[Paleopsych] Reason: Darwinian Markets

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Darwinian Markets

    Economist Paul Seabright on how homo sapiens evolved into homo
    Interviewed by [25]Julian Sanchez

    After spending millennia as one more smart hunter-gatherer primate,
    human beings developed an unprecedented, fantastically complex system
    of cooperation and specialization between unrelated individuals
    unknown elsewhere in nature. In [26]The Company of Strangers: A
    Natural History of Economic Life (Princeton), University of Toulouse
    economist [27]Paul Seabright examines how biological dispositions and
    social institutions together enabled the "great experiment" of
    civilization. Seabright spoke with Assistant Editor Julian Sanchez in

    REASON: How did evolution and institutions in tandem allow hunter
    gatherers to become cosmopolitan participants in market economies?

    Paul Seabright: The important part of the story is to emphasize that
    this is an opportunistic experiment.  It's quite common when you look
    at animal behavior, for example, to say that their behavior must have
    proved adaptive for them, that it fits their environment. Implicitly
    when we do that, we're saying that the environment today is the same
    as the environment in which the species evolved. So we use a kind of
    functionalist explanation that accounts for the evolution of the
    behavior in terms of its adaptiveness in that environment.

    The key thing about human beings is that our environment is as much
    each other as it is a particular natural ecology, and that component
    of our environment, the social component, has changed spectacularly in
    the last ten millennia. Therefore, the things we do can't possibly be
    explained in a very simple way as having evolved through ordinary
    natural selection for the environment in which we find ourselves
    today.  So we have to patch together an argument consisting of two
    parts.  The first part is to say: What do we think human beings were
    like, physically and psychologically, as a result of their evolution
    in the African woodland savannah until about 10 millennia ago? Then we
    have to ask: How can we imagine that you launch that set of capacities
    out on the open sea of human social interactions where suddenly things
    get fantastically complicated, we start dealing with situations we
    never had to deal with before, with modern society as the result.

    You can still use selective explanations, though they're much more
    likely to be cultural as opposed to natural selection explanations,
    but at the same time they have to be compatible with what we think the
    psychology was that survived through the African woodland savannah.
    So, for example, if we want to think that human beings are inherently
    pacifist in nature, we have to explain how a pacifist nature could've
    survived on the woodland savannah, and that's not very plausible.

    REASON: Are there general differences that account for some countries'
    having institutions and conventions that promote trust and market
    exchange, whereas others seem stuck?

    PS: I think you need to distinguish relatively superficial sorts of
    conventions like "How do people behave at traffic lights" from more
    fundamental ones like "how do they interact with their neighbors, with
    their business associates, with their communities?"  It's true that
    you can sometimes look in a sort of pop-sociology way at the fact that
    people don't stop at traffic lights in Brazil even when there are
    policemen there, whereas in Sweden they frequently do even when there
    are no policemen there, and say something about the tendency of the
    society for social order.  On the other hand, whether people stop at
    traffic lights is not really a fundamental determinant of their
    prosperity.  What's much more important is the kinds of associative
    habits they have and, crudely put, who they're prepared to trust.  If
    you read Tocqueville on America in the 19th century, he was very
    struck by the fact that the US was characterized by enormous
    efflorescence of voluntary organizations. Even at that point he was
    struck by something that still characterizes the US today. If you look
    at membership in churches, community groups, and so on the United
    States, it's very much higher than in most European countries.

    We don't know exactly the causes of that, but we can speculate. We can
    speculate, for example, that feudalism was rather bad for these
    things, because feudalism encouraged vertical ties, where essentially
    you got your place in society from your ties to your feudal lord, and
    therefore it didn't help you very much to set about creating ties to
    your horizontal equals.  The United States is really the only country
    in the world founded as a commercial republic, where right from the
    start, whether they were settlers clearing the back wood or whether
    they were traders or so on, they had to forge some way of living with
    people who were in some sense their equals--might not be their
    economic equals, but were at least in status their equals.

    So there's something about settling virgin territory where you don't
    have all the feudal baggage to contend with that almost certainly
    encouraged that.  But as very interesting recent work by Stan Engerman
    and Ken Sokoloff has shown, it wasn't just a matter of settling virgin
    territory, because South America was among the richest continents in
    the world at the beginning of the 18th century and has been massively
    overtaken by North America.  That seems to have a lot to do with the
    fact that Latin American agriculture was characterized much more by
    large estates and a smaller proportion of independent farmers, who
    elsewhere provided a bedrock of citizenry, who demanded a vote, and
    having gotten the vote demanded education. So Latin American societies
    were much more hierarchical.

    REASON: So what would you recommend to someone who wanted to improve
    institutional performance in the developing world?

    PS: It sounds banal, but I actually believe in education quite a lot.
    Effective education in the developing world takes place at all
    levels.  Some of the most useful money that's been spent in Russia and
    Eastern Europe in the past decade has been training judges in how to
    apply civil law, particularly the Russian empire bit of eastern
    Europe, the part that never really enjoyed a bourgeois period between
    feudalism and socialism.  They never really had proper civil law, and
    if you're an entrepreneur trying to do creative things with all this
    property that's been privatized, you don't have a tradition of law
    that ensures your contracts will be respected.  Those countries badly
    needed to establish the institutions that would make people depend on
    the law and not have to go to the Mafia for enforcement.  That's still
    very fragile in Russia, but the money that's been put into training
    judges is very useful.  So that's at the top end.  Right at the
    bottom, it's really striking how education is not just about teaching
    people to handle the information superhighway or whatever, it's also
    about teaching them what kinds of institutions work and what don't.

    I've been very struck by this in my research in India, and in fact I
    have a student now who's doing research in Tunisia on simple things
    like: What makes people respect allocations of water? My student's
    been doing this work understanding how water cooperatives handle this
    and make sure people don't steal water. You might think this is a
    simple matter, but it's not a simple matter.  You can't get the secret
    police to watch over people; what you need is a community consensus
    that people who steal water are harming the community. It's very clear
    that the smaller the communities are, the better they police stealing,
    but communities with higher levels of education police stealing better
    too.  That's partly because education teaches them about what kinds of
    institutional incentives work and what don't, gives them some
    experience in terms of comparing with elsewhere in the world what the
    options are.

    REASON: Which evolved traits of our hunter-gatherer brains turned out
    to be conducive to market society?

    PS: The two key characteristics are the ability to calculate and to
    reflect on what's prudent for you and the ability to respond with
    reciprocity to others--to respond warmly and generously to others'
    warmth and generosity. I suggested you can't reduce one to the other:
    We don't respond generously to generous people just because we
    calculate that it's in our interest to do so. Modern life is so
    complex and full of opportunities for cheating--if you're really
    determined--that if everyone had an eye to the main chance 100 percent
    of the time, we probably couldn't get any social cooperation going.

    It's precisely because most people will cooperate reasonably decently
    if it doesn't cost them too much, because they generally quite like
    the company of their fellows and respond warmly to people who are
    decent to them, that we can get by with a feasible level of mutual
    policing. We need surveillance mechanisms and rational calculation
    about our interests to get us to cooperate, but we also need some
    reciprocity, some instinctive emotional need to respond cooperatively
    to others who are cooperative with us. The advantage of the capacity
    for calculation is that it can make a relatively small amount of
    reciprocity go a long way, once other people's tendency for
    reciprocity is factored into your calculations, just as a little bit
    of yeast can raise a lot of dough.

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

    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

    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

    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.

    The upside of modern communications is that people are thinking
    conscientiously and intellignently about the wider impact of the way
    they live, and that's clearly desirable. But a little bit of thinking
    outside the tunnel can be a dangerous thing.  You can wind up, in a
    fury of moral fervor, harming the very people whose cause you purport
    to advance.

    REASON: Is there something in our evolved background that makes us
    susceptible to this?

    PS: One problem is cognitive: It's just difficult to master all the
    information about how the world actually does work.  The other is
    emotional. Realistically, if you're trying to think "should I buy
    trainers from Nike, or do I think Nike's employment practices suck?"
    it's difficult to get all the information, for one thing, but for
    another you're surrounded by other people, many of whom you admire,
    who are sending you strong emotional messages: "These are disgusting
    capitalists; these are the enemy." So you may be motivated as much by
    hatred of Nike as by love for the people employed in their factories.
    If you're motivated by that, it's going to be quite difficult to
    evaluate information coming from different sources about what's
    actually a desirable policy in different circumstances.

    I'm not, incidentally, saying there shouldn't be regulation of
    employment practices by multinationals.  But a simple stance that says
    it's outrageous that they're employing people at some wage that seems
    low to you and me may have very bad consequences.

    So the problem, I think, is at least as much emotional. I have friends
    in the anti-globalization movement who get thrilled when a big
    demonstration imposes humiliation on some multinational or Starbucks
    windows get smashed.  It's the thrill of the chase, the thrill of the
    battle. They'd be completely incapable of explaining why this
    particular result advances the interests of anybody that they care
    about.  Yes, the fact that it's hard for us to engage in political
    activism without the emotional highs and lows of the tribal experience
    is a big problem.

    REASON: You say we should think of liberalism as a tradition that goes
    back far further than, say, the aftermath of the wars of religion in

    PS: I think you can view philosophers, particularly political
    philosophers, as doing two kinds of jobs.  On the whole, academics
    tend to think one of these jobs is more high status than the other.
    You can view them as acting as sages and mediators to societies
    wracked with problems, offering advice about how to resolve these
    various difficulties. Or you can view them as more like
    psychotherapists, helping societies to articulate things they probably
    already know about themselves.  I tend to view political philosophers,
    the good ones, as more in the psychotherapist mold. What the great
    philosophers of liberalism did was appeal to stuff about ourselves
    that we sort of knew that had gotten obscured or overlaid.  What they
    said was that thinking about other people in a certain way does come
    more naturally to us than you might think.

    You can see why they needed to say this after the wars of religion,
    which were exceptionally bloody.  It took very clear heads among the
    political philosophers of the age to say: Look, toleration of people
    who don't share your religion is not something completely foreign to
    human nature.  Sometimes they did it in a combative spirit, like
    Voltaire, who took on in a very polemical way some of the forces of
    religious intolerance.  But actually he was preaching a message that
    was less confrontational than it seemed.  It was not: You guys are
    prejudiced religious bigots who have to be faced down. It's more: All
    of us have some capacity for hatred and bigotry in us, but all of us
    have a capacity to overcome that and to treat other people without
    being upset that their religion is different from ours.

    Most of the conventional stories of the origins of liberalism imply
    that it's something we discovered in response to these horrific
    events, a new way of living that nobody had ever thought of before.
    But if you go back to the Athens of Pericles, you find that a lot of
    the ingredients were there. Only some of them, of course: The Athens
    of Pericles practiced slavery.  Nobody was arguing that slaves should
    have a say; nobody in their right mind then thought women should get a
    say. But in terms of a frame of mind in which you don't automatically
    think you can kill somebody just because they bow down in front of a
    different altar from yours, the elements were there.

    REASON: How fragile or robust is our "great experiment" of extended
    social order today?

    PS: One aspect of that is: How should we react to the view that the
    whole edifice of modern social life just rests on convention?
    Convention is just what people have decided to do; maybe tomorrow they
    could decide to do something completely different.  Maybe the
    conventions that underpin your ability to call me from across the
    Atlantic with both of us sitting reasonably securely in our respective
    offices having this conversation could disappear tomorrow.  It may
    look, in a general sense, almost vertiginously contingent.  But on the
    other hand it's also remarkable how robust some of the conventions
    are. That's partly because the conventions aren't masterminded in any
    one place. Most of the conventions that underpin modern society are
    extremely decentralized: Nobody's actually enforcing the fact that we
    all behave in a certain way. We reinforce it ourselves through
    billions of everyday decisions about how we treat our colleagues and
    our friends. There's that general question of the fragility of the

    What the sophisticated modern terrorist organizations are trying to do
    is find a symbolic point of weakness that can threaten the whole
    edifice, even though the edifice itself doesn't have any kind of
    central pillar.  You could knock out the White House or many other
    places and society wouldn't collapse. It would be bad news, but in
    terms of how I respond to my neighbor in daily life, I'm not doing it
    because it's been politically commanded; I'm doing it because it's an
    equilibrium of my interactions.

    You can think of terrorist organizations as saying: This doesn't seem
    to have a genuine central pillar, but could we find a symbolic pillar
    we can knock out such that people will be so scared that they begin to
    modify their behavior to each other in other ways, even though
    strictly speaking they don't have to? That's why they chose the Twin
    Towers, and why a lot of modern terrorist organizations are very media

    Religious conflicts come to the fore in this because religious
    ideologies are so heavily symbolically weighted toward objects of
    veneration.  If you're trying to launch a terrorist attack on some
    boringly secular bourgeois republic, it's pretty hard to know where to
    hit.  Whereas if you're launching it on a society that has a
    collective religious allegiance, you've got the Pope or you've got
    symbolic sources authority that don't seem as easily replaceable.
    It's always more attractive to attack a king than some Scandinavian
    style president whose name nobody can remember. The exception that
    proves the rule is when the Swedish foreign minister was stabbed by a
    loony in Stockholm a few years ago, and people realized that senior
    Swedish politicians had been walking around for ages in the streets
    without any kind of bodyguard, because they're too boring for anyone
    to want to attack on symbolic grounds.  And that's how they should be;
    it's great. I'm a fan of that kind of boring, secular, bourgeois
    society.  But to the extent that modern conflicts take a religious
    tone, they kind of up the stakes because they create more symbolic

    [28]Julian Sanchez is Reason's Assistant Editor. He lives in
    Washington, D.C.


   25. mailto:jsanchez at reason.com
   26. http://www.amazon.com/exec/obidos/tg/detail/-/0691118213/reasonmagazineA/
   27. http://idei.fr/vitae.php?i=53
   28. mailto:jsanchez at reason.com

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