Listened to last week’s EconTalk, with Viviana Zelizer talking about the divide between the initimate and the commercial.
It struck me as a huge exercise in missing the point. Not once were the key words mentioned. They are trust and commitment.
Contracts are all very well when it is possible to specify precisely what each party expects to get out of a relationship. However, if I have expectations which I can’t practically define and enumerate, then I can’t put them in a contract.
However, it is frequently advantageous to be able to make binding commitments. How do we do that in cases where we can’t use contract enforcement to make the commitments binding?
Fortunately, there is a mechanism built into us. Humans can form emotional bonds with other humans. If parties to a relationship can see that the other parties have emotionally bonded to them, then they can have confidence that their needs in the relationship will be met, without recourse to contract lawyers and bailiffs.
It is possible to fake an emotional bond. The central question of much human interaction is whether, and how strongly, such bonds have genuinely formed. The literature on this subject is vast, and includes a large portion of all fiction ever written. We are continually on watch to check that the bonds others have to us are still strong.
This is the reason for what Zelizer calls the “Hostile Worlds” of the intimate and the commercial — the deliberate and socially expected attempt to separate, as far as is practical, intimate relationships from commercial relationships. If those who we believe are with us for emotional reasons are actually with us for commercial reasons, we can no longer rely on their emotional bond to enforce their commitments beyond what we can achieve in the courts.
This is by no means an original line of reasoning: I’m sure I’ve come across it in books by Diamond, Dawkins, Matt Ridley as well as writings by economists. The issue of signalling an emotional commitment came up at length in an earlier EconTalk podcast on religion, so I’m disappointed that Zelizer ignored the question, and that Russ Roberts didn’t bring it up. It defines the boundary of the intimate and the commercial (because it is the answer to “why do we care”) If we expect consideration from a party to a relationship beyond what we are able to define and enforce publically, then we must rely on intimacy – emotional bonds – which themselves require a certain amount of care and maintenance.
Update: more thoughts on the question
Have you investigated with line of thinking as regards organizational development? For instance, I work withing the construction community, which is generally organized according to "virtual organization" dynamics. Individuals and relatively small teams come together to form relatively large teams committed to a discreet and temporary project. At the conclusion of the project, we usually separate, but portions or sometimes the whole team may reassemble to execute another project. Despite or perhaps because of the efforts of lawyers, these groups rely on contracts primarily to outline the intent of anagreement and scope of the work, butt not the details. For that reason, among others, the project teams areusually composed of individuals with very high trust among the project team. It is not possible to commercialize these relationships without compromizing trust, nor to introduce trust into a commercial relationship without compromising the commercial boundary and initializing trust. For my business, I rely solely upon trust in my clients and vendors, and do not rely upon any relationship that is commercial unless I or the other party can convert that relationship to ttrust my sense
My sense, from the business literature, is that this prioritization of trust over contract also occurs within even venture capital efforts, especially among so-called angel investors.