Generation Bubble

Social Distortion: Wishing Relations Away

The density of social relations necessarily complicates economic transactions, but the results from this are not necessarily positive or negative, just difficult to predict or extrapolate from. In some cases, social relations become social capital — the golf games among the power elite; the inside information passed at lunches. In some case they engender sweetheart deals between contractors. They preempt excessive lawyering. In other cases they constitute an insulating web protecting a community from outsiders. Social relations prompt mimetic purchasing, determine the relative value of positional goods and the degree of conspicuous consumption, the general usefulness of consumerism in signaling. (If no one sees you in your American Apparel, was it worth putting it on?) Social relations likely amplify the biases identified by behavioral economics. All these contingencies play into how goods are priced, contracts are drawn up, and arrangements are settled — rendering supply-demand-equilibrium models much less useful in explaining actual economic behavior.