Close-knit groups spontaneously develop wealth-maximizing norms.
Evidence
A similar thesis is advanced by Robert C. Ellickson, A Hypothesis of Wealth Maximizing Norms: Evidence from the Whaling Industry, 5 J. L. Econ. & Org. 83, 84 (1989), where he explores the “hypothesis that when people are situated in a close knit group, they will tend to develop for the ordinary run of problems norms that are wealth maximizing.” For a broader and more theoretical articulation of this thesis, see generally, John Gray, Hayek on Liberty (2d ed. 1986), discussing Hayek’s theory of spontaneous order and the “competitive selection of rules and practices,” particularly, “Hayek’s assertion that the evolution of culture may itself be fruitfully investigated in terms of the competition between different traditions or practices, with a natural selection among them occurring which is at least partly to be explained by their relative efficiency as bearers or embodiments of knowledge.” — Lisa Bernestein, Opting out of the Legal System, 22
Categorization
- DEFINE: Defines the wealth-maximizing-norms thesis and Hayek’s spontaneous order, both central frames for the chapter’s argument.
- XREF: Ellickson’s whaling norms connect to the author’s study of the diamond cartel’s internal governance. — connects to: Crowds arouse sub-individual instincts while organized groups transcend individuals — Georg Simmel, on individuality and social forms_…, 345; Economic institutions depend on personal networks that generate trust and enforce norms — Coleman, SocialCapitalCreation-1988, 28; Trust extends kin-group loyalty outward to the whole society
Broader Connections
- Economic institutions depend on personal networks that generate trust and enforce norms
#expands(0.85) — Coleman, SocialCapitalCreation-1988, 28 - Trust extends kin-group loyalty outward to the whole society
#corroborates(0.80) - Crowds arouse sub-individual instincts while organized groups transcend individuals
#corroborates(0.75) — Georg Simmel, on individuality and social forms_…, 345