Fully agreed with the underlying realization: trust (enforced by norms, shared culture, and friendship) is FAR MORE efficient than markets. If you have social capital and trust relationships in areas that match your needs, definitely use them. Also, continue to invest in such things—they’re more valuable than money (at many common margins, at least; exceptions abound).
I disagree that markets reduce trust. Markets operate with less personal trust, and can achieve many things that a network of trusted contacts just can’t. And it’s not evenly distributed, either. Some people wouldn’t even have needed to rent a truck—they have friends who’ll lend it. Some people don’t have friends able/willing to drop everything and perform labor for them. In your case, you used the market to get a truck, and a trust network to get the labor. Great, but having the market as fallback for those parts you couldn’t otherwise do made it possible.
In truth, the efficient point will vary by task and individual (and their network) - almost nothing interesting is purely market or purely non-market, but some mix of the two. Which is the main point of theory of the firm—the blending of market transactions for many purposes and many timeframes with non-market (mix of contractual and social norms) activities for others.
Good points! I agree with everything, and the way you puts it is clearer.
You’re definietly right that markets do not reduce trust. That was a bad turn of phrase: what I tried to say, and what I think you are saying, is that markets enables transactions with lower levels of personal trust.
And it is very true that markets are great enablers when they allow you to do things not possiblie within your network. Expanding my network to include someone with a truck might (or might not) be an efficient investment for me, for example. I don’t think it would be rational to exit the market. But it is important to remember that there is another direction one can look in, and that sometimes investing in growing your network is more efficient than raising your salary.
Fully agreed with the underlying realization: trust (enforced by norms, shared culture, and friendship) is FAR MORE efficient than markets. If you have social capital and trust relationships in areas that match your needs, definitely use them. Also, continue to invest in such things—they’re more valuable than money (at many common margins, at least; exceptions abound).
I disagree that markets reduce trust. Markets operate with less personal trust, and can achieve many things that a network of trusted contacts just can’t. And it’s not evenly distributed, either. Some people wouldn’t even have needed to rent a truck—they have friends who’ll lend it. Some people don’t have friends able/willing to drop everything and perform labor for them. In your case, you used the market to get a truck, and a trust network to get the labor. Great, but having the market as fallback for those parts you couldn’t otherwise do made it possible.
In truth, the efficient point will vary by task and individual (and their network) - almost nothing interesting is purely market or purely non-market, but some mix of the two. Which is the main point of theory of the firm—the blending of market transactions for many purposes and many timeframes with non-market (mix of contractual and social norms) activities for others.
Good points! I agree with everything, and the way you puts it is clearer.
You’re definietly right that markets do not reduce trust. That was a bad turn of phrase: what I tried to say, and what I think you are saying, is that markets enables transactions with lower levels of personal trust.
And it is very true that markets are great enablers when they allow you to do things not possiblie within your network. Expanding my network to include someone with a truck might (or might not) be an efficient investment for me, for example. I don’t think it would be rational to exit the market. But it is important to remember that there is another direction one can look in, and that sometimes investing in growing your network is more efficient than raising your salary.