The Lower Right Quadrant
By Arnold Kling
In a comment on my eariler post, Paul Seabright writes,
Unlike Arnold I’m very interested in the bottom right quadrant, inter alia because historically the boundaries between government and criminal groups have often been very fuzzy.
He is referring to a matrix in which coercive organizations are either centralized (government) or decentralized (criminal groups). The other half of the matrix is non-coercive organizations that are centralized (like the accounting standards board) or decentralized (competitive markets).
I would say that Seabright’s book also raises the issue of the boundary between competitive markets and criminal groups. He is focused on how norms of behavior persist. He focuses on people’s propensity for strong reciprocity, meaning that we reward people who obey norms and punish people who cheat. One could argue, and I believe that Seabright would argue, that without strong reciprocity markets would degenerate into criminality.