As a practice, the modern economy reflects centuries of assumptions and collective experience, and heavily relies on the increased accuracy that writing and then printing brought to regulating exchange. These assumptions, experience and technologies converged, at the dawn of industrialization and the introduction of massive mechanization, in the social theories of the Enlightenment and the general secularization of society.
Modern economy can be construed as the rationalization of exchange through accurate records – contracts (among these, money itself and all other time-shifted forms of money, i.e. finance) and accounts mainly. Although I’m focusing on rationalization, I don’t mean to imply that human aspects other than reasons were eliminated. In fact, it is increasingly accepted that economic choices are essentially driven by emotional or irrational components. However, the fact remains that the economic institutional set-up reflects the belief that rational choice leads to a prefixed outcome in the more effective way available. Reason allows humans to forecast the future accurately and hence allows humans to act upon it and determine their destiny.
Generalizing even more, modern economy is quantifying, through money as the unit of measurement, the power within the exchange, or what is exchanged. Economical value is a measure of power. We can evaluate the power of objects (commodities, etc.) and people by the disruption that is introduced by their absence. If power is the ability to move or lead people and / or objects, then the more the impact, the higher the value. The economy is a game of power, and hence consensus-forming, emotional attachment forming, and the manipulation of groups’ drives are the goals, and anything beyond that – like evaluating whether what is done has any further value, is good or bad (high or low ranking) under a certain perspective – is not essential, essentially it is a waste of time and energies. The economy institutional set up ought to reflect the goal (intentional or un-intentional) of controlling people behavior and passions, and this fact is just a reaffirmation of the fact that the economy is one of the major regulating systems of modern society. No one doubts the strong interrelation between political and economical power, one helping the other in leading people toward a specific outcome. Political leadership is complementary, and sometimes even a substitute, of economical leadership, and vice versa. Both are performing leadership functions either in the front or in the back stage. The rationalization of exchange imposes a structure, a regulation to power. When political power needs to change the status quo then the economy is one of the most powerful tools to drive that change.
The establishment of a rational trading and economic market changed the nature of the exchange from a social to a technical practice. Modern contracts make the relationship between the giver and taker as limited in time as possible – although the law can prolong specific responsibilities of the parties, when the giver is compensated fairly by the taker, the relationship is extinguished. The relationship between the given and the taker is also made impersonal, i.e. there is no need to know the other party because responsibilities are defined and captured by the contract. The modern economy has allowed society to trade both objects and people without regard for whom the trade is entertained with and without any regard for the effects and affects that the trade raises. And the same time, this neutralization of the relationship between the giver and taker allows for a fast and high volume of exchange.
Is an economy centered in relationship-building instead of relationship-neutralization (in the sense above introduced) possible? To be more specific: is it possible to entertain economic activities with contracts that capture a different type of relationship, i.e. a relationship that does not extinguish with time and that presuppose a level of trust that almost makes the contract itself superfluous? Does that require the absence of law, i.e. the absence of a way to establish common principles of agreement? Just because law and writing came about together with trading does not necessarily means that trading is not possible without them – in fact, we know that writing, for instance, grew out of its original function as an accounting device, and certainly there has been plenty of trading and economies run beyond the law in the world history. It all depends on the perceived risk, and if a relationship is in place, risk should be reduced to a minimum. When risks are taken, so should responsibilities that do not need to be diluted and shared by the community unless the reward is also shared. A specific contract, relationship-based instead of law-based, should suffice.
Relationship is a game of power and deception is an ingredient of it. In fact, I’m not posing questions having a vision of a paradisiacal world where a trustful relationship cures forms of nihilism. However, I believe that the exploration of the differences and of the effects on society and its environment of an economical practice that is not based on neutralizing the most essential characteristic of humans and life in general could bring to light interesting opportunities for redirecting those practices and our history.
It can certainly appear counter-intuitive that trade and economy in general should have relationship-building (to the point of not needing a written contract) as a prerequisite. It would certainly require a slow down of all activities and hence of the volume of present-day economy, at least in terms of quantity. In fact, if the emphasis of the economy is moved from quantity to quality then the benefits of a relationship-based economy may become evident.
I said above that economic value is a measure of power. And power requires a well established connection with its subjects if it wants to be effective. If this connection is neutralized by the rationalization of exchange, what is the effect on power and hence on economic value? I would suggest that we need to make an addition to the traditional categories of use-value and exchange-value. In fact, I believe that value is attributed to objects and people also by how their functionality is detached from the environment they reside in. Paradigmatic examples are luxury items and management executives, for instance, the functionality of both being very much detached from the environments that support them and at the same time having enormous power over those environments. I would interpret under this light the felt necessity by most management executive of being reimbursed to the level that we all know in case of demise: their superfluity needs to be balanced, needs to acquire ‘meaning’ through monetary value. Like luxury items, their superfluity is valuable.
What if the function of luxury items and management executives were based on an established relationship with the environment they reside or operate in? What would the value of extremely valuable things and people be in a relationship-based economy? How would in a relationship-based economy value be acquired? Contrary to modern economy, it would be acquired by the permanence and the strength of the bond (between the giver and the taker) over time. Growth would be based on the long-term permanence of the effect of an exchange. Since that would presuppose quality, growth would absolutely be centered on quality instead than volume and speed. Value would be given to executives which function is to represent and lead an organization and produce long lasting and respectful objects, instead of being front-stage actors of shareholders.
Specialization of labor is perhaps another aspect of the rationalization of exchange. Nobody would trust a specialist whose discipline is beyond one’s ability (and / or education) to comprehend. A way to establish responsibilities is hence needed because without knowing the specialist, trust is absent. Specialization of labor is the commoditization of expertise – even when that labor is very expensive. Human personality makes every two engineers dissimilar but that is about behavior, not expertise since the educational system tend to make both equally prepared. And commodities exchange does not form bonds, commodities do not have qualitative difference across the market, hence there is no difference between any givers. Same applies to finance, and what happens based on trust in risk-managing contracts instead of relationship is under the view of the world right now.
In the last decade there has been the coming to the fore of the gift economy. That is mainly due to the success of initiatives like Wikipedia, the open-source movement in software engineering, feminist studies, and in general because there is a search for an alternative to the mass-driven and consumerist capitalism. However, the gift economy still sounds either an anthropologic subject of debate or an utopian or childish subject. However, we need to remember that the basic unit of society, the family, is based on the principles of the gift economy. Authority and prestige, long-term emotional bonds (debt / borrower) based on giving without a quid pro quo or contractual agreement, fundamental trust, no immediate apparent utility of the given, sharing, and no interest-based exchange. Fundamental in all this is the blurring between the giver and the taker, being both part of an extended and comprehending community. Giving is giving to a part of oneself.
Interest and profit are the other fundamental concepts of modern economy that rarely are under discussion. Why, it is said, should anybody entertain a business if the gain is not higher than the cost? The simple answer would be: because the goal is not to gain – but perhaps to exchange and establish a permanent relationship by doing that? Fundamentally: why should anything be exchanged with a gain? Is perhaps gain and the focus on it needed to allow a better control of people’s passions as Hirschman has sustained? Is that a powerful way to build a basis of consensus? Is that a way to push aside the search for correctness if not truth?
Interest and profit, like contracts and the rationalization of exchange are the institutions that allowed the industrial revolution to bring its fruits to society. However, it seems pretty clear now that those institutions can bring havoc too, and hence further developments are needed. Can we go beyond rationalization in economy – as in politics? Can we introduce a counterpoint of reasons and passions, of truth and power, and redefine who the giver is and who the taker is, and replace interest as the main driver of the economy? As it is clear, the redefinition of giver and taker – hence of personhood in an economical sense – requires a discussion about property, intellectual and physical. When you think that intellectual achievements are due more to any specific ability of one’s own body and brain, or any specific character of one’s person instead of the interaction that bodies and brains had before and during the course of one’s life, when one needs to secure under contract one’s achievements in order to be reimbursed for the hard work instead of considering that hard work itself as something to be thankful for, we are then in a the culture of reaction, a culture of rigidifying life, a culture of fear and anxiety, and hence a culture where control and conservation of the status quo prevails.
