This View of Life Anything and everything from an evolutionary perspective.
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How To Create A Cooperative Darwinian Economy In 23 Steps
AUTHOR
Image credit: Flickr/Simon Cunningham
Jag Bhalla
Jag Bhalla
is an entrepreneur, inventor and writer. His current project is Errors We Live By, a series of short exoteric essays exposing errors in the big ideas running our lives.

Intro: Economics is in our nature. But it is not, as most economists promote, the narrowly self-interested kind. Our paleo-economics required inalienable other-interestedness. The logic of our “natural economics” can help tame modern market errors.

There are three evolutionary ideas that economics benefit from (evolution and economics are both in the “productivity selection” business). First, Christopher Boehm’s work on our evolved moral-rule processors. Second, Robert Frank’s “Darwin’s Wedge” patterns that show how competition can create inefficiency. Third, studying “objective moralities” can fix the “Naturalistic fallacy,” and describe an as yet unnamed natural principle that “survival of the fittest” must yield to.

1. Boehm has spent decades studying hunter-gatherers and primates and writes in Moral Origins that our ancestors’ survival became a team sport, likely about 250,000 years — or 10,000 generations — ago, when driving big game toward teammates yielded more meat than solo hunting. But division of labor requires sustainable division of profits. Nowadays, we call that economics.

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2. Boehm has built the largest database of modern hunter-gatherer behaviors (with detailed coverage including 50 of 339 known cultures). It shows they practice remarkably similar economics, leading Boehm to conclude that our ancestors transitioned from living hierarchically to becoming devoutly egalitarian. Team survival has a fundamentally different logic than self-maximizing.

3. Modern hunter-gatherers are ever vigilant against free-riding and elite-exploitation, both as threatening to team survival as any predator would be. They rigidly enforce social rules to ensure that skilled cooperators fare better than self-maximizers. For example, meat is never distributed by whomever made the kill, but by another stakeholder. Enforcement can be by ridicule, shaming, shunning, and, ultimately, exile or execution.

4. Socially enforced rules create powerful environmental pressures, and the lowest-cost strategy to avoid social penalties becomes preemptive self-control. Impulse control (whatever your genetic predispositions) has long been adaptive for humans. Even for powerful humans, because “counter-dominant coalitions” punish “resented alpha-male behavior” (like hogging an unfair share of meat). Ultimately this becomes inverted eugenics: eliminate the strong, if they abuse their power.

5. This premium on self-control shaped our moral sense, our capacity to internalize our culture’s behavioral rules and feel strongly that certain behaviours are definitively right or wrong. Shame and guilt — i.e. our moral emotions that likely serve as evolutionarily useful “fast thinking” — enable “self-policed” social contracts.

6. Our prior “apelike…fear-based social order” changed to include “internalizing rules and worrying about personal reputations.” Conscious, reputation-based social selection for collaborative activities subsequently became dominant. Those known to be poor cooperators would not be selected for joint ventures, including the massively expensive business of raising new humans. Boehm calls this tendency for team players to breed with each other “auto-domestication” (we bred ourselves for cooperation).

7. However plausible Boehm’s “moral origins” story seems, key aspects are hard to deny. Humans objectively have culturally configurable social-rule processors (i.e. a “moral sense”). Put another way: It is in our nature to need rules. By enabling improved social productivity, rules beat no rules. Our social-rule processors work like our language-rule processors in that both evolved for social coordination. We automatically absorb the (often tacit) rules of our native cultures grammar and behavioral norms. As Alison Gopnik notes: an “impulse to follow rules …seems…innate” and it emerges untutored. Toddlers act in “genuinely moral” ways, understanding that certain rules should not be broken. Moralities, like languages, likely have an underlying universal structure that cultures configure differently (e.g. Jonathan Haidt’s six component mix: fairness, care, liberty, loyalty, authority and sanctity.)

8. Once our social-rule processors arose, their cultural configurations also became subject to “productivity selection.” We’re descended from those with the fitter traits, and tools, and rules (i.e the higher productivity moralities). Perhaps common patterns in extant hunter-gatherer habits harbor lessons?

9. Economics today faces the same basic issues Boehm describes, further complicated by the evolutionarily recent rise of agriculture, cities, and industrialization, and the opportunities for un-egalitarian accumulation they created. But none of that negates key features of team survival logic (especially the viable limits of self-maximising).

10. Economists usually make 3 assumptions that ideas from evolution can clarify—that humans are selfish (unlimitedly self-maximizing), that competition creates efficiency, and that the “invisible hand” ensures the best overall outcome. Each requires correction.

11. Throughout nature, “self-interest” has limits. All biological appetites have maximum capacities. Most biological inputs not only have diminishing returns, in excess they’re toxic (too much food/water/oxygen is fatal). Perhaps Aristotle’s view that every virtue in excess becomes a vice also applies to psychological appetites like economic “self-interest” (too little is bad, too much is harmful). “Self-interest” as economists use it seems a poor proxy for our biological interests.

12. “Self-interest” also faces limits from an as yet unnamed natural principle that’s more general than “survival of the fittest.” It’s an extended form of Richard Dawkins’s replicators (genes) vs. vehicles (bodies) distinction. Every “selfish” gene must cooperate with its vehicle-mates (genes that damage their bodies don’t do well). More generally, anything that damages what it depends on lowers its own survival chances. We might call this the “vehicular viability” or “needism” principle.

13. The logic of vehicular viability, that is, self-maximizing that damages its vehicles ultimately becomes self-destructive, is a principle that applies widely (e.g. to bodies, hunting teams, food supply, companies, communities, markets, economies, ecologies…the planet). It constrains the kinds of self-maximizing that is survivable. We may be the only species ever to know this, or to have any choice about it. The rest of nature is basically genetically bound to its fate. But we have foresight and the ability to organize ourselves.

14. Robert Frank in The Darwin Economy distinguishes two kinds of “invisible hand” patterns: where individual and group incentives either converge or diverge. Economics focuses on the former, while mostly ignoring the latter. In the former, local incentives could work well if people choose prudently. In the latter, the “invisible hand” isn’t benign, it maliciously misleads. Frank refers to these as “Darwin’s Wedge” situations.

15. Economists have long preached that competition creates efficiency as if it was a law of nature. But nature itself teaches different lessons. “Natural” competitions routinely deliver disaster (e.g. self-extinction by overhunting) and regularly create waste. Dawkins, to illustrate how “unintelligent” natural competition is, calls tree trunks “standing monuments to futile competition.” A forest canopy approximates “an aerial meadow…on stilts…gathering solar energy.” Yet that energy is largely “wasted” on the stilts which only raise the canopy to gather “the same harvest” it would at lower heights. If somehow the trees could agree and enforce height limits, each could save energy and the forest as a whole would be “more efficient.” Obviously trees can’t do this. But need our economics be as dumb as trees?

16. Competitions for positional rank generally drive added, and often avoidable, overhead costs.  In these “arms races” however much is spent — on taller trunks, larger antlers, fancier cars — the same fraction “win.” Such overheads could be minimized by intelligent coordination and enforcement for mutual as well as group benefit. Such coordination of joint interests is not only rational, it is needed to avoid foreseeably bad outcomes, like those that uncoordinated self-maximizing delivers in the tragedy of (or freedom in) the commons.

17. Rules that limit acceptable behaviors (i.e. ethics or morals) are key and Game Theory now permits the objective study of natural laws in ethics. Until recently evolution was the only “game theorist” in town, constantly testing not only Darwin’s “endless forms” but also endless behavioral strategies, and naturally selecting the more productive. Prehistory was shaped by blind genetic strategies, until proto-humans arrived, and non-genetic strategies and social rules emerged. We have only recently developed the ideas and tools to understand that we are game theorists. Game theoretic computer simulations are “behavioral telescopes” that make visible the objective long-term effects, patterns, and limits of behavioural rules.

18. The “naturalistic fallacy” says, roughly, that we can’t derive ethical lessons from nature. But we can, and should, learn from our own nature. We can compare the productivity and sustainability of various ethical rules—even if only to map negative ethical spaces that foreseeably become self-destructive. Surely self-destructiveness is objectively bad? Perhaps rightly called evil? This is almost a sort of “negative telos”: life that doesn’t discover such “purpose” doesn’t survive. Likely no other species has any choice in this. But we do.

19. For example, we can assess how various ethical rule-sets perform in games like the Prisoner’s Dilemmas, compared to it’s most productive known strategy, Tit-For-Tat (i.e. start cooperatively, then do what the other player did last time). The results are intriguing: “Rational” self-maximizers do worse than the Golden Ruled. And Jewish tenets “beat” Christian ethics. But Tit-For-Tat requires more…

20. “Rational self-maximizers” typically don’t cooperate yielding low productivity. The Golden Ruled cooperate, thereby beating “rational self-maximizers.” But Christian turning-the-other-cheek (as Machiavelli and Nietzsche complained) is exploitable. Old Testament eye-for-an-eye is closer to Tit-For-Tat because punishment must be sufficient to ensure that cheating doesn’t pay. But punishment also must not obstruct further cooperation, so forgiveness is needed (forgiveness isn’t only divine, it can be evolutionarily adaptive… after punishment). We could call this the “Golden Punishment Rule,” it encodes a natural logic of ruthless cooperation (high productivity cooperation must prevent or punish unsustainable exploitation).

21. Darwin (being un-Darwinian) said “social instincts…with the aid of active intellectual powers… naturally lead to the golden rule.” Game theory shows that simple, rigidly followed rule — without active intellectual powers — can create evolutionarily stable cooperation. And human “games” often have much simpler structures than Prisoner’s Dilemmas (a known bad cooperator is eliminated in advance). It’s early in the study of game theory, but it seems that the behavioral universe has certain stable, high-productivity rule patterns which evolution/culture can discover. And behaviours that violate the “vehicular viability” principle eliminate themselves. Perhaps this explains the similarities among team-economic-practices of Boehm’s surviving hunter-gatherers.

22. Our survival has long required a mix of self-interest and cooperation that binds our self-interest inalienably to the interests of others. Economists generally believe that self-maximizing agents responding to local incentives in markets ensure the best outcomes. They’re wrong. Many situations have Darwin’s Wedge dynamics. And local incentives often encourage both sides of voluntary transactions to exclude costs (like pollution). Sadly for the besotted “free-market” lovers, their love can’t cure these kinds of problems without needing some element of (typically hated) central enforcement.

23. Something must reconnect supposedly “rational” self-maximizing to collective self-preservation. This needn’t mean being “devoutly egalitarian,” but delegating our interdependent futures to mindless “market forces,” and their dumb coordination, is neither rational, nor survivable. We can and must coordinate better than the invisible hand’s invisible brain.

Conclusion: Highly configurable ethics are in our nature (economics is ethics enacted). But no configuration that ignores our inalienable interdependence and our vehicular limits is fit to survive.

8 Comments

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8 Comments

  1. David C. Rose says:

    Excellent article. For an examination of the nature of the moral beliefs that do the best job supporting economic behavior along the lines you discuss see my book “The Moral Foundation of Economic Behavior” (Oxford University Press, 2011).

  2. Bryan Atkins says:

    WOW!!
    This is glorious, tough, beautifully reasoned and presented.
    Thank you.
    I would add a bit of complexity, some physics about social rules, that they are code.
    And about CODE: Entropy-generated, efficacious infrastructure for complex network relationships.
    “The story of human intelligence starts with a universe that is capable of encoding information.” Ray Kurzweil
    Or: Genetic and epigenetic code / Bio network;
    Language (spoken & written), moral, religious, math, legal, etiquette &
    monetary codes / Cultural network;
    Software code / Tech network.

  3. David Sloan Wilson says:

    Congrats to Jag Bhalla for a fine overview of a new economic paradigm based on evolutionary theory. Please visit the economics and business sections of TVOL and the EI website to learn more, including a video presentation by David Rose and an article by John Gowdy that expands upon Jag’s point 10. The EI’s economic focus has already resulted in a special issue of the Journal of Economic Behavior and Organization titled “Evolution as a General Theoretical Framework for Economics and Public Policy”. Our next event is a conference titled “Complexity and Evolution: A New Synthesis for Economics” that will be held in February, sponsored by Germany’s Ernst Strungmann forum.

  4. Economist says:

    “Economists generally believe that self-maximizing agents responding to local incentives in markets ensure the best outcomes. They’re wrong.”

    I think it’s fair to say that’s a strawman. Economists believe that in a carefully constructed theoretical situation of perfect markets, prices that include all externalities and perfectly symmetric information, the markets tend to reach allocative efficiency, that is, no more is produced than what is needed and the resources are efficiently employed to maximize production and utility.

    There is a very small, very vocal minority of politically motivated commentators that deny externalities and asymmetric information exist, and insist that real world market outcomes are by definition morally right.

  5. Helga Vieirch says:

    The difference between most animal ecologies and a human economy is that humans have division of labour and sharing of food with dependents. This has certain, but limited analogy with systems of food storage, and infant/larva provisioning, seen in animals like squirrels, beavers, and social insects.

    However, in humans it is related to provisioning for offspring that take a long long time to mature. It is not just that they remain dependent on their elders for protection, even after weaning, like young elephants and whales, but rather that they need provisioning with food that the adults gather, and they also need help while learning survival skills, for a far longer time. Think of how much harder an elephant herd would have to work if, rather than the calves beginning to eat leaves and fruit for themselves, the adults in the herd had to go out each day and bring back all the food needed by those calves, to a central location where those calves are kept safe. Wolves, foxes, and other denning and nesting species do this for a limited time for their growing offspring, but the interval is relatively short: within a year or two the cubs are nearly grown and can actively contribute to the hunt. Human children – among hunter-gatherers as well as in other societies – still often need supervision and provisioning until their late teens or early twenties.

    Economists conceptualize this in terms of dependency ratios. What we call “work” among human beings often derives from the recognition that our reproduction requires a far greater energy commitment (labour), on the part of more people than any other species. This energy commitment is that essential fact of life in a human cultural ecology: work. That ‘work” or “labor” is subject to efficiencies when done by dedicated specialists, and this is thus an essential aspect of human economic systems.

    Among hunter-gatherers I studied in the Kalahari, each band consisted of two to ten households. Each household consisting of a two or more adults, usually a man, wife, children and sometimes a dependant older person or couple.

    For these groups there were two separate and easily calculable dependancy ratios: one for each household, and one for the whole band.

    The household ratio was based on the number of consumers compared to the number of gatherers. Gatherers were usually women over 16 and they brought back to camp up to 45kg of plants and small collectible animals like grubs. These were not usually shared with other households.

    At the band level the dependency ratio was based on the number of consumers of meat compared to the number of hunters in the band, since the whole band shared in the meat form every kill.

    As you can imagine, if the household ratios were high, as when one women was collecting to feed herself, her husband, and five growing children under twelve, her workload was often heavier. She would go out gathering every day, and for a longer time each day as local food sources diminished. If she had her mother or another adult women to assist her, this made the workload far less arduous. Thus, households with many younger children were often assisted by older female relatives. For this reason, bands with younger families with many dependent tended to reshuffle membership, bringing in some older households or widowed members to reduce dependency ratios. Furthermore, since there was not just division of labour and dependency ratios to consider, but also specialization of skills, an effort was made to include people reputed to be good trackers, especially if the current make up included men who were good shots but who still had a lot to learn about reading spoor signs. Other skills too, like finding honey trees, or making well balanced arrows, or going into shamanistic trance, or experience in midwifery, or adeptness at resolving conflict, also weighed in decisions about the composition of camping parties (bands).

    For whole bands there was a similar calculation, as a camp with too few hunters would be getting very limited access to meat, and the hunters would be over-worked. Since, on average, only one hunt in every three or four was successful, the availability of game and the number of hunters set lower and upper limits on the size of camping parties.

    Food abundance varied seasonally too, so camp size and membership varied too. Smaller camping parties characterized the dry season, while larger ones occurred in the rainy season. This was true, in the area where I was working (SE Kalahari) even as the dry season tended to cause camping sites to aggregate around remaining water. Camping sites near rainy season water filled pans, where game was abundant, tended to be much larger, since the frequency of hunting success went up and larger animals were taken.

    This has some serious evolutionary implications. Bands had to be flexible to allow for adjustment of dependency ratios, both on the level of the household and for the whole band.

    Men having more than one wife might have serious consequences – creating a much higher dependency ratio not only for his household – but for the whole band. Monogamous arrangements, on the other hand, assure a lower ratio between meat consumers and hunting males, and a more continuous supply of animal protein and fat for everyone in the band.

    Hunter-gatherer economies run from sedentary to highly mobile, and no doubt adjusted locally to all kinds of work intensities under differing patterns of resource fluctuation, both seasonal and longer term. This means that economic behaviour is a part of a cultural system, and the whole pattern, including patterns of mobility and sedentism, forms of marriage, size of households and of communities, are permissive of adaptive flexibility, capable of adjusting to any kind of local ecosystem.

    The implications of these aspects of the forager economy have some interesting evolutionary implications. First fo all, one of the earliest and most successful human species, Homo erectus, occupied both Eurasia and Africa for over a million years, through major ice ages and interglacials, as a hunter-gatherer, Thus, it appears that the human mind is not an adaptation to African savanna or to one system of foraging economy. Moreover, looking even further back, into the murky distant past when some forms of Australopithecines were evolving towards Homo. I don’t know about you, but to me it seems highly improbable that trend toward enlarging brains could have happened absent the lengthening of childhood. In turn, I have some doubts that that longer childhood dependency could have occurred without the adjustable dependency ratios just discussed, which in turn entrain a tendency towards division of labour and longer post-reproductive life spans. These are aspects of our biology that responded to a flexible and learned economic pattern, where the work done by adults supported each other and a rather larger proportion of dependents, for much longer than we see in most other species.

    Thus, the idea of “many hands make light work” acquires evolutionary significance. Additionally this suggests that there really is such a thing as overwork, which sets very hard constraints on freeloading. As such, these constraints may have less to do with individual “selfish vs altruistic” strategies than with group survival. The golden rule may guide individual conduct, but it also translates into a tough and enduring practicum of community morality; a morality older than our species.

    • Helga Vieirch says:

      Carmi, I do nto recall mentioning egalitarianism… but perhaps your remarks was intended for another person’s comment?

  6. Carmi Turchick says:

    I think you are placing too strong an emphasis on the egalitarian idea. Modern societies are not essentially one group that is far larger but otherwise the same as our little hunter-gatherer groups we used to live in. Instead they are collections of smaller nested and overlapping groups which compete within the larger group. Further, the mechanisms that Boehm identifies for enforcing egalitarianism necessarily fail in larger groups. Consensus becomes impossible, sub-groups back their own, knowledge of who did what becomes uncertain.

    Another problem is the assumption that game theory, and especially PD, can give us insights and understanding. PD is a scenario either extremely rare or unknown in our evolutionary past. The evolution of our ability to lie and our talent for self-deception both attest to how difficult it was for our ancestors to defect without detection, something PD assumes 100% efficiency of. Further, most fitness effecting choices required N cooperators to realize any reward, or indeed to avoid a result of everyone having a fitness of zero. Too few men defending the group and their territory, and collective fitness rapidly reaches zero. Too few men hunting that large animal, everyone goes hungry. And it was impossible to know often how many would be not enough. So the PD idea that our ancestors could readily defect and still get a fitness increasing reward is just wrong.

    I think the issue is rather more complex than you are understanding it to be. You can read my paper , “When competition is good for the host” here: link to theroadtopeace.blogspot.com

    David Sloan Wilson, sorry I missed the interesting sounding conference you mention above. I think you will find my paper interesting though and would love to hear your thoughts on it.

  7. Helga Vieirch says:

    This is very strange. I would have said that the hunter-gatherers I knew in the Kalahari are well described by the following suggestion – they indeed,“are collections of smaller nested and overlapping groups” the part that does not fit is the added conditional “which compete within the larger group.”

    The hunter-gatherer data suggests that where these networks extended furthest, the flexibility would be greatest, and the long-term effect would be a more successfully reproducing population. Territorialism, resulting in mutual aggression, is likely to have been counter-productive to long term survival. Competitive exclusion, whereby some groups expanded at the expense of others, ignores the simpler strategy of impulse control and opportunistic negotiation. The latter enlarges the scope of caloric throughput from one generation to the next, without the stress of fighting and injury. Even small positive increments in reproductive success would be enough to make this a dominant strategy, especially in environments when opportunities to extend both information flow and potential movements of personnel (gene flow) in both directions would permit mutual possibilities of refuge if local resources were reduced by drought of volcanic activity.

    This fits with the suggestion that humans evolved a “social brain”, which tended to grow in tandem with these increased network sizes, and which made interactions with others fall into a series of nested clusters of categories, ranked hierarchically in terms of number of points of intersect with other people’s networks. We not only could keep track of our own individual network, but mediate relationships between our own and our partner’s network, and between our own and that of our close friend’s family and in-laws as well.

    “The ‘social brain hypothesis’ for the evolution of large brains in primates has led to evidence for the coevolution of neocortical size and social group sizes, suggesting that there is a cognitive constraint on group size that depends, in some way, on the volume of neural material available for processing and synthesizing information on social relationships. More recently, work on both human and non-human primates has suggested that social groups are often hierarchically structured. We combine data on human grouping patterns in a comprehensive and systematic study. Using fractal analysis, we identify, with high statistical confidence, a discrete hierarchy of group sizes with a preferred scaling ratio close to three: rather than a single or a continuous spectrum of group sizes, humans spontaneously form groups of preferred sizes organized in a geometrical series approximating 3–5, 9–15, 30–45, etc. Such discrete scale invariance could be related to that identified in signatures of herding behavior in financial markets and might reflect a hierarchical processing of social nearness by human brains.”
    W.-X. Zhou, D. Sornette, R. A. Hill and R. I. M. Dunbar 2005, Discrete hierarchical organization of social group sizes Proc.R.Soc.B (2005)272,439–444
    doi:10.1098/rspb.2004.2970 Published online 17 February 2005

    This makes it possible to meet strangers through a close friend of our brother, and to extend to them the courtesy of trust, purely on hearsay: “Oh yes, he talks about you quite a lot – all good – and so this is your best friend from high school? Hi Steve, nice to meet you, can you I get you a beer?” To the extent that social organization and the values attached to behavior can be transmitted culturally, a successful way of organizing economic activities could, in fact, spread independently of any genetic propensity to have large networks and open and flexible foraging systems. Once begun however, the spread of such a learned behavior could hypothetically set in motion certain selection pressures off its own bat. For example any genetic tendencies toward aggressive dominance hierarchies would become quite sharply dysfunctional in a social setting where generalized sharing of food permitted more offspring to survive.

    But as Carmi points out, being pleasant and neighborly can only go so far. If egalitarian sharing of food becomes such a strong biological drive, that it is automatic, the group becomes vulnerable to freeloading and cheating.

    I think this is where networks of communication, that go well beyond local groups, becomes critical. I had instances of intermarriage among the three main language groups of San hunter-gatherers. Within the whole culture area, stories, dances, jokes, and of course gossip, passed fairly swiftly among thousands of groups over tens of thousands of square miles (many people were multilingual). A strange male or female, arriving at any camp, would be welcomed if they could recite their networks and find points of connection with known and trusted companions in other groups. But if that trust is betrayed, word will spread and eventually these people will find no welcome in any local band.

    Thus, a system of self-control via the prefrontal cortex, which permits assessment of people from out-groups based on socially transmitted knowledge of their moral behaviour (reputation) is more serviceable than some kind of territoriality that implies automatic aggression between local communities. Within local groups, social control of the kind suggested by Christopher Boehm means that a certain spiteful outrage and venting, when infractions occur, balances the etiquette of cooperative inclusivity. This sets some very familiar limitations on the potential for exploitative opportunism and deceit. Local groups, heavy in young dependents, but who could balance dependency ratios by enlisting members from a larger pool, would be more successful at reproducing themselves than those who did not, but only as long as working adults pulled their weight

    So, we might ask ourselves, if, as symbolic language developed, might it not have became a very useful tool for communicating past behaviour of individuals, so that even people a thousand miles away in the network would get word, not to trust a certain named person from a certain named area, and be forewarned?

    In such a system, the role of the nested group memberships, and the networks of information flow among them, would seem an effective system for seriously curtailing the reproductive success of freeloaders and liars. So moral acts develop cultural valiance: some things become taboo: the sacred comes into being along with the banal – and both have reproductive consequences.