Impersonal Exchange Research Articles

The Medieval Church and the Foundations of Impersonal Exchange

The Medieval Church and the Foundations of Impersonal Exchange

Entrepreneurs and firm growth under guilt vs shame cultures

PurposeThis study aims to try and understand under what cultural conditions entrepreneurship will thrive and prosper, whether under shame or guilt cultures.Design/methodology/approachThe authors use basic game theory to model the conditions under which entrepreneurship will thrive. The authors anticipate that guilt cultures allow for the development of a rules-based culture that allows for the development of impersonal exchange, whereas shame cultures, which are relationship-oriented, focus on strong ties and hence lack the means to expand firms from small and medium family/clan-based businesses.FindingsEmpirical results are completed to see whether guilt-dominating cultures are more conducive to having larger firms and whether guilt-dominating cultures have less informality. The authors find support for the latter but lack the right data to test the former.Originality/valueThe authors use a new measure of culture to see how it impacts entrepreneurship.

Authoritative performances of care in home exchange

This research examines the position of home exchange within the sharing economy. Drawing on in-depth qualitative research, we adopt the lens of authoritative performances to explore how home exchangers resolve contradictions between competing endeavours. Taking a pluralistic view, our findings have revealed that home exchangers are entrepreneurial in the meanings they attach to their homes. However, this is softened by authoritative performances of care that replace impersonal exchange with interpersonal relationships of reciprocity and mutual trust. Our findings also offer further contributions by exploring how home exchangers experience the dichotomies of familiar and unfamiliar in tourism and the absent and present host.

13 City, State, and Market: Lessons from Mesoamerica

ABSTRACTIn evaluating the contributions to this issue, this chapter questions the predictable co‐occurrence of cities with markets and states, a long‐held position in western social theory. However, an extreme relativism is also flawed, and the projection of anti‐capitalist fantasies on past, other peoples have equally distorted interpretations of the archaeological record and blinded researchers to the reality of market economies in societies including the Maya. Ultimately, the power of the comparative method entails more than the identification of commonalities between different market traditions. It can also serve to illuminate how market economics were embedded in distinct cultural, ideological, and material worlds. Calculating self‐interest, supply‐and‐demand, and impersonal exchange do not operate according to a single behavioral logic but are shaped by ideologies of identity and desire specific to distinct regimes of value. Therefore, attention to the cultural and spatial context of economic transactions—in the original spirit of Polanyi—remains indispensable to interpreting how markets may have shaped historically particular constructions of personhood, community, inequality, place, and the ontological status of commodities. In the end, I argue that archaeologists also need to investigate the political affordances of markets as specific urban places and not simply as epiphenomena to a priori political or economic institutions.

Rational Emotions: An Evolutionary Perspective

Despite the existence of a compelling literature that articulates the function of emotions from an evolutionary standpoint, the role of emotions in motivating economic behavior has not been systematically studied. In those rare instances in which emotions are invoked to explain large-scale economic phenomena (e.g., market euphoria), they are usually treated as a form of constraint on otherwise rational behavior. By integrating experimental findings scattered across various fields into coherent narrative, this paper offers an accessible framework for understanding the evolutionary origins of our emotions; their role in supporting higher-level cognitive faculties; and their constitutive function in facilitating impersonal exchange, and coordination at the organizational level on which the modern economy is built.

Recoding the city: cultural mediation of short-term rental platforms in the US

ABSTRACT This paper explores the cultural mediation of short-term rental (STR) platforms in US cities. While many STR advocates emphasize ‘authentic’ cultural experiences and the support of local economies, less obvious are the ways that STRs like Airbnb can erode communities by transforming homes into hotels and neighbours into strangers. STR platforms have significantly disrupted many communities through increased gentrification, resident displacement, racial discrimination, and reduced city tax bases for the provision of services. As with all technological systems, STR platforms embody a politics that shapes human activities and relations. The platforms, in other words, present a set of scripts for the organization of practices and the configuration of space, tending, by design, toward impersonal commercial exchange and conceptions of neighbourhoods as resources for such exchange. I argue that as public infrastructures are absorbed into and recoded as platforms, the emerging ensemble normalizes market- over rights-based orientations to city spaces and services. The process supports the formation of platform cultures that cast precarious gig-economy relations as necessary and enabling while obscuring the social inequalities and human suffering engendered by those arrangements. In attending to the mediation of STRs by communities and to contestations over platform meanings, politics and power relations become visible, allowing for the problematization of destructive platform configurations.

Market interactions, trust and reciprocity

Trust is a key ingredient of almost all market interactions. Much of the literature on the relationship between trust and market activity, however, has focused on how trust facilitates market activity rather than on how market activity affects trust. In this study, however, we investigate whether market interactions can affect the subsequent trusting and reciprocating behavior of former trading partners. Additionally, we explore the effect of personal and impersonal exchange on the trusting and reciprocating behavior of former trading partners. We find experimental evidence that suggests that positive and negative market interactions can affect such behavior. Further, we find that past market dealings only affect the trusting and reciprocating behavior of subjects who participated in an experimental market where exchanges were more personal, but did not affect trust and reciprocity between trading partners who participated in an experimental market where exchanges were more impersonal. In the market where exchanges are more personal, people exhibit higher levels of trust and reciprocity to trading partners with whom they have mostly positive market interactions than with whom they have mostly negative market interactions. However, in the market where exchanges are more impersonal, people exhibit the same levels of trust and reciprocity to trading partners regardless of the nature of their previous market interactions.

Defining and Defending a Progressive Market Square: Bringing Institutionalist Development Discourse in Line with the Reality of Post-Soviet Transition Experiences

:This article is a response to two crucial ideas about progressive institutional change: the first is J. Fagg Foster’s principle of “minimal social dislocation,” which asserts that socio-economic changes should be implemented gradually, to avoid unraveling the social fabric of the community; the second is Karl Polanyi’s principles of redistribution of rights and powers by relevant authorities and reciprocity, a symmetrical and highly personalized exchange system, which is likewise a protective mechanism that society employs against anonymity and disintegration brought about by unregulated market. Using lessons learned in the thirty-year transition to market in post-Soviet countries, this article argues that to commence progressive institutional change in the honesty- and transparency-resistant cultures of former Soviet states, impersonal exchange and impartial rule of law must be given far greater weight than personalization of contacts and continuation of cultural traditions.

Emergence of Modern Impersonal Exchange: Role of Formalization

I develop an evolutionary framework to study when firms formalize and voluntarily establish internal “order and discipline” in their conduct, in a traditional relational economy, to conduct imperso...

Adam’s Smith’s Concept of a Great Society and its Timeliness

Abstract The article aims to present the concepts of Adam Smith which are important considering the current disputes over liberalism, as well as the challenge that is the maintenance of the world’s economic order. Firstly, the article analyses the significance of the division of labour which is perceived as a fundamental premise for transitioning from small communities and face-to-face exchanges to the impersonal exchange and the expanded social order in which relations with strangers become meaningful. Secondly, the present work indicates that Smith did not neglect the matter of justice when proclaiming the need for freedom. He believed that efficient functioning of the market depends on the political system and a man’s ethical system, and his criticism of interventionism was not directed against the state as an institution co-creating the social order, but against the act of granting special privileges to certain interest groups. Thirdly, the article refers to the concept of coordination described by Scottish moral philosophers and the so-called Smith Problem. In this context, the article presents arguments against the assumption that John Nash’s theory provided proof of the erroneous nature of Adam Smith’s concepts. Arguments in favour of the timelessness of the economic philosophy of the father of economics are also drawn from Vernon Smith’s experimental economy and the research of evolutionary psychologists.

When Do Ethnic Communities Affect Foreign Location Choice? Dual Entry Strategies of Korean Banks in China

Research shows that firms tend to expand into foreign locations with sizeable co-ethnic communities. Yet many cases exist in which the ethnic community influences the investment choice of the same firm in one location but not in another. We offer an institutional lens to explain this heterogeneity in location choice. Ethnic groups function like informal institutions that facilitate transactions between a foreign firm and customers, suppliers, and information providers through interpersonal exchange. Relying on ethnic communities to mediate transactions in foreign markets is valuable but limited by the relatively small scale of these communities. In contrast, relying on formal institutions allows firms to expand more broadly into the foreign market because the impersonal exchange inherent in formal governance is more scalable. This is manifested in ‘dual entry strategies’ by which ethnic communities have a significantly stronger influence on location choice in places with unreliable (weak and unstable) for...

Money is more than memory

Impersonal exchange is the hallmark of an advanced society and money is one key institution that supports it. Economic theory regards money as a crude arrangement for monitoring counterparts’ past conduct. If so, then a public record of past actions—or memory—should supersede the function performed by money. This intriguing theoretical postulate remains untested. In an experiment, we show that the suggested functional equivalence between money and memory does not translate into an empirical equivalence: money removed the incentives to free ride, while memory did not. Monetary systems performed a richer set of functions than just revealing past behaviors.

Enforcing social norms: Trust‐building and community enforcement

We study impersonal exchange and ask how agents can behave honestly in anonymous transactions without contracts. We analyze repeated anonymous random matching games, where agents observe only their own transactions. Little is known about cooperation in this setting beyond the prisoner's dilemma. We show that cooperation can be sustained quite generally, using community enforcement and “trust‐building.” The latter refers to an initial phase in which one community builds trust by not deviating despite a short‐run incentive to cheat; the other community reciprocates trust by not punishing deviations during this phase. Trust‐building is followed by cooperative play, sustained through community enforcement.

Islam and Economic Performance: Historical and Contemporary Links

This essay critically evaluates the analytic literature concerned with causal connections between Islam and economic performance. It focuses on works since 1997, when this literature was last surveyed comprehensively. Among the findings are the following: Ramadan fasting by pregnant women harms prenatal development; Islamic charities mainly benefit the middle class; Islam affects educational outcomes less through Islamic schooling than through structural factors that handicap learning as a whole; Islamic finance has a negligible effect on Muslim financial behavior; and low generalized trust depresses Muslim trade. The last feature reflects the Muslim world’s delay in transitioning from personal to impersonal exchange. The delay resulted from the persistent simplicity of the private enterprises formed under Islamic law. Weak property rights reinforced the private sector’s stagnation by driving capital from commerce to rigid waqfs. Waqfs limited economic development through their inflexibility and democratization by keeping civil society embryonic. Parts of the Muslim world conquered by Arab armies are especially undemocratic, which suggests that early Islamic institutions were particularly critical to the persistence of authoritarian patterns of governance. States have contributed to the persistence of authoritarianism by treating Islam as an instrument of governance. As the world started to industrialize, non-Muslim subjects of Muslim-governed states pulled ahead of their Muslim neighbors, partly by exercising the choice of law they enjoyed under Islamic law in favor of a Western legal system.( JEL N25, N45, O43, O53, P51, Z12)

Combining formal and informal contract enforcement in a developed legal system: a latent class approach

AbstractHow do firms combine a broad range of contract enforcement mechanisms into coherent governance structures? How often are distinct structures used in an economy? We develop a new empirical approach, based on latent class analysis, to answer these questions. Economy-level data from Hungary are used to derive a data-driven typology of contractual governance between firms. The joint use of law, morality, self-enforcing contracts, reputation and community norms is examined. They are shown to be combined into bilateral, third-party or comprehensive governance structures. The crucial governance choice is whether to move beyond bilateralism and, if yes, whether to use a mixture of (formal and informal) third-party mechanisms as a substitute or a complement. Complementarity is much more common. We find no instances of ‘impersonal exchange’; the law never stands alone. By implication, economic development may be best understood as a process from a narrower towards a broader set of enforcement mechanisms.

The Institutional Factors of Strategic Development and the Tactical Regulation of Nanotechology

The analysis of influence of institutional factors on development of technologies is carried out. The generating role of institutions in technological progress is proved. The general logic of an institutionalization of new technological way is presented on an example of nanotechnologies.Institutes are the "weak link" of the concepts and theories of the evolution of technology and technological structures. Most modern theorists of evolutionary economics are focused mainly on the study of the dynamics and forms of scientific and technological progress, especially the mechanisms of nucleation and diffusion of large "clusters" of innovation.In their turn, the institutional economists have concentrated on the analysis of factors and ways to minimize the transaction costs sustained interaction of agents and their organizations "in the high-tech world with a huge degree of specialization and division of labor other than impersonal exchange" (North 1997).In their works only relate to the institutional structure and infrastructure of innovative development, although, as noted by Nelson (2002), the concept of national and regional innovation systems is institutional in nature just on this fact is rarely emphasizes the attention of scientists. As a result, institutional forms and mechanisms of technological evolution is very poorly understood, and their analysis is based on very general ideas about the institutes and institutions.

Blockchain's Struggle to Deliver Impersonal Exchange

With its decentralized peer-to-peer structure, application of the blockchain technology underpinning Bitcoin holds the promise of making impersonal exchange possible for all types of old and new transactions in all types of markets. Such theoretical promise is examined here by identifying what value blockchain adds to the contractual process, exploring its contractual potential and analyzing the main difficulties it is facing. The article argues that blockchain applications will evolve towards dual structures separating causal and formal transactions. Complementarily and contrary to naive conceptions that proclaim the end of intermediaries and state involvement, such applications will rely on a variety of interface and enforcement specialists, including standard public interventions, especially for property transactions. Without these interventions, blockchain will at most work as an in personam—instead of as an in rem—system, therefore facilitating mere personal instead of impersonal transactions.

Evolution of Trust in Impersonal Exchange

I develop an evolutionary framework to study when firms formalize and voluntarily establish internal “order and discipline” in their conduct, in a traditional relational economy, to conduct impersonal market-based exchange. Impersonal exchange can emerge if benefit from doing business at arm’s length is large (utility condition), and if firms above a threshold adopt such formalization (formalization condition). Cycles, where formalization and impersonal exchange follows opportunism and cautious relational exchange, characterize impersonal exchange. I also discuss the endogenous emergence of market-supporting public institutions, and the rise of impersonal markets in sixteenth century Northwestern Europe.

Towards a Political Analysis of Markets

This article was originally published July 1993, IDSB24.3This Bulletin stems from a dissatisfaction with the way in which the idea of ‘the market’ or ‘the free market’ is currently used in conventional discourse on development issues. One notion is particularly dominant, implicitly or explicitly: ‘the market’ seen as a flexible, atomistic realm of impersonal exchange and dispersed competition, characterized by voluntary transactions on an equal basis between autonomous, usually private, entities with material motivations.This etiolated model of the market derives from the universe of neo-classical economists and, in the world of development policy, serves to provide intellectual support for their prescriptions. This ‘ideal-type’ market has been elevated to the level of an ideological principle and ethical ideal, providing a policy panacea which promises both efficiency, prosperity and freedom. The main theme of this Bulletin reflects my own concern as a political scientist that, by and large, conventional economic theory, in most of its manifold incarnations, has either ignored or downplayed the role of power in economic processes generally and in markets in particular.

How Rome Enabled Impersonal Markets

Impersonal exchange increases trade and specialization opportunities, encouraging economic growth. However it requires the support of sophisticated public institutions. This paper explains how Classical Rome provided such support in the main areas of economic activity by relying on public possession as a titling device, enacting rules to protect innocent acquirers in agency contexts, enabling the extended family to act as a contractual entity, and diluting the enforcement of personal obligations which might collide with impersonal exchange. Focusing on the institutions of impersonal exchange, it reaches a clear positive conclusion on the market-facilitating role of the Roman state because such institutions have unambiguously positive effects on markets. Moreover, being impersonal, these beneficial effects are also widely distributed across society instead of accruing disproportionately to better-connected individuals.