Catallactics matters

Sauvik has great piece Catallaxy, key to an Open Society in Mint today.

Some excerpts:

• Yet, community is a bogus value in a market society, which, in order to succeed, must be urban and cosmopolitan. Community makes sense in a village comprising one caste or in a small, exclusive tribe where everyone knows everyone else. It makes no sense in a city where individuals operate, peacefully trading with complete strangers. For such a society, the appropriate political value is “catallaxy”, which means an open trading arena. But first, a little about this word.

• In the 20th century, Austrian economists alone used the word “catallactics” to denote the science of exchange. In Ludwig von Mises’ Human Action(1949), the section dealing with traditional economic issues is titled “Catallactics”. Derived from the Greek word for “exchange”, Mises mentions that catallactics was first used by the British economist and theologian Bishop Whately in the previous century, which means the word was well known to the classical political economists. Mises’ student from his Vienna years, Nobel laureate Friedrich Hayek, confessed to having “fallen in love with this word”, for which he discovered two additional meanings that the ancient Greeks ascribed to it: first, “to welcome into the community”; and second, “to turn from enemy into friend”. These connotations of the word indicate its importance to an Open Society.
  
  
• Hayek defines community as “a common recognition of the same rules”. Such rules can be religious or tribal—or they can be secular. In an open catallaxy, only one rule need be recognized by all: private property. Happily enough, as Hayek also points out, this rule has been the cornerstone of open markets for millennia. Whenever people exchange, they exchange properties. Thus, most trade takes place without legal paperwork of any kind. Hayek said that the rule of private property operates in all of us “between instinct and reason”. We follow the property rule without knowing why. We have given up the instinct to plunder, to snatch and grab—but we don’t know why.