Stability, Specialization and Social Recognition

R.P. Gilles, E.A. Lazarova, P.H.M. Ruys

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Yang s theory of economic specialization under increasing returns to scale (Yang 2001) is a formal development of the fundamental Smith-Young theorem on the extent of the market and the social division of labor.In this theory specialization and, thus, the social division of labor is firmly embedded within a system of perfectly competitive markets.This leaves unresolved whether and how such development processes are possible in economies based on more primitive, nonmarket organizations.In this paper we introduce a general relational model of economic interaction.Within this non-market environment we discuss the emergence of economic specialization and ultimately of economic trade and a social division of labor.We base our approach on three stages in organizational development: the presence of a stable relational structure; the presence of relational trust and subjective specialization; and, finally, the emergence of objective specialization through the social recognition of subjectively defined economic roles
Original languageEnglish
Place of PublicationTilburg
Number of pages31
Publication statusPublished - 2006

Publication series

NameCentER Discussion Paper


  • networks
  • stability
  • social division of labor
  • specialization


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