In an interview on The Soulful Science

Your first book is The Company of Strangers by Paul Seabright, which reflects on how amazing it is that we let strangers make our clothes, serve us food, and we even allow someone we don’t know fly the plane we’re on…

It’s really about how the division of labour – which Adam Smith first wrote about in the 18th century – has become so extensive that everything we do in the economy means that we’re tightly connected to a huge number of other people. This is really remarkable if you think about humanity’s evolutionary origins: very tight-knit social circles, where if somebody wasn’t a member of your immediate family or kinship group, you’d probably kill them as soon as you saw them. So this extension of trust to millions of other people who make products and services that we depend on every day is really quite extraordinary. The book is about how miraculous this is – and we normally don’t think about it in those terms very much. Also, how fragile that makes the economy in some ways. The new edition looks in particular at the global financial crisis as a demonstration of the kind of fragility that comes about through those interconnections.

Does that mean the system is at risk, that we might again become suspicious of strangers at times like this?

Paul Seabright isn’t hugely pessimistic: he’s not one of the people who are saying that civilisation is bound to collapse because it’s become overextended and overcomplicated. There are some books that do that – Jared Diamond’s Collapse is a good example of a book that is pretty pessimistic about our ability to sustain the kind of global economy and society that we’ve developed. But in The Company of Strangers Paul Seabright says we need to think about the way human beings relate to each other. We need to think about what we can learn, as economists, from anthropology and sociology, in order to understand how better to govern what we’ve created. Because if you think about it, there are lots of examples of how we don’t have very good rules and systems for making sure that the world economy is well related between countries. It’s still a very nation-state based system.

This is something that people had started to say about globalisation anyway. If you look, for example, at what’s been happening at the Foxconn factory in China…when we think about the standards that those kinds of factories have, compared to the standards in our own country. What do we think about international trade rules that mean that we import things from low cost countries? What kind of intellectual property rules do we have between different countries, where what a US court decides about an American company, in the Google Books case, for example, has implications for writers and artists around the world? So the argument of the book is the need to think about how to do it better and how to draw on psychology and anthropology to allow us to do it better.

Economics isn’t enough; it needs the insight of other disciplines?

That’s right, and although I think the insights of economics are essential, actually, good economists have never thought economics was enough. There’s a kind of caricature about economics, that it’s all about the false assumption that people are rational, calculating machines who don’t care about anybody else. That’s never been true. There was a high tide of economics that was like that in the Thatcher and Reagan era, but that was well over 20 years ago now. For the past generation economists have moved very far away from that kind of caricature. And good economists always drew on history, they drew on mathematics, they understood psychology (even if they didn’t incorporate psychology formally in their models), they were interested in political science and political decision-making. It’s always been a subject that’s been at the cusp of a lot of other disciplines, and I think that interdisciplinary strength has been revived recently and is very much to the fore in a book like Paul Seabright’s.