Monday, January 28, 2013

Euvoluntary Truck (Sixteen Tons)

North, Wallis and Weingast (NWW) refine concepts of violence and social orders in their instant classic “A Conceptual Framework for Interpreting Recorded Human History” (2006, available from NBER) by modeling what they call “limited access orders”, in which elites curb private predation by establishing well-guarded rents and “open access orders”, in which elites abdicate strict control over the portals to political and economic activity. 
Some people say a man is made outta mud
A poor man's made out of muscle and blood
Muscle and blood and skin and bones
A mind that's a-weak and a back that's strong
 Limited access orders feature a panoply of picayune practices that drive those of us immersed in open access orders to mercilessly, (and as I shall argue) mindlessly mock. Well-heeled Westerners see squabbling bazaars, chicken-and-bead in-kind haggling over barter goods, even wink-wink nudge-nudge under-the-table black or gray market trades and shake their heads ruefully at the poor, benighted rubes who don’t know how to conduct civilized business. As you might predict, I think such mockery is hogwash.  Folks in limited access orders labor under alien institutional constraints that are easy for folks in open access orders to miss. After all, good institutions are invisible: we don’t have to meditate on each point of coordination that tells us to drive on the correct side of the road before getting behind the wheel. Sloppy thinking draws conclusions from mere practices.

Practices like a truck system. 
You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store
 A truck system is something between the relatively lean barter system and the relatively thick market exchange system. Bartering is one step out of the Hobbesian jungle; it recognizes the wealth-generating power of trade, but is hobbled by double coincidences of wants and flaccid (though not absent) intertemporal exchange opportunities. Anonymous, impersonal market exchange economizes on lots of stuff; information about the relative scarcity of goods under all relevant constraints and conditions gets distilled into one simple price signal that informs and coordinates trade activity. Truck is an intermediate commodity swap; I mow your lawn, you let me raid your fridge for lunch—I build your hydroelectric plant, you give me chits redeemable at the company store. 
I was born one mornin' when the sun didn't shine
I picked up my shovel and I walked to the mine
I loaded sixteen tons of number nine coal
And the straw boss said "Well, a-bless my soul"
 As long as a higher form of trade is de facto available, the use of a lower form is persuasive evidence that the trade does not violate the coercion by circumstance condition for euvoluntary exchange: both parties have chosen a less efficient means of trade of their own volition. I could have paid you the cash equivalent of a sandwich for my freshly-trimmed lawn, but we agreed on larder scrounging instead. Regrettable? Perhaps if your tuna salad has gone a bit off. Exploitation? No way, Jose. The same goes for truck arrangements. Boardwalk tokens, poker chips, and Monopoly money are all fine and dandy mediums of exchange until the legal tender option is off the table (what does this imply for periods of hyperinflation?) at which point, BATNA disparity becomes considerably more menacing, even if nothing else changes. 
I was born one mornin', it was drizzlin' rain
Fightin' and trouble are my middle name
I was raised in the canebrake by an ol' mama lion
Cain't no-a high-toned woman make me walk the line
 And again, contra Locke’s fisherman example in Venditio, it is precisely when the chips are down that Danny Dewgooder is morally obliged to refrain from interfering in trades of which he bears no part. Indeed, limited access orders can erupt unexpectedly and it strikes me that folks who find themselves in unfortunate circumstances thanks to monetary malfeasance (Zimbabwe, Weimar Germany, [others redacted]) owe it to themselves and their communities to pursue vigorously those opportunities for truck that might naturally exist. Knuckling the poor towards autarky is heinous, no matter what moral code one might hew to. 
THIS division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another
Adam Smith: Wealth of Nations Book 1 Chapter 2

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Do you have suggestions on where we could find more examples of this phenomenon?