Douglas Rushkoff, the author of Life Inc., is a guest blogger.
I've been getting lots of great (and some angry-but-still-great) email from bb readers contesting and inquiring about a couple of the contentions I made in the Life Inc. movie posted on Monday. The two main areas of concern are:
1. My seemingly romantic, almost "noble savage" argument that human beings have been corrupted by our economic institutions. Why can't I just accept the fact that people are greedy, and that the economy is simply a reflection of this natural human state?
2. The general sense that I'm disagreeing with accepted economic theory, or contradicting what passes these days for Econ 101. Why can't I accept economics and its premise of 'utility maximization' as a science - an explanation of nature - rather than a crudely arbitrary stab at game theory?
So I thought I'd answer those repeating questions right here, with an argument from the book. Right before this section, I explore the work of RAND and Beautiful Mind subject John Nash, whose experiments attempting to prove core human selfishness all failed because the secretaries of the RAND corporation kept making cooperative choices instead of selfish ones.
...from Life Inc:
Thanks to the combined emergence of a computer culture capable of recognizing the power of emergent systems and a rising class of dot- com workers profiting off what appeared to them to be the exploitation of a free- market technology, libertarianism was in ascendance. In reality, the phenomena we were all celebrating in the mid- 1990s had little to do with the free market; the Internet had been paid for by the government, and dynamical systems theory was much more applicable to the weather and plankton populations than it was to economics. But as profits and stock indexes rose, the stars themselves seemed to be aligning, and systems theory was as good a way as any of justifying the same options packages that young programmers would have been embarrassed by just a few years before, when they were anti-establishment hackers.
While computer programmers were finding jobs in Silicon Valley, social scientists and chaos mathematicians won contracts at corporate-funded think tanks. The Santa Fe Institute studied complexity theory, and applied its findings to the market. The "four Cs," as they came to be known--complexity, chaos, catastrophe, and cybernetics--now dominated economic thought.
Building on the work of Hayek, the new science of economics held that there was no global, central controller in an economy--only a rich interaction between competing agents. Order, such as it was, emerged naturally and spontaneously from the system--the same way life evolved from atoms or organization emerges from an anthill.
For those of us who had witnessed the Internet come to life or who had watched a simple fractal equation render an entire forest or ocean on a computer screen, the case for a bottom- up economy based on nothing but a few simple rules was compelling. If, as the anthropologists and social scientists were now telling us, human beings followed the same sorts of simple rules for self- preservation that ants and slime molds used to build their colonies and distribute scarce resources, then all we needed to do was let nature take its course. A great society would emerge much faster and better than it could ever be legislated into existence by intellectuals or social reformers.
Richard Dawkins's theory of the "selfish gene" popularized the extension of evolution to socioeconomics. Just as species competed in a battle for the survival of the fittest, people and their "memes" competed for dominance in the marketplace of ideas. Human nature was simply part of biological nature, complex in its manifestations but simple in the core commands driving it. Like the genes driving them, people could be expected to act as selfishly as Adam Smith's hypothetical primitive man, "the bartering savage," always maximizing the value of every transaction as if by raw instinct. Even the people who are crazy enough to behave differently end up testing new market strategies in spite of themselves. Best yet, according to Dawkins, "the whole wave keeps moving." In spite of local and temporary setbacks-- like what's happening in the United States at the moment--the trend is our friend, and undeniably progressive. Let her rip.
Freakonomics, the runaway best seller and its follow- up New York Times Magazine column, applied this model of "rational utility-maximization" to human behaviors ranging from drug dealing to cheating among sumo wrestlers. Economics explained everything with real numbers, and the findings were bankable. Even better, the intellectual class had a new way of justifying its belief that people really do act the way they're supposed to in one of John Nash's game scenarios.
Ironically, while the intelligentsia were using social evolution to confirm laissez- faire capitalism to one another, the politicians promoting these policies to the masses were making the same sale through creationism. Right- wing conservatives turned to fundamentalist Christians to promote the free- market ethos, in return promising lip service to hot- button Christian issues such as abortion and gay marriage. It was now the godless Soviets who sought to thwart the Maker's plan to bestow the universal rights of happiness and property on mankind. America's founders, on the other hand, had been divinely inspired to create a nation in God's service, through which people could pursue their individual salvation and savings.
As the best-selling Christian textbook America's Providential History explains, "Scripture defines God as the source of private property. . . . Ecclesiastes 5:19 states, 'For every man to whom God has given riches and wealth, He has also empowered him to eat from them.' . . . Also in I Chronicles 29:12, 'Both riches and honor come from Thee.' " America is God's true nation because it is the bastion of the free market through which He can exercise His divine will. Socialism (and American liberals) set up the state as provider instead of God. Bureaucrats end up intervening in the sacred relationship between the Lord and His creations, usurping His role, and interfering in the process of salvation. Charity is an opportunity for people--not governments--to care for their fellow men. Social-welfare programs, like evolution, implied that God had not created a perfect world in the first place. The free market, on the other hand, gave human beings the opportunity to exercise their free will in pursuit of personal salvation as well as a personal piece of God's good earth. No engineering or central planning was required.
The same right- wing think tanks writing white papers justifying game- theory economics through bottom- up social Darwinism were simultaneously advising conservatives on how to leverage Christian Fundamentalists in support of the resultant ideals. What both PR efforts had in common were two falsely reasoned premises: that human beings are private, self- interested actors behaving in ways that consistently promote personal wealth, and that the laissez- faire free market is a natural and self- sustaining system through which scarce resources can be equitably distributed.
For all the ability of genes and even memes to battle for survival against one another, human beings are just as likely to share and cooperate as they are to cheat and compete. But the ascendance of market rhetoric in America and Britain was accompanied by the assertion of some decidedly antiromantic science. University anthropologists seemed determined to correct the hopeful impressions that so many still clung to of peaceful, vegetarian gorillas enjoying one another's company in the jungle. Like stories of supposedly peaceful aboriginal tribes as yet untainted by corrupt Western civilization, such visions-- according to the new social Darwinists--were pure fantasy.
The people-are-actually-really-mean hypothesis was supported by the anthropologist Napoleon Chagnon's observation of violence among the Yanomami people of South America. Chagnon's documentary footage depicted tribesmen attacking one another with machetes. He demonstrated that the seemingly random violence had broken out along complex familial lines, supposedly proving that the tribesmen's genes were still competing for dominance. Buried deeper in his documentation was the real reason for these attacks: Chagnon had distributed a small number of machetes to just one of the tribes. The neighboring tribes wanted the machetes, too. Although the study has been argued over for decades now, the artificially introduced scarce resource was at least part of the reason they were fighting.
Paleontologists and social biologists such as Lucifer Principle author Howard Bloom present contagiously popular evidence of violence among competing gorilla and chimpanzee groups, going as far as to describe the steps by which a certain female chimp dashed out the brains of its rivals. That the chimps were fighting over rights to a human garbage dump isn't considered germane. Perhaps predictably, Bloom's follow- up work, Reinventing Capitalism, applies these same insights - ones I believe are skewed - to the market. He is not alone.Volumes could be filled (and actually are) with essays and studies about the violent, self-interested behaviors of monkeys and indigenous peoples, written by prominent scholars and directed to policy- makers and economists.
Just because many participants in leading intellectual forums such as The New York Review of Books or Edge.org (a website on which I participate) consider these proudly unromantic views of human nature more consistent with a godless universe doesn't make them any more true. More scientifically gathered evidence points the other way.
A South African archeologist and Harvard professor named Glynn Isaac based his own studies of human behavior less on abstract models or analogies with apes than on hard evidence from fossils and archeological digs. By focusing on the evolutionary record, Isaac showed how social networks and food sharing were the deciding factors in allowing early hominids to succeed over their peers. Researchers at Ohio State University studied sex- based size differences in human fossil remains, concluding that competition between males for mates was much less prevalent than earlier believed. "Males were cooperating more than they were competing among themselves," the researchers concluded.
Studies by psychologists at the University of Chicago in which researchers measured subjects' ability to see problems from the perspective of others demonstrated how "cultures that emphasize interdependence over individualism may have the upper hand." (In their conclusions, the psychologists noted the individualistic bias of Western corporations compared with those of Asia. A Texas corporation "aiming to improve productivity told its employees to look in the mirror and say 'I am beautiful' 100 times before coming to work. In contrast, a Japanese supermarket instructed its employees to begin their day by telling each other 'you are beautiful.' ")
While legends of violent meat- eating Homo sapiens vanquishing tribes of Neanderthals still garner rapt attention at dinner parties, there is little evidence that such events ever took place. On the other hand, there's plenty of evidence for the less dramatic assertion that a combination of tools, hunting, gathering, and food- sharing permitted what we now think of as civilization to evolve out of cooperative human activity. In certain circumstances, the tendency toward conflict with neighboring tribes inhibited survival, while cooperation within a social group and beyond promoted it.
We shouldn't be too shocked that the industrial world's intellectuals would be so prone to perceive humanity as driven by instinctual, self- interested violence. This behavior is as old as colonialism itself, and calls to mind wealthy plantation owners arguing that Africans were better equipped anatomically--by the Maker or by evolution-- to pick cotton. Today's equivalent, however well masked in scientific jargon, is no better supported by the facts. As a cultural mythology, however, it helps assuage any residual guilt the rich might feel over the inequitable distribution of wealth built into the existing economic order.
Or perhaps the wealthy obsess over what they hope is an entirely dog- eat- dog reality because their participation in the culture of money hasn't ended up making them any happier. According to a study conducted at the height of the market, 23 percent of brokers and traders at the seven largest firms on Wall Street suffered from depression--more than three times the national average. Scientists and United Nations sociologists alike have concluded that affluence produces rapidly diminishing returns on happiness. After achieving an income per capita of about $15,000, any increase in wealth makes little difference to a nation's total happiness metrics.
Among the six articles I found from Forbes in 2006 fiercely criticizing this "swath of studies" as well as the whole notion of "happiness research," none mentioned any of them specifically, or their findings. The libertarian think tank the Cato Institute similarly criticized these studies along with any attempt to measure subjective well- being--but concluded that even if they were true and money didn't make people happier, this would only support the libertarian position that wealth redistribution by government was unnecessary. Still others have criticized happiness research because it could lead to the implementation of authoritarian policies by central governments under the pretense that they were trying to make people happier.
But it's disingenuous to equate any critique of the theory of "rational utility- maximization" with efforts to construct a socialist welfare state. And it's especially cynical to do so while marketing and defending financial instruments intentionally designed to take advantage of consumers' irrationality when making economic decisions.
(after this comes a section on Behavioral Finance, and how credit card companies and banks used language to exploit what they know about our propensity to make bad decisions.)