Means–Ends or Cost Minimization?

Robbins defines economics as the investigation into the solving of means–ends problems in the face of scarcity. Economics is not interested in the ends but only with the ‘efficient’ use of means: “[T]here are no economic ends. Only economical and uneconomical means of achieving given ends” (1935, p. 144).Footnote ¹⁶ But one may wonder whether the ‘economical or uneconomical’ use of means is indeed independent of the ends. Naturally, one can always say that one is interested in the efficient use of resources, irrespective of what the person using the resources aims to achieve.Footnote ¹⁷ This may, at first impression, appear value free but why would one be interested in the efficient use of resources in the first place? Would anyone’s interest in this question be independent of the aim that the people who employ resources try to achieve?

While Robbins seems to be quite clear about his intention, in this case it might be useful to examine the same theme in Wicksteed, who, as we have acknowledged earlier, was one of the main sources of influence on him.Footnote ¹⁸ Wicksteed (Reference Weber1933) defines economics as the study of “the administration of any kind of resources … in such a way as to secure their maximum efficiency for the purpose contemplated. It is administration with a minimum of waste” (1933, p. 14). This sounds very much like Robbins's conception, but phrased in this way, it also exposes the difficulty of this definition. What does it mean “to secure their maximum efficiency for the purpose contemplated”? Does this necessarily lead to the next sentence: “it is administration with a minimum waste”?

The first part of Wicksteed’s definition suggests that the maximum efficiency depends on the purpose. In other words, the criterion of economic performance depends on that which one is trying to achieve. Maximum efficiency, therefore, can only mean the best way to serve a particular purpose. But why should this be “minimum of waste”?

“All successful administration,” writes Wicksteed, “consists in the purposeful selection between alternative applications of resources; and the ultimate value or significance of such success depends on the nature of the objectives at which the administrator aims” (1933, p. 14). Moreover,

Unlike Robbins, Wicksteed seems to acknowledge the relevance of the ends people seek to the evaluation, and perhaps even the working, of the system. However, many pages later (p. 184), Wicksteed all of a sudden changes tack. He suggests that the reason why economics can nevertheless be neutral is because the free reign of intelligent people seeking to promote their own ends always promotes the other’s ends and produces more resources to help achieve whichever end we wish.

So it is not that minimum waste has anything to do with a specific objective, but rather because—and I will phrase this in terms of modern economics as it means exactly the sameFootnote ¹⁹—in competitive equilibrium, everyone gains from trade and output is maximized so as to facilitate the achievement of any objective.Footnote ²⁰

There can be little doubt that Robbins was in full agreement with this. He too talks about the conditions of perfect freedom as the benchmark of how things should be (without elaborating why this should be so).Footnote ²¹ Given the endorsement of Wicksteed’s position in his introduction to the Common Sense, it is quite plausible that the same logic applies to Robbins.Footnote ²²

However, what Wicksteed is actually saying is not that economics is totally uninterested in the objectives of individual/social behavior, but rather that the economic objective of maximizing output is useful for all other possible objectives. Better still, that the economic objective of output maximization is consistent with all other possible objectives, as it provides more resources for them.

One could be tempted to interpret Wicksteed as saying that the economic objective of output maximization is just the means to achieve other objectives, but this cannot be acceptable, as the other reason for its neutrality is the fact that people always benefit each other.

Robbins does not discuss these complex relationships in full, but simply accepts the assertion that economics is about minimum waste (‘economical’), that it is consistent with all other objectives, and, therefore, that it is ethically neutral.Footnote ²³ Given the elaborate treatment by Wicksteed, it is easy to see that the claim, according to which economics does not care about objectives and is ethically neutral, is quite problematic. For one, it is difficult to see how the clear admission about output maximization can be accepted as objective, which is beyond the ethical;Footnote ²⁴ in particular, as it was coupled with the assumption that people benefit each other in the process. More difficult would be to argue that this objective may be consistent with all other possible objectives.

Perhaps the best demonstration of this difficulty behind the Robbins–Wicksteed conception of economics emerges from Robbins's own metaphor of the power of economic analysis. I will quote it at some length:

Here we have two different communities with different ends to promote, the one ‘purely material’; the other, ‘purely spiritual.’ As both types of communities face scarcity, they are the subject of economic investigation. By referring to the differences in relative prices, Robbins assumes that in both cases there will be an equilibrium where the difference in prices will reflect the difference in taste (or what he calls “the initial data”) and, thus, opportunity costs. As a result, the ‘economical’ allocation of resources would be different in the two societies. If we accept this at face value, then this vindicates both Robbins and Wicksteed as the “waste minimisation” is perceived to be perfectly consistent with two extremely different sets of ends.

However, for the waste-minimizing (productive efficient) allocation to emerge in both economies, prices would have to be at a competitive equilibrium.Footnote ²⁵ Naturally, this is not a claim that the economy must at all times be at equilibrium, but rather is the presumption that the coordinated outcome is possible in principle, and that over time, actual prices will tend towards these prices.

In the material society, when individuals seek to enhance their own material well-being without any clear regard to others, the main problem, for society, would be the coordinated outcome of such behavior. In a sense, the ends that individuals and society wish to promote are identical to the declared end of economics: to ensure plentiful means (i.e., output maximization through waste minimization) while everyone’s pursuit is successful and benefits the other. The economic problem would be to find the institutions that facilitate this happy ending, and the answer, as we know, is straightforward: free competition.

But what about the other society? If, in the purely spiritual society, individuals seek to live an ethical life based on minimal material comfort and respect for ethical principles (whatever they are), would they face a similar problem of coordination as the previous society? Is the benchmark of competitive equilibrium where prices reflect the real opportunity costs a meaningful point of reference?

Without delving into the question whether their cooperative streak invites any form of equilibrium as a relevant analytical concept, that which might govern their exchange could easily be ethical principles (for instance, the ‘just price’). Hence, while it is clear that the description of equilibrium relationship will be different—as suggested by Robbins—this type of statement would not necessarily be value free any longer. Whether the actual vector of ‘just prices’ is ’economical’ is not really a question about which this society cares much. Nor would they care if they were told that their ‘administration’—to use Wicksteed’s concept—failed to produce the plentiful of means to support all other ends. As far as this society is concerned, to allow people to compete in the marketplace is a violation of their ethical principles, and stands in contrast to the ends they seek to promote.

To demonstrate this point, consider the following fairly basic example. Suppose that there are two agents in society and two commodities (x and y). Suppose too that agent 1 can produce either 6 units of y or 3 units of x (or any linear combination of the two), while agent 2 can produce either 3 units of y or 6 units of x (or any linear combination of them). It is clear that by specialization and trading, they can both benefit from trade. Becoming members of one society would therefore produce the following economic set-up:

According to Robbins, the neutrality of economics emanates from the fact that all three positions (A, B, and C) are equally ‘economical,’ and would produce different measures of opportunity costsFootnote ²⁶ and, hence, competitive prices.

Suppose now that society cares only about equal distribution of burden, and that the labor required for the production of x is far more unpleasant than that required for the production of y. Not A, B, or C produce an outcome compatible with the social objective of equal distribution of burden. At A, we have full specialization, which means that agent 1 is producing the unpleasant x while agent 2 is working in the pleasant production process of y. At B, agent 1 produces only y while agent 2 produces both x and y, and, therefore, 2 is exposed to the unpleasant task while 1 is not. The reverse is true at point C. Only at D would the distribution of burden satisfy the social desire for equity of burden. There, each individual spends exactly half their time engaged in the unpleasant process of producing x and half their time in the more pleasant process of producing y. This means that if the distribution of burden is equal, society would produce 4.5 units of both x and y. What can an economist say if he followed Robbins's conceptions?

At point D, society has chosen a point that is clearly not ‘economical,’ and prices will not be a meaningful guide in the search of efficiency. In fact, there is nothing meaningful that the economist can say. The only way out of D is by claiming that individuals are opportunistic and care only about consequences, but this would have turned the society of ascetics into sybarites. As such, economics ceases to be universal and becomes ethics dependent.

Can Resource Allocation Be independent of the Economic Problem?

Robbins is trying to persuade us—as do many modern textbooks—that economics is about resources allocation, irrespective of what it is we seek to obtain. However, if we examine the history of economic thought, we will find that there were many attempts to deal with the problem of resources allocation, yet there has not been unified thinking about the best way of conducting such an allocation.

The reason for this is that while everyone was concerned about resources allocation, different scholars solved different economic problems. Thus, for instance, both Plato and Aristotle were concerned with the formation of the just society. Inasmuch as there is economics in either of these writers, it is with reference to the type of economic institutions that would support the just society.

However, even though they shared the same economic problem, their conclusions with regard to the best institutional set-up were very different. In Plato (1974, pp. 246–247 [462 b–c]) we can find the argument in favor of communal ownership of property as private property promotes divisiveness, while Aristotle (1976, p.114 [1263a]) claims that private property is a source of virtue. The difference between them, in part, is due to the differences in their epistemology, which affect the way they construct ethical notions like virtue or justice. What is, however, clear is that both were concerned with resources allocation, but the measure of how well different institutions performed depended on the economic problem they formed as well as on the epistemology by which they conceived this problem.

Equally, classical economists like Smith and Mill, on the one hand, and Marx, on the other, were trying to solve yet another economic problem (wealth creation), but they too ended up with very different institutional set-ups and criteria of economic performance. Their approaches differed from those of the Greeks because they were solving a different economic problem. Their solutions differed from each other as they followed different epistemologies.

In other words, while describing equilibrium relationships may indeed be value free—if we accept that “equilibrium” is a useful universal term to capture human interaction—the criterion of economic performance is bound to be dependent on the problem that society tries to resolve. In the above metaphor, it was clear that efficiency (or being economical, in Robbins's terms) is consistent with a society that wishes to coordinate the material wealth maximization of its agents. Society’s objective cannot be described as other than wealth maximization. In the case of the purely spiritual society, the criterion of efficiency became meaningless as it would have been in the case of an AristotelianFootnote ²⁷ or Platonic societies.

Robbins's insistence on the distinction between wealth creation and his own definition of economics is based, primarily, on the claim that economics is not only about material wealth. However, he says, “by saying that services are material vibrations or the like [we] can stretch the definition to cover the whole field” (Robbins Reference Robbins1935, p. 21).

This brings Robbins very close to the position of Walras. The latter, in his Elements of Pure Economics, asserts, like Robbins, that the Smithian definition of economics is not well conceived, as to provide a plenty of revenue may be an admirable objective but it lies outside the science of economics (Walras Reference Smith, Raphael and Macfie1984, p. 52). However, Walras has no problems with the subject matter as “social wealth...means all things, material or immaterial... that are scarce, that is to say, on the one hand useful to us and, on the other hand, only available to us in limited quantity” (p. 65).

Nevertheless, there seems to be a remarkable similarity between Walras’ initial claim—that the science of economics cannot be construed as the study of wealth creation—and that of Robbins. Even though Walras is not at all disturbed by whether the concept of wealth includes only material wealth, his science of economics, as captured by his Elements of Pure Economics, is almost identical to what Robbins considers as the subject matter of economics.

Yet, there are a few fundamentals that distinguish Walras from Robbins. Firstly, while Walras draws a distinction between what he calls science, art, and ethics, he does not consider economics to be comprised of only one of these categories. He clearly insists that the study of value in exchange is the subject of science, the study of production (industry) is the subject of art, and the study of property/distribution (institutions) is the subject of ethics. However, he also accepts that they are all “three generic phenomena or the three orders or groups of specific facts which result from the limitation in quantity of utilities or the scarcity of things” (1984, p. 68). Indeed, while the study of exchange is called “pure economics,” the study of art and ethics associated with social wealth contains economics in their title: applied economics and social economics, respectively.Footnote ²⁸

The second element is somewhat obscured in Walras’ own analysis. While appropriation and ownership are matters for social economics, they seem to be, in his own words, the preconditions for the ‘science’ of economics. “We have seen a priori,” writes Walras, “how scarce things, once appropriated, acquire value in exchange” (p. 68). In other words, it seems that the natural phenomenon of value in exchange, according to Walras, depends on a social phenomenon—the appropriation of scarce things.

Robbins clearly wanted to limit economics only to what Walras called the ‘science’ of economics. However, Walras would not have agreed that the subject of economics should be confined to only one of the categorical manifestations of social wealth.

In fact, in the light of Walras’ analysis, it is easy to see that what Robbins proposes is not really to divorce economics from a particular set of objectives (or economic problems). Instead, he simply suggests a different economic problem from the one adopted by Classical economists. We are no longer interested in wealth creation, but rather with the reconciling of unsatiated wants with scarcity. In other words, economics is about coordinating the activities of wealth-maximizing individuals.

Thus, it seems that Robbins's attempt to separate the study of economics from a particular problem has not really been persuasive. Equally, to describe equilibrium relationships, even if they always exist, is not necessarily a value-free exercise. Nor is the criterion of economic performance, which is associated with efficiency. Whatever we wish to say about individuals’ objectives, if we evaluate the outcome of their chosen organization by the word “efficiency,” we are implying a wealth-maximization exercise at least at the level of individuals. If society merely wishes to coordinate such an activity, society is effectively endorsing the objectives adopted by the individuals. Hence, as economics cannot be separated from the problem it aims to solve, and as ends are natural objects of ethics, economics cannot really separate itself from ethics by claiming to be mute on the objectives that individuals seek to obtain.

The Universal Competitive Benchmark

So far we focused on Robbins's claim that economics is merely about choosing the best means to an end but not from the perspective of the end. Rather, the measure that economics employs to evaluate the choice of means is from the point of view of efficiency, which we claimed was nothing short of subjugating all ends to a supreme end of maximizing wealth (or means).

We now move to the second element of Robbins's call for the neutrality of economics: coordinated outcome. From an Austrian perspective, this simply means that whatever people want to achieve, their actions and interaction constitute a process that will lead to an equilibrium, or some kind of order. The only thing we can say, in such a case, is that we may use utility to explain why prices relate to each other in a particular way, but we will not be able to assert that these prices facilitate the minimization of costs.

In Robbins (Reference Robbins and Wicksteed1934), the connection between the evaluation of cost and equilibrium is clearly stated:

In other words, we have here both the Austrian story of process, which, Robbins claims, requires that people consider costs in terms of prices, and the Walrasian story, according to which only in equilibrium will prices reflect the true opportunity costs. The ease with which Robbins swings between the two is more than a proof, in my view, that he was less convinced of their incompatibility than most Austrian writers. But more to the point, he could not have been more explicit about the fact that proper cost minimization cannot be achieved outside the Walrasian equilibrium.

Moreover, Israel Kirzner (Reference Kirzner and Holcombe1999), in claiming Wicksteed—and, by implication, Robbins—to the Austrian perspective, says that: “Here we see Wicksteed, in an Austrian fashion, seeing the decisions of market participants not as the implications of equilibrium conditions somehow assumed already to exist, but as the initiating cause for (and stages) the process of equilibrium itself” (Kirzner Reference Kirzner and Holcombe1999, p. 111). What distinguishes the Austrian story from the Walrasian one is that in the Austrian approach, equilibrium is not determined by a priori exogenous conditions, but rather by the process in the marketplace. However, there is nothing clearer than Robbins's own statement that “[w]e enquire rather concerning the conditions of equilibrium … given certain data” (Robbins Reference Robbins1935, p. 67, my italics). And: “Now, of course, it is of the essence of the conception of equilibrium that, given his initial resources, each individual secures a range of free choice, bounded only by the limitations of the material environment and the exercise of similar freedom on the part of the other economic subjects” (p. 143, my italics).Footnote ²⁹ By no stretch of imagination can this be interpreted as an Austrian narrative.Footnote ³⁰

It seems to me quite obvious that Robbins is describing a Walrasian equilibrium where equilibrium prices depend on exogenous variables like taste and initial distribution of resources. He then goes on to say that society may choose not to allow such freedom to individuals (a different end). But the role of the economist is not to judge society’s choice but merely to say that—by referring to the potential competitive free equilibrium as the benchmark—the actual allocation does not satisfy the cost-minimization principle (that a policy is or is not ‘economical’). In other words, Robbins thinks that economists must always refer to the benchmark of efficiency (which solves the implicit problem of a plenty of means) to evaluate any existing equilibrium. However, by saying this, Robbins is contradicting the most important edifice of his structure: that the means–ends examination is value free.

There is an appearance of ethical neutrality in this kind of claim. Irrespective of what people want, economists would comment only on whether what they do minimizes cost. But this could be meaningful only if, given what people want, there could have been a competitive free equilibrium. If we refer to the metaphor from section II, it is clear that for the first society, if left to their own devices, competitive equilibrium would emerge. However, the purely spiritual society, if left in complete freedom, would not necessarily produce a competitive equilibrium. Unless, of course, we suppose that their ethical disposition is just a façade, and that underneath every one of them lurks a member of the materially motivated society.

Therefore, for economics to be value free in a meaningful manner, there must be a coordinated outcome, or equilibrium, to all possible sets of ends. By adding Wicksteed’s qualification that each individual would benefit the other while achieving his own ends, we may say that such an equilibrium should be not only productively efficient but also efficient in the Pareto sense of it. Indeed, according to Robbins, the description of this coordinated outcome is what economics is all about (1935, p. 67). Without it, there is little economics could say that could potentially be value free. Thus, when we discuss taxation, we are not interested in the influence it would have on production or distribution, as much as we are interested in the comparative statics of an equilibrium without taxes and an equilibrium with taxes (p. 69).

Equilibrium and the Natural State

Robbins is clearly focused on equilibrium: instead of causes of wealth, we “enquire rather concerning the conditions of equilibrium of various economic ‘quantities’” (1935, p. 67). But “we regard [the economic system] as a series of interdependent but conceptually discrete relationships between men and economic goods; and we ask under what conditions these relationships are constant” (p. 68). This seems to suggest that equilibrium is a possibility but achievable only under some conditions. This already implies a departure from the ethical neutrality.

We said in the previous subsection that for economists to be able to say anything meaningful, they must be able to compare a free competitive equilibrium to an actual equilibrium (or even just a set of prices—there is no obvious commitment to a continuous equilibrium, although there is some ambiguity with this respect in Robbins). But why should the circumstances of ‘freedom’ in the sense required by the competitive model, and which Robbins enumerates (1935, p. 143), constitute a benchmark? Is it not in itself an ethical choice? The fact the we allow society to choose other ends is just a pretence because in the end, economists would judge society on the basis of criteria about which society may not care. Does it not make economics irrelevant rather than ethically neutral?

However, the benchmark of free competition could become a meaningful—value- free—benchmark if one argued that this is what would happen not in complete (State-protected) freedom, but rather in the natural state of things.

On this question, it seems that Robbins is fluctuating between the empiricism of Classical economists like Smith and the rationalism of Walras:

Obviously, Robbins treats Smith’s idea of ‘natural liberty’ as the conditions under which competitive general equilibrium emerges. If things were left to themselves, there would always be an equilibrium, regardless of what ends people seek to achieve. In other words, equilibrium is a natural, empirical, phenomenon. The Walrasian system, in that vein, is merely an exposition of the nature of equilibrium that would emerge in natural liberty.

Robbins does not seem to be conscious of the shift in paradigm between Smith and Walras, nor of their epistemological differences. It is not very difficult to establish that Smith was an empiricist while Walras was a rationalist. The significance of this is that the Walrasian general equilibrium reflects the essence of things rather than what they are (their appearance). Therefore, in Walras, the idea of the order of natural liberty is universal and always holds, logically. But this does not mean that it also holds empirically.

To a great extent, this is what Robbins (and Wicksteed) is claiming. I have shown a few examples why Robbins's equilibrium is more Walrasian than Austrian. We also saw that the way to accommodate the multitudes of ends with a neutral economics would come from having a universal benchmark of competitive efficient equilibrium. The Walrasian system offers exactly that. Moreover, even though Robbins finds it easy to move from an “equilibrium of exchange and the formation of prices,” Walras faced a monumental task in answering the question of how does the world of ideas relate to the world of appearances. This means that while reality may produce various types of equilibria, the value-free one is the free competitive Walrasian equilibrium. So, according to this story, every set of aims has a potentially efficient equilibrium, which economists can meaningfully compare to the real relationship between economic quantities.

However, in the case of Smith, things are a bit more complicated. While it is true that Smith—in the true spirit of enlightenment—believed that if things were left to themselves, an order would emerge, the type of order was not independent of the ends people seek to achieve. In his Theory of Moral Sentiments (Smith Reference Salerno1976), he famously describes two types of society. The one, a society of benevolent individuals, will flourish and be happy as people help each other because they care about them. The other, a society of self-interested people, would also survive as mutual help is given in a mercenary way but they would be considerably less happy.Footnote ³¹ Naturally, the former, cooperative, society would not need a concept of equilibrium to explain the relationships between economic quantities. The latter would. So does this mean that the natural order is that of competition and equilibrium or that of cooperation?

Moreover, while Smith recognized that a natural order would emerge, his concept of equilibrium was very different from the Walrasian one.Footnote ³² What mattered most were the dynamic implications of the static equilibrium rather than the mere existence of a coordinated outcome. This is why Smith makes a clear distinction between equilibrium at natural rates and equilibrium at market prices. The former is conducive to growth; the latter, not so. As the economic problem Smith was trying to solve was that of growth maximization, the mere coordination was, in itself, unimportant.

For Robbins, Smith’s contribution is not the distinction he draws between the two types of equilibrium, but rather the mere notion that there always exists a natural order. By removing the interest in the ends that society wishes to promote, he empties Smith’s distinction between types of equilibrium, and invites the Walrasian system to describe them. In this way, the Walrasian logical structure becomes universal.

In short, it seems that by connecting Smith to Walras, Robbins turns the rationalistic tool of general equilibrium into what Smith treated as natural state. If so, it is logically clear why the benchmark of economic pronouncement would be the free competitive equilibrium. It is not an ethical choice but a description of the world before any institutional intervention. It is a good world. Smith, of course, would not have agreed to this. According to him, the natural state (and, therefore, the ostensibly value-free reference point) depends on what motivates individuals.

Natural State and Society

Neither Walras nor Smith would have agreed to the notion that economics can be separated from ethics. In the case of Smith, this is quite evident, as we saw through the example of the two types of societies that may exist. Surely the society of benevolent individuals would not find them competing against each other. Nor would the societies of monks, in the metaphor of section II above, end up in a competitive state that requires equilibrium to coordinate their behavior. To compare the actual outcome that emerges to the competitive equilibrium would be a meaningless exercise.

In the case of Walras, it would not hold, either, as while the science of economics describes the essence of the value in exchange, it is the social process of appropriation that pours content into it. In other words, we need to know first what it is that made people depend on each other before we can explore how they would coordinate this interdependence.

Robbins's and the modern story begin with identifying the subject matter of economics as being all those things that are both scarce and desirable. This, in turn, gives rise to the important distinction between allocations that are merely feasible and allocations that constrain our desires (i.e., efficiency). Therefore, given the difference in individuals’ abilities, it stands to reason that the first action a rational person should take to solve his, or her, individual problem of reconciling want with scarcity would be to specialize and trade. Thus, individuals become dependent on each other.

However, the reason why people become dependent on each other is really a rational construction. We assume that individuals, as a matter of fact, seek to maximize—among other things—their material wealth, and, therefore, they become dependent on each other. In other words, there is no underlying social dimension to why individuals depend on each other and, therefore, there is no need to add a social dimension to the coordinated outcome.

The absence of the social dimension in the description of what made people depend on each other is also the reason why Robbins can easily dismiss ethics. After all, by “social dimension” we refer to the way people view others, which, as a matter of fact, is the foundation of ethics. The question here is not what they consider to be right or wrong, but rather the fact that if they have any particular attitudes towards others, it might affect the reason why they depend on them as well as the means that govern their interaction.

Smith too begins the Wealth of Nations with a description of specialization and the subsequent dependence that exists among members of society. But Smith’s theory does not begin in the Wealth of Nations. It begins much earlier, in the Theory of Moral Sentiments and the Lectures on Jurisprudence, where he is trying to understand what it is that brings people together.

He first observes that people are social beings in the sense that they seek the approval of others. He then describes how they go about it from early stages of society. Smith does not follow a rationalist agenda—he approaches the subject as a true empiricist. Notwithstanding whether his anthropology is correct, Smith forms the view that people started to specialize and trade because they wished, at first, to confer presents on others to acquire their approval. It is a long and complex story, which I do not wish to repeat here,Footnote ³³ but in his theory, the driving force behind specialization and trade is the pursuit of social approval (through the deceptive powers of wealth).

In the end, both the Robbinsian and the Smithian narratives lead to the same conclusion: individuals specialize and trade, and thus become dependent on each other. However, the fact that in Smith they do so in search of social approval makes a great deal of difference. The question we must answer is not whether we reached an outcome that is or is not economical, but whether individuals succeeded in achieving their objectives through the coordinated outcome. The distinction he draws between equilibrium in natural rates or market prices partially answers this question.

Smith did not complete his agenda, as there is questions that remain unanswered: how does the fact that individuals seek others’ approval affect the development of social/ethical norms of behavior, and how do these affect the nature of human interaction? Would competition be the right mechanism of coordination if people become more socially minded?

Throughout history, interest in the question of social and economic organization has always been coupled with an understanding of what brings people together. Plato (1984, pp. 115–122), for instance, claims—through Socrates’ voice—that there are two principles bringing people together: they need each other to supply their needs; and they have different aptitudes (Book 2, part 2, section 1). Therefore, in a Hobbsian manner, individuals have no choice but to become members of society, and, therefore, the question of how to organize it becomes external to their attitudes towards one another.

Aristotle, on the other hand, claims that “observation tells us that every state is an association, and that every association is formed with a view to some good purpose” (Aristotle 1957, p. 54). This means that the reason that people come together is fundamentally moral. Not surprisingly, he promotes self-sufficiency and condemns trade (beyond the satisfaction of needs) as immoral.

Nearer to today, we have the example of J.S. Mill, who believed in the evolving nature of human character. For him, individuals will become increasingly cooperative, which, in turn, could make competition, and equilibrium, redundant concepts of social organization.

All this tells us that if, indeed, equilibrium describes the natural state, we must begin by asking what makes people dependent on each other. I believe the answer to that is bound to influence their attitudes towards others. This, in turn, will inevitably feed into the way moral notions are formed (what I call “positive ethics”), which, in turn, is bound to affect whether social interaction is predominantly competitive or cooperative in nature.