The company of strangers a natural history of economic life

The Company of Strangers This page intentionally left blank The Company of Strangers A NATURAL HISTORY OF ECONOMIC LIFE REVISED EDITION Paul Seabright Foreword by Daniel C Dennett princeton university press princeton and oxford Copyright © 2010 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, Oxford Street, Woodstock, Oxfordshire OX20 1TW All Rights Reserved Library of Congress Cataloging-in-Publication Data Seabright, Paul The company of strangers : a natural history of economic life / Paul Seabright – rev ed p cm Includes bibliographical references and index ISBN 978-0-691-14646-1 (pb.: alk paper) Social capital (Sociology) Economics–Sociological aspects Sociobiology Strangers Trust I Title HM708.S43 2010 306.3–dc22 2009049522 A catalogue record for this book is available from the British Library This book has been composed in Lucida using TEX Typeset and copyedited by T&T Productions Ltd, London Printed on acid-free paper ∞ press.princeton.edu Printed in the United States of America 10 To Alice, Edmond, and Luke This page intentionally left blank Contents Foreword xi Acknowledgments xv Trust and Panic: Introduction to the Revised Edition P a r t I: Tunnel Vision 15 Chapter Who’s in Charge? 17 Prologue to Part II 33 P a r t II: From Murderous Apes to Honorary Friends: How Is Human Cooperation Possible? 35 Chapter Man and the Risks of Nature 37 Chapter Our Violent Past 55 Chapter How Have We Tamed Our Violent Instincts? 65 Chapter How Did the Social Emotions Evolve? 80 Chapter Money and Human Relationships 91 viii • Contents Chapter Honor among Thieves: Hoarding and Stealing 106 Chapter Honor among Bankers? What Caused the Financial Crisis? 116 Chapter Professionalism and Fulfillment in Work and War 134 Epilogue to Parts I and II 147 Prologue to Part III 151 P a r t III: Unintended Consequences: From Family Bands to Industrial Cities 155 C h a p t e r 10 The City, from Ancient Athens to Modern Manhattan 157 C h a p t e r 11 Water: Commodity or Social Institution? 172 C h a p t e r 12 Prices for Everything? 186 C h a p t e r 13 Families and Firms 204 C h a p t e r 14 Knowledge and Symbolism 226 C h a p t e r 15 Exclusion: Unemployment, Poverty, and Illness 244 Epilogue to Part III 263 Prologue to Part IV 265 Contents • ix P a r t IV: Collective Action: From Belligerent States to a Marketplace of Nations 269 C h a p t e r 16 States and Empires 271 C h a p t e r 17 Globalization and Political Action 288 C h a p t e r 18 Conclusion: How Fragile Is the Great Experiment? 302 Notes 317 References 343 Index 365 362 • References Tooby, J., and L Cosmides 1997 Evolutionary psychology: a primer (Available at www.psych.ucsb.edu/research/cep/primer.html, accessed November 17, 2009.) 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Wrangham, Richard, and Dale Peterson 1996 Demonic Males: Apes and the Origins of Human Violence Boston, MA: Mariner Books Wray, L Randall 1998 Understanding Modern Money Cheltenham: Edward Elgar Wrosch, Carsten, and Gregory E Miller 2009 Depressive symptoms can be useful: self-regulatory and emotional benefits of dysphoric mood in adolescence Journal of Personality and Social Psychology 96:1181–90 Zahavi, A 1975 Mate selection: a selection for a handicap Journal of Theoretical Biology 53:205–14 Zeder, Melinda 2008 Domestication and early agriculture in the Mediterranean Basin: origins, diffusion, and impact Proceedings of the National Academy of Sciences 105:11 597–604 Zimbardo, Philip 2007 The Lucifer Effect: How Good People Turn Evil London: Rider Books Zollikofer, C P E., M S Ponce de León, B Vandermeersch, and F Lévêque 2002 Evidence for interpersonal violence in the St Césaire Neanderthal Proceedings of the National Academy of Sciences 99:6444–48 This page intentionally left blank Index Abu Graib, 78 Adams, J., 48, 321 n 10 advertising, 113, 294 Aesop, 151 Afghanistan, 183 Africa, 46, 200, 227, 265, 273, 280, 296 agriculture, 4, 46–47, 184, 207; adoption of, 265; disease resistance and, 168; hoarding and, 106; invention of, 6, 106; spread of and nutrition, 265–66, 272; water use in, 183–84 AIDS, 53, 105, 176 Aidt, T., 341 n 27 aircraft, 21–22, 205, 223–24; carriers, 284; pilotless, 22; safety of, 40–41; symbolism of, 237 Aizenman, J., 341 n 26 Akerlof, G., 131, 149, 329 n Akoa, 61 alcohol: diminished sensitivity to danger, 77; laughter and, 77 Allen, W., 151 Altamira, 237 Amis, M., 105, 327 n 25 Anderson, D., 322 n 12 Andersson, M., 322 n Andes, 265, 273 anomie, 30 anonymity, 88, 225; money and, 94 Aoki, M., 329 n 3, 333 n 1, 334 n 15 Aral Sea, 50, 168 Arkwright, Richard, 209, 235–36 Armelagos, G J., 339 n armies, 225; mercenary, 276; professional, relationship of with civilians, 281 arms trade, 282–83 Arrow, K., 333 n 15 artists, 23, 142, 158–59, 232, 237 Ascherson, N., 332 n 12 assortative matching, 252–53; auction mechanism and, 254 Athens, 137, 157–58, 163, 169, 277–78, 292, 326 auctions, 192–93, 239, 254; eliciting true value through, 193; trust and, 197; winner’s curse in, 195 Auden, W H., 176, 332 n 15 australopithecine, 43 Austria, 256, 292 Axelrod, R., 325 n Bachorowski, J.-A., 75, 324 n 19 Balzac, H de, 104, 163, 291, 327 n 24 Banerjee, A., 326 n bank runs, 108, 119; in Rhode Island, 1991, 111 banking system, trust in, 117–18 banks, 43, 114, 212; central, 286; collapse of, 49; origins of, 106; risk sharing and, 148; runs on, 108, 119; vs traditional lenders, 224, 256 Banpo, 55 Bantu people, 273 366 • Index Barabási, A.-L., 326 n 22, 342 n Barash, D., 322 n Barcelona, 159–60 Bardhan, P., 337 n Barnes, B., 330 n 18 Barro, R., 341 n 25 barter, 91, 97–98; ethics of, 103; networks and, 101 Bar-Yosef, O., 339 n Basque people, 273 Basu, K., 68, 324 n 8, 337 n Baumann, D., 332 n 14 Bayes Law, 321 n Beckerts, R., 330 Begg, D., 331 n 10 Belfer-Cohen, A., 339 n Belgium, 257 Bellwood, P., 338 n Bénabou, R., 337 n Berglof, E., 334 n 24 Bergstrom, T., 330 n 16 Bernheim, D., 336 n 17 Bettinger, R., 319 n 18, 338 n Biggart, N W., 326 n 23 Binmore, K., 73 Bishop, C., 318 n 12 Blackmore, S., 227, 319 n 19, 335 n Blakeslee, S., 324 n 23, 335 n Bliss, C., 337 n Blombos cave, 227 Boldrin, M., 238, 240, 336 nn 13 and 18 bonobos, 3, 6, 37, 59; violence among, 59 Borges, J L., 163, 331 n 13 Bourguignon, F., 291, 320 n 5, 329 nn and 5, 333 n 2, 341 nn and Bournville, 209 Bowles, S., 61, 85, 88, 326 n 21, 330 n 17 Boyd, R., 144, 329 n 19, 330 n 17, 338 n Brahe, T., 230 brain, 227, 237, 293; evolution of, 34, 74; size of and social group size, 43 brainwashing, 28 brands and branding, 28, 220–21, 240 Braudel, F., 332 n 12 Brendon, P., 328 n 3, 337 n Britnell, R., 321 n 11 Brodsky, A., 338 n 10 Brooks, A., 335 n Brunel, E., 226 bubbles, speculative, 43, 50 Buchan, J., 94, 102, 104, 326 nn 3, 19, and 23 Buchanan, J., 88 Buder, S., 333 n Burckardt, M., 334 n 24 Burke, S., 289, 341 n Bursztajn, H., 338 n 10 Bushmen, 61 calculation, cheating, 73–75 Calcutta, 165 Calvino, I., 134, 328 n Camerer, C., 330 n 17 Canada, 256 Carlton, D., 336 n 17 Carlyle, T., 289 Case, A., 330 n 16 caste system, 47, 88, 138; symbolism of water in, 176 Çatal Hưk, 207 Cavalli-Sforza, L L., 272, 318 nn 14 and 17, 338 n 2, 339 n cave paintings, 6, 226, 237 Cave, R., 340 n 22 caveat emptor, 112 Caxton, W., 230 central planning, 50, 183, 217 centralization, 184, 216; firms and, 204 certification, 25, 87, 112, 221 Chagnon, N., 322 n 5, 330 n 16 Chandler, A., 213, 217, 334 nn 21 and 27 Index • 367 Chandler, R., 170, 307, 331 n 22 Chaucer, 230 Chauvet caves, 226–29, 237, 241 Chauvet, J.-M., 226 chimpanzees, 3, 5–6, 11, 34, 38, 43, 59; culture of, 229; violence among, 59 China, 180, 207, 214, 230, 242, 265, 279, 283 churches, 225; cities’ threat to, 170; invention of printing and, 219; Protestant, 242, 295; Roman Catholic, 235–36 Cirera, X., 329 n cities, 4, 9, 90, 157–71, 207–8, 252, 254, 285; and need for hinterland, 9; and property rights, 200; and resistance to disease, 168; complexity of, 170; defense of, 275; disease in, 162; golden ages of, 157; Greek, 276; importance of networks to, 158; inventions and, 275; stink of, 163; strength of through prosperity, 275 city-states, 180, 275–76, 278; Greek, 276; Phoenician, 275 civil service, 293 Clark, G., 72 cleaner fish, Clyde, S., 332 n 18 Coase theorem, 182, 239 Coase, R., 332 n 22, 333 n coercion, in definition of the state, 305 Cohen, D., 337 n Cohen, E E., 282, 327 n 1, 340 n 21 Cohen, M N., 339 n collective action See cooperation comparative advantage, 44, 289 conditional probability, 39; specialization and, 44 Constant, B., 297, 341 n 17 Cooper, G., 335 n 32 cooperation, 7, 19, 275; among animals (nonhuman), 4–5; in defense, 271; in politics, 294; violence and, 290 See also trust cooperation, evolution of, 65, 73 coordination failure, 148 Copernicus, 230 Corbin, A., 163, 331 n 14 Cornett, M M., 327 n Corrado, M., 332 n 16 Cosmides, L., 74, 324 n 17 Coulson, H., 340 n 22 Cox, D., 330 n 16 Coyle, D., 329 n Crafts, N., 338 n 15 Cronk, L., 330 n 16 culture, evolution of, 227 Daly, M., 322 n Dasgupta, P., 330 n 14, 338 n Davies, G., 327 n Davis, N Z., 198, 332 n 11 Dawkins, R., 317 n 8, 318 n 11, 319 n 19 De Soto, H., 201, 332 n 13 De Vries, J., 320 n 6, 321 n 11 De Waal, F., 85, 322 n Deacon, T., 318 n 16 Deaton, A., 337 n decentralization, 184–85 Deneubourg, J.-L., 330 n Denmark, 257 depression, 256–57, 304 Diamond, J., 168, 322 n 7, 323 n 9, 331 n 20, 336 n 9, 340 n 17 diamonds, 218 Dickens, C., 163, 291 disease, 9, 27, 49–50, 164, 238, 258, 285, 302–3; conditional probability and, 39; in cities, 163; poverty and, 291; resistance to, 168 division of labor See specialization Donne, J., 328 n Dostoyevsky, F., 56, 322 n double coincidence of wants, 101 Dougherty, P., 148, 329 n Douglass, C., 46 Dow, W., 337 n 368 • Index Duchenne, G., 76 Duerr, H P., 71 Dumont, D., 328 n 7, 332 n 13 Dunbar, R., 43, 321 n 4, 330 n 16 Du Pont Corp., 217 Durant, W., 324 n Durkheim, E., 140, 328 n Dutta, J., 341 n 27 East India Company, 208 Edgar, B., 317 n 5, 318 n 16, 321 n 7, 335 n education, 309–10 Egypt, 207, 230 Eisenstaedt, A., 58 Eisenstein, E., 230, 235, 336, 336 n 10 Eisner, M., 63 Elias, N., 71 Ember, C., 60, 323 nn and 13 Emerson, R W., 233 empire, 137, 174, 267, 278; Chinese, 279; European, 280; Greek, 278; Roman, 192, 196, 279; Soviet, 30 Engerman, S., 340 n environment See pollution erosion, 169 ethnic tensions, 304 Evans, W., 245 evolution See natural selection experiments, economic, 66 externalities, 50, 147, 153, 160–61, 285, 305; assortative matching, 254; examples, 24; pollution, 24, 160; soil erosion, 169; traffic, 160; water, 178–79 faking laughter, 77 Farrell, J., 338 n fashion, 24, 26 Febvre, L., 336 n 10 Federal Deposit Insurance Corporation (FDIC), 112 Fehr, E., 66–67, 81, 149, 323 nn and 3, 324 n 4, 325 nn and 9, 330 nn 15 and 17 Feinbloom, R., 338 n 10 Feldon, J., 336 n 22 Ferguson, A., 267, 281, 339 n financial crisis, 116, 133; psychological causes of, 131–32 Finland, 257 firms, 10, 25, 66–67, 153, 186, 190, 204–8, 212–23, 236, 240, 242, 252–54, 294; American, nineteenth and twentieth century, 217; as information channel, 263; central planning of, 224; history of, 206, 208; in experiments, 66; institutions and financing of, 214; limits of technology, 220; size of, 211–12, 221; standardization of, 210–12, 218; structure of, 218; technology and, 221; transfer of knowledge through, 241; trust and, 213–14 Fisher, I., 249 Florence, Italy, 158, 162, 166 Fogel, R., 340 n Ford, H., 205, 210 Fossey, D., 280 Foucault, M., 338 n 16 France, 172, 208, 226, 273, 284 Frank, R., 231, 324 n 18, 336 n 12 free ride, 181, 272 Friedman, M., 120, 319 n Friedman, R., 319 n Frost, R., 133 Fujita, M., 338 n Fukuyama, F., 214, 334 n 22 Furedi, F., 141, 328 n 11 Gächter, S., 323 n 2, 324 n 4, 330 n 15 Galenson, D., 337 n 23 Gambetta, D., 87, 326 n 20 Gann, J., 201, 332 n 14 garbage, 161, 164; collection in Mexico City, 167 Gat, A., 61, 72, 276 Gates, B., 231 Gellner, E., 339 n Index • 369 General Motors, 217, 253 genes, 4–5, 37, 56; correlation of with spread of agriculture, 273 genocide, 280, 288 Germany, 256 Ghana, 292 Ghatak, M., 337 n Ghiglieri, M., 322 nn 2, 6, and 7, 323 n Ghiselin, M., 330 n 16 Gibbon, E., 163, 192, 332 n gifts, 198 Gintis, H., 73, 325 n 11, 330 n 17 Gladwell, M., 342 n Glasgow, 158 Gleick, P., 332 n 17 Glick, R., 341 n 26 globalization, 53, 148, 281, 287–301; Athens and, 103; effect of on incomes, 291 gold, 95 Goodall, J., 60 gorillas, 280; violence among, 59 Göring, H., 136 Gorochowskij, B., 326 n Gorton, G., 120 government: regulation by, 285; role of, 29, 293; size of, 284 Granovetter, M., 88–89, 326 n 22 Gray, J., 289, 341 nn and 16 Gray, J A., 324 n 24, 336 n 22 Great Depression, 245, 248 green revolution, 184 Green, J., 329 n Greene, G., 74 Greenspan, A., 249 group selection, 82 Gusterson, H., 144, 329 n 17 Gutenberg, 230 Hacking, I., 320 n 4, 321 n Hall, P., 137, 157–59, 326 n 20, 328 n 5, 330 n 4, 331 n 11, 333 n 4, 334 nn 11, 16, and 18 Hamermesh, D., 320 n 3, 329 n 14, 337 n Hamm, R., 338 n 10 Hansen, Z., 168, 331 n 21 Hanson, R., 174, 331 n Hanson, V D., 276–78, 282, 333 n 6, 340 nn 9, 11, and 20 Harrington, J., 329 n 12 Hart, O., 333 n health, 25, 50, 135, 294; decisions regarding as economic phenomena, 258; mental, 260–61; national budgets and, 258; public, 165; system with litigation concern, 259 health care costs, 260 Hegel, G.W F., 312 Hemsley, D R., 336 n 22 Hendricks, K., 332 n Henrich, J., 325 n 8, 330 n 17 Herman, R., 332 n 24 Hill, K., 336 n Hirshleifer, J., 330 n 16 history of, 206 hoarding, by nonhuman animals, 106 Hobbes, T., 281 Hochschild, A., 340 n 18 Holland, O., 330 n Hölldobler, B., 317 n 7, 330 n Holmström, B., 260, 337 n 9, 338 n 11 Homer-Dixon, T., 331 n 2, 342 n Homo erectus, 43 Homo ergaster, 228 Homo neanderthalis, 228 Homo sapiens sapiens, 4–5, 41, 56, 59, 116, 241, 268, 287, 291, 303, 315, 317 n Horden, P., 332 n 12 hormones, 78, 80 Hörner, J., 329 n 12 Höss, R., 135 housing boom, 125 Hrdy, S B., 82 Hudson’s Bay Company, 208 Hughes, R., 159, 162, 331 n Hugo, V., 291 Hume, D., 297 Humphrey, N., 318 n 16 370 • Index Hungary, 257 Huntington, S., 296, 341 n 13 Hurtado, M., 336 n Hutchins, E., 328 n 6, 333 n 7, 334 n 29 Ibn Khaldun, 267, 281, 339 n India, 17, 138, 180–81, 218, 250, 256, 292; unemployment in, 250 infant mortality, 169 informal institutions, 90 information revolution, 218, 241 Innocent III, 282 institutions: defined, 7; formal and informal, 89; intellectual property rights as, 240; political, 169; water rights and, 179 See also property rights insurance, 43–44, 109, 111, 258; and moral hazard, 109; deposit, 109; health, 257, 260 intellectual property rights, 233–38, 242; a world without, 238; pirating and, 239 intelligence, evolution of, 37, 47, 57 International Criminal Court, 311 internet, 4, 101–2, 187, 197, 218, 221, 231, 240–42, 255, 304 Iraq, 312 Irons, W., 330 n 16 Islam, 237, 296–98 Israel, 304 Italy, 87, 164, 209, 256, 291 Jacobs, J., 90, 161–62, 326 n 26, 331 n 9, 331 n 10 Japan, 46, 209, 214, 237, 284 Jericho, 62, 206–7, 274 job satisfaction, 20 Jones, E L., 242, 320 n 9, 333 n 5, 334 nn 10 and 18, 337 n 24 Jones, S., 82 Kahan, D., 324 n 10 Kakar, S., 338 n 16 Kaplan, H S., 336 n Kaufmann, D., 326 n Kaufmann, S., 330 n 18 Kazakhstan, 257 Keeley, L., 61, 340 n 16 Kennedy, P., 278, 340 n 12 Kepler, J., 230 Keynes, J M., 103 kin selection, 4, 56, 83 Kirchsteiger, G., 323 n Kirman, P., 330 Klein, N., 28, 320 n Klein, R., 317 n 5, 318 n 16, 321 n 7, 335 n Klemperer, P., 196, 332 n knowledge, 7, 47, 219–20, 227; as accumulated through symbolic artifacts, 232–33 Kremer, M., 254, 336 n 20, 337 nn and Kreps, D., 329 n 11 Kroszner, R., 333 n Krugman, P., 338 n Kübler-Ross, E., 128 Laffont, J.-J., 337 n La Fontaine, J de, 151 Laing, R D., 338 n 16 Lamont, N., 29 Lamoreaux, N., 334 nn 19 and 28 Lancaster, J., 336 n Landes, D., 181, 211, 242, 332 n 21, 334 n 18, 337 n 25, 340 n 23 language, 4–5, 211, 228, 231, 273 langurs, violence among, 59 Lanjouw, P., 337 n Lascaux, 226, 237 Latvia, 257 laughter, 46, 75–76, 293; as signal for trustworthiness, 85; faking of, 77 laughter, evolution of, 74 law of averages See law of large numbers law of large numbers, 38, 40; investment banking and, 108 Lawrence, T E., 134 Index • 371 Leblanc, S., 323 n 14 Ledeneva, A., 326 n Lenin, V I., 210 Lerman, R., 337 n Lester, D., 328 n Levine, D., 238, 240, 336 nn 13 and 18 Levy, J., 63 Lewis, B., 298, 341 nn 19 and 20 Libecap, G., 168, 331 n 21 liberalism, 295–301; and tabula rasa, 296; trust and, 300; values of, 295; vs socialism, 298 Lin, I.-F., 330 n 16 lions, Lipton, J., 322 n Lithuania, 257 Locay, L., 322 n 11 Locke, J., 295–96, 299 London, 162–63, 167; Victorian dung collectors in, 165 Lorenz, K., 60, 323 n Los Angeles, 158 Louis XIV, 231 Loukoianova, E., 341 n 27 Lovin’ Al the Wizard, One Swing Al, 142 loyalty, 214, 293; family as trigger for, 293; military, 135 Lu, F., 339 n Luhrmann, T., 144, 260–62, 338 n 12 Lully, J.-B., 231 Luther, M., 295 MacArthur, D., 245 Macaulay, T B., 285, 288, 341 n Macpherson, C B., 296, 341 n 14 Madoff, B., 127 Mae Enga, 61 Mafia, 225; code of honor in, 87 Mailath, R., 337 n Malle, K.-G., 331 n 10 Manchester, 158 Mandeville, 151 Marin, D., 326 n markets, 9–10; among aboriginals, 46; failures of, 147 Márquez, G G., 87 Marrus, M., 328 n Martimort, D., 337 n Martin, H.-J., 336 n 10 Martindale, C., 336 n 23 Marx, K., 210 Marxism, 30 Mas-Colell, A., 329 n Maskin, E., 326 n 4, 337 n mass market, 211 Mauss, M., 198, 332 n 10 Mayhew, H., 165, 167, 331 nn 18 and 19 McBrearty, S., 335 n McCloskey, D., 200, 332 n 12 McCulloch, N., 329 n McDonald’s, 216 McElreath, R., 330 n 17 McGranahan, G., 331 n 17 McLanahan, S., 330 n 16 McMillan, J., 329 n 2, 338 n McNaughton, N., 324 n 24 McNeill, J R., 333 n medium of exchange See money Meggitt, M., 61, 322 n 5, 323 n 15 Menozzi, P., 338 n Mesopotamia, 207, 230 Mexico, 172, 265, 273 Michell, H., 137 Microsoft Corp., 220, 235–36, 253 migration, 304 Milgrom, P., 260, 329 n 3, 337 n military: innovation in, 282; technology and, 304 mill towns, 209 Mill, J S., 296 Miller, G., 328 n Mirrlees, J., 337 n Mithen, S., 48, 229, 318 n 16, 328 n 4, 335 nn 2, 3, and 7, 339 n Mizzen, B., 321 n Mollicone, J., 111 money: anonymity of, 94, 97; characteristics of, 94; diamonds as, 95; invention of, 94; spending of and sexuality, 103 372 • Index Monnerie, D., 96, 326 nn and monopoly of inventions, 235 moral hazard, 109 Morrison, C., 291, 333 n 2, 341 n mortality, 40; child, 49; infant, 53, 291; infanticide of gorillas, 280; Russian, 52 Mowery, D., 335 n 33 Mozart, W A., 231 murderousness, 56 narrative, personal: caste system and, 138; effect of specialization upon, 139; European feudal system as, 138; from labor, 137, 143; parenting and, 141; World War II, 144 nationalism, 31 natural selection, 37; contraception and, 81 Neanderthal man, 43 Neary, P., 338 n Netherlands, the, 257 network externalities, 255 networks, 20, 157, 212–13, 216, 220–21, 225; ethnic, 225; importance of to cities, 158; planning of, 159; robustness of against disruption, 308; weak ties in, 89 neural basis of reciprocity, 68 Nieboer, H J., 340 n Nikitchenko, I T., 136 North, D., 326 n 24 Northern Rock, 119 Norway, 257 Nuremberg, 135 O’Rourke, P J., 129 Ogilvie, S., 320 n Olson, M., 313, 342 n 11 opportunism, 82 O-ring, 254 Overy, R., 328 n Owren, M., 75, 324 n 19 oxytocin, 78 Packard, V., 28, 294, 320 n 7, 341 n 10 Packer, C., 318 n 11 Pakistan, 230 Palestine, 304 parenting, personal narrative, 141 Pareto, P., 26 Pareto-efficiency, 26; conditions for, 26; trust and, 148 Paris, 158; stench of, 163–64 patent office, 234 patent rights, 235 Pearce, D., 338 n Perec, G., 142, 329 n 15 Pericles, 277, 292, 297 Perloff, J M., 329 nn and Perrin, N., 321 n Peterson, D., 320 n 1, 322 n 2, 323 n 7, 340 n 19 Philipson, T., 337 n Piazza, A., 338 n planned cities, 157 Plato, 71, 289 poetry, 22–23 Polanyi, K., 326 n 21 Pollard, S., 209 pollution, 9–10, 50, 147, 167, 285, 303; water, 177 Pomeranz, K., 337 n 24 Ponzi, C., 126 Porter, R., 332 n Portney, R., 338 n Portugal, 256 poverty and globalization, 291 Price-Smith, A., 341 n prices: and U.S presidential races, 190; monopoly, 189; of bets on future events, 191; setting of, 186 primates, violence among, 59 principal–agent problem, 259; verification in, 260 printing, 235; invention of, 219, 230 private good, definition of, 178 probability, conditional, 39 Index • 373 property rights, 89, 200–201; importance of to growth, 89; in water resources, 179 public goods, 229, 272; definition of, 178 public spirit, 29 Purcell, N., 332 n 12 Pusey, A E., 318 n 11 Putnam, R., 330 n 14 Putterman, L., 333 n Raff, D., 334 nn 19 and 28 Ramachandran, V S., 324 n 23, 335 n Rawlins, J N P., 336 n 22 Rawls, J., 295, 341 n 12 Ray, D., 337 n reciprocity, 33, 65–71, 75, 77, 89, 149, 204, 227; as evolutionary mistake, 81; disposition toward and credibility, 75; evolution of, 33; experimental evidence for, 67; gifts as, 198; in nonindustrial societies, 70; institutions and, 69; neural basis of, 68; riskiness of, 87; social order and, 199; trust and, 68 reciprocity and revenge, 87 recycling, 168 Renfrew, C., 339 n “repo” markets, 121–22 Rhine River, 175 Ricardo, D., 44, 289, 321 n 5, 341 n Richerson, P., 144, 319 n 18, 329 n 19, 338 n Ridley, M., 317 n 6, 321 n Riedl, A., 323 n Riley, J., 329 n risk: environmental, 49; evaluation of, 42; perception of, 40 risk compensation, 48 Robarchek, Carole, 322 n 5, 323 n Robarchek, Clayton, 322 n 5, 323 n Robbins, L., 331 n Roberts, J., 329 n Robson, A., 336 n Rodrik, D., 329 n 4, 341 n Rogers, P., 332 n 18 Roman empire, 279 Romania, 292 Rome, 200, 277 Rosen, S., 336 n 12 Ross, M., 332 n 16 Rothschild, E., 152, 329 n 7, 330 n Rousseau, J.-J., 60, 295, 297, 300, 341 n 21 Royal African Company, 208 runaway selection, 57 Russell, B., 296 Russia, 52–53, 91, 96–97, 257 Rwanda, 280 Sala-i-Martin, X., 341 n 25 Samuelson, L., 337 n Sandel, M., 341 n 16 Saunders, A., 327 n savings-and-loan failures, 1980s, 112 Schama, S., 331 n Schelling, T., 338 n schizophrenia, 242 Schopenhauer, A., 69 Schwartz, A., 120 Scott, J., 330 n 2, 340 n 15 Seabright, P., 323 n 1, 326 n 1, 329 nn 10 and 13, 337 n 3, 338 nn 2, 3, and Sears Roebuck, 217 secular education, 310 secularism, 309 seigniorage, 96 self-sufficiency, 30, 49–50, 140, 247 Sen, A., 321 n September 11, 2001, 40, 302, 315 Serageldin, I., 330 n 14 sexual rivalry, 57 sexual selection, 57, 113 “shadow” banking system, 121 Shaked, A., 337 n 374 • Index Shakespeare, W., 19, 57, 87, 103, 138, 152 sharks, shell currencies, Solomon Islands, 96 Shiller, R., 131 Shimer, R., 337 n shirts, 17–18, 21, 23–28, 31, 45, 50, 185, 247; prices of, 190 Shleifer, A., 332 n 23 signaling, 187 Sivéry, A., 320 n slavery, 201, 273, 280, 288 smell, 163 smiling, 76, 293; as a signal for trustworthiness, 75; evolution of, 74; faking it, 76 Smith, A., 7, 12, 45, 148, 152, 159, 207, 211, 219, 243, 288–89, 329 n 6, 330 n Smith, L., 337 n Snow, Dr J., 162 Snyder, C., 336 n 20 Sober, F., 325 n 11 social capital, 89, 149 social insects, 4, 42; fables about, 151 Solow, R., 333 n 15 Soviet Union, 19, 23, 25, 30, 50, 257; factory system, 212 Spain, 256, 273, 298 specialization, 4, 7, 17, 23, 42, 44–45, 47–48, 50, 289; across generations, 233; adoption of agriculture and, 46; among hunter-gatherers, 46; and authoritarianism, 180; and economic cycles, 246; as cause of brain size, 42; central planning, 50; certification and, 113; danger of, 26, 45; effect on personal narratives, 139; governments and, 286; hoarding and, 106; in complex society, 46; in insects, 4; in warfare, 47; knowledge, 47; of institutions, 199; risk sharing and, 42 spite, experimental evidence for, 68 Stamp, Sir Josiah, 29 Standard Oil, 217 Stanford Prison Experiment, 78 states: disparity in strength, 279; innovation, 278 statistics, 29, 38, 50 Steinbeck, J., 168 Stern, N., 337 n sticklebacks, stirrup, 278 Stokes, A., 241, 336 n 21 Strassler, R., 340 n 10, 341 n stress, 81 strong reciprocity: evolution of, 80–85 suicide, 25, 53, 140, 257, 304; Durkheim’s theory of, 140; rates of, 256 Süskind, P., 163, 331 n 15 Sutton, J., 223, 335 n 34 Sweden, 257, 292 Switzerland, 256 symbiosis, symbolic artifacts, replication, 231 symbolic communication, 233, 236 symbolic reasoning, 197, 293 symbolic recombination, 237; relation to complexity of symbol, 237 symbolic representation, 226, 228 Taylor, F., 210 technology and firm size, 216 Teece, D., 334 n 21, 334 n 26 Temin, P., 334 n 19, 334 n 28 Terkel, Studs, 20, 141, 144, 320 n 2, 329 nn 12 and 18 termite nest building, 151 terrorism, 238, 306–8; technology and, 305 Thomas, R P., 326 n 24 tickling, 124 Tirole, J., 329 n 13 Titmuss, R., 333 n 15 Tomasello, M., 228, 318 n 16 Index • 375 Tooby, J., 74, 324 n 17 tools, 45–46, 48, 210, 226, 228 torture equipment, 144 Tourneur, C., 103, 326 n 22 transactions costs, 212, 225 Trivers, R., 318 n 11 trust, 5, 8, 11, 21, 33, 41, 64–65, 74–90, 94, 104, 112–14, 116, 148, 150, 184, 198, 216, 234, 240, 246–47, 256, 262, 306; across generations, 232, 238; and banking, 107; and barter, 102; and hormones, 78; and origins of hoarding/saving, 106; and the emotions, 77–78; as certification, 113; as code of ethics, 137; as necessary to specialization, 246; caveat emptor, 112; cycles in as cause of economic cycles, 247; in business, 77; in cities, 162; in economics literature, 149; in medical advisers, 258, 260; in repeated interactions, 149; information and, 251; institutions and, 69, 216, 234, 249; lack of and underdevelopment, 256; Mafia as provider of, 87; Pareto-efficiency and, 148; reciprocity instinct and, 68; role in encouraging exchange, 55; self-reinforcing in a culture of trust, 149; signals of, 74; symbolic communication and problem of, 242; unemployment and, 249 Tufte, E R., 331 n 12 Tully, J., 341 n 15 tunnel vision, 7, 9, 20–31, 135, 141–45, 160, 165, 170, 175, 185, 201; arms trade and, 283; costs of, 31; in design of nuclear weapons, 144; necessary to manufacture of equipment for torture, 143; politics and, 286; prices and, 189; role in professional honor, 145 Turner, R K., 338 n Twilight cave, 227 Udry, C., 337 n Uganda, 164, 292 Ukraine, 223–24, 244, 257 ultimatum game, 67 unemployment, 49, 244–45, 249, 294; in India, 250; in Russia, 51 United States, 311, 313 urban planning, 161 U.S Steel, 217 vampire bats, Varese, F., 326 n 20 veil of ignorance, 295 Venables, A., 338 n Venice, 282 verification of authenticity, quality See certification Vernon, J., 329 n 12 Vespasian (Emperor), 102 Vienna, Austria, 158 Villeneuvette, 208 violence, 53, 57, 300, 302–3; among primates, 59, 290; between groups, 290; different incidence of among men and women, 57; evidence from archeology, 61; evolution of, 56, 59; frequency of among nonhuman animals, 280; in modern societies, 62; in nonindustrial societies, 60, 61; statistics of, 303; technology and, 304 Viscusi, K., 329 n 12 Vishny, C., 332 n 23 Voltaire, 296–97 von Papen, F., 136 Wade, R., 332 n 20 Waldman, M., 336 n 17 Wantchekon, L., 294, 341 n 11 Ward, D R., 331 n 2, 332 n 17 Wason selection task, 86 376 • Index water, 10, 50, 153, 162, 172–85, 221, 303; as conduit for disease, 176; as symbol of caste system, 176; consumption in Mexico, 172; health benefits of bottled, 172; household supply of, 164; management of, 172; pollution in, 175; property rights to, 177, 183, 200; quality, as political issue, 177; scarcity, 173, 184; treating as economic good, 184 water-borne diseases, 174 Watt, J., 235 weakest-link See O-ring Weiss, Y., 337 n Whinston, M., 329 n 1, 336 n 17 White, L., 340 n 14 Whiten, A., 336 n Wiener, M., 103, 326 n 20 Wilde, O., 197 Wilkinson, G S., 318 n 11 Williams, B., 297, 341 n 18 Williamson, O., 333 n Wilson, D., 325 n 11 Wilson, E., 317 n 7, 330 n Wilson, M., 322 n Wilson, R., 329 n 11 Winterhalder, B., 339 n Winters, L A., 329 n Wirth, L., 326 n 23 Wittfogel, K., 180, 332 n 19 Worcester, R., 332 n 16 World Trade Organization, 311 Wrangham, R., 320 nn and 2, 322 n 2, 323 n 7, 325 n 14, 340 n 19 writing, 94, 275; invention of, 230 xenophobia, 27 Xenophon, 134, 145, 276 Yanomamo, 61 Yir Yoront, 46 Ziedonis, A., 335 n 33 Zimbardo, P., 78 .. .The Company of Strangers This page intentionally left blank The Company of Strangers A NATURAL HISTORY OF ECONOMIC LIFE REVISED EDITION Paul Seabright Foreword by Daniel C Dennett... Oxfordshire OX20 1TW All Rights Reserved Library of Congress Cataloging-in-Publication Data Seabright, Paul The company of strangers : a natural history of economic life / Paul Seabright – rev ed... professional values and at the same time makes them resistant to change Codes of personal behavior and professional ethics can therefore make individual acts of local cooperation more reliable,