There is a persistent tension in the social sciences between the theories we construct and the evidence we compile about human interaction in the world around us. It is most striking in economics, where the contrast between the logical implications of neoclassical theory and the performance of economies (however defined and measured) is startling. Certainly neoclassical theory has been a major contribution to knowledge and works well in the analysis of markets in developed countries. At the other end of the scale, however, it does not provide much insight into such organizations as the medieval manor, the Champagne fairs, or the suq (the bazaar market that characterizes much of the Middle East and North Africa). Not only does it not characterize these organizations' exchange process very well, it does not explain the persistence for millennia of what appear to be inefficient forms of exchange.

The disparity in the performance of economies and the persistence of disparate economies through time have not been satisfactorily explained by development economists, despite forty years of immense effort. The simple fact is that the theory employed is not up to the task. The theory is based on the fundamental assumption of scarcity and hence competition; its harmonious implications come from its assumptions about a frictionless exchange process in which property rights are perfectly and costlessly specified and information is likewise costless to acquire.