Contracts

Excerpt from Absolutization of the Market by Bernard Barber:

In [market exchange] the values and norms prescribe that each of the role partners in the interaction must behave like what has been called homo economicus, that is, as an economizing, rationalizing individual – considering only price, buying cheap and selling dear, treating all buyers and sellers on the market impersonally and honestly. While there has sometimes been a tendency to psychologize this notion of homo economicus, to treat it as a class of motives, to assume that when Adam Smith spoke of “man’s propensity to truck, barter, and exchange,” he was imputing biological instincts or psychological motives rather than speaking merely descriptively, it is essential to understand that market exchange behavior in the relevant situations is prescribed by values and norms, regardless of motivation, and that it depends for its possibility on a definite set of institutional arrangements. Thus, the great sociologists from Durkheim forward have stressed the institution of contract, what Durkheim called the “non-contractual element in contract,” as an indispensable component of market exchange structures and processes. Market exchange woks only if honesty is institutionalized and further supported, if either confusion of understanding or deviance occur, by a whole institutionalized law of contract. Maine had hold of a central sociological fact when he asserted that previous societies had been societies of status and that the modern world was a world of contract. Status prescribes reciprocal and redistributive types of exchange; contract prescribes the market.