Economics‎ > ‎

Cooperation





For the most part, we have to leave it to institutions and businesses to decide how to hire employees and price services, confident that successful enterprises are usually better able to make this call than legislatures or judges.

   --  Adam Smith


Co-operation and competition are not mutually exclusive.
It is possible to compete and co-operate at the same time.


Social co-operation may benefit the poor more than the rich, meaning social justice should favour the rich and not the poor.
Things the rich bring the poor
  • Jobs
  • Technology (medicine, education etc)
  • More taxes paid even at a flat rate

Co-operation requires a self interested party

Self interest gets a lot of flak. If only people were less self interested there would be better outcomes.

In the following scenario :Two people could help each other pick an apple off a tree by one standing on the others shoulders.
  • If both parties are self interested, sometimes they will co-operate and sometimes will not.  They could share the apple(s).
  • If one party is self interested and one is not self interested you will get co-operation. The self interested party will get an apple.
  • If both parties are not self interested. They will possibly cooperated to get the apple, but both argue the other should have an apple and not come to an agreement.
Results
  • This is the same in markets with with a negotiation. You can't have a negotiation if both parties are not self interested. They will never agree who gets the benefit and hence no benefit.
  • If one party is self interested the other will be exploited. 
  • Both of these outcomes are not good.
  • However if both parties are self interested and they can share some of the co-operation benefits, both will be better off. If they cannot agree how to share the benefits, no-one will be worse off that they were previously.


The first is that when both parties decide to give up their share of the profits or insist that their share of the profits is too high, an argument ensues. In the arguments we encounter in real life, most stem from us pursuing our own interests. As a result, we often make the mistake of assuming that if we were to always side with the other party, such disputes wouldn’t occur. But in The Land of Gentlemen, we can see that taking the interests of others as the basis of our decisions also leads to conflict, and as a result, we still must search for the logical foundation of a harmonious and coordinated society.

Here we encounter a profound and important truth: negotiations in which both parties are seeking their personal gain can reach equilibrium, whereas if both parties are looking towards the interests of the other party, they will never reach a consensus. What’s more, this would create a society always at odds with itself. This fact goes strongly against the expectations of most. Because The Land of Gentleman is unable to realize a balance in the relations between its inhabitants, it eventually turns into the Land of the Inconsiderate and Coarse. 

From the above point we can see that humans can only cooperate when they seek their own interests. That is the secure foundation on which humanity is able to strive for an ideal world. If humankind were to directly and exclusively seek the benefit of others, no ideals could be realized.

In the past, it was thought that propaganda calling on the people to work in the service of others without repayment could improve social morals. Yet that is most certainly a great misunderstanding, for those who will learn how to seek some type of personal advantage will greatly outnumber those who learn how to work in the service of others.

From the perspective of economic gains, a universal obligation to serve others is wasteful. Those attracted to the offer of free repair services are quite likely carrying damaged items that are not really worth repairing, perhaps even items taken directly from the trash. But because the price of fixing those items is now zero, the scarce time devoted to repairing them will increase, as will the scarce materials used for their repair. As the burden to fix these items rests on the shoulders of others, the only cost to the average person seeking a free repair is the time it takes to queue. From the vantage point of society as a whole, all of the time, effort, and materials used to repair those damaged items will yield some barely usable pots and pans. If the time and materials were instead used on more productive activities, it would certainly create more value for society. From the perspective of economic efficiency and overall wellbeing, such obligatory and uncompensated repair work almost certainly does more harm than good.

In no way do I oppose the study of Lei Feng, as he helped those in need, which for society is a positive, even a necessary, activity. However, the requirement that the service of others be obligatory creates incoherence and disorder and distorts the voluntary spirit of Lei Feng.

In our society there are those who are quite cynical, and who detest a society that, in their estimation, elevates money above all else. They think that those with money are insufferable and that the rich view themselves above the rest of society, while the poor suffer for the sake of humanity. They believe that money warps the normal relations between mankind. As a result, they desire to create a society based on mutual service, free from talk of money and prices. That would be a society where peasants plant food without thought of reward; where workers weave cloth for all, also without reward; where barbers cut hair for free; etc. Is such an ideal society practical?

For an answer, we need to turn to the economic theory of resource allocation, which requires a digression of some length. To make it easier, we could start with a thought experiment. Consider a barber. Currently, men get their hair cut every three to four weeks, but if haircuts were free, they might go to the barber every week. Charging money for hair cuts better utilizes the labor of the barber. In the market, the price of the barber’s services determines the share of society’s labor devoted to that profession. If the state keeps the price of a haircut low, then the number of those seeking haircuts will increase, and accordingly the number of barbers will also need to increase and other jobs must be reduced if the total labor force is held constant. What’s true of barbers is true of other professions.

It does not follow, though, that love and friendship can replace money. We cannot do away with money just because we fear that it will erode the bonds of human emotion. In fact, prices expressed in money are the only method available for determining how to allocate resources to their most highly valued uses. If we maintain both monetary prices and our highest emotions and values, we can still hope to build a society that is both efficient and humane.

The Balance of Self-Interests
Suppose that A and B need to divide two apples before they can eat them. A makes the first move and grabs the bigger of the two. B bitterly asks A, “How could you be so selfish?” to which A retorts, “If it were you to have grabbed first, which one would you have chosen?” B responds, “I would have grabbed the smaller apple.” Laughing, A responds, “If that is the case, then the way I selected is perfectly in line with your wishes.”

In that scenario, A took advantage of B, as B was following the principle of “placing the interest of others above oneself,” while A was not. If only one segment of society follows that principle while others do not, the former is assured to suffer losses, while the latter will profit. If that continues unchecked, it is bound to lead to conflict. Clearly, if only some of the people put the interests of others before themselves, then in the end this system will merely generate conflict and disorder.

If both A and B look to the interest of the other party, then the above mentioned apple problem would be impossible to resolve. As both would look to eat the smaller one, a new problem would arise, just as we saw in The Land of Gentlemen. What is true of A and B would be true of everyone. If all of society, save for one person, followed the principle of explicitly benefiting others, the entire society would serve at this person’s pleasure; such a system would be possible, logically speaking. But if that person were in turn to become a practitioner of the above-mentioned principle of serving others, then the society would cease to exist as a society, that is, as a system of cooperation. The principle of serving others is generally feasible only under the condition that looking after the interests of the whole society could be delegated to others. But from the perspective of the entire globe, that would be impossible unless the responsibility for looking after the interests of the planet’s population could be delegated to the moon.

The reason for that incoherence is because from the vantage point of society as a whole, there is no difference between “others” and “oneself.” Of course, to a specific John or Jane Doe, “oneself ” is “oneself,” while “others” are “others,” and the former shouldn’t be confused with the latter. However, from a societal perspective, every person is at the same time “oneself ” and an “other.” When the principle of “serve others before serving oneself ” is applied to Person A, Person A must first contemplate the gains and losses of others. Yet when the same principle is adopted by Person B, Person A becomes the person whose interest is placed as primary. To members of the same society, the question of whether they should think of others first, or others should think of them first leads directly to confusion and contradiction. Therefore, the principle of selflessness in this context is logically incoherent and contradictory, and therefore could not serve the function of solving the many problems that arise in human relationships. That, of course, is not to say that the spirit animating them is never worthy of being commended, or that such other-regarding behavior is not commendable, but rather that it could not provide the universal basis by which members of society look to secure their mutual interest.

 If we agree that “serve others before oneself ” cannot as a rule solve the problem of how best to distribute two apples, does it follow that there is no better way to do so? 

The logic behind the resentment of the rich is flawed. If one were resentful of the rich because one had not yet become rich, then the best strategy one could adopt would be first to overthrow the rich, and then wait until such a time that one had oneself become wealthy, after which one would advocate the protection of the rights of the wealthy. For a certain group of individuals, this indeed would be the most rational way forward. But for society as a whole, there is no way to coordinate this process so that all of the members of society could become wealthy at the same pace. Some will become wealthy before others; if we wait for all to become wealthy at the same rate, none will ever achieve wealth. The opposition to the rich is without justification, for the poor will only have a chance to become rich if the rights that allow anyone—and everyone—to gain wealth are guaranteed; if the fruits of one’s labor are not infringed upon; and if the right of property is respected. A society in which more and more individuals attain wealth and agree that “to get rich is glorious” is, in fact, something that can be built.

References

Links

http://libertarianhome.co.uk/2015/12/martin-keegan-on-the-evolution-of-private-cooperation/

Subpages (2): Dependency Free Riders
Comments