Loss of community
Small communities are governed by the principle of caring for one another. This works when people know each other and tasks are simple.
Can we take turns cleaning the bathroom? It works if we are talking about a group of 20 kids sharing a bunk at a summer camp. It doesn’t work if we are talking about several hundred people toiling in an office building.
Can we just operate without markets or organization charts? We can if the task is simple, like pitching a tent or cooking dinner for 10 people, which we can manage just by talking with one another. But for designing, manufacturing, and shipping a new smart phone, coordination involves more than just “You do this and I’ll take care of that.”
In a large, complex economy, almost everything we consume has been made possible by the contributions of thousands and thousands of people, few of whom we know personally. The coordination involved cannot be governed simply by people caring for one another. It requires management organization within firms and market transactions among firms.
The inhabitants of a small village will know one another. That is not going to be the case in a large city.
The more advanced an economy becomes, the less we depend on personal interaction and the more we rely on people we do not know. I remember when a household that needed someone to mow the lawn would hire the neighbor’s son to do the job. Today, people hire strangers.