Money and Intimacy

by Russ Roberts on February 26, 2007

in Podcast

Should you mix friendship and money? Family and money? In the latest EconTalk, I talk with sociologist Viviana Zelizer about these issues and how differently economists and sociologists look at money, family and exchange. In the course of the conversation, we discuss this quote from Hayek’s The Fatal Conceit:

Part of our present difficulty is that we must constantly adjust our
lives, our thoughts and our emotions, in order to live simultaneously
within different kinds of orders according to different rules. If we
were to apply the unmodified, uncurbed, rules of the micro-cosmos
(i.e., of the small band or troop, or of, say, our families) to the
macro-cosmos (our wider civilisation), as our instincts and sentimental
yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once.

[Italics in the original]

Zelizer argues that in general, it’s a mistake to view money and intimacy as two separate worlds. As an economist, I think, she’s basically right—it’s not productive to view them as two separate worlds. But as a parent, husband, brother and son, I’m not so sure. So in a positive sense—how the world is—it’s good to remember that these worlds often intermingle. It can be fruitful to view a family as a firm, for example where goods of various kinds, some tangible and some intangible are exchanged. As a normative question—how we want the world to be (and this is what I think Hayek was talking about)—we don’t want to treat intimacy as a commodity.

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{ 1 comment }

Matt C. February 26, 2007 at 12:08 pm

One of the worst things that an entrepreneur can do is make business personal. Sure there is a relationship many times between the produce of a good and the consumer. No matter how personal you want to keep things, if you don't pay attention to the bottom line or find the efficiencies in other places that the family member can't produce, you are sunk.

Hernando DeSoto talked about his at his lecture at the Heritage Foundation on a recent trip to the US. He stated that many times in the Third World countries, entrepreneurs make the mistake of seperating the business from family.

At the same time personal relationships are important for establishing trust in business relationships. The Jewish diamond traders are a good example, they trust each other, but they don't let personal relationships get in the way of business.

My father-in-law owns a body shop and he was good friends with his paint supplier. He found some other producer that provide the same quality paint at a lower price. In order for him to stay competitive in the market, no matter how close he was with his friend, business had to come before friendship.

I look forward to listening to the podcast!

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