The Market Society Is a Pro-Social Society

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Title: The Social Nature of Commerce: Trust, Cooperation, and Market Success

Human beings are inherently pro-social creatures. Aristotle went so far as to refer to us as political animals, driven by our nature to create associations that culminate in the broader community of the polis. And our capacity for reciprocity, trust, and cooperation has deep evolutionary origins. These big brains of ours developed, in part, to handle the growing size and complexity of our social networks. We are wired to connect. It is no surprise, then, that research continues to demonstrate that social bonds are essential to human flourishing and well-being.

Adam Smith seems to have tapped into this truth about human nature. While acknowledging mankind’s selfish tendencies, Smith noted that, “there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” This is why “man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love.” Because of this natural endowment, we humans are able to expand our circle of trust and cooperation beyond our kin to a far greater extent than other animals. This has in turn helped shape our cultural institutions, including, perhaps surprisingly, commercial markets. Commerce, therefore, is pro-social. Markets are relational in nature.

Enlightenment Heavyweights and Others in Favor of Commerce

Historically, merchants and markets have more often than not been on the receiving end of suspicion and disrepute. But an alternative view of market exchange—doux (gentle) commerce—began to develop among various thinkers during what has become known as the Enlightenment. Perhaps the most well-known proponent of this “gentle commerce” was the French political philosopher Montesquieu:

– Commerce cures destructive prejudices, and it is an almost general rule that everywhere there are gentle mores, there is commerce and that everywhere there is commerce, there are gentle mores. Therefore, one should not be surprised if our mores are less fierce than they were formerly…. Commerce… polishes and softens barbarous mores, as we see every day.
– The natural effect of commerce is to lead to peace. Two nations that trade with each other become reciprocally dependent; if one has an interest in buying, the other has an interest in selling, and all unions are founded on mutual need…. The spirit of commerce produces in men a certain feeling for exact justice…. By contrast, total absence of commerce produces the banditry that Aristotle puts among the ways of acquiring.

Other Enlightenment era thinkers (including Smith) lifted their voices in support of the gentleness and civilizing effects of markets, arguing that commerce is not just a force for economic prosperity, but a catalyst for a bundle of habits and values that lead to social cooperation. Commerce, they believed, can make friends out of enemies and build trust with those who we would otherwise view with suspicion.

Social Capital Is at the Heart of Commerce

Trust may vary from transaction to transaction, but we’re generally pretty trusting of people we do business with. Think about your own transactions. When you buy something at the store or online, how much do you actually worry over the trustworthiness of the person on the other side? Is it enough to make you not make the purchase? Better yet, what was the name of the cashier that checked you out at your last supermarket visit? Do you even know how many hands handled your last Amazon purchase? In many of these cases, you are trusting total—and sometimes faceless—strangers to come through for you without a second thought. The “commercial society”—as Adam Smith called it—is ultimately a cooperative endeavor, facilitating trust across great distances and different people. It both relies on and produces social capital. And it does so by making cooperation valuable.

For Smith, a commercial society was one in which “the division of labour has been… thoroughly established” and “it is but a very small part of a man’s wants which the produce of his own labour can supply.” No longer do we produce everything we need ourselves; no more isolated, atomistic self-sufficiency. Instead, we specialize, we produce, and we trade. We become economically interdependent with one another. In a commercial society, “every man… lives by exchanging, or becomes in some measure a merchant,” and we prosper together through mutually beneficial trade. To even risk interdependence requires a trusting, cooperative spirit. But actually practicing interdependence can further cultivate this spirit. For Smith, the “division of labor… is not originally the effect of any human wisdom,” but instead “the necessary, though very slow and gradual consequence of a certain propensity in human nature… to truck, barter, and exchange one thing for another.” Commerce is an extension of humanity’s social nature.

The Social Nature of Business

Market exchange within a commercial society implies market competition. And many believe that cutthroat, winner-takes-all competition creates skepticism and distrust for those who participate in it. Competition fuels greed, leading to cut corners and shady business practices to get ahead. It seems only natural that this would be the outcome of a system built on the profit motive. When the bottom line is all that matters, trustworthiness goes out the window. Trust is sure to crumble under the weight of such perverse incentives. Right?

But these assumptions, like many made about the commercial society, are also mistaken. And they are mistaken because they fundamentally misunderstand the nature of market competition. What makes an entrepreneur or business competitive in a market economy is not of the might-makes-right variety. It’s not even due primarily to the lone-wolf nature of eccentric innovators (though that may play a role). And while efficiency matters, dishonest cost-cutting isn’t the way to market success either.

What makes a market actor competitive is their ability to identify and supply the wants and needs of society through persuasion. They must persuade consumers that their product or service is worth exchanging their hard-earned money for. And in order to do that, they must build and maintain trust with their customers. Reputation, integrity, and reliability are crucial components of a successful business in a competitive market. Without trust, consumers will not be willing to engage in transactions with a particular business, leading to its eventual downfall.

Businesses that prioritize building trust with their customers are more likely to succeed in the long run. This is because trust leads to repeat business, positive word-of-mouth referrals, and a loyal customer base. Trust also fosters a positive reputation in the marketplace, attracting new customers and differentiating the business from its competitors. In essence, trust is the foundation of a successful business, and it is essential for thriving in a competitive market environment. Clark, The Son Also Rises: Surnames and the History of Social Mobility (Princeton: Princeton University Press, 2014); and Deirdre Nansen McCloskey, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (Chicago: University of Chicago Press, 2016).