What If Our Economic System Conflicts With Our Human Nature?

What if much or even all of modern advances and wonders happened in spite of capitalism, not because of it?

What if social democracy and political democracy, if a free economy and a free society is ultimately in complete opposition to everything that has come to be associated with capitalism: hyper-individualism and aggressive competition, consumer-citizenship and worker-citizenship, neoliberal exploitation and resource extraction, theft of the commons and destitution of the masses, education and healthcare disparities, high inequality and economic segregation, rigid hierarchies and permanent under class, inherited and concentrated wealth, cronyism and nepotism, plutocratic ruling elite, psychopathic corporate model, corporatism and corporatocracy, oligopolies and monopolies, fascism and inverted totalitarianism, revolving door between big gov and big biz, law and policy determined by big money lobbyists, elections determined by big money donors, etc?

What then?

Income Accelerates Innovation by Reducing Our Fear of Failure
by Scott Santens

Studies have shown that the very existence of food stamps — just knowing they are there as an option in case of failure — increases rates of entrepreneurship. A study of a reform to the French unemployment insurance system that allowed workers to remain eligible for benefits if they started a business found that the reform resulted in more entrepreneurs starting their own businesses. In Canada, a reform was made to their maternity leave policy, where new mothers were guaranteed a job after a year of leave. A study of the results of this policy change showed a 35% increase in entrepreneurship due to women basically asking themselves, “What have I got to lose? If I fail, I’m guaranteed my paycheck back anyway.”

None of this should be surprising. The entire insurance industry exists to reduce risk. When someone is able to insure something, they are more willing to take risks. Would there be as many restaurants if there was no insurance in case of fire? Of course not. The corporation itself exists to reduce personal risk. Entrepreneurship and risk are inextricably linked. Reducing risk aversion is paramount to innovation.

Such market effects have even been observed in universal basic income experiments in Namibia and India where local markets flourished thanks to a tripling of entrepreneurs and the enabling of everyone to be a consumer with a minimum amount of buying power.

Children’s Helping Hands
Felix Warneken

Young children are also willing to put some effort into helping. Further studies showed that they continue to help over and over again, even if they have to surmount an array of obstacles to pick up a dropped object or stop playing with an interesting toy. We had to be inventive in creating distracting toys that might lower their tendency to help— flashy devices that lit up and played music; colorful boxes that jingled when you threw a toy cube into them and shot it out the other end. We decided that if we couldn’t sell the scientific community on our results, we could at least go into the toy business.

As noted, the behavior of our little subjects did not seem to be driven by the expectation of praise or material reward. In several studies, the children’s parents weren’t in the room, and thus the helping cannot be explained by their desire to look good in front of Mom. In one study, children who were offered a toy for helping were no more likely to help than those children who weren’t. In fact, material rewards can even have a detrimental effect on helping: During the initial phase of another experiment, half the children received a reward for helping and the other half did not. Subsequently, when the children again had the opportunity to help but now without a reward being offered to those in either group, the children who had been rewarded initially were less likely to help spontaneously than the children from the no-reward group. This perhaps surprising result suggests that children’s helping is intrinsically motivated rather than driven by the expectation of material reward. Apparently, if such rewards are offered, they can change children’s original motivation, causing them to help only because they expect to receive something for it.

The Case Against Rewards and Praise
A Conversation with Alfie Kohn

by Sara-Ellen Amster

Rewards kill creativity. Some twenty studies have shown that people do inferior work when they are expecting to get a reward for doing it, as compared with people doing the same task without any expectation of a reward. That effect is most pronounced when creativity is involved in the task.

Rewards undermine risk-taking. When I have been led to think of the “A” or the sticker or the dollar that I’m going to get, I do as little as I have to, using the most formulaic means at my disposal, to get through the task so I can snag the goody. I don’t play with possibilities. I don’t play hunches that might not pay off. I don’t attend to incidental stimuli that might or might not turn out to be relevant. I just go for the gold. Studies show that people who are rewarded tend to pick the easiest possible task. When the rewards are removed, we tend to prefer more challenging things to do. Everyone has seen students cut corners and ask: “Do we have to know this? Is this going to be on the test?”

But we have not all sat back to reflect on why this happens. It’s not laziness. It’s not human nature. It’s because of rewards. If the question is “Do rewards motivate students? The answer is “Absolutely. They motivate students to get rewards.” And that’s typically at the expense of creativity.

Rewards undermine intrinsic motivation. At least seventy studies have shown that people are less likely to continue working at something once the reward is no longer available, compared with people who were never promised rewards in the first place. The more I reward a child with grades, for example, the less appeal those subjects will have to the child. It is one of the most thoroughly researched findings in social psychology, yet it is virtually unknown among educational psychologists, much less teachers and parents.

Is Shame Necessary?
by Jennifer Jacquet
Kindle Locations 626-640

Some evidence from work on moral licensing disagrees with this assumption that buying green is a good first step. People who buy eco-products can apparently more easily justify subsequent greed, lying, and stealing. A 2009 study showed that participants who were exposed to green products in a computer-simulated grocery store acted more generously in experiments that followed, but that participants who actually purchased green products over conventional ones then behaved more selfishly. 7 A 2013 study confirmed suspicions about slacktivism when research showed that people who undertook token behaviors to present a positive image in front of others— things like signing a petition or wearing a bracelet or “liking” a cause— were less likely to engage with the cause in a meaningful way later than others who made token gestures that were private. 8 This research suggests that linking “green” to conspicuous consumption might be a distraction and lead to less engagement later on. If this is true, we should not be encouraged to engage with our guilt as disenfranchised consumers, capable of making a change only through our purchases, and instead encouraged to engage as citizens. Markets might even undermine norms for more serious environmental behavior. In some cases, as has been noted in Western Australia, eco-labeling fisheries may even be giving fishing interests leverage against establishing marine protected areas, where fishing would be prohibited or more heavily regulated, on the grounds that protection is not needed if the fisheries in those areas are already labeled eco-friendly. 9 The market for green products might sedate our guilt without providing the larger, serious outcomes we really desire.

Strange Contagion
by Lee Daniel Kravetz
Kindle Locations 1157-1169

Grant’s research is at the forefront of work motivation and leadership. Oddly, despite teaching in a school dominated by economists, he’s landed at a surprising place in terms of the one social contagion he grudgingly propagates. “The study of economics pushes people toward a selfish extreme,” he tells me after his class lets out. More to the point, he says, “The scholarship of economics is responsible for spreading a contagion of greed.”

The Cornell University economist Robert H. Frank has discovered many examples of this, Grant says. Consider that professors of economics give less to charity than professors in other fields. Or that students of economics are more likely to practice deception for personal gain. Then there’s the fact that students majoring in economics routinely rate greed as generally good, correct, and moral. In fact, says Grant, simply thinking about economics chips away at one’s sense of compassion for others. Studying economics also makes people become less giving and more cynical. Students who rank high in self-interest might self-select for degrees and careers in economics-related fields, but by learning about economics they wind up catching more extreme beliefs than those they possess when they first register for class. By spending time with like-minded people who believe in and act on the principle of self-interest, students of economics can become convinced that selfishness is widespread and rational. Self-interest becomes the norm. Individual players within the whole unconsciously model and catch behaviors, in turn pushing ethical standards.

Incentives of Individualism

There are some childhood studies that offer a useful insight about human nature and society. They indicate certain behaviors that appear to be inherited, rather than learned.

The specific behaviors are a natural response to be helpful and cooperative. Kids, when presented with an opportunity, want to open the door for someone with their hands full or to pick up an object someone drops. They don’t need to be told to do this. This is basic social behavior, without which early societies would never have formed.

These studies, however, demonstrated something even more telling about our present society. If you give kids a reward for good behavior, it actually ends up disincentivizing good behavior. Yet the belief in incentives is the basis of our entire capitalist society. Selfish individuals aren’t born. They are created. It is inevitable that strong communities, civic society, and culture of trust weakens as capitalism takes over more and more aspects of life.

That gave me an insight. There are various theories, Julian Jayne’s bicameralism being the most famous, that individualism as we know it didn’t always exist. What if the development of systems of incentives was a major factor in creating individuals.

This would have been a slow process. Monetary systems were developed in the ancient world. But at that time they would have had little use to the average person. And it was limited to only a few societies. Most of daily living for most people in most societies would still have involved the even more ancient traditions of gift economy and/or barter. It wasn’t until after the collapse of bicameralism (or however one wishes to explain that transition) that monetary systems became more central. It was centuries into the post-bicameral Axial Age before coins began to be minted.

Like writing, the early monetary systems would only have initially and directly effected a small number of people. Think how long it took from the invention of writing to when the majority of most societies were literate, two to three millennia. Barter was the main economic system in some American communities well into the twentieth century. It was in the major cities where these kinds of things took hold first and even there it developed first among the upper classes. Writing and currency did co-develop to some extent, as writing was earliest used for purposes of accounting. And accounting would in ancient societies would only have been a concern for governments and the elite of large-scale business owners and traders.

The trader, in particular, would have been in a position to develop individualistic behavior the earliest. Traders not only dealt most directly with the developing monetary systems, along with writing and accounting, but they also were the people who spent the most time outside of their home communities. This was at a time when most people spent their entire life never leaving the community into which they were born.

So, if my hypothesis is correct, this is where we would want to look for the initial developments of individualism. It’s also in the modern world among businessmen, stockbrokers, etc where we’d want to look for the most extreme behaviors of individualism.

It might be interesting to anthropologically study business management schools and corporations to see how they help further individualize people. Then we might want to consider what happens when a society becomes so individualistic that the social bonds that hold society together begin to fray, as we are now seeing.

Most Americans Know What is True

There is one topic I return to more often than most, a topic that has been on my mind for about a decade now. This topic has to do with the confluence of ideology, labels, and social science. I’ve written about this topic more than I care to remember.

I’m about equally interested in conservatism and liberalism (along with other ideological labels). But liberalism in some ways has intrigued me more because of all the massive confusion surrounding the label. Most Americans hold fairly strong left-leaning views on many of the most important major issues.

There are a number of facts that have become permanently caught in my craw. I considered two of these in a post from not too long ago, Wirthlin Effect & Symbolic Conservatism. In that post, I pointed out that most Americans are more in agreement with one another than they are with the more right-leaning political elites who claim to speak for and represent them. But there is a complicating factor involving the odd mixture of liberalism and conservatism in the American Mind (I never get tired of quoting this fascinating explanation):

Since the time of the pioneering work of Free & Cantril (1967), scholars of public opinion have distinguished between symbolic and operational aspects of political ideology (Page & Shapiro 1992, Stimson 2004). According to this terminology, “symbolic” refers to general, abstract ideological labels, images, and categories, including acts of self-identification with the left or right. “Operational” ideology, by contrast, refers to more specific, concrete, issue-based opinions that may also be classified by observers as either left or right. Although this distinction may seem purely academic, evidence suggests that symbolic and operational forms of ideology do not coincide for many citizens of mass democracies. For example, Free & Cantril (1967) observed that many Americans were simultaneously “philosophical conservatives” and “operational liberals,” opposing “big government” in the abstract but supporting the individual programs comprising the New Deal welfare and regulatory state. More recent studies have obtained impressively similar results; Stimson (2004) found that more than two-thirds of American respondents who identify as symbolic conservatives are operational liberals with respect to the issues (see also Page & Shapiro 1992, Zaller 1992). However, rather than demonstrating that ideological belief systems are multidimensional in the sense of being irreducible to a single left-right continuum, these results indicate that, in the United States at least, leftist/liberal ideas are more popular when they are manifested in specific, concrete policy solutions than when they are offered as ideological abstractions. The notion that most people like to think of themselves as conservative despite the fact that they hold a number of liberal opinions on specific issues is broadly consistent with system-justification theory, which suggests that most people are motivated to look favorably upon the status quo in general and to reject major challenges to it (Jost et al. 2004a).

What the heck is a symbolic conservatism? I’m not quite sure. I don’t know if anyone has that one figured out yet.

I also pointed out that even most Southerners are on the left side of the spectrum. It’s just that most Southerners are disenfranchized. If most Southerners voted, Republicans would never be able to win another election in the South without completely altering what they campaign on.

The claim of a polarized population is overstated. This brings me to a new angle. I came across another piece of data that now can be permanently caught in my craw with the rest. It is from a book by Cass R. Sunstein, not an author I normally read, but the book looked intriguing. He wrote (How to Humble a Wingnut and Other Lessons from Behavioral Economics, Kindle Locations 249-253):

Recent studies by Yale University’s John Bullock and his co-authors suggest that with respect to facts, Democrats and Republicans disagree a lot less than we might think.

True, surveys reveal big differences. But if people are given economic rewards for giving the right answer, the partisan divisions start to become a lot smaller. Here’s the kicker: With respect to facts , there is a real difference between what people say they believe and what they actually believe.

This was from a fairly short essay that ends with this conclusion (Kindle Locations 271-282):

What’s going on here? Bullock and his colleagues think that when people answer factual questions about politics, they engage in a degree of cheerleading, even at the expense of the truth. In a survey setting, there is no cost to doing that.

With economic incentives, of course, the calculus is altered. If you stand to earn some money with an accurate answer, cheerleading becomes much less attractive . And if you will lose real money with an inaccurate answer, you will put a higher premium on accuracy.

What is especially striking is that Bullock and his colleagues were able to slash polarization with very modest monetary rewards. If the incentives were greater (say, $ 100 for a correct answer and $ 25 for “I don’t know”), there is every reason to expect that partisan differences would diminish still more.

It might seem disturbing to find such a divergence between what people say and what they actually believe, but in a way, these findings are immensely encouraging. They suggest that with respect to facts, partisan differences are much less sharp than they seem—and that political polarization is often an artifact of the survey setting.

When Democrats and Republicans claim to disagree, they might be reporting which side they are on, not what they really think. Whatever they say in response to survey questions, they know, in their heart of hearts, that while they are entitled to their own opinions, they are not entitled to their own facts.

Incentives can make people honest. And when honest, people agree a lot more. This reminds me of research showing that, by doing word jumble puzzles and such, people can be primed for rational thought and indeed they do think more rationally under those conditions. Between incentives and priming, we could have a much higher quality public debate and political action.

This also reminds me of implicit knowledge (see here and here). Many writers have observed the strange phenomenon of people simultaneously knowing and not knowing. Maybe this directly relates to incentives and similar factors. It might not just be an issue of incentives to be honest, but also incentives to be self-aware, to admit to themselves what they already know, even when such truths might be uncomfortable and inconvenient.

A further confounding factor, as research also shows, the political elites and the political activists are very much polarized. Those with the most power and influence are the stumbling blocks for democracy or any other moral and effective political process. This plays straight into the cheerleading of the masses. Too many people will simply go along with what the pundits and politicians tell them, unless some other motivation causes them to think more carefully and become more self-aware.

One wonders what the public debate would be like about issues from global warming to economic inequality, if the incentives were different. A single honest public debate could transform our society. It would be a shock to the entire social, political, and economic system.