New urban communities. Exploring the micro and macroeconomic analytical implications

Maria Patrizia VITTORIA, IRISS/CNR - Naples (Italy)

Intro

The term Community is generally used to refer to different forms of associative life, from the primordial social aggregations, which arose around characteristic traits, customs and cultures of a certain territory, to cases of practices and knowledge or even specific interests acquired and shared via web.

Further elements of distinction, among the most recurrent in contemporary literature, refer to the nature of the links between the people involved. Direct or indirect links, including one or two-way links, i.e. those that describe communication flows that only go from one subject to another or that wait for feedback to address a participatory decision.

The immediate association to the concept of network is therefore possible. What counts is not only the number of nodes and the nature of the links, which is useful to visualize the morphology, but also if there are pacts, agreements, past agreements, which establish methods of management and conduct, where one of the basic conditions is to define the rules of access.

In any case, they will always be mutually exclusive ties. This is to say that any community, however 'open' it may be, requires the assumption of a cost of access, whether expressed in monetary terms or only in emotional or cognitive terms^[1]

1. The micro analytical level

Community microeconomics traditionally focuses on the analysis of the dynamics underlying the individual's choice to join a group. With this, it has generated different categories of Communities depending on whether they were considered to be of an associative nature (à la Putnam) or based on specific interests and convenience (à la Olson). In fact, the term "Community" had positive meanings, deriving, precisely, from the idea that social ties, based on trust, had positive effects on society and economic development or, on the contrary, negative, or even hindering, limiting the growth of the economy. In the latter situation, the various reasons why collective life frustrates the satisfaction of individual preferences are argued. For example, because it is impossible to aggregate the opinions of individuals; or also because it is inevitable that leadership encounters problems of representativeness (principal-agent); or, again, because groups create insider-outsider dynamics, which prevent the mobility of productive factors that is necessary for long-term economic growth.

In this context, it should be included, among others, the important Olson’s contribution (1965), who argued that all social aggregations, starting from informal and up to organized groups, are affected by defects in the search for convenience (rent-seeking), which limit growth. More recently, behaviourist theories have come to highlight a positive role for communities, that is, a mechanism for empowering individual action.

The analysis, in this field, is built on different starting hypotheses where the idea that the individuals think only of maximizing their own utility is replaced by the consideration that the same, instead, give more weight to the construction-affirmation of their own identities. Thus, one of the community action’s greatest advantages is linked to the possibility of triggering processes of preference emergence^[1].

In particular, the effect - it is said - may arise from the possibility of adhering 'freely' or to choose, to opt for participation in specific processes. This makes the actor more aware of what he actually wants.

When we know our preferences, we are also willing to mobilize all our efforts to try to satisfy them. This promotes growth and efficiency ^[2]. This view, it is easy to imagine, will have further interesting implications in terms of coordination costs. In addition, to the traditional belief that the discovery of one's own preferences conflicts with belonging to a community, these authors oppose the belief that the conflict itself can be considered outdated when preferences are intrinsically related to each other^[3].

It is not by chance that the main glue that holds these social aggregations together is the strong motivational proximity between the actors. At the same time, the element allows their free adhesion.

Communities of this kind are also spaces for experimentation, which facilitate social relations through workshop activities that are open to embracing error ^[4]. In the meanwhile, several authors have proposed and discussed the notion of Epistemic Communities, as actors capable of performing exploratory learning^[5][6][7]. This includes research into how leaders and groups are able to form their views and opinions on economic change^[8].

At an operational level, i.e. action to pursue their own preferences, communities facilitate the translation of ideas into production processes^[1].

Always at this level, that of acting, communities have been seen as areas of mediation of interpersonal exchanges. This type of activity often meets the opportunity to reduce costs. In particular, those costs incurred in acquiring the information, as well as in ensuring the reliability of the information itself.

Community membership, therefore, can witness these forms of transaction, through the reputation effect, the ability of an immediate and synthetic communication (signalling), or that of directing and filtering information flows. Finally, community action can also be facilitated when the community itself is able to exchange knowledge and information through the web. In these cases, what Granovetter (1973) called 'the strength of weak links' occurs frequently.

Finally there would be the final step, that is to say the one that, following the phases of self-recognition and one's own preferences, then that of putting them together and favouring the composition of collective choices-actions, would correspond to obtaining results in such contexts^[2].

Of course, any contribution to economic efficiency made by helping individuals to discover their preferences should then be balanced against the costs of making the resulting choices.

These are therefore the costs, which, the doctrine indicates, may derive from the principal-agent dynamics. Where principals are forced to combine, aggregate their preferences with those of others, in turn possibly different, and find an agent to represent them.

The literature offers several hypotheses for the analysis, linked for example to the size of the groups, but also to the nature of the preferences. Here, moreover, the need to extend searches to know more about which types of preferences are involved, and their minimum threshold for aggregation, is contested.

Finally, we point out that further attention is paid in doctrine to the fact that membership of a community can also facilitate the expression of preferences through the intrinsic ability to give them a voice ^[9][10].

2.The macro analytical level

In more aggregate terms, we wonder at this point how it is possible to move from the advantage/disadvantage of membership that has been reported to operate at the micro level, to a reading that reflects its effects in a broader context.

Obviously, although not in a direct way, different answers are possible depending on the context of analysis in which you decide to push the observation. Where an initial reference should be made to the studies that have focused attention on the dynamics 'social relationships-results'.

Here, the arguments underpinning the positive meaning of the concept of community itself emerged from the literature on Social Capital. Where it is argued that social bonds based on trust form the foundation of social networks and associative life. These links have positive effects on economic and social development. Communities are established to encourage participation, to generate forms of reciprocity that bind individuals to society, to teach mediation and to smooth conflicts^[11].

As we know, however, although these studies have helped to say that cities can distinguish themselves on the basis of their communities, especially if they represent local political culture and forms of political mobilization ^[12], nothing or little can be said about how much these same differences can affect economic performance at the urban level.

It must be acknowledged, indeed, that in an adjacent field of study, the one described by economic sociology, which, in turn, presents an agnostic approach to results, the inevitable presence of social networks in most economic processes has been emphasized more strongly^[13]. The effects may be negative or positive, but in any case, market exchanges are supported by the mechanisms of non-market groups. Some networks of actors are held together by trust, inter-personal relationships, and reputation, all of which can help to lower transaction costs and increase the efficiency of economic coordination, although some can reinforce specific interests and prioritise access to resources.

A synthesis, instead, at the level of behaviourist analysis would require that an estimate of the community welfare effect should be the result of a reasoning based on the sum of the positive/negative effects induced by the action of the groups. A first addendo would be given by the contribution in terms of discovery, i.e. the ability to recognize yourself and what you want.

However, in what way, we ask ourselves, does economics integrate (and aggregate) these variables, until now for the use of behavioural sciences and psychology?

The emotion-decision link is the aspect that links the two contexts of analysis.                                                                                                                              

In particular, the occurrence of situations, to use the term dear to behaviourist economics^[14],as localized facts or local influences, local stimuli, where the adherence to a community, group or network, in which the individual finds himself, represents a specific case, has been said to influence the capacity of decision making ^[15][16]. Thus, it would be a question of associating the idea of free membership with a tool for learning and understanding of ourselves. Where, it would be useful to investigate specific cases and these processes of self-determination.

A second addendo would be represented by the sum of the contribution in terms of the ability to carry out information exchanges, to select efficient choices from a set of preferences, to reduce any transaction costs, or even those resulting from difficulties of coordination, any costs of representation, or even those resulting from parochial behaviour and convenience.

The reasoning, placed in these terms, interests, therefore, welfare economics when questioning the role of self-centred goals (link between free membership and the discovery of one's own identity and, therefore, with the way we define our welfare goals ourselves) than those defined by other influences, including social links^[17][18].

At the level of local development, the fact that, under particular circumstances, membership of groups can help actors to 'know what they want' implies, on a wider scale, that development may depend on the nature of the associative tissue of spontaneous nature^[1]. Meanwhile, because different opportunities can develop depending on whether the "principals" can learn what they actually want.

At this level, the empirical analysis of the effectiveness of urban policies would no longer be based on the question 'whether it is good or bad to have an intense group life in our cities', but on the question 'what would be the 'tasks' expected from community action'^[19]

[1] Seen in these terms, informal communities, when well integrated into the local reality, would play a role similar to that 'desired' by the new regional policy (cfr. Foray, 2017). They would be similar to Schumpeterian development agencies with a free interaction with creative potential, therefore, even with the possibility of failure, error, etc. etc. For an empirical analysis of some Neapolitan craft communities with a similar role, see Vittoria, (2019)^[20].

[1] In this case, it refers to the ability to translate individual preferences into collective action (Acting on what we want), which in open communities is achieved through the assembly and participatory approach.

[2] This would be the behavioural hypothesis that would see communities with free membership contribute to growth and efficiency. Obtaining results (Getting what we want) would follow the condition of greater awareness of yourself and what you want.

[1] In other words, the processes would be among those that would facilitate a greater understanding of what you want (Knowing what we want).