Saturday, August 13, 2016


In a recent, still unpublished, paper that John Roemer kindly shared with me,  Roemer envisages (and calls for) a change in the modern advanced capitalist economies such  that cooperative behavior rather than single-minded profit-maximizing will become more common. Roemer nicely distinguishes cooperative behavior from altruism; actually one can behave very cooperatively out of pure self-interest because in repeated games “nice” behavior will be rewarded. I thought that it was a very clever point although I am much less sanguine than Roemer that we are moving toward a “gentler” and more cooperative ethos.

I see several factors working against it. The first is the increasing commodification of many activities. The most obvious case is commodification of activities that used to be conducted within extended families and then, as we became richer and more individualistic within  nuclear families. Cooking has now become out-sourced and families often do not eat meals together. Cleaning and child-rearing have become more commercialized than before or ever.

The growth of the gig economy further commercializes either our free time or things we own. Uber was created precisely on the use of free time: limo drives had  extra time that they could use to drive people around and make money. So, now anybody who has some free time can “sell” it by working for a taxi company or delivering pizza. A portion of the leisure time that we could not commercialize (simply because it was so short and discrete) has now become marketable. Likewise, our apartment that in the past might have been given for a week without compensation to family and friends have now become assets that are rented out to foreigners, for a fee. The opportunity cost of not delivering pizza or not renting your apartment on AirB-and-B is quite steep. But that opportunity cost used to be zero. Commodification has made it positive.

Commodification of what was hitherto a non-commercial resource makes each of us do many jobs and even, as in the renting of apartments, capitalists. But saying that I work many jobs is the same thing as saying that workers do not hold durably individual jobs and that the labor market is fully “flexible” with people getting in and out of jobs at a very high rate. Thus workers indeed become, from the point of view of the employer, fully interchangeable “agents”. Each of then stays in a job a few weeks or months: everyone is equally good or bad as everyone else. We are indeed coming close to the dream world of neoclassical economics where individuals, with their true characteristics,  no longer exists because they have been replaced by “agents”.

The problem with this kind of commodification and flexibilization is that it undermines human relations and trust that are needed for the smooth functioning of an economy. When there are repeated games we try to establish relationships of trust with people with whom we interact. But if we move from one place to another with high frequency, change jobs every couple of weeks,  and everybody else does the same, then there are no repeated games because we do not interact with the same people. If there are no repeated games, our behavior adjusts to expecting to play just a single game, a single interaction. And this new behavior is very different.

After being away from New York for a couple of months, I came back to discover that many of the people with whom I thought I was playing these repeated games, in restaurants where I go, in the apartment building where I live, have simply changed. Some new people have appeared who treat you when you come to your favorite restaurant (understandably) as a complete stranger. Then from your own side you do not have much of an incentive to behave “nicely”,  to send the signal of cooperative behavior, because you know that these new people too will soon change. Investing in being “nice” is costly: it takes effort and is justified by the expectation that “niceness” will be reciprocated. But if the person to whom you are nice will not be there in a month, what is a point? it is a waste of effort to be “nice”.  

The same reasoning, of course, is made by the other side: why should he care about you if he is already eyeing his next gig?

Increasing commodification of many activities, the gig economy and flexibilization of labor market are just a part of the same change; they should be seen as a movement toward a more rational, but ultimately more  depersonalized, economy where most of interactions will be one-shot contacts. Holding of many  jobs and the shortness of interactions make investing in cooperative behavior prohibitively expensive. This Is the key reason why I am less optimistic than others that we are moving toward a society with a more collective, or “nicer” ethos. Actually, I think we are moving in the opposite direction.

Now, this type of complaint is not new. Very similar complaints were voiced when manufacturing and Fordism replaced artisanal production. Things seemed  to have gotten worse and very depersonalized. But the output increased and all of us became richer. The same thing may be happening now: using our apartments as temporary hotels and our leisure time to drive taxis will increase nation’s output. But we should not be ready to believe, I think, that it will help our inter-personal relations.  There is a trade-off.

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