Strategies of Cooperation

I am pleased that Daniel Klein has added yet further wrinkles to our discussion, on which I shall comment briefly on two.

First, there is much truth in Paul Rubin’s provocative suggestion that ordinary individuals evolved in group settings that were not entirely congenial to markets. The point of this observation is that families are bound together by strong genetic ties such that each person within the group takes into account the utility of others as though those utilities were their own. That is a consequence of the common genetic origins. What this proposition entails is that we can expect to see some higher level of cooperation among these individuals than we would expect to see among strangers, so that there is less need for, and less likelihood of, a price system emerging to mediate differences among members of family groups. That proposition is as true of the modern family as it was of our prehistoric ancestors. And it suggests that there is little in these forms of cooperative behaviors that help people reach the kinds of voluntary markets that are needed among strangers.

But by the same token, this is an incomplete account, for even if most interactions take place within the context of a family, there are always some that have to take place among strangers, and for these there are only two ways to proceed, by coercion or consent. The evolutionary impulses on this choice are not all that clear. If there is dominance and you can get what you want, then you will take it, or so the theory goes. But that strategy has serious risks because if the aggression fails, then defeat could happen in the individual case, or, even if the attackers “win,” they could easily be weakened and thus exposed to real losses at the hands of third persons in some subsequent encounters. The cooperative strategy may not give the same instantaneous uptick as aggressive behaviors when they work, but it does not have the same larger downside. So there are pressures toward cooperation in stable arrangements among strangers as a way to avoid the ultimate confrontation. And those instincts also have some genetic base, I suppose, which means that the willingness to engage in market-like behavior is not wholly foreign to the species.

On the normative side, of course, the choice is generally easy: cooperation produces joint gains, and aggression one-sided ones. We therefore should move strongly to endorse the former over the later, and shift that presumption only in rare cases. It is this basic insight that explains why the classical liberal position is so attractive. It is the only political philosophy that, if consistently maintained, promises a steady, relatively risk-free course of human progress.

Also from this issue

Lead Essay

  • George Mason University’s Daniel Klein begins this month’s lead essay by presenting evidence from a poll of economists showing that more than half of those who are in favor of a minimum wage generally don’t think it is coercive, suggesting that judgments about what is coercive or voluntary underpin professional opinion about economic policy. If so, Klein asks, shouldn’t economists address the question of coercion more directly? Klein argues that we should treat non-coercion as a maxim to be followed “ninety-something percent of the time,” which allows for the legitimacy of coercion under certain conditions. Economists may then ask: “When should we endorse the liberty maxim and when not?” in a principled way. Klein draws on ideas from F.A. Hayek and Adam Smith to argue for the centrality of the distinction between voluntary and coercive action in the ordinary practice of economic inquiry, and to urge a renewed emphasis on the role of liberty in economic theory.

Response Essays

  • NYU philosopher and legal theorist Liam Murphy responds to Daniel Klein’s lead essay by questioning the relevance of the general concept of coercion to the defense of market institutions and disputing Klein’s particular characterization of coercion. Murphy observes that arguments in defense of markets generally appeal to pre-institutional rights or a conception of good consequences. In neither case does the idea of coercion play a key role. Further, Murphy suggests that Klein’s particular account of coercion is loaded with contestable moral baggage. But, Murphy writes, “The concept of coercion … is deeply indeterminate, with disagreement about correct usage tracking exactly the fault lines that have political significance; so there is simply no right answer to such questions as whether a labor contract for below a minimum wage, or its prohibition, is coercive.”

  • Harvard economist Edward Glaeser agrees with Dan Klein that economic regulations, such as minimum wage laws, are coercive, and that this ought to give us pause. “For millenia, governments have abused their control over the tools of violence,” Glaeser writes. “The historical track record insists that we treat any governmental intervention warily.” However, that does not rule out coercion. “The ultimate job of the state is to increase the range of options available to its citizens,” Glaeser maintains, and well-targeted coercion can increase total freedom in this sense. “Certainly, redistribution reduces the freedom of the taxpayer but it increases the options of the recipient of governmental largesse,” Glaeser says. He goes on to argue that laws that restrict the liberty to contract, such as the minimum wage, generally are not freedom-enhancing overall and tempt government abuse.

  • In his reply, University of Chicago law and economics guru Richard A. Epstein attempts to lay out an account of “justified coercion.” Taking the minimum wage as an example, Epstein sets forth and then rejects several grounds on which the minimum wage may be seen as non-coercive. He then sets forth and rejects several arguments that might justify the coercion in economic regulations such as the minimum wage. According to Espstein, state coercion in support of market institutions “is justified because it expands the envelope for gains from trade through voluntary exchange.” In general, coercion may be justified when “it is to the long-term advantage of all,” but detailed and systematic analysis of particular institutions — such as the one Epstein provides for the minimum wage — is required to establish when this is, and is not, the case.