Economics of the community mechanism

This paper discusses the importance of the community mechanism that complements the market and power mechanisms in an economic system during an era of crisis, defined as a mechanism for resource allocation by which at least one person proposes voluntary cooperation, and the proposal is not rejected. While this community mechanism can function alongside homo economicus in win-win situations, it can be further activated with social preferences for altruism and reciprocity and with norms or worldviews that encourage cooperation. Other factors that relate to these include the character strengths that contribute to community and society known as virtues, with the concept of wellbeing related to virtues being known as eudaimonia. Some aspects of the acquisition of virtues can be viewed as changing preferences, and there is empirical evidence suggesting changes in trust relate to changes in preferences. Leadership is an example of the virtue of justice, and servant leadership seems important for the community mechanism, as does perspective taking. For evaluating policies, normative economics based only on consequentialism may not be sufficient, and virtue ethics seems essential when the community mechanism is important.