• Networks;
  • Stability;
  • Social division of labour;
  • Specialisation

Xiaokai Yang's theory of economic specialisation under increasing returns to scale is a formal development of the fundamental Smith-Young theorem on the extent of the market and the social division of labour. In this theory specialisation—and thus the social division of labour—is firmly embedded in a system of perfectly competitive markets. This leaves unresolved whether and how such development processes are possible in economies based on more primitive, non-market organisations.

In this paper we discuss a general relational model of economic interaction. Within this non-market environment we discuss the emergence of economic specialisation and eventually of economic trade and a social division of labour. We base our approach on three levels in organisational development: the presence of a stable relational structure; the presence of relational trust and subjective specialisation; and, finally, the emergence of objective specialisation through the institution and social recognition of economic roles.