Solidarity Networks in Preindustrial Societies: Rational Peasants with a Moral Economy

Abstract

Mutual insurance networks in preindustrial societies have been an object of curiosity for many social scientists.' In his seminal book The Moral Economy of Peasants, James C. Scott showed how the solidarity mechanisms of southeast Asian peasants are reflected in their ethical values: the right to subsistence and the principle of reciprocity. He failed to explain, however, how mutual insurance can survive in spite of incentive problems. This led Samuel L. Popkin, in The Rational Peasant, to criticize Scott's view as implying that preindustrial communities, unspoiled by capitalism, are motivated by higher ethical values.2 Popkin's contribution was to present numerous evidence of opportunistic behavior among precapitalist peasants.3 His critique, however, failed to account for the well-documented existence of solidarity networks. Richard A. Posner reconciles these two apparently diametrically opposed views, arguing that a mutual solidarity system can be sustained in the long run by the existence of a lasting relationship between its self-interested members.4 Opportunistic behavior can be prevented as long as short-run benefits from deviation are smaller than long-run punishments. Posner's verbal argument is formalized in Miles S. Kimball and in Stephen Coate and Martin Ravaillon.5 Elaborating on Posner's approach, Jean-Philippe Platteau presents an excellent discussion of Scott's and Popkin's views.6 He also shows that mutual insurance can take a variety of forms-grain transfers, credit, access to land, labor assistance, etc.-and discusses in great detail the incentive problems associated with various types of solidarity mechanisms. This article revisits many of the arguments presented by Posner, Platteau, and others in the light of recent developments in the theory of repeated games. Instead of analyzing particular institutions, this