market.
The basic concepts of Anglo-American common law, as well as the international merchant
law, evolved in a similar fashion, the result of people’s attempts to work out the most
mutually beneficial ways of living and working together.
So when people tell you that society can’t solve its problems without force applied from
the top down, you’re right to be skeptical.
Mechanisms that facilitate and are based on social cooperation are all around us.