The Clan and the Corporation: Sustaining Cooperation in China and Europe
CESifo, Munich, 2015
CESifo Working Paper No. 5233
![](https://cesifo.org/DocImg/cesifo1_wp5233.jpg?c=1689237132)
Over the last millennium, the clan and the corporation have been the loci of cooperation in China and Europe respectively. This paper examines - analytically and historically - the cultural and institutional co-evolution that led to this bifurcation. We highlight that groups with which individuals identify are basic units of cooperation. Such loyalty groups influence institutional development because intra-group moral commitment reduces enforcement cost implying a comparative advantage in pursuing collective actions. Loyalty groups perpetuate due to positive feedbacks between morality, institutions, and the implied pattern of cooperation.
Fiscal Policy, Macroeconomics and Growth
Behavioural Economics