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Stability, Specialization And Social Recognition

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Author Info

  • ROBERT P. GILLES

    ()
    (Department of Economics, Virginia Polytechnic Institute & State University, Blacksburg, VA 24061, USA)

  • EMILIYA A. LAZAROVA

    ()
    (School of Management and Economics, Queen's University Belfast, 25 University Square, Belfast BT7 1NN, UK)

  • PIETER H. M. RUYS

    ()
    (Center for Economic Research and Department of Econometrics, Tilburg University, Warandelaan 2, P.O. Box 90153, 5000 LE Tilburg, The Netherlands)

Abstract

Yang's theory of economic specialization under increasing returns to scale (Yang, 2001) is a formal development of the fundamental Smith-Young theorem on the extent of the market and the social division of labor. In this theory, specialization — and thus, the social division of labor — is firmly embedded within a system of perfectly competitive markets. This leaves unresolved whether and how such development processes are possible in economies based on more primitive, non-market organizations.In this paper we introduce a general relational model of economic interaction. Within this non-market environment we discuss the emergence of economic specialization and ultimately of economic trade and a social division of labor. We base our approach on four stages in organizational development: a primordial stage of chaos; the emergence of a stable relational structure; the emergence of relational trust and subjective specialization; and, finally, the emergence of objective specialization through the social recognition of subjectively defined economic roles. In turn, this paves the way for the introduction of market institutions.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Division of Labor & Transaction Costs.

Volume (Year): 02 (2007)
Issue (Month): 02 ()
Pages: 83-109

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Handle: RePEc:wsi:dltcxx:v:02:y:2007:i:02:p:83-109

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Related research

Keywords: Networks; stability; social division of labor; specialization;

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References

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  1. Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Szilvia Papai, 2000. "Unique Stability in Simple Coalition Formation Games," Econometric Society World Congress 2000 Contributed Papers 1537, Econometric Society.
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  6. Partha Dasgupta, 2005. "Economics of Social Capital," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages S2-S21, 08.
  7. Sun, Guang-Zhen & Yang, Xiaokai & Zhou, Lin, 2004. "General equilibria in large economies with endogenous structure of division of labor," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 237-256, October.
  8. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472 Elsevier.
  9. Robert Gilles & Dimitrios Diamantaras & Pieter Ruys, 2003. "Optimal design of trade institutions," Review of Economic Design, Springer, vol. 8(3), pages 269-292, October.
  10. Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 912-50, October.
  11. North, D-C, 1997. "The Process of Economic Change," Research Paper 128, World Institute for Development Economics Research.
  12. Cheng, Wenli & Yang, Xiaokai, 2004. "Inframarginal analysis of division of labor: A survey," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 137-174, October.
  13. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  14. Robert P. Gilles & Dimitrios Diamantaras, 2005. "New Classical Economics: Towards A New Paradigm For Economics?," Division of Labor & Transaction Costs (DLTC), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 35-56.
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Citations

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Cited by:
  1. Robert P. Gilles & Emiliya Lazarova & Pieter H.M. Ruys, 2006. "On Socio-economic Roles and Specialization," Tinbergen Institute Discussion Papers 06-035/2, Tinbergen Institute.
  2. Gilles, R.P. & Lazarova, E.A. & Ruys, P.H.M., 2008. "Stable Economic Cooperation: A Relational Approach," Discussion Paper 2008-25, Tilburg University, Center for Economic Research.
  3. Gilles, R.P. & Lazarova, E.A. & Ruys, P.H.M., 2011. "Economic Institutions and Stability: A Network Approach," Discussion Paper 2011-084, Tilburg University, Center for Economic Research.

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