Catallaxy, key to an Open Society by Sauvik Chakraverti
For a market society, the appropriate political value is not a sense of ‘community’. Rather, it is ‘catallaxy’
The political value of “community” is collectivist. Community lies at the root of communism, socialism and nationalism. It stood behind Nazism, apartheid and white supremacy. It justified “ethnic cleansing” in
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.
The ancient Greeks traded and mingled with all nations around the
The success of any market society lies in its openness and inclusiveness, and not in a narrow sense of community. There is no “chief” issuing commands to all traders. A market society is not a “command economy”. Such a society is strongly individualistic, wherein each trader takes independent decisions and is responsible only to himself for his own gains and losses. Further, such a society is marked by “impersonality”. There are good manners, yes, but there is no personal relationship between trader and customer.
Going deeper, a market society is characterized by “competitive individualism”: we all compete as sellers; we all compete as buyers. We all realize that we prosper when this catallactic competition is at fever pitch. We gain when there are a huge number of sellers as we go to buy. We gain when there are a huge number of buyers as we go to sell. The bazaar that is humming with catallactic energy is the crowded bazaar, not the vacant one. Thus, we all realize that openness matters. A successful catallaxy is open to strangers from all parts of the globe and hospitable towards them. It is not a closed community.
As we witness the economic decline of Western nations, we must realize that the primary cause of this decline is their misplaced faith in community. All of them operate “national economies” with national fiat currencies, central banking, immigration barriers, protectionism and rampant interventionism. Socialist India follows the same path.
However, the great thing about
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.
Thus, there is a “natural order” in all cosmopolitan open catallaxies. Posses of armed policemen are not required to “maintain order” in any crowded marketplace anywhere in the world. This order exists on its own. Without the “narrow domestic walls” of community, the idea of catallaxy solves the social problem for all individuals, while also uniting humanity in a rational, natural order.
Sauvik Chakraverti is an author and columnist. He blogs at Sauvik-antidote.blogspot.com
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