This site advances a structural theory of economic organization in which societies are understood as collections of bounded groups that govern shared resources internally while competing externally through privately capturable returns. The central claim is that economic order emerges from a sorting mechanism: individuals and activities are continually reallocated between cooperative group settings and market-like domains based on the relative performance of group-public assets versus private opportunities.
Within this framework, groups are defined not merely by identity or culture, but by rule-governed access to non-divisible or imperfectly divisible assets. Such assets—landed estates, commons, institutional authority, epistemic legitimacy—function as group-public goods: they are accessible to members, governed by internal norms, and resistant to direct pricing. Participation confers benefits that are distributed through social rules rather than markets, creating a publicness that is endogenous to group membership rather than universal.
Outside these groups, individuals engage in domains characterized by alienable, liquid, and privately capturable returns. These domains—markets, trade, professional careers, or platforms—permit competition unconstrained by group obligations and reward individual optimization. The boundary between group and market is therefore not fixed; it is continuously reshaped by changes in relative returns, enforcement capacity, and legitimacy.
The theory’s explanatory power lies in showing how publicness and competition are not opposites, but complementary outcomes of the same sorting process. Internally, groups suppress price signals and individual appropriation in order to stabilize shared assets and reduce coordination costs, consistent with Ostrom’s findings on common-pool resource governance. Externally, groups compete for members, status, and influence through performance, innovation, and access to higher-return opportunities, aligning with North’s account of institutional evolution driven by differential returns and path dependence.
This mechanism also integrates Mises’s praxeological insight that all outcomes originate in individual action. Individuals are not assumed to act altruistically or selfishly in the abstract; rather, they respond to institutionally structured opportunity sets. Actions that appear cooperative within the group—maintenance of shared assets, adherence to norms, acceptance of unequal internal distribution—are rational given the group-public payoff structure. Conversely, actions that appear self-interested outside the group reflect the higher marginal returns and certainty of private capture. The theory thus avoids moralizing distinctions between cooperation and self-interest, treating them as context-dependent expressions of action under differing institutional constraints.
Historically, the theory explains periods of social transition as moments when private returns in external domains outpace the productive or legitimating capacity of group-public assets. Under such conditions, groups become custodial rather than generative: obligations persist while returns stagnate. Individuals increasingly sort into private domains, weakening internal enforcement and prompting pre-commitment maneuvering, ideological rationalization, or reform efforts. This dynamic aligns with classical coordination problems such as Rousseau’s Stag Hunt, while extending them beyond static games into historically embedded institutional change.
By framing economic structure as an evolving ecology of groups and markets linked through a sorting mechanism, this theory bridges literature on institutions, collective action, and market pricing. It accounts for why public goods are often effectively governed at intermediate group scales, why markets excel at allocating marginal resources across groups, and why systemic change is typically gradual, conflictual, and legitimacy-lagged rather than abrupt or purely efficiency-driven.
In sum, the proposed framework offers a unified explanation for how societies organize cooperation internally while sustaining competition externally, and how shifts in resource productivity drive the continual reconfiguration of social commitments and economic structures.
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