ABSTRACT
People in business have always understood that a framework of reciprocity was crucial to their affairs. The contractual relationships of modern industrial economies, as Durkheim pointed out in his classic study of the division of labour,1 depend upon a moral and legal consensus that makes them trustworthy. Business communities use intermarriage, churches, sports, secret societies, guilds and clubs to foster a social reciprocity that facilitates mutual support and limits the disruptiveness of competition. They use government to protect prices, money and markets. Employers negotiate contracts with their employees, and try to cultivate a sense of reciprocal loyalty, to create stability and continuity of skill. An efficient market depends upon mutual understandings, sanctions, regulations which facilitate the process of exchange, just as efficient production depends upon reliable understandings between workers and managers. Without these, as I found when I studied the development of African businesses in Kenya, shortly after independence, the growth of both production and markets is stunted. The productive African businesses could not expand, despite profits to reinvest, because they did not know how to create relationships with their employees in which they could trust, once the business grew beyond their immediate oversight. The retailers were caught in a corresponding dilemma: they could not expand their market without giving credit, but the customs and expectations of their communities did not allow for any effective sanctions against default.2 Conversely, the Asian businesses in Kenya, deeply imbedded in caste and kinship, could sustain credit networks stretching from an up-country grocery store to suppliers in Bombay.
