Doing business with neighbors

Awhile back I claimed that business practices were developed to make it possible for us to trade with folks who aren’t our neighbors. While reading an article by Malcolm Gladwell, pointed out by Cindy Rollins, I came across a passage that I think backs up my claim:

One of the reasons that the Parsi in India, the East Asians in Africa, the Chinese in Southeast Asia, and the Lebanese in the Caribbean, among others, have been so successful, sociologists argue, is that they are decoupled from the communities in which they operate. If you are a Malaysian in Malaysia, or a Kenyan in Kenya, or an African-American in Watts, and you want to run a grocery store, you start with a handicap: you have friends and relatives who want jobs, or discounts. You can’t deny credit or collect a debt from your neighbor, because he’s your neighbor, and your social and business lives are tied up together. As the anthropologist Brian Foster writes of commerce in Thailand:

A trader who was subject to the traditional social obligations and constraints would find it very difficult to run a viable business. If, for example, he were fully part of the village society and subject to the constraints of the society, he would be expected to be generous in the traditional way to those in need. It would be difficult for him to refuse credit, and it would not be possible to collect debts. . . . The inherent conflict of interest in a face-to-face market transaction would make proper etiquette impossible or would at least strain it severely, which is an important factor in Thai social relations.

The minority has none of those constraints. He’s free to keep social and financial considerations separate. He can call a bad debt a bad debt, or a bad customer a bad customer, without worrying about the social implications of his honesty.

Gladwell’s article discusses how adversity can be beneficial in shaping a man’s character and business skills. He makes another point that any parent should spend some time pondering:

In one study, conducted in Britain, eighty per cent of dyslexic entrepreneurs were found to have held the position of captain in a high-school sport, versus twenty-seven per cent of non-dyslexic entrepreneurs. They compensated for their academic shortcomings by developing superior social skills, and, when they reached the workplace, those compensatory skills gave them an enormous head start. “I didn’t have a lot of self-confidence as a kid,” Orfalea [founder of Kinko’s] said once, in an interview. “And that is for the good. If you have a healthy dose of rejection in your life, you are going to have to figure out how to do it your way.”

There’s no question that we are less than comfortable with the claims that people like Schwab and Orfalea make on behalf of their disabilities. As impressive as their success has been, none of us would go so far as to wish dyslexia on our own children. If a disproportionately high number of entrepreneurs are dyslexic, so are a disproportionately high number of prisoners. Systems in which people compensate for disadvantage seem to us unacceptably Darwinian. The stronger get stronger, and the weaker get even weaker. The man who boasts of walking seven miles to school, barefoot, every morning, happily drives his own grandchildren ten blocks in an S.U.V. We have become convinced that the surest path to success for our children involves providing them with a carefully optimized educational experience: the “best” schools, the most highly educated teachers, the smallest classrooms, the shiniest facilities, the greatest variety of colors in the art-room paint box. But one need only look at countries where schoolchildren outperform their American counterparts—despite larger classes, shabbier schools, and smaller budgets—to wonder if our wholesale embrace of the advantages of advantages isn’t as simplistic as Carnegie’s wholesale embrace of the advantages of disadvantages.

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One thought on “Doing business with neighbors

  1. But maybe the problem is not in the neighbours but in the “business model”. In the capitalism itself. Maybe it’s not as “natural” as it seems.

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