American Scientist

The Company of Strangers: A Natural History of Economic Life. Paul Seabright. xii + 304 pp. Princeton University Press, 2004. $29.95.

Humans are economic animals. Although textbooks often deal with a fictitious Homo economicus guided entirely by rational self-interest, all of us—even economists—know that passions, habits and emotions vie with reason in the daily decision making that keeps up the flow of services and goods. Yet every generation of economists has come to grips in different ways with what Adam Smith referred to as our "propensity to truck, barter, and exchange."

Attempts to integrate economic life into natural history are not new: Early in the 18th century, Bernard Mandeville published several editions of his Fable of the Bees, and in 1759, Adam Smith published his Theory of Moral Sentiments, well before inquiring into the "Wealth of Nations" in 1776. In the 19th century, both Karl Marx and Herbert Spencer tried to incorporate natural selection into their doctrines of social warfare. The transfer of ideas has not been one-sided: Charles Darwin and Alfred Russel Wallace were greatly influenced by Adam Smith and T. R. Malthus. In the 1960s and 1970s, sociobiologists such as E. O. Wilson and William D. Hamilton analyzed costs and benefits of behavioral traits in terms of reproductive success, and John Maynard Smith hijacked game theory, a tool from mathematical economy, to investigate the trial and error of mutation and selection in terms of evolutionarily stable strategies. In return, Maynard Smith's "game theory without rationality" greatly boosted experimental economics and in its newest form led to neuroeconomics, a field in which researchers use functional magnetic resonance imaging to identify zones in the human brain specializing in emotional or rational decision making.

Thus microeconomics, which focuses on the activities of individual people, households or firms, is a branch of psychology, which is a branch of zoology. But microeconomics is definitely not a branch of entomology! Social insects run their states along different lines. One of the major insights of the early sociobiologists was that Mandeville's Fable of the Bees is utterly misleading. The division of labor within a beehive or an anthill is based on close genetic ties: The organisms are a band of brothers (well, mostly sisters), resembling more a single organism than a city-state. Such close relatedness is not required for human cooperation within a firm, a village or a gang.

"Human nature," a dirty word some 50 years ago, has returned in strength and may be used again in civilized discourse on sociology and economics. Recently, some of the best books about it have been written by biologists—for instance, Jared Diamond (The Third Chimpanzee) and Matt Ridley (The Origins of Virtue). What makes The Company of Strangers so remarkable is that this "natural history of economic life" comes from the other side of the hill: Author Paul Seabright is an economist.

The major problem addressed by all these writers is that the human species has not changed much during the last thousand generations. Our "nature," therefore, is that of hunter-gatherers. The puzzle is this: Why is it that we seem to have no problem adapting from small-scale societies to mega-cities within the span of one generation? How do we stand the change?

There are so many aspects to this question that it is hard to know where to begin. What prepared us for music, for instance, or mathematics? Why do we enjoy driving a car, or surfing the Internet? Seabright focuses on one conundrum that is particularly intriguing: How can we cope with strangers?

Our forebears lived in small groups. Only rarely would they have met a stranger. From what little we know of hunter-gatherers, such meetings were no occasion to rejoice, but rather were very tense moments likely to erupt in violence. There seems to be no evidence that the third chimpanzee was anything but a shy, murderous ape. Even when, some 10,000 years ago, humans began to live in settlements, the situation did not change appreciably. In a village, the people all know one another.

But in a city, everyone is surrounded by strangers. Nothing in our past prepared us for this condition. Why don't we get the screaming fits? How do we manage to keep cool when surrounded by thousands or millions of strangers? In fact, it is the opposite situation that seems more threatening. To be alone in a forest is likely to cause some apprehension, especially when the dark settles in. Yet this experience must have been quite common in our evolutionary past.

Is that the explanation? If humans have developed instinctive fears of snakes or spiders, it is because these were common threats. Being lost, cut off from the group, must also have been a frequent danger, and this is why stories of castaways are so thrilling. Maybe we do not abhor cities because they never posed a hazard to our forebears.

Far from feeling apprehensive, most of us enjoy big towns. The lure of the city is captured well in a tale by Edgar Allan Poe, "The Man of the Crowd," whose frenzied hero seems driven across town relentlessly, by an inexplicable passion. In the end, we understand that he is desperately hunting for the rush and bustle of anonymous throngs. The man described by Poe is plainly sick—yet we all share some of his addiction for "the tumultuous sea of human heads." A well-filled theater, a crowded stadium, a buzzing coffeehouse increase our well-being. Even social outcasts seem to feel most at ease within the milling thoroughfare of a large train station. Cities are sexy. Nubile young villagers swarm to them like courting birds to a huge lek. Within a short time their urban foothold takes precedence over their rustic roots.

The human readiness for instant bonding is an evolutionary riddle. A few strangers in a boat, a soccer team or an infantry platoon will quickly develop an in-group feeling, and often a ferocious solidarity directed against outsiders. Change the team, and the loyalties will shift within weeks.

A few repeated contacts in a soup kitchen, a marketplace or a hospital ward can suffice to create a sense of familiarity. Familiarity—the term is telling.

Seabright quite rightly sees in our talent for trusting strangers—for treating them, in his happy phrase, as "honorary relatives"—the glue behind the social institutions that took us from the first enclosed settlements to the global market and from the defense of herds or grain stores to the clash of civilizations—while evolution barely blinked.

As any horse-cab driver in downtown Cairo knows, a horse must be blinkered to navigate the streets, or else the traffic will cause it to shy. We humans seem able to put on our blinkers ourselves, to forget the alien commotion and concentrate on the business at hand. Seabright calls this our tunnel vision, and defines it as the capacity to play one's part in the great enterprise without knowing or necessarily caring very much about the overall outcome. It is an essential requisite for the division of labor, which works mostly without a master plan, and for the blind—or better, blinkered—trust needed for social life among strangers.

The Company of Strangers can be summed up as offering a panoramic view of tunnel vision and its effect on all aspects of human life. There seems to be no place where Seabright is a stranger. He obviously feels as much at home among classical economists as among evolutionary biologists, quotes modern literature and ancient history with equal aplomb, jumps from experimental psychology to political philosophy and draws liberally on his personal memories of places from Ukraine to India. He has chapters on the murderousness of apes and on the information behind market prices, on faking laughter and ruling empires, on gifts and auctions (from slave markets to eBay), on property rights, on water management, on the search for knowledge as division of labor across generations.

The style is impressionistic, covering a huge canvas with a light brush. The chapter on cities, for instance, describes deftly the flair, and the stink, of great cities but relegates their social history to endnotes and references. If the book has a weak point, it is the exceptional facility of Seabright's writing—sometimes his verve threatens to carry him away. But then, this may well be intentional: The book is obviously not meant as an exercise in planned economy, but as an excursion, without blinkers and without apprehension, through a tumultuous crowd of ideas.