In 2018 I completed a book that I had been working on for longer than I like to recall: The Community of Advantage: A Behavioural Economist's Defence of the Market (Sugden, 2018). Its title is taken from a passage in John Stuart Mill's Principles of Political Economy, first published in 1848. Mill is contrasting what he sees as the enlightened economic views of his own time with the mercantilism of the past. Mercantilism, he says, treats economic relations between countries as if they were relations between rival tradesmen trying to undersell one another. This obsolete way of thinking “overruled for centuries all sense of the general community of advantage which all commercial countries derive from the prosperity of one another” (Mill, 1871, III. xxv. §1). Mill is telling his readers that the market is a community of advantage.
By ‘advantage’, Mill clearly means that a market is a network of mutually beneficial transactions. But what does he mean by ‘community’? Isn't the market simply an institutional framework in which individuals pursue their respective self‐interests? Mill thinks not:
"Commerce first taught nations to see with good will the wealth and prosperity of one another. Before, the patriot … wished all countries weak, poor, and ill‐governed, but his own: now he sees in their wealth and progress a direct source of wealth and progress to his own country." (1871, II. xvii. §5)
His idea is that, by participating in relationships of mutual benefit, people come to see one another as cooperative partners rather than as rivals in a zero–sum game. My book is an attempt to express to modern readers the idea of the market as a system of voluntary cooperation that each of us can recognise as valuable.
Details: Forthcoming in Economic Affairs
Online version available
Authors: Bob Sugden
Posted on Wednesday 13th November 2019