07 May 2015

Your relations on multiple levels

I sent an email to my students explaining how I understood this figure:

Think of the concentric ovals (Individual in the middle, Societal on the outside) and relate those to the "scale" of the institutional structures we've been exploring, i.e.,
  • A society (like the market) contains many people who may not know each other or interact often. We coordinate via laws and traditions (or prices) but cannot "depend" on each other too much.
  • A community (like a collective) contains fewer people who can know each other and depend on each other. We coordinate via feedback, promises, communications, shame because we're "stuck with each other"
  • A relation (like a principal-agent) involves a few people who help and depend on each other in varying degrees. Relations work better when we care about each other, but they can be tragic if one side does not.
  • Individuals face and make choices that affect themselves. These choices must be made and sometimes (bounded rationality; limited "capabilities") they can be worse than we'd like.
The important thing is to remember that we operate within all these structures -- and all those ovals -- simultaneously. We cannot easily isolate ourselves from collective actions, just as we cannot isolate ourselves from our communities.

1 comment:

  1. We are full of strength. - What can we do, to make the things better? When you see, that something goes wrong, it must be possible to make it better. - There are “bad interests” and good interests. - How can we make good interests go there way?
    It is science, to find it out. There are values, which each of us have to select and support them. - Is this a market-problem? May be not. It seems to me, that the most important parts of human life are related to preferring and supporting values. - But is this a problem of the price-system? If not, then the economy has there place. - And there are other, with different tasks and solutions. - I will point them out with “philosophy and thinking”, and “laws and rules”. - In a community you will come thru philosophy and thinking to laws and rules. - Economy has to obey these laws, and the price-system is bounded.


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