Co-operation and Competition: Why You Cannot Have One Without the Other
Jonathon Haidt and David Sloan Wilson post (5
September 2013) “Sears the Invisible Band” on Forbes HERE
“Five years ago,
Eddie Lampert, the chairman of Sears
Holdings after Sears merged with Kmart, reorganized the company so
that each business unit functions like an autonomous company, with its own
president, board of directors, and profit-and-loss statement. …
…”The results have
been disastrous, in part because Lampert was ideologically committed to the
metaphor of the invisible hand and the associated idea that people are purely
selfish. Ideology is a lens – it makes some things more visible, others less
so. Lampert’s ideology prevented him from seeing that he was destroying the
invisible band – the bond that forms around groups that can trust each
other and work together toward shared goals” …
… “People are not
just selfish. It might make Ayn Rand roll over in her grave to put it this way,
but corporations and capitalism depend on the invisible band, as well as the
invisible hand.”
Comment
This is a short
extract from an interesting article, but to read more follow the link (I am
just about on the verge of breaching Forbes’ copyright to quote more). It goes on to discuss aspects of
evolutionary theory that are worth reading too.
Markets are not
entirely “dog eat dog” experiences. I remember hearing an overly self-confident
entrepreneur who almost salivated at his commitment to “balls-breaking
competition” (he didn’t specify what he meant by that”).
I think it is morea characteristic of
“merchants and manufacturers”, as Adam Smith described them, to aim to avoid
competition where they can, which, at root, is the purpose of tariff
protectionism since before Smith’s day (plus the Statute of Apprentices,
Settlement Acts, and Navigation Acts – prompted by the dynastic and territorial
ambitions of European rival monarchies and the clamour of businesses with State
legislatures to impose minimum regulatory requirements on smaller businesses unable
to afford them and, ultimately force them out of business, rather than
genuinely improve product and service quality.
“Narrowing the
competition” has always been a common objective of businesses, manifested in
their “trade associations”, lobbying activities and other contact points with
politicians, nowhere more evident than in the richest world markets, especially
those with large government sectors. Moreover,
competition is not “balls breaking”.
Trade requires at
least minimal co-operation. Smith
on exchange by “bargaining” (WN I.ii.) makes this clear with his iconic “butcher,
brewer, and baker” example. Buyers
should address the “self-love” of the sellers and vice versa.
Markets do not work well when each party demands only his or
her own self-interests (tonight’s dinner) without “addressing” the other
parties “self interests” too. In
short self-interested actors must mediate their self-interests to fit in with
the mediated self-interests of the party when trying to strike a
bargain (not all negotiated bargains are concluded.
In TMS Smith
refers to “persuasion” as the way we seek what we want the other party to do to
co-operate with us in exchange for what we will do for them. This is called the
condition proposition: “If you do this for me, Then I shall do that for you’.
Whatever Lambert
running Sears thought he was up to, he was bound to fail and it had nothing to do with Adam Smith's use of the invisible-hand' metaphor.
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