It takes a good deal of courage to depart much from Adam Smith. The great economist philosopher once stated that man is an animal who makes contracts. Others have pointed out that man is, in this way, unique and in particular distinguishable from say, dogs.
I’m not so sure. The Christmas break has given me a chance to think more carefully about what we can learn from the ubiquitous dog habit of “hiding things”. Bix (Beiderbecke fame) the “local subject” griffon does plenty of hiding – but with discrimination.
Not everything is to be hidden. Dried pigs ear are especially prized. Dried hide bites less so. Other bits and pieces fall in between. What does this tell us?
For a start the dog has the ability and the inclination to value assets, to value them differently one to another, to value them relatively in respect of one another and (presumably) tastes. These values seem to dictate certain behaviours.
Secondly, he appears able to make sense of the value of time, discounting and net present values (in this he is ahead of Russell Norman). Thus one buries some assets for the future since the NPV of consumption right now is below that of other items to be eaten right now – better to save.
A third point is the implication that Bix grasps opportunity cost. The opportunity costs – the sacrifice in time that could be spent barking, chasing cats and other activities – is simply not worth the candle for a bit of dried hide. A pigs ear is a different matter.
Notice too the grip he has on substitutes here. The price elasticity of a pigs ear is clearly lower (in his subjective valuation) than the ever substitutable commodity – any old piece of dried animal hide readily obtainable in the here and now.
Finally, in this first brush with dogonomics, notice that he has a grasp of the significance of private property rights. Hiding places have value – since it is monopoly possession of that knowledge which ensures that the value of the asset is maintained through time.
It is then rational to incur the significant transaction costs involved in finding a hiding place, silent and careful hiding assets so that others do not notice and are unable to easily misappropriate the property in question.
All the elements of trade are here then….. efficient running of the dogonomy (and thus the maximising of dog utility) depends, as in other economies, on respecting the fundamental rules. This means not attenuating property rights by interfering with inappropriate leashes, or through undue command and control, and certainly not by arbitrary re-distributions of wealth .
It seems that to call one’s dog Marx would be to risk a serious labelling error.