The ties within a community enable it to act as a support of last resort. When all is lost, we can always return to our family or village, where we will be helped because of who we are rather than what we can pay or what we have accomplished. A study finds that 20 per cent of households within a caste group in India in 1999 sent or received transfers of money.7 The transfers amounted to between 20 and 40 per cent of the receiving household’s annual income. Each sending household sent between 5 to 7 per cent of its annual income, implying a number of them combined to help a household that had major contingencies like illness or marriage. Even with modern sources of social insurance such as unemployment benefits and pensions, the community is critical in filling holes that are left by the formal government and market systems.
Facilitating Transactions
Communities facilitate internal trading by monitoring behavior and ostracising defaulters, cutting them off from further transactions and community support.8 Some embed differential treatment of insiders and outsiders into their norms. Anthropologist Douglas Oliver observed that to the Siuai of Solomon Islands, mankind consists of relatives and strangers. ‘Transactions with relatives ought to be carried out in a spirit devoid of commerciality.’ With few exceptions, however, ‘persons who live far away are not relatives and can only be enemies … One interacts with them only to buy and sell – utilising hard bargaining and deceit to make as much profit from such transactions as possible.’9 With such an attitude, it would take a particularly confident outsider to contemplate trading with the Siuai, ensuring outside trades would be few and far between. But that may be the point! Parochial as the attitude may seem, it fortifies the community by strengthening within-community trade and limiting opportunities for members to stray outside.
Encouraging Favours and Resolving Conflicts
Bonds between members are obviously stronger if they grow up together, undergo common socialisation processes and rites of passage, and share common values and traditions. However, bonds can also build between members of a community in a more modern setting where they come together only in adulthood. Indeed, despite having access to a modern legal system, neighbours may rely on community norms to resolve potential conflict because it is cheaper.
Robert Ellikson, a legal scholar at Yale University, studied ranchers in Shasta County in Northern California and found that their community had developed a variety of unwritten norms to deal with various frictions. For example, cattle from one ranch might trespass onto another rancher’s land. If that rancher discovered an animal wearing someone else’s brand, he would inform the owner. The owner, though, might take weeks to pick up his animal in a collective roundup – it is too costly to go fetch each animal as it strays. In the meantime, the rancher would incur costs of hundreds of dollars for feeding the trespassing cattle. Nevertheless, he typically did not charge the owner for this.
Ellikson conjectures this is because in the thinly populated rural areas of the county, neighbours expect to interact with one another on multiple dimensions such as fence repair, water supply, and staffing the volunteer fire station, and these interactions will extend far into the future. Any ‘trespass dispute with a neighbour is almost certain to be but one thread in the rich fabric of a continuing relationship.’ Therefore, most residents expect giving and receiving to balance out in the long run – a shortfall in the trespass account will be offset by a surplus in the fence repair account.
Accounts need not balance over time. When a transfer is necessary to square unbalanced accounts, neighbours in Shasta County prefer using in-kind payments, not money, for the latter is thought ‘unneighbourly’: If one’s goat eats a neighbour’s plants, the neighbourly thing to do would be to replant them, not offer money. Indeed, when one of the ranchers paid to settle a trespass dispute, others rebuked him for setting an unfortunate precedent.10 The point is that neighbours prefer to keep an ongoing cooperative relationship rather than end it through ‘cold hard cash’, which can signal an arm’s-length dealing and poison the atmosphere. It is the web of credit and debit accounts within Shasta County ranchers, settled with favours rather than with money so that no one quite knows what the balance is, that seems to tie the community together.
In every such community, there will be potential deviants, who are happy to take but will not give. Ellikson describes a rising set of penalties for defaulters, starting with adverse gossip within the close community. A besmirched reputation is enough to stop the flow of favours, so most ranchers are very careful not just about adhering to the norms but about being seen to be adhering to the norms. If the deviant does not really care about his good name, aggrieved ranchers may take sterner action like killing the trespassing animals after giving the owner due warning, or reporting the owner to county authorities. While disputes are resolved under the shadow of the law, legal remedies are rarely invoked, and even then, typically against outsiders. As one rancher put it, ‘Being good neighbours means no lawsuits.’11 More generally, as we will see, communities can be diminished by the intrusion of the state, and it is not surprising that Shasta County tries to avoid relying on it.
THE VALUE OF COMMUNITY
It is easy to see why the community is so appealing. Apart from contributing to our sense of who we are, a richer range of transactions can be undertaken within the community than would be possible if everything had to be contractual and strictly enforced by the law. The record of what one does for the community continues to be visible in the community, and it does not vanish into an anonymous marketplace. This leads to greater pride, ownership, and responsibility. The community comes together to raise its young and to support its weak, elderly, and unlucky. Because of its proximity, and the degree of information it receives, the community can tailor help to the specific needs of the situation. It also recognises freeloaders far better than any distant government could and can shut down their benefits. As a result, given any quantity of available resources, it can offer a far-higher level of benefits to the truly needy. Communities therefore aid the individual, preventing them from drifting – untaught, unaided, and unanchored – in life.
The work of economic theorists like Oliver Hart, who won the Nobel Prize in Economics in 2016, offers a related explanation for the economic value of communities. The real world is plagued by the problem of incomplete contracts. We cannot fully anticipate what will happen in the future, and even if we can, we do not have the ability to prove who did what, and when, to the satisfaction of a court of law. We cannot thus write the full range of arm’s-length contracts that would be necessary to deal with all the problems that might arise in real life. For instance, to deal with the problem of stray cattle with explicit arm’s-length contracts, every rancher would have to contract with every other rancher on what ought to be done if his cattle strays, as well as on the necessary payments for services rendered. With little ability to verify when the cattle wondered off the ranch, or what the quality of their treatment was in the hands of the rancher who found them, lawsuits could proliferate. The system of implicit community responsibility and enforcement might be far more effective in protecting cattle and minimising transactions costs than using explicit contracts and the legal system. Communities thus can be more than the sum of individuals who compose them.
Finally, an important modern function of communities is to give the individual in large countries some political influence over the way they are governed, and thus a sense of control over their lives, as well as a sense of public responsibility. Well-structured countries decentralise a lot of decisions to local community government. To the extent that individuals can organise collective political action within the community more easily, it affords them a vehicle