Competitive and cooperative capacity
This section begins with a deductive reasoning assessment of the ideological implications of the question of selfish or prosocial nature or human behavior and then exploring how both features can be explained from anthropology and sociology through reciprocity and an extended form of self.
In this section
The invisible hand of the first and second order
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages - Adam Smith, 1776 Wealth of Nations
Since the time of Adam Smith, self-interest and private profit maximization (Smith, 1776) are foundations of classical economic theory despite the knowledge and Smith’s own acknowledgement of the dual nature of both self and others regarding human behavior (Smith, 1970). Selfish intent is a logical condition for Hardin’s tragedy of the commons metaphor since it is the selfish motive that leads to the free-riding and inevitable destruction of the commons (Hardin, 1968). This selfish axiom is part of both to the conclusion of an inevitable tragedy and to the classical model remedy, which asserts that the best social welfare outcomes for everyone emerge by the action of the “invisible hand” (Smith, 1776) of the market when individuals act in their own self-interest with their own private knowledge empowered by the mechanisms of capitalism - property rights, voluntary contracts. The “invisible hand” and “wisdom of the crowd” may work well for controlled conditions of a well behaved market but are insufficient as a complete political economy.
Few mainstream economists put blind faith in the naive optimism of an unchecked “invisible hand” since it is not sufficient conditions to ensure socially optimal outcomes due to the realities of market failures, unequal starting conditions and winner-take-all dynamics of market monopolies (Core Economics Chp 12 ; Jones, 2014). If the “invisible hand” is insufficient to ensure good social outcomes then the question of self vs other orientation may have consequential implications for the design of the political economy. A low regulation, decentralized system empowering individuals with freedoms may produce good outcomes if more often than not individuals voluntarily act out of genuine prosocial intentions. If instead more often than not they are selfish in action and intent, formal or informal controls may be necessary to ensure their competitive tendencies do not impede the interest of collective public welfare.
The Heritage Foundation authors acknowledge the risks of unrestrained selfish actors and need for both behavior regulation and welfare redistribution to “contribute to human dignity and equality”. They propose that these responsibilities should fall respectively to “societal norms, not government laws and regulations” as the “primary regulator of behavior” and to “prosperous peoples [who] have the resources to take better care of their poor” for redistribution (Miller, 2020). These norms “guide our understanding of ethics, the etiquette of personal and professional relationships, and consumer tastes.“ On closer inspection this proposal may not be so different from Smith’s naturalistic hypothesis but instead is a second order invisible hand whereby instead of the direct material outcomes, the rules governing behavior and the selection criteria from the prosperous and the unprosperous people “grow organically out of society itself, reflecting its history, its culture, and the experience of generations learning how to live with one another”. The authors do not draw on this faith of organic self-regulation effect of norms and prosperous people when it cites the free-rider problem and inevitable tragedy of the commons for physical resources. Instead they call on the coercive power of state authorities to apply formal controls to enforce property rights. Logically there should not be any tragedy in the absence of an outside coercive force if these organic safeguards are sufficient to restrain behavior. If norms and prosperous people are sufficient to safeguard rules of restraint on selfish behaviors, they should be sufficient to manage the commons.
This design decision instead appears to be a qualitative preference for different forms of rights and behaviors to regulate with either formal or informal controls. The formal coercive authority of government is called on to protect, enforce financial, material, physical property rights. Areas such as the environment, labor wages or wealth inequality are left to the informal, diffuse process governing norms and prosperous people. The question of whether humans are more often than not selfish or prosocial is relevant with respect to how it affects the second order dynamics governing the formation and enforcement of norms and the selection process of prosperous people. Insight to the selfish-prosocial dynamics could then be applied to design the institutions that govern the economy towards the best social outcomes using either distributed market networks or central state authorities. Some insights from anthropology, sociology and economics report that while self-interest is a useful general framework to explain the behavior of autonomous individuals in groups, the binary proposition of selfish or prosocial is a false dichotomy.
Quasi-prosocial - reciprocity, justice and extended form of the self
The social psychologist Shalom Schwartz attempted to map out a universal set of values that characterize human motivation and cultural differences (Schartz, 2012) and his work compliments other studies on human behavior such as the neuroendocrinologist Robert Sapolsky’s in his book “Behave : the biology of humans at our best and our worst” (Sapolsky, 2017 ; Jackson, 2017). Schwartz presented his model with an evolutionary biological interpretation that humans adapted both selfish and cooperative features to adapt to different environment conditions of surplus or of scarcity. His model of universal values is based on two tensions - one between novelty and tradition on one axis, and the other between self and others (Schwartz, 2012 ; Jackson, 2017). Sapolsky elaborates the neuroendocrinological and neuroanatomical basis for Shwartz’s generic model to present a predictive model of the determinant factors for competing pro-self or prosocial forces and their implications on development and social dynamics through positive feedbacks on different timescales of seconds, hours, weeks, years and generations (Sapolsky, 2017).
Sapolsky uses self-interest as a general framework to explain how humans have adapted the capability for both selfish-competitive, and prosocial-cooperative collective behavior as a social species through reciprocal strategy and extended forms of the self to the group identity such as kinship selection and tribal identities. Although he uses his own language to describe the concept, according to Sapolsky, prosocial behavior can be thought of as quasi-prosocial where the emergent behavior is genetically “selfish” but is not conscious and explicitly selfish at every instantaneous decision. In some cases this is achieved by time inconsistency where a prosocial decision is part of an ultimately selfish strategy based on expectation of future reciprocity (Axelrod, 1984) or through subconscious processes such as an extended form of self tribal identity such as “social discounting” (Williams, 2006).
Reciprocity
Reciprocity could help to explain how real world collective action problems overcome the free-rider problem and avoid tragedy. The economist Robert Axelrod concluded that humans are not so tragically doomed, but instead there is potential for both cooperation and competition (Axelrod, 1984). He explored how sequential games would alter player’s behavior and determined that under certain conditions cooperation could be stable when players adopt a tit-for-tat strategy. The potential for retribution in future rounds disincentivizes defect strategy (Axelrod, 1984). Hardin’s prisoner’s dilemma is a simplified single-round game with rigid fixed parameters and may not accurately reflect real-world games which are dynamic and occur as repeated rounds of choice, with the potential for tit-for-tat reciprocity (Axelrod, 1984). Strategic reciprocity and cooperation in bilateral negotiating contracts is also identified by the liberalization advocates as “the foundation of the market system” (Miller, 2020). However, this optimism seems context dependent. The tone shifts to a more skeptical view when multilateral reciprocity is applied to a cooperative group for collective bargaining of contracts between unions and firm management as “either a force for greater freedom or an impediment to the efficient functioning of labor markets” (Miller, 2020). Humans as social beings organize themselves into groups on multiple scales. There are features of cooperation and competitive behavior both within and between groups. Group behavior and reciprocity are also mechanisms of cartels and price-fixing market distortions. Furthermore, others have continued on Axelrod’s general line of sequential game theory using complex simulations and found there is no general guarantee of stable forms of either cooperative or competitive patterns. Both patterns can emerge from similar initial conditions or even oscillate indefinitely so while tragedy is not inevitable it is possible (Sapolsky, 2017).
Extension of the self to the group
I’ll gladly lay down my life for two brothers or eight cousins - Geneticist J.B.S Haldane (Sapolsky, 2007)
Informal association is another dynamic of group behavior. While either bilateral or multilateral reciprocity could be understood as a complex manifestation of self-interested profit maximization, it is not clear whether profit is a useful representation of the force of association. The self-similarity force of association also appears to be an alternative, sub-optimal explanation of the origins of resource inequalities and their build-up over time cannot be explained by differences in skill and productive capabilities. There are a number of possible bases for association such as shared interest, shared experience, or kinship (Sapolsky, 2017).
The role of kinship selection and social discounting in informal association is presented in Figure C.1. The figure shows a dropping likelihood of providing help depending on the social distance - whether the person is a sibling, cousin or acquaintance. The full picture is complex as the chart illustrates with the observation that non genetically related “friends” are treated more similarly as siblings than as genetically related cousins. Multiple modes of association in real social networks form complex patterns of overlapping connected groups with some individuals preferring to stay in tightly connected small groups with “strong ties” and others positioned in larger group sizes with “weak ties” often acting as connectors between multiple loosely affiliated smaller groups (Easley, 2010). This pattern of weak and strong ties could create the potential for multiple complex overlapping tribal or group associations for a single individual such as family, work, hobby group and sports team. Both the behavioral dynamics of individuals and institutional design could influence the structures and operational dynamics of these large social networks and they can result in either cooperative or competitive outcomes (Easley, 2010).
Altruism and justice
Lab experiments studying the social phenomenon of “altruistic punishment” reveal results that challenge the assumption of self-interest (Boyd, 2003). Evidence of pure altruism has been observed in economic game theory when a participant makes a move of either cooperation or punishment at a cost to themself even in one-off interactions with unaffiliated strangers (Boyd, 2003). In one 2004 experiment by De Quervian, participants are informed that one of the other players has committed an offense. They are offered the choice of either (A) doing nothing (B) enforcing a small fine at no cost to themself or (C) paying to have a larger fine levied on the other player. A non-negligible level of the participants opted for options (B) and (C ). Furthermore measurement of their dopamine levels during the action indicated that they enjoyed paying to punish the other player (Sapolsky, 2017). While the prevalence of such actions may vary, these observations offer evidence of potential larger scale cooperation networks beyond small groups (Boyd, 2003).
Conformity
Expressions of association to a group may include another form of cooperation from reciprocity - conformity - where an individual subordinates their self-interest and autonomy to the group. Conformity as it’s used in this case is distinguished from consensus, which is an arrival at joint decision through deliberation and independent evaluation of information relevant to the decision. Here conformity is suppression of independent judgement and critical thinking in order to align with the group. Conformity is a positive feedback dynamic that can reinforce inequalities in informal social networks in a winner-takes-all pattern.
Command-and-control conformity of hierarchies that demand loyalty and execution of orders may be familiar to for-profit firms and military organizations. Power and influence hierarchies are general features of humans as a social species, occurring both in formal and informal networks. Studies by psychologists Solomon Asch, Stanley Milgram, Philip Zimbardo revealed disturbing but not surprising facts about conformity behavior (Asch, 1952 ; Zimbardo, 1971 ; Sapolsky, 2007). In one such experiment by Asch in 1952, individuals were asked to match the length of a line to a control reference as illustrated in Figure 4.2. When other participants (who were, unknown to the test subject, cooperating with the experimenter) had publicly reported a wrong answer in an earlier round, the subject was more likely to report the wrong answer. While this is not surprising, the scale of the impact is substantial. Only 25% of the participants were completely independent of group majority pressure (Asch, 1952). There were variations in subjects' sensitivity to group pressure, with some who were reported to be “nervous and somewhat confused” and small breaks in unanimity of the majority signal can quickly diffuse the effect (Asch, 1952).
Independence and decentralization enhance the information processing capabilities of markets and networks. Conformity is a breakdown of independence of market participants. It is a form of cooperation that concentrates decisions to a small subset of the market and can amplify extreme and perverse aberrations. If simple judgements of line estimates can be distorted, can moral judgement also be distorted by the pressure of conformity?
Several controversial experiments were conducted in the 1960’s and 1970’s by Stanley Milgram, Philip Zimbardo (Sapolsky, 2017) which are now forbidden by ethical guidelines to find out just how far individuals would go when they are given orders. The interest at the time was to understand under what conditions individuals will follow orders to harm someone else. One of the intentions was explain whether historical events of genocide such as the Holocaust could repeat, and if anything could be learned about the conditions so that they might be prevented in the future (Sapolsky, 2017). One of the more controversial experiments was the Stanford prison experiment by Zimbardo (Zimbardo, 1971). In the experiment, subjects were divided into two groups in roles of prisoners and guards. The experimental setup intended to be as real as possible simulated with costumes and a small prison cell. The guards were instructed to enforce obedience in the prisoners and had means of absolute control over the prisoners including the power to lock them in a cell and ability to withhold their food. The study took place over several days and the depravity of the behavior of the guards became so severe that the experiment was stopped short after 7 days from the plea of an outside observer to Zimbardo (Zimbardo, 1971 ; Sapolsky, 2017). The study has since been critiqued and some have attempted to replicate the results under better controlled control conditions as Zimbardo himself was actively participating in the experiment and intentionally trying to agitate the guards to violence and abuse to see how far they would go. The take-away lessons from the original experiment and subsequent replicas are that individuals will follow orders to abuse an innocent person when four conditions are present.
Conditions for obedience to abuse of power instructions (Zimbardo, 1971 ; Sapolsky, 2017)
Demand characteristic - they are willing to participate and go along with an authority or associated purpose
Anonymity - the actions cannot be traced back to the individual’s identity
Power asymmetry - between the abusing and the victim group
Individual characteristics - either authoritarian, or the lack of prosocial markers
All of these four conditions could be met in a typical for-profit firm when employees carry out the orders for morally questionable decisions in the interest of shareholder profits by upper management. Examples are numerous and could extend from a chemical company looking to cut waste processing costs by dumping pollution into a public waterway or an textile manufacturer looking to contain labor costs by under-paying undocumented workers. Whistleblower laws could help to act as a deterrent however many abuses and cases of corruption persist despite these deterrents.
Individuals behavior is not independent of others either voluntary and involuntary mechanisms for the dynamics of group behavior in real complex social networks. Group dynamics of reciprocity, extended self by association, conformity, group size constraints, and institutional design influence emergent outcomes in scaled-up real world social networks. The next part of the analysis explores the implications for policy design on governing selfish and prosocial behaviors using formal and informal controls in case studies of institutions of common pool resources by Elinor Ostrom (Ostrom, 1990).
Last updated
