Foundations of Cooperation in Economic Life

• Book: Moral Sentiments and Material Interests: The Foundations of Cooperation in Economic Life (2006), edited by Herbert Gintis, Samuel Bowles, Robert T. Boyd, and Ernst Fehr.

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Contextual Citation

David Sloan Wilson:

"The metaphor of the invisible hand should be declared dead. Let there be no more talk of unfettered competition as a moral virtue. Cooperative social life requires regulation. Regulation comes naturally for small human groups but must be constructed for large human groups. Some forms of regulation will work well and others will work poorly. We can argue at length about smart vs. dumb regulation but the concept of no regulation should be forever laid to rest." (http://evonomics.com/death-invisible-hand-narrow-pursuit-self-interest-always-fails/)

Discussion

Cooperation vs. Cheating

David Sloan Wilson:

"the single minimalistic principle of self-interest could not explain the length and breadth of human behavior. Economists started to conduct experiments to discover the actual preferences that drive human behavior. The field of experimental economics was born and two of its founders (Vernon Smith and Daniel Kahneman) were awarded the Nobel Prize in 2002.

Actual human preferences are all about regulation. A microcosm of America’s economic collapse can be created in the laboratory in a single afternoon. Yank a group of people off the street, give them a task that requires cooperation, and most of them will play along as solid citizens. Unfortunately, a few will game the system if there is any way to cheat. Once the solid citizens realize that they’re being ripped off, they withdraw their cooperation as their only defense. Provide them with an opportunity to punish the cheaters, and some (but not all) punish with zeal. Even the cheaters punish other cheaters with zeal! Once the capacity for regulation is provided in the form of rewards and punishments that can be implemented at low cost, cooperation rises to high levels. Regulation is required or cooperation will disappear, like water draining from a bathtub.

These social preferences go beyond our own species. Cooperation and cheating are behavioral options for all social species, even bacteria, and cooperation survives only to the extent that it is protected against cheating. The eternal conflict between cooperation and cheating even takes place within our own bodies, in the form of genes and cell lineages that manage to game the system at the expense of the organism upon which they depend. We call them diseases, but they are really the failure of a vast system of regulations that enable us to function as organisms as well as we do.

Mandeville could not have been more wrong about actual nature of bees. There is a difference between self-organization and self-interest. Beehives and other social insect colonies are indeed self-organized. There is no single bee commanding the troops, certainly not the queen. Each bee plays a limited role in the economy of the hive, just as a single neuron plays a limited role in the economy of the brain. The intelligence of both can be found in the interactions among the parts, which have been shaped by natural selection operating over countless generations. But bee behavior cannot be reduced to a single principle of self-interest, any more than human behavior. There are solid citizens and cheaters even among the bees, and the cheaters are held at bay only by a regulatory system called “policing” by the biologists who study them.

Why are we so different from all other primate species? Because we are so cooperative. Why are we so cooperative? Because it is so easy to regulate each other’s behavior in small face-to-face groups. It happens so naturally that we don’t even notice it. Alexis de Tocqueville, the great French social theorist who wrote Democracy in America (1835, 1840), also said this about small human groups: “The village or township is the only association that is so perfectly natural that…it seems to constitute itself.” This self-organizing ability to function as cooperative groups is “so perfectly natural” because it evolved by a long process of natural selection, in humans no less than bees.

By the same token, functioning as large cooperative groups is not natural. Large human groups scarcely existed until the advent of agriculture a mere 10 thousand years ago. This means that new cultural constructions are required that interface with our genetically evolved psychology for human society to function adaptively at a large scale.

These constructions can work well or poorly. They can arise by a raw process of cultural evolution—many inadvertent social experiments, a few that succeed— or by a less wasteful process of intentional planning. Tocqueville marveled at the vitality of the American democratic experiment planned by the founding fathers, compared to French society as an inefficient accretion of history. He also perceptively observed that America’s vitality could not be attributed entirely to intentional planning. Mexico copied the United State’s constitution, but the results were not the same. Something more contributes to America’s vitality that we vaguely call “culture” but must study to understand. Tocqueville also speculated that the American democratic experiment could unravel in an eerie premonition of our current turbulent times.

Theories and metaphors are the cultural equivalent of genes. They influence our behaviors, which have consequences in the real world. Mother nature practices tough love. When a theory or a metaphor leads to inappropriate behaviors, we suffer the consequences at scales small and large. To change our behaviors, we need to change our theories and metaphors." (http://evonomics.com/death-invisible-hand-narrow-pursuit-self-interest-always-fails/)