Money and Markets: Essays in Honor of Leland B. Yeager

NotesEthnic conflict and the economics of social cooperation 237* This paper was especially prepared for a session “The Humble Truth I: HonoringLeland Yeager,” held at the Southern Economic Association meetings in New Orleans,November 2004. An earlier version of this paper was presented at the SouthernEconomic Association meetings in November 1996 in a session entitled “Freedom,Trade and the Nation State.” That version was entitled “Ethnic Conflict and theMacabre Logic of National Economic Efficiency.” Leland Yeager was my critic. Hefound my remarks stimulating and commented at great length about the importance ofthis topic. At that time I did not know about his forthcoming treatment of related topicsunder the title Ethics as Social Science: The Moral Philosophy of Social Cooperation (Cheltenham,England: Edward Elgar, 2001). It is with great pleasure and respect for his greataccomplishments as a professor, scholar, and mentor that I dedicate this revised versionof the earlier paper to this Festschrift on the occasion of his 80th birthday. I am solelyresponsible for what follows, and I do not mean to imply that Professor Yeager agreeswith these ideas or my general approach, but only that I have benefited greatly from ourdiscussions and his criticisms of earlier versions.1 In a market setting, refusing to hire a minority worker when it is profitable to do soamounts to an unwise business decision but this behavior cannot be ruled out at all. AsHampsher-Monk points out, in a market setting consumer utility is what is importantand there is nothing to stop a consumer from trading off some portion of his or her networth for avoiding the displeasure of having to cooperate with a minority. Sowellimagines a large monopoly or conspiracy of the majority group coming together for thepurpose of forcing the wages of the minority group down so the discrimination will befinancially profitable in addition perhaps to exclusionary attitudes (see the referencessupplied in the text).2 Hayek wrote:[Some beliefs] adapted to life in the small roving bands or troops in which the humanrace and its immediate ancestors evolved during the few million years while thebiological constitution of homo sapiens was being formed. These genetically inheritedinstincts served to steer the cooperation of the members of the troop. ... Theseprimitive people were guided by concrete, commonly perceived aims, and by asimilar perception of the dangers and opportunities – chiefly sources of food andshelter – of their environment. [But modern society] and the existence of mankind inits present size and structure are the [result of] rules of human conduct that graduallyevolved ... These rules are handed on by tradition, teaching, and imitation ratherthan by instinct, and largely consist of prohibitions (“shalt not’s”) that designateadjustable domains for individual decisions ...(Hayek 1988: 11–12)3 As early as 1919, the great Austrian economist Ludwig von Mises pointed out that anation is never a single race and that it is a shared language that is at the basis for anynation, not territory (Mises 1983 [1919]: 38–45). Mises pointed the way towards themodern sociological understanding of nation and away from Adam Smith’s uses of theterm. Unfortunately, I shall not be able to do full justice to Mises’s valuable contributionsin this paper and shall leave this for another time.4 Michael Mann offers a more qualified set of definitions as follows:An ethnicity is a group that defines itself or is defined by others as sharing commondescent and culture. So ethnic cleansing is the removal by members of one group ofanother such group from the locality they define as their own. A nation is such a groupthat also has political consciousness, claiming collective political rights in a giventerritory. A nation-state results where such a group has its own sovereign state. Not