A theory of social custom, of which unemployment may be one consequence

Abstract

This paper examines adherence to social customs. Models of social customs are found to be inherently multi-equilibrial. It is found that social customs which are disadvantageous to the individual may nevertheless persist without erosion, if individuals are sanctioned by loss of reputation for disobedience of the custom. One example of such a social custom is the persistence of a fair (rather than a market-clearing) wage. In this fashion, involuntary unemployment is explained. Introduction There are many social customs whose disobedience under the right circumstances is of pecuniary advantage to the person who disobeys. Furthermore, if the sin of not following a social custom is considered less serious if disobedience is more common, in all likelihood the values responsible for the observance of a social custom are less likely to be passed on from one generation to the next the greater is the disobedience. It might be expected, in consequence, that even in a state of the world in which the beliefs underlying a social custom are universally accepted, some persons with unusual tastes will be attracted by the pecuniary gain from breaking it; this breaking of the social custom will, at least to some extent, undermine the beliefs responsible for its observance; and this undermining of belief will in turn provoke more disobedience, etc. – in such a sequence of increasing disobedience and erosion of belief that in the long run the social custom disappears.