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The Company of Strangers: A Natural History of Economic Life

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The Company of Strangers starts with the purchase of a shirt. How is it that exactly the item we want is available in our local store, when we didn't know the farmer who grew the cotton, the dyer who dyed the thread, the tailor who sewed the pieces, nor the shipper who shipped the shirt? Nor did most of these people know each other. Of all the things that might puzzle a Neanderthal who wandered into our time zone, this would be one of the strangest.

In this wonderfully readable book, subtitled "A Natural History of Economic Life", Paul Seabright follows the story of what he calls the "shy, murderous ape" from lonely hunter to homo economicus, confidently mingling with crowds of strangers and daily dependant on numerous people whom he has never met. Amazingly, to our Neanderthal, we have learned to trust strangers.

The question asked in the second half of the book is how far we should rely on such leaderless chains. Some items, such as airline travel and hospital care, don't lend themselves to blind trust. And who is to stop the cotton farmer from polluting the river that the dyer downstream drinks from, or the dyer from polluting the air that the tailor breathes? At what point do the connections between countries or companies become impossibly fragile?

Finally Professor Seabright dismisses recent talk about globalization as "excitable" and dismisses it as a mere continuation of a trend of "at least the last ten thousand years." That does imply that, as far as economics is concerned, camels and the Silk Road are no different from container ships and the internet highway. This is one of several topics in the final chapters of the book which are only touched upon and which would repay our closer attention. Perhaps we can hope that The Company of Strangers is only the first volume in a story to be continued.

Kudos also to Leslie Flis, Tim Flach and Augustin de Berranger for the stunning dust jacket. They too were part of the chain in the production of this highly entertaining and likable book.

Academic press books rarely get the attention they deserve, so I hope this book does not get lost in the mix. Paul Seabright is a terrific writer, and his account in this book of the origins of cooperation is lucid and exciting. Seabright makes the important point that successful economies and societies depend on cooperation, and that even though self-interest would seem to lead us to reject that, time and again we manage to work together. This cooperation with strangers is, though, a fragile thing, and Seabright's conclusion raises the specter that in the future we may need to work a lot harder to remain in the company of strangers. I'm not fully convinced by the book's end, but the argument is worth thinking about. Also see Robert Wright's "Nonzero," Howard Rheingold's "Smart Mobs," and James Surowiecki's "The Wisdom of Crowds" for variations on this argument.

Despite the rough treatment handed to Edward O. Wilson's call for a unification of biology and the social sciences some three decades ago, and despite the hostility still aroused by the notion of "sociobiology" by some traditionalists, the process of integrating social science into natural science appears to be in full swing. Paul Seabright's new book is a welcome and important contribution to this process.

The idea behind sociobiology is that there are many social species, and our understanding of ourselves will be enhanced by analyzing the similarities and differences between human and non-human social systems. The main title of Seabright's book, "In the Company of Strangers" isolates a unique characteristic of human sociality: while several species evolved a highly complex and decentralized division of labor, humans are the only species with extensive cooperation among unrelated individuals.

The maturation of sociobiology since E. O. Wilson's call to arms has included several key strands of research. One is a broadened concept of sociality, in which it is recognized that from the emergence of multi-cellular organisms to the rise of Homo sapiens, major evolutionary transitions have required novel mechanisms facilitating the cooperation among the complex parts of biological wholes. It is now routine, for instance, to note that the disciplining of an aberrant cell in an organism, an ovipositing worker in a bee hive, and a shirking worker in a business enterprise are modeled in a similar manner. A second contribution is gene-culture coevolutionary theory, important because human sociality has been far more cultural than that of any other species.

Seabright's book exemplifies a new breed of economic analysis, seeking answers to fundamental question wherever they are best found, ignoring disciplinary boundaries. A transdisciplinary approach to economics life is nothing new. Adam Smith, for instance, not only wrote The Wealth of Nations, but also The Moral Sentiments, which is perhaps the greatest work of psychology prior to William James. But this tradition was all but buried in the early years of the Twentieth century, only recently to be rediscovered.

Seabright provides elementary, but nonetheless richly fascinating, introductions to such standard economic topics as the division of labor, prices, money, and firms, and addresses such perennial economic problems as unemployment, poverty, environmental destruction, and economic instability. The novelty is that he consistently does so from a long-run evolutionary perspective. This is decidedly not a book on economic policy. Even such traditionally central questions as capitalism versus socialism, the balance between competition and regulation, and the distribution of wealth and income are mentioned only in passing.

The innovation in this book lies in its treatment of the psychological prerequisites of modern economic life. As Seabright notes, "[M]odern society is an opportunistic experiment, founded on a human psychology that had already evolved before human beings ever had to deal with strangers in any systematic way." (p. 4) This psychology has two elements, one of which is well known and the other relatively novel in behavioral science. The well known is what Seabright calls "rational calculation," by which he means a capacity for logical reasoning, information processing, and technique mastery that far exceeds that of any other of Earth's creatures. The novel is what he calls "reciprocity," which is "the willingness to repay kindness with kindness and betray with revenge, even when this is not what rational calculation would recommend." (p. 27)

Two terminological issues are important to set straight from the outset. First, by "reciprocity" Seabright means what has been called "strong reciprocity" (Bowles and Gintis, Nature 415 Jan 2002). The "strong" adjective is meant to distinguish the behavior from the self-interested notion of reciprocity common in the biological literature. Second, Seabright follows a long tradition in economics of considering reciprocity to be non-rational, using the term "rational" when one means "caring only about oneself" as though the terms were synonymous. There is nothing "irrational" about such other-regarding elements of strong reciprocity as returning kindness with kindness and retaliating against someone who has harmed one, even when these behaviors involve net material costs.

Seabright's treatment of human society is innovatory because both biologists and economists have long maintained both that humans are selfish when dealing with non-kin, and their cooperation can be explained by long-term self-interest. Moreover, there is a long tradition, especially on the Left, of faulting capitalism for promoting greed and selfishness, which is at best a partial truth, since market economies at least tolerate, and probably promote, strong reciprocity. Experimental economics, as described by Seabright, has shown that most people are indeed reciprocal and in fact neither economic nor biological models of self-interested cooperation are rarely plausible when they involve groups of more than a few individuals.

Seabright also analyzes the "dark side" of strong reciprocity, which is the tendency to exhibit hostility to "outsiders" in the name of "insider" cooperation. "Cooperation within a group," he observes, "can make the group more lethally aggressive in its dealing with outsiders... [the] systematic killing of unrelated individuals is so common among human beings that... it cannot be described as exceptional, pathological, or disturbed." (pp. 209,53). He concludes that "what Adam Smith famously described as the human propensity to 'truck, barter and exchange' has always coexisted uneasily with a rival temptation to take, bully, and extort." (p. 233).

This book is highly readable and will be accessible to a wide audience. It is, however, weak on details, eschews formal model building and extended analytical argumentation, and hence will serve only as a stepping-stone to the field for those interested in the economy as a dynamically evolving system.

Bishop Usher is famous for defending a Biblical history of man, starting 6000 years ago. This is the 'short history of man' theory. A slight variation on this theme asserts mankind was 'unconscious' until about 6000 years ago, when the miracle of 'civilization' lifted the savages to our now enlighted state of grace. Bishop Usher's reputation is fairly low among academic circles, but those who expound the milder 6000 year miracle of civilization have not shared his fate.

They should.

Seabright, like Usher, thinks human history so simple a matter that there is no need to explore the archeological and biological evidence for clues about the evolution of human nature. It seems to be too obvious. Why waste time on something everyone knows?

For example, Seabright reminds us over and over again that humans murdered all strangers until the dawn of civilization a few thousand years ago. This simply isn't true. All primates have strategies for mixing families. For some species of primates it is the adolescent male, for some it is the adolescent female. Either way, half the adolencent population is chasing strangers and the other half deciding how to respond to being chased. It isn't intuitive, but that's what primates do.

Over and over again, Seabright reminds us that cooperation is unnatural, a trend running counter to human evolution and selective advantage. The argument simply doesn't hold up to the light of day. Human muscle is, pound for pound, about 6 times weaker than chimp muscle. We have been breeding out serious muscle advantage, and associated dominance, for millions of years.

Seabright's story isn't much different than the one told in 1784 by Henry Home, Lord Kames (Sketches of the History of Man). Lord Kames proposed a "four-stage theory of history": hunting-gathering, herding, farming and modern-commerce. Kames lauched a thousand research projects, including Darwin's adventures. We now know a lot more about human evolution and we learn more every day. Despite all this work, Seabright does little to update the 200 year old scheme Kames presented.

The project of integrating a 3 million year history of human evolution and economcs is a great project. Whoever takes up this challenge needs to read up on primatology and neuroscience. Seabright hasn't done his homework.

Both a disappointment and a pleasant surprise. I was expecting a rich and cohesive economic treatment of the role strangers play in each others lives. While that was the theme of the book, it did not hold it very well. The good news is that there are redeeming features of this book, and I would recommend it.

The thesis of the book is that the role that strangers play in our lives is immense and surprising. This is an interesting idea, and the author goes through several examples illustrating what he means in the first couple chapters. He then spends several chapters talking about various economic institutions and wraps up with the potential danger of nations and the dark side of this dependence on strangers. The problem is that as the author goes further into the book, he wanders further and further away from his main point. At the end, he is completely isolated from it, and cannot tie things together in the last few pages to justify his departures.

But the discussions that take him off of the path are illuminating and fascinating. His discussions of negotiation, money, water, and western liberalism are page-turners, and would be great essays.

In the end, given the subject matter, the book was way too long, as many in this genre are. The extra material is interesting in its own right, but is frustrating in the context of the book.

This book is organized around a fantastically interesting question. How did human groups develop the social capacity for exchange? A simple answer about the evolution of cooperation (etc., etc.), suitable for the broadest of outlines, will not really do the trick. The development of exchange and economic relationships did not move in step with the gradual or the punctuated changes in human evolution. This book's idea is that institutions and social conventions must have been crucial. They had to build on and interface with the evolutionary baggage humans brough to the organized societies of the pre-historic world, but they added something of their own on top of it.

Having opened that question the book never really nails it shut. In part that's because it is intent on serving two distinct purposes -- of addressing this question, and of popularizing various strands of economic literature. Most of the content is about the latter, but the literature in question deals with fundamentally modern (on an evolutionary scale) institutions like banking, business firms, states, labor markets, etc. Having been convinced that hey, yeah, there's something to explain here, I thought it was a disconnect to jump to accounts of the things to be explained. Naturally, some comments are included about how these things might have taken shape from proto-forms, but that stuff -- which *is* what the book sets out to address -- is completely speculative (and never presented otherwise).

If you're into this sort of thing, the substantive chapters are redeeming enough, though a nontrivial portion of the material (e.g., the self-organizing capacity of markets, at their best; the importance and durability of reciprocity as a gut instinct people follow even when it can't help them) has been well covered for years or decades in similar popularizations.

So that's pretty much the value. Still, it would have been not just good but great if that interesting question had been settled, or even addressed consistently.

This book addresses the question how trust between strangers is possible to the extent that we have build a whole social and economic system on it. It reflects the renewed interest in social sciences for an evolutionary perspective, and shows how fruitful and overdue the combination of the two is.

Seabright goes back to our history as hunter-gatherers and shows how it equipped us with both reciprocal and selfish tendencies. He then discusses institutions that govern the major areas of our social and economic lives; markets, politics, cities, firms, money etc. and the way these institutions exploit and channel our calculating and reciprocal inclinations.

As is clear from the examples, the book ranges wide. This makes it both interesting and confusing. It is fascinating to see familiar topics be evaluated from a different perspective. But the fact that the institutions under discussion are so different, each with their own economic and social peculiarities that make them work the way they do, means that it is not always easy to follow the main thread of the story. The connections and bridges between the chapters are sometimes contrived. Also, since each chapter would warrant a book in itself, inevitably one now and then gets a bit restless because of the questions skimmed over, and claims made too fast.

But with a subject matter like this one cannot write a non-interesting book, and Seabright has not. All in all he has written an accessible and well-written introduction to an exciting new field in social science.

Credit author Paul Seabright's achievement on several scores. First, he is an economist who thinks outside the supply-and-demand box, and whose thoughts actually are comprehensible to the average reader. Second, his ideas are original, blending evolution, economics and sociology. In his view, the daily trusting interaction of complete strangers is a marvel that is unprecedented in the animal kingdom. Moreover, this high degree of non-familial social cooperation has only arisen in the past 10,000 years or so, despite the six to seven-million-year existence of 'Homo sapiens'. Although the average businessperson probably has no direct application for Seabright's book, it's interesting, worthwhile reading anyway. In a world where the need for global cooperation is greater, and its existence more fragile, we recommend this book for its unique, valuable perspective.

The progress of humans over the past ten thousand years and, in particular, over the past two hundred years has been both remarkable and entirely unforeseen. How significant is the unplanned coordination and trust embedded in modern society for explaining these changes? How did a shy murderous ape adapted to a tribalistic hunter-gatherer existence learn to trust complete strangers? What does this bode for the future?

In "The Company of Strangers," Paul Seabright has assumed the difficult challenge of answering these questions. Using economics, anthropology and history, Seabright provides his insights on this (never-ending) debate. The end result is a book that is extremely well written, thought provoking and full of quotable passages. This is definitely one of my favorite books of 2010 and I am disappointed that I did not discover it earlier.

As to the first question, Seabright begins with a simple, but profound example of the unplanned cooperation and trust underlying modern society. Roughly twenty million people globally will purchase a shirt today without having told anyone in advance of this decision. Yet, when these people visit their local store, they will be met with a variety of shirts suited to their tastes and budgets. This results from a complex process of large scale international cooperation. The cotton in the shirt was grown in India using seeds developed in the U.S. Artificial fiber used in the threads originates in Portugal and the dye material comes from at least six other countries. The collar linings come from Brazil, the machinery for the weaving, cutting and sewing originated in Germany and the shirt itself was manufactured in Malaysia. For all of this to be possible, a shy murderous ape (that's us) needed to learn to trust those outside of his immediate tribe. This series of market exchanges results in a process that is economically efficient in the sense that all parties in the exchanges benefit without having harmed non-participating parties. By cooperating with strangers, humans are able to leverage the benefits of specialization and trade, the accumulation of knowledge and risk sharing to reach a standard of living never dreamed possible in hunter-gatherer societies.

Seabright's explanation for what makes these market exchanges possible are social institutions that harness the strong human propensity toward reciprocity (i.e. the willingness to repay kindness with kindness and betrayal with revenge). Laws, courts, the rule of law, social norms, education and, in particular, property rights assist in ensuring that people can trust others that do not look alike, speak the same language or reside in the same geographic region.

However, Seabright remains somewhat ambivalent towards the future. The same processes and institutions that have improved the lot of the average human can also be used to wage war and generate market externalities (pollution, economic inequality, a loss of trust, etc.). The recent financial crisis of 2008 provides a good example of what can happen when trust between strangers erodes. Unfortunately, based on our nature, we humans are just as prone to evil as to good.

The debate about human development and the implications for the future is ongoing and may never be resolved. Seabright's book is a must read if these issues are of interest to you.

It's a scary world out there, but Professor Seabright helps explain why we're prepared to put our trust in people to whom we're not related. Starting with the example of the (unplanned) global cooperation needed just to enable Paul to buy a new shirt, he takes the reader on an ambitious tour of the economic evolution of human nature.

Previous Seabright publications have included macroeconomic monographs on Eastern Europe. Though still not an easy read, this will appeal to the intelligent general reader looking for a new perspective on world affairs.

And what links this to Iron Maiden, the heavy-metal rock group? From 1972 to 1976, Paul Seabright was at the same school (and in the same house) as Bruce Dickinson, who would go on to become lead singer of that group. It is a strange world, and one wonders how much trust there would now be between the two.

My belief is that this could be one of the most important books published this year. It would also make a great documentary TV series, if the BBC were prepared to make another epic in the mold of 'The Ascent of Man' and 'Civilisation'.