The challenge of living successfully in modern society Chapter 9

Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within the different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilization), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of worlds at once.

Friedrich Hayek (1988). The Fatal Conceit. In W.W. Bartley III (ed.),
The Fatal Conceit, I
(Liberty Fund Library, 1988): 18.

As emphasized throughout this volume, modern prosperity is produced through an astonishingly complex web of human cooperation. This web of cooperation is vast. It spans the globe. Nearly every individual in the modern world is part of it, both as a consumer and as a producer. And so almost all of this productive cooperation is among strangers.

This fact is highly significant for the rules that guide us in our daily activities.

Every day, each of us participates in two very different kinds of productive and valuable social arrangements. One of these arrangements involves interactions with people who we know and care about—our parents, siblings, spouses, children, friends, close neighbours. Call these arrangements “small- group arrangements.”

The other arrangements are with multitudes of strangers—the millions of people in the great global web of economic cooperation. A small handful of these strangers you see face-to-face, such as the cashier at the supermarket and the flight attendants on your most recent flight. But the bulk of these strangers—such as the person who sewed the shirt you’re now wearing, and the person who designed the shoes now on your feet—are people you’ll never lay eyes on. All of these strangers are people you know nothing about. Call arrangements with these multitudes of strangers “large-group arrangements.”

One of the greatest challenges to those of us who live in modern society is to be able to function comfortably within both types of arrangements. The challenge lies in the fact that behaviours that are appropriate in one of these arrangements are often inappropriate in the other, and vice-versa.

Consider the ultimate small-group arrangement: the immediate family. As in the larger society, within families economic decisions must be made. What’s on the menu for tonight’s dinner? Who’ll cook that dinner and who’ll wash the dishes? (Such decisions allocate the family’s labour resources.) Where will the family vacation this summer? Should money be spent to remodel the kitchen or should that money be saved for the kids’ college education?

Within families, even such “economic” decisions are not made commercially among the members of the family. Perhaps family decisions are made by mutual agreement; perhaps mom and dad alone make all decisions. But regardless of the details of the rules or habits that any particular family uses to reach decisions, normal families do not make decisions by using “arms-length” formal contracting, market prices, competitive bidding, or any of the other impersonal procedures that characterize most of our economic relationships with strangers.

The same holds true for decision-making within other small-group settings, such as when friends decide which movie to watch together. The decision is typically reached by informal discussion leading to mutual consent, rather than through bargaining in which the highest monetary bidder gets to choose.

Also within families and many small groups we typically apply egalitarian norms of distribution. The portion of the family’s budget that mom has, the portion that dad has, and the portion that each of the kids has is not determined by impersonal market forces. It is instead determined by a strong sharing norm. Within families, income is distributed not only consciously (usually by the heads of the household) but also more or less equally. This sharing norm within families and most other small groups is, of course, praiseworthy.

That we use informal, non-commercial decision-making procedures and norms in small-group settings is a good thing. First, the formalities and competitiveness of commercial procedures are unnecessary in small-group settings. Family members and friends genuinely care about each other and they know each other personally and with a depth of detail that simply cannot exist among strangers. So not only can people in small-group settings rely upon love or mutual concern to prevent cheating; people in these settings also know a great deal about each other. This mutual, detailed, and deep knowledge enables each person to be trusted to act wisely with respect to each other. Parents, for example, generally do not need to be forced by the police to treat their children well. Also, as parents they know their children’s desires and abilities well enough that they do not need to learn this information through market competition and prices.

The close personal connections, the on-going face-to-face communications, and the mutual affections that bind together members of families and other small groups give each member of these small groups such deep knowledge of the other members that no impersonal means of dealing with each other are required.

Second and more importantly, using the formalities and competitiveness of commercial procedures in small-group settings would undermine all that is valuable about those settings. Central to our human nature is our longing and our ability to interact with loved ones and with friends on personal terms— to interact in ways that are built upon particular feelings and expressions of sentiment, caring, and love. Each of us wants to have people to personally care for and to care about, and each of us wants to be loved and cared for personally by other flesh-and-blood individuals. Attempts by parents, say, to charge their children for home-cooked meals, for the time that parents spend nursing their children through illnesses, or for any other benefits and care-giving that parents extend to children would rip from family interactions all that makes those interactions worthwhile and satisfying. Children growing up in such “families” would likely become, at best, social misfits as adults.