Contractual Bonds and Hegemonic Bonds

I noted on June 26 that Virginia Held contrasted the contractual relations of “economic man” or homo economicus with the relations between mothers and their children.

Ludwig von Mises compared contractual bonds with hegemonic bonds.  He said there are two kinds of social cooperation – one by virtue of contract and coordination, the other by virtue of command and subordination or hegemony.  The two most important hegemonic bonds are the family and the state. What differentiates the hegemonic bond is the scope in which the choices of the individuals determine the course of events.

“Any kind of human cooperation and social mutuality is essentially an order of peace and conciliatory settlement of disputes. In the domestic relations of any societal unit, be it contractual or hegemonic bond, there must be peace” (Human Action, 3rd revised edition 195-97).

He says little about contractual bonds. They are symmetrical, whereas hegemony is asymmetrical. The contractual order of society is an order of right and law. He doesn’t say so, but I think contractual bonds – including unwritten contracts -- are an important part of the marketplace and economic production. He does not describe hierarchies within business firms as hegemonic. However, bosses or supervisors do have control and influence over other people.  A few examples are work assignments, organization, setting priorities, promotions, and compensation. The higher a person in the hierarchy of a firm, the more authority and control that person generally has. His or her direction and decision-making exercise more control over the course of events within the firm and for the firm in the marketplace. The big boss or CEO has the most authority and control.