Thursday, January 3, 2008

The firm, society, and the government - The beginning

What is the game that these three entities play? What is its purpose? Let me go back to about... say 6500 BC. Life was simple back then.

It is almost certain that society came first as a natural means of survival of a group. This naturally led to inter-dependence and using a set of shared and limited resources.

Shared resources lead to conflict and hence it is safe to say that there was a set of rules created to share these resources and resolve this conflict. It is therefore safe to assume that some sort of government came next. Government... religion... I will not quibble with semantics. The role of government was then to provide a level playing field for society to use shared resources.

Once there was a relatively level playing field, makind I assume, moved on to greater things. Specialization. I can hunt, you can cook... we have a deal.. business therefore probably came last. Its purpose was to create wealth and increase the wealth of the society as a whole.

This is a key point. Individuals did not start trading because they wanted to be rich. Individuals started trading because they were dependent on each other to survive. There was a realization that by doing what each did best, the group as a whole was better off.

Right... to summarize...
1) society was created first as a means for survival
2) government was formed to regulate the use of the resulting set of shared and limited resources
3) individuals specialized in order to make the set of contributors to society better off

And to answer my previous question.. 'What is the game that they are all playing?'
'The game is survival... of the group of a closed set of individual contributors called the society'.

These are my Lemmas for this section... naturally if one disagrees at this point, it makes the subsequent conversations harder....

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