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February, 1998 -- What are the facts of reality that give rise to the concept of "loyalty"?
Notice, first, that the objects of loyalty are human and institutional. One is loyal to a friend, an organization, a spouse, a country. However dedicated a person may be to his work, he is not "loyal" to it.
Notice, further, that loyalty characterizes a person in virtue of some correlative role: a husband is loyal to his wife; an employee to his employer; a citizen to his country. Such relationships need not be totally exclusive: a person may be loyal to all his friends; a customer to all his suppliers. But a person is not loyal to everyone, in the way that he is honest with everyone. In particular, a person cannot be loyal to his friends and to their adversaries; he cannot be loyal to his suppliers and to their competitors.
Why should this be so, if interests do not conflict? The answer is that fundamental interests do not conflict, but concrete goals may. And it is amid the clash of goals that one speaks of a loyal friend or a loyal spouse.
These observations provide the basis for a definition of "loyalty": It is the recognition that one best serves one's interests by forgoing actions contrary to the goals of another person or institution, because one has a valuable, ongoing relationship with that person or institution. Thus, a loyal husband may forgo an invitation to golf with friends because it conflicts with his wife's goal of celebrating her mother's birthday.
(Numerous analogous types of loyalty also exist. For example, one may speak of loyalty to one's values rather than to a person. But that is simply the virtue of integrity. Or, one may minimize the actions one takes contrary to a former partner's goals. Here, though, the purpose is not to optimize the value of the relationship—there is none—but to optimize the value one gets from an untarnished memory of the former relationship.)

Relationships as Trade

Is a relationships that requires loyalty from the two parties compatible with the view of a relationship as a trade? Why should a customer not tell his supplier: "When you're the best, we'll trade. When you're not, I'll go elsewhere. No hard feelings." Why should a husband not tell his wife: "When we want to do things together, we will. When not, not. No hard feelings." How can one optimize his profit from a relationship if he eschews the trader's characteristic detachment from the other party and his goals?
The following mundane case answers the question. A person who loyally shops at his neighborhood grocery store is nominally exchanging money for food. But in fact, he is simultaneously engaged in numerous other exchanges. For example, as a loyal customer, he may be receiving special friendliness and recommendations from the personnel. More important, by nurturing the relationship he is laying the basis for receiving such values in the future, since greater friendliness and concern exists between acquaintances than between strangers.

Loyalty and Selfishness

This analysis suggests why people make two closely related mistakes regarding loyalty. The first is to look upon loyalty as a trait displayed only occasionally. Specifically, many people see loyalty as something that exists only in the face of a major temptation. The explanation for this error is that, usually, the loyal customer seems to act more or less like any other regular customer. His behavior is striking to casual observers only when a special temptation arises, say, a comparable store opening up much closer to his home. Other customers abandon their former store for the more convenient one. The loyal customer does not, and those who observe such resistance to temptation say that that is the meaning of loyalty.
This perception, that loyalty is a trait exhibited only occasionally and in contrast to typical economic behavior, leads to a second error: that loyalty is undertaken either as a selfless duty or as indulgence in irrational nostalgia.
The error in both cases is a failure to see that the loyal customer's shopping is not like that of other regular customers. In order to reap the full value of his relationship with the store, the loyal customer frequently forgoes goals that would clash with the goals of this store and its personnel: he passes up sales at other stores, for instance, or suppresses his inclination to hurry home rather than linger and chat. Thus, loyalty is a constant, self-interested feature of the relationship it characterizes. Resistance to strong temptation is but a visible instance of the same pattern.
Ultimately, of course, most (but not all) rational loyalty is limited by the competitive principle. If another store opens closer to home, offering better prices, a broader selection, longer hours, better service, more friendly personnel, and so forth, it would no longer be true that the customer could best pursue his interest by remaining loyal to his old store. And he would take his patronage to the new store.

Several people provided suggestions that have served to clarify this concept for me: Ken Barnes (who also suggested the topic), Frank Bryan, Philip Coates, Donald Heath, and David Kelley. The responsibility for the analysis is, of course, my own. 
This article was originally published in Navigator, Vol. 1, No. 6, February, 1998, p. 11.


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