Discursive Rationality and the Division of Labour: How Cooperation Emerges

American Journal of Economics and Sociology, The, Oct, 1999 by Jorg Guido Hulsmann

Hence, utilitarian considerations alone, and with it all present economic explanations of the division of labour, are insufficient. They explain the incentive that man has for co-operation. However, they cannot explain why this incentive is (as it seems to be) systematically higher than the disincentives springing from the possibility that his exchange partners will cheat on the contract. And they cannot explain why most market participants most of the time do not cheat on their contracts.

What are, then, the theoretical options that we face? First, we will examine the important contribution by Mariam Thalos and show in which respects it needs to be amended. Then we will present a rational account of the division of labour.

III

Utilitarianism Plus Belief: Thalos' Concept of the Public Function of Belief in God

THE UTILITARIAN APPROACH can explain why people seek co-operation. It cannot explain why most people respect the private-property rights of those persons with whom they co-operate. One solution to this problem is to claim, with Hobbes, that people fear their government or, more precisely, the sanctions that the Leviathan state imposes on violations of property rights. However, as Mariam Thalos observes,

the existence of such a system presupposes prior collaboration, for how could such a system arise except as a result of very significant collaborative efforts? [...] Prior to anything resembling a legal system that can inflict penalties for breach of contract what can serve the function of bringing potential collaborators together to erect such a system? (Thalos 1998, p. 350)

Overcoming this shortcoming of Hobbes' statist theory of civilisation, Thalos presents another, more sophisticated fear theory. She suggests that fear of God might induce people to respect the property titles of their fellows:

If you know that I believe in God, and believe I will indeed be struck dead if I breach our agreement (or at least incur the great displeasure of the deity at whose pleasure I enjoy life), then you are in possession of strong evidence that I have bound myself to my part of our bargain. [...] My belief in God, coupled with an act of promising, serves as evidence to you of my having bound myself. [...] Thus my belief-promise combination gives me bargaining power in our situation. If potential transactors believe that defections will be met with extreme disutility, imposed by a being who is supremely knowing, powerful, and prone to take pledges very seriously, chances are breachers will be few. Moreover, known believers will be favored as potential parties to contracts. (Thalos 1998, 357) [5]

Thus the belief in God can fulfil the important public function of reducing uncertainty and information costs on behalf of potential exchange partners. However, the fact that beliefs have such a public function does not mean

that my beliefs sometimes serve the aims of the community as a whole--although they might do that as well, as a byproduct. Rather, it is to say that sometimes it is in the service of my own aims to form beliefs that will be publicly visible. In other words, beliefs are articles that can be placed in the landscape to be navigated by others, not merely pieces of the compass by which one steers a course through an antecedently fixed landscape. ... And since beliefs can be so placed, they can also be placed so, strategically. (Thalos 1998, p356)