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The Company of Strangers

The Company of Strangers: A Natural History of Economic Life (Revised Edition)

Paul Seabright
Foreword by Daniel C. Dennett
Copyright Date: 2010
Edition: STU - Student edition
Pages: 368
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  • Book Info
    The Company of Strangers
    Book Description:

    The Company of Strangersshows us the remarkable strangeness, and fragility, of our everyday lives. This completely revised and updated edition includes a new chapter analyzing how the rise and fall of social trust explain the unsustainable boom in the global economy over the past decade and the financial crisis that succeeded it.

    Drawing on insights from biology, anthropology, history, psychology, and literature, Paul Seabright explores how our evolved ability of abstract reasoning has allowed institutions like money, markets, cities, and the banking system to provide the foundations of social trust that we need in our everyday lives. Even the simple acts of buying food and clothing depend on an astonishing web of interaction that spans the globe. How did humans develop the ability to trust total strangers with providing our most basic needs?

    eISBN: 978-1-4008-3478-5
    Subjects: Economics, History, Psychology

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-x)
  3. Foreword
    (pp. xi-xiv)
    Daniel C. Dennett and Austin B. Fletcher

    A smoothly running automobile is one of life’s delights; it enables you to get where you need to get, on time, with great reliability, and for the most part, you get there in style, with music playing, air conditioning keeping you comfortable, and GPS guiding your path. We tend to take cars for granted in the developed world, treating them as one of life’s constants, a resource that is always available. We plan our life’s projects with the assumption that of course a car will be part of our environment. But when your car breaks down, your life is seriously...

  4. Acknowledgments
    (pp. xv-xx)
  5. Trust and Panic: Introduction to the Revised Edition
    (pp. 1-14)

    Modern societies are fragile. There are rare but dangerous moments when a fresh wind blowing suddenly from an unexpected quarter brings apparently solid buildings crashing down. Such collapses are no less dangerous when they involve the intangible structures of our social life: the informal norms and formal institutions that ensure that trust takes the place of mutual suspicion. The collapse may be triggered from outside, as in wartime, or it may be set off, more mysteriously, from within—by some subterranean evolution of mutual attitudes that casts sudden doubt on the trust that was once taken for granted. Whether the...

  6. Part I: Tunnel Vision

    • CHAPTER 1 Who’s in Charge?
      (pp. 17-32)

      This morning I went out and bought a shirt. There is nothing very unusual in that: across the world, perhaps 20 million people did the same. What is more remarkable is that I, like most of these 20 million, had not informed anybody in advance of what I was intending to do. Yet the shirt I bought, although a simple item by the standards of modern technology, represents a triumph of international cooperation. The cotton was grown in India, from seeds developed in the United States; the artificial fiber in the thread comes from Portugal and the material in the...

    • Prologue to Part II
      (pp. 33-34)

      What makes trusting strangers a reasonable, instead of a suicidal, thing to do? It’s not enough to show that societies in which people can trust one another reap the benefits of peace and prosperity on a scale unimaginable to our distant ancestors. They do, but trust would soon unravel if individuals could enjoy the benefits of other people’s cooperative behavior while making no contribution of their own. Making mistakes about the trustworthiness of others is not just costly but extremely dangerous, and more so for human beings than for almost any other species. The evidence that will be reviewed in...

  7. Part II: From Murderous Apes to Honorary Friends:: How Is Human Cooperation Possible?

    • CHAPTER 2 Man and the Risks of Nature
      (pp. 37-54)

      It is notoriously hard to make scientifically robust statements about something as complex and multifaceted as human intelligence, and even more so to compare the intelligence of different groups. But here are two statements we can be reasonably confident are true. First, over the course of human evolution in the 6 or 7 million years since our last common ancestor with chimpanzees and bonobos, children have been, on average, very slightly less intelligent than their parents. Secondly, over that same period, each generations’s parents have been, also on average, very slightly more intelligent than its grandparents.¹

      How can these statements...

    • CHAPTER 3 Our Violent Past
      (pp. 55-64)

      Banpo is a village in central China that was inhabited around six thousand years ago by a small agricultural community. As archeologists have reconstructed it, some twenty huts were clustered around a slightly larger building, with smaller shelters for animals and for the storage of food. It looks very like the hamlets in southern India where I spent a year doing fieldwork as a graduate student, and one might be forgiven for thinking that life in farming communities had hardly changed in sixty centuries. Except in one respect. The village at Banpo is surrounded by a vast ditch. It measures...

    • CHAPTER 4 How Have We Tamed Our Violent Instincts?
      (pp. 65-79)

      Like chimpanzees, human beings are prone to violence when they can easily get away with it, and are much more peaceful when violence doesn’t pay. The simple explanation for the large fall in the incidence of violence in human societies since prehistory is therefore that we have managed to cooperate in increasingly sophisticated ways that make settling disputes peacefully more attractive than resorting to violence. Of course, that just pushes the question one step further back. Why have we succeeded in organizing society round a more generally cooperative model?

      We can be fairly confident that our ancestors evolved to trust...

    • CHAPTER 5 How Did the Social Emotions Evolve?
      (pp. 80-90)

      For social primates like us, navigating a room full of other members of our species requires us to launch the shaky vessel of our psyche onto an unpredictable hormonal tide. Where are the people we know? As we scan the horizon our cortisol levels rise, and blood pressure rises too. There’s a wash of oxytocin as a friend moves into view—she did us such a kind favor the other day. But then, when she fails to notice us, the stress returns. Was it a deliberate snub? Or would it be worse if it was unintentional? An adrenaline rush now...

    • CHAPTER 6 Money and Human Relationships
      (pp. 91-105)

      In northwestern Russia a man and a woman are bartering goods, each offering something they have made against something they want. This is the way goods have been exchanged for most of the human past, and it epitomizes the traditional culture of face-to-face interactions. What are they exchanging? Animal skins, it turns out, against rather simple shoes. You could be forgiven for imagining the scene as taking place in a forest clearing, or at the side of a muddy track, with horses occasionally stamping their feet and launching clouds of breath into the winter air. In fact, the woman is...

    • CHAPTER 7 Honor among Thieves: Hoarding and Stealing
      (pp. 106-115)

      A wide range of animals hoard food outside their own bodies, from theSphexwasp (which paralyzes insects for its own larvae to feed on) to dogs, bees, and squirrels. It is something that becomes harder to do the larger and more sophisticated the animal. Big animals are big eaters and big excreters, often too much so for their immediate environment to support them for long, so they are obliged periodically to move on. But the gypsy life limits how much you can store, for it must all be carried with you.

      When our ancestors first began to settle down...

    • CHAPTER 8 Honor among Bankers? What Caused the Financial Crisis?
      (pp. 116-133)

      The world financial crisis that erupted in 2007 was a failure of social trust on a massive scale. It is in some ways a test case for the arguments developed in this book, for it is the very success of our most ambitious institutions for promoting trust that gives them the power to do us such serious damage. A boom in which too many people trusted others uncritically to be taking difficult decisions about risk on their behalf has been followed by a crash in which everyone’s ability to trust others with such decisions is being reevaluated—in a mood...

    • CHAPTER 9 Professionalism and Fulfillment in Work and War
      (pp. 134-146)

      Thus Italo Calvino describes the predicament of a meandering army in the fifth century B.C.E., one similar to many thousands of others through the course of history and unusual only in that one of its officers, Xenophon, recorded its passage in a book that has survived for us and is calledThe Anabasis. After comparing Xenophon with the later writer T. E. Lawrence, and noting—with some approval— that in contrast to Lawrence’s aestheticizing vision, “with the Greek there is nothing beneath the exactness and dryness of the narration,” Calvino goes on to say:

      Of course there is a kind...

    • Epilogue to Parts I and II
      (pp. 147-150)

      Part I described how a surprising degree of coordination can be achieved by a system of decentralized activity of production and exchange in which individuals are concerned about nothing more than what is happening in the markets for the things they buy and sell. Modern economic analysis has made this claim very precise.¹ Specifically, markets that satisfy a number of key conditions achievePareto-efficiency, in which all opportunities for making individuals better off without harming others have been exhausted. The most important of these conditions are:

      There are large numbers of buyers and sellers (so that no one party has...

    • Prologue to Part III
      (pp. 151-154)

      Economists of the seventeenth and eighteenth centuries, like moralists of the ancient world, were fond of drawing parallels between human societies and the colonies of social insects such as ants and bees. Mandeville’sFable of the Beeswas in a tradition stretching back to Aesop, carried on by his contemporaries such as La Fontaine in the fable of the grasshopper and the ant, and inspiring the likes of Woody Allen even today. In fact, those parallels are misleading: modern human societies are not like colonies of ants, bees, or termites. As we have seen, human societies involve the interactions of...

  8. Part III: Unintended Consequences:: From Family Bands to Industrial Cities

    • CHAPTER 10 The City, from Ancient Athens to Modern Manhattan
      (pp. 157-171)

      What makes a great city? And in particular, what gives certain cities at certain periods a burst of creativity, an innovative flair, an ability to attract and stimulate people with talent and ideas? Here, too, geography and timing are everything; it is as simple and as mysterious as that. The questions “Why here? Why now? Why not there? Why not then?” have probably been asked more often about cities than about any other human phenomenon. While the detailed answers differ, there is something the most convincing answers all have in common. They point to a quality in all great cities...

    • CHAPTER 11 Water: Commodity or Social Institution?
      (pp. 172-185)

      What would it mean to account properly for water as a valuable resource? To answer that question we need first to understand why we value water and what we value about it. Answers to this question are many, varied, and paradoxical. The government of Mexico spends around 400 million dollars per year providing drinking water to its population, of whom nearly half in rural areas still have no access to safe sources of supply. This is one-fifth of what consumers in France (which has a population three-quarters the size of Mexico’s) spend per year on bottled mineral and spring water,...

    • CHAPTER 12 Prices for Everything?
      (pp. 186-203)

      Traders in shares around the world sit in front of computer screens displaying dozens, sometimes hundreds, of numbers at a time. These numbers are prices, and they represent the amounts of money at which other traders (known as “market makers”) are willing to exchange what are literally shares in the control of firms—rights to participate with others in deciding how these firms should be run, and of course to be paid some fraction of the profits that result from doing so. Sometimes nothing much happens for a long time: the numbers rarely change, and the faces in front of...

    • CHAPTER 13 Families and Firms
      (pp. 204-225)

      The side streets of any major city in the developing world are full of small workshops in which manufacturing, repair work, and assorted services are carried out by groups of people of all ages, often related to each other. Tailors, garage mechanics, assemblers of radios or plastic toys, jewelers, and pawnbrokers carry on their business for long hours each day, usually cooking, sleeping, and doing their laundry in the same building, fitting their domestic lives and their work complicatedly and—to a bureaucratic eye—messily around each other. These people depend on markets for their livelihood, but their relationships with...

    • CHAPTER 14 Knowledge and Symbolism
      (pp. 226-243)

      Late one Sunday afternoon in 1994, a week before Christmas, three friends were coming to the end of an afternoon’s potholing in the Ardèche in southern France. In a small cavity in the rock, a site well-known to cavers and walkers, they stumbled across an opening that led to a passage widening out into a large, empty space. They would need further equipment to continue, which would mean adjourning to their car, but it was already night and they were tired. Once back at the car, they nearly decided not to return, but when they did, they discovered a series...

    • CHAPTER 15 Exclusion: Unemployment, Poverty, and Illness
      (pp. 244-262)

      I visited Kiev, the capital of Ukraine, for the first time in 1995. The country was in a deep economic recession, so I was surprised to see evidence of a great deal of construction activity. For several kilometers along the road from the airport to the center of town, half-finished tower blocks could be seen, clad in scaffolding and dominated by soaring cranes. There were trucks, cement-mixers, piles of builders’ sand. After we had driven for some minutes past this astonishing expanse of building site, I was struck by an oddity, and asked my host, “Is today a public holiday?”...

    • Epilogue to Part III
      (pp. 263-264)

      The theme of part III has been the way in which the character of human societies in the mass is shaped by the pervasive presence of externalities. This character may be attractive or repellent, but it has been endlessly fascinating to economists.¹ Entire branches of economics have sprung up to deal with various themes that have been touched on in these chapters: the geography of cities and of economic development more generally,² the way in which environmental resources are depleted in the absence of incentives to take care of them,³ the way in which different types of markets allocate resources...

    • Prologue to Part IV
      (pp. 265-268)

      One of the great puzzles of prehistory is why agriculture caught on so fast. You might think that, once the idea appeared and the climate made it possible, the answer was obvious: why go out to hunt and gather when you can sit home and watch the grass grow? The reality, though, is more complex. Sitting and watching the grass grow is not the idyll it seems, for those who are sedentary are also vulnerable. When enemies attack, hunter-gatherers can simply melt into the forest, but farmers have much more to lose: houses, chattels, stores of food. So farmers not...

  9. Part IV: Collective Action:: From Belligerent States to a Marketplace of Nations

    • CHAPTER 16 States and Empires
      (pp. 271-287)

      Effective defense requires teamwork. Each member of a team of fighters almost always has a much better chance of survival in a battle than its individual members would on their own. The only important exception is when fighters are mobile and can survive by running away (as guerrilla fighters have always known). Then and only then can it be an advantage to be fighting alone.

      When our ancestors began farming and herding, they gave up the advantages of mobility. It’s true that domesticating sheep, cattle, or pigs does not bind you as tightly to one place as planting grain does....

    • CHAPTER 17 Globalization and Political Action
      (pp. 288-301)

      Imagine a world in which entire communities make a living by digging strawberry ice cream of the finest quality out of the northern tundra and processing it to extract the strawberries. Further south, hitherto unknown societies find outstanding vintage wine flowing in streams and process it to remove the alcohol and recover the natural grape juice. If we were to discover such people, we would no doubt welcome this expansion of the world’s ethnographic riches and think them worthy at least of a full-color spread in theNational Geographic. But, if we could think beyond the exoticism, we would be...

    • CHAPTER 18 Conclusion: How Fragile Is the Great Experiment?
      (pp. 302-316)

      As you are reading these words, somebody you have never met is working hard on your behalf. Almost certainly many people are working for you—an Indian farmer driving bullocks across his land so he can plant the cotton that will be made into the shirt you will buy sometime next year; a Brazilian farmer harvesting the coffee beans for your breakfast next month; a civil servant planning the road improvements close to that dangerous junction you pass on your way to work; a chemist synthesizing molecules to treat the illness that you still do not realize you have. These...

  10. Notes
    (pp. 317-342)
  11. References
    (pp. 343-364)
  12. Index
    (pp. 365-376)