And the Lord said, Look they are one people, and they have all one language; and this is only the beginning of what they will do; nothing that they propose to do will now be impossible for them. Come, let us go down, and confuse their language there, so that they will not understand one another's speech. (Genesis 11:6-7)The bond of language is perhaps the strongest and most lasting that can unite men. (Tocqueville [1835, 1840] 2000, p. 29)I am a friend to neology. It is the only way to give to a language copiousness and euphony. Without it we should still be held to the vocabulary of Alfred or of Ulphilas; and held to their science also; ... (Thomas Jefferson to John Adams, August 15, 1820; emphasis in the original)POLONIUS: What do you read, my lord? HAMLET: Words, words, words. (Act II.2)1. IntroductionLanguage use is a distinguishing characteristic of Homo sapiens.1 Human beings are programmed to construct hundreds of thousands of words from a comparative handful of sounds, a phenomenon known to linguists as duality (Pinker 1996).From a purely economic perspective, language can be seen as an exchange-facilitating institution, just as important in its own right as other, more deeply studied underpinnings of orderly markets, such as clearly defined property rights and rules for enforcing contracts. Exchange, of course, is not the only economic function of language since language can be used for many purposes, including coercion (arrest that man!). The paradigm of exchange has nonetheless proven analytically fruitful and, indeed, has been applied by economists to help explain the functioning of political markets, patterns of trade within the family, crime, drug addiction, and many other seemingly noneconomic aspects of human behavior (e.g., Becker 1976, 1996; Becker and Murphy 2001). Viewing language as an exchange-friendly institution locates the study of its growth and impact squarely within the singular perspective of economic science.2 This analytical framework in no way diminishes the importance of more traditional approaches to the subject; it simply calls attention to an emerging literature in which economists have begun colonizing the study of language.3Language, as Friedrich von Hayek (1960) stressed repeatedly, is an example of spontaneous order. In other words, language was not created deliberately; it evolved in the absence of human plan or conscious design. Viewed in that perspective, the evolution of language has much in common with that of exchange-friendly institution--money. Both of these institutions emerged spontaneously as rational individuals searched for mutually acceptable ways of communicating and of acting on their natural propensities to truck, barter, and exchange one thing for another (Smith [1776] 1976, bk. I, chap. II, p. 17). Over time, independent responses to novel situations produced words and rules for their use that facilitated communication in much the same way that attempts to cope with the rarity of dual coincidences of wants led to the selection of one commodity as money. As Hayek (1988, p. 106) puts it,Trade, migration, and the increase and mixture of population must not only have opened people's eyes, but also loosened their tongues. It was not simply that tradesmen inevitably encountered, and sometimes mastered, foreign languages during their travels, but that this must have forced them also to ponder the different connotations of key words (if only to avoid either affronting their hosts or misunderstanding the terms of agreements to exchange), and thereby come to know new and different views about the most basic matters.4 What materialized over millennia as a result of competition among alternative media of exchange and means of communication were efficient monies and languages.In modern parlance, language is the archetypal network good (i. …