Darwinian Markets

Economist Paul Seabright on how homo sapiens evolved into homo economicus

(Page 2 of 3)

REASON: How about the other side; what are the atavistic, obstructive holdovers?

PS: It’s pretty clear that a lot of characteristics were adaptive for us as hunter gatherers, and in a lot of contexts may even be adaptive for us individually, but collectively may be very damaging—most obviously a tendency for violence. We can strongly conjecture from our own pre-history, with corroborative evidence from the behavior of other species and non-state societies today, that a capacity for physical violence and a tendency to engage in it to pursue your ends would’ve been strongly adaptive for individuals. People who were peacefully inclined and only ever sorted out disputes in a reasonable and peaceful manner would’ve got blown over by people who took a tough and violent approach. That has to be nuanced, because communities where people only ever sorted out conflicts violently lacked the cohesion that would’ve made them more prosperous and, having become prosperous, capable of buying more sophisticated forms of defense. So we know that some ability to moderate our violent passions by rational cooperation has been better for us than a crude tendency to resort to violence for every dispute. But that ability to cooperate is put into the most deadly effect in group warfare, when we join armies and make military alliances against other groups, often for reasons that are very poorly founded in an assessment of our direct interest in doing so.

REASON: You emphasize the importance of trust and cooperation. What about the importance for societies as a whole of dissent, even when its not in someone’s immediate self interest to pipe up?

PS: We deal with problems very different from what existed on the woodland savannah. One difference is that the ability to spot a low probability but high cost risk may be particularly valuable. If you’re one of a group of tough young males wondering which alpha male to follow, on the woodland savannah it probably does some good to follow the male who shouts loudest and beats his chest most. It may not suit you very much to follow the sensitive philosopher type who can see three sides to every question. That’s because on the woodland savannah your fundamental challenges are of a relatively restricted kind. You need to go hunting, you need to make sure you don’t starve, and you need to see off predators. The guy who thumps his chest the loudest is probably going to be best at all those things, and the sensitive philosopher isn’t going to have an edge on very much except possibly adjudicating family disputes. Modern challenges, including modern warfare, the guy who thumps his chest loudest isn’t going to be very good at the challenges beyond attacking the next machine gun post. He won’t necessarily be best at deciding the right balance between “shock and awe” tactics and a “hearts and minds” operation.

What we have is a series of emotional responses to who we find convincing as a leader that were shaped by the emotional responses that were adaptive for hunter gatherers. What we’ve realized is that those are frequently rather dangerous for us in modern contexts. What we want is modern contexts is someone whose thinking isn’t determined by a wish, conscious or unconscious, to side with the powerful guy in the group, but the person whose eyes are really out there looking for hazards and spotting dangers well in advance. That’s going to require a capacity for independent and critical thinking that’s very valuable to us now but was not that valuable to us then.

What we should be doing is set up incentive systems that make that attractive to somebody, and I don’t think we should underestimate the extent to which we do this. Think of the humble world of accounting. What are accountants but people who in some sense, with many flaws and mistakes as we’ve seen recently, we try to incentivize to tell the truth about what’s going on inside a company when the board of directors would rather send a much more rosy picture. Sometimes they collude with the management, but most of the time we set up countervailing powers inside the companies to make sure that what’s adaptive for the individual inside the company isn’t just to follow whatever the CEO says. We do that all the time, even if not as effectively, especially in the political sphere, as we might like. 

REASON: You have an interesting aside noting that the alienating “anonymity” and “impersonality” of modern markets is also a source of their vibrancy.

PS: It’s been a refrain of romantic conservatives down the ages that modern market society doesn’t give us the kind of hum they think people of former ages felt. The feudal lord would go and observe his happy subjects tugging their forelocks at him and allowing him to hold their babies on his knee and enjoy the harmony of the community in which there was “a place for everyone and everyone in his place.”

I don’t want to caricature that too much, because I know there are people who regret the anonymity of modern society but don’t buy the fantasy of a lost age. But the key point is precisely that in order to be able to engage someone—the guy who sells me bread or installs my telephone or whatever—I actually don’t need to know much about the guy’s character. That’s a really important strength, because if I had to know something about his character before I could let him into my house, most of the time I just wouldn’t dare. It’s exactly because I can be indifferent to the guy that we can function at all. If you trust somebody’s personality, you need to know a lot about them.

That links in with the evidence we have about our fundamentally fairly violent nature. If you think human beings are by nature generally placid, sociable, trustworthy people who can be trusted into each other’s homes without killing their children and stealing their worldly goods, then you don’t really see why this feeling of indifference to other people can possibly be a strength of modern society. You’re bound to bemoan it. If you think that, in the absence of a set of institutions that allow us to trust the postman just because he’s the postman, we wouldn’t be able to have a modern society at all because we’d be too scared of the guy, then you start to see why this anonymity is a good thing, or a symptom of a good thing.

REASON: Economists focus on how markets respond to people’s interests; you argue that narratives have a great but underappreciated importance.

PS: Things like professional ethics, though sometimes thought of as being antithetical to market economies and market logic, are actually pretty central to them. Even if you are only doing the decent thing because of fear of the consequences, you must be conjecturing that somebody, somewhere down the line, is going to be behaving as they do just because it’s the right thing to do. So the policeman inquiring into who cheated who mustn’t just be motivated by who’s giving him the biggest bribe, the judge looking at the case mustn’t be deciding on that basis, but saying: “No, no, I’m looking at the case on its merits as I am professionally required to do.”

The professional narratives are really important for all of us. It’s not just people in the “higher” professions; someone working at a supermarket checkout is partly internalizing a picture of how they do things well. I go to the supermarket and think, you know, five minutes into the job I’d be grumpy and miserable, yet people who do it hour after hour and day after day are smiling at me and taking care that I haven’t dropped anything. Even people doing pretty humdrum jobs tend to want to project a sense that they do it well. That’s what I mean by professional ethics, not just what a Supreme Court judge does.

REASON: You talk a bit about “tunnel vision,” the way phenomenally complex market processes work without producers or consumers paying any mind to the big picture, but only knowing their immediate wants and price constraints. What about the growth in what we might call “symbolic consumption,” fair trade coffee or no-sweatshop apparel?

PS: It’s precisely because tunnel vision can have dangerous consequences—environmental degradation, spiraling military expenditures—that it’s clearly desirable that people should be thinking out of the box a bit, or at least out of the tunnel. It doesn’t follow from this that all kinds of non-tunnel thinking are constructive. I’m struck by the work of some of the anti-globalization protesters, which I think has been admirably out-of-the-tunnel in terms of motivation, but naively ill-informed about how the world economy works in many other respects. You get people campaigning against investment by multinational companies in some poor countries on the gorunds that they’re only paying $5 a day, when the people they’re employing would otherwise be working at between $1 and $2 a day. Now, you may say “we wish the multinationals paid them $10 a day,” but to say that the multinationals have no business to be there unless they’re paying people $10 a day is a spectacularly stupid and self-defeating campaign platform. You really damage an awful lot of people. There has been evidence that some NGO campaigns against child labor, for instance, have led to children being laid off and left in much worse situations.

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