Global Crisis Blog

The Future of Capitalism…As Seen by Anthropologists

Does Fairness Convey Evolutionary Advantage?

By Shlomo Maital

   As the dust from the 2007-9 global crisis clear,   it dawns on the world that the global crisis has not ended but simply changed its form (from financial crisis to recession to sovereign debt crisis, a la Greece, Spain, Portugal, Ireland).   Some have begun to think about how to reinvent capitalism.   Don’t ask economists.  They are still shell-shocked. As David Brooks notes in his New York Times column today, economics needs an entirely new paradigm.  But building one will take a long time, because today’s economists have a huge human capital investment in the existing one. 

    Let’s then turn to the anthropologists.   Unlike the economists, they ask really good questions, and answer them by studying a wide variety of 15 different human societies.  The latest such study is led by Joseph Henrich, published in SCIENCE magazine. [1]    Henrich and his team ask:  “why do ‘strangers regularly engage in mutually beneficial transactions'”?   In other words: Why doesn’t everybody act like the Wall St. money-grubbers who destroyed the world for their own short-term gains and bonuses?  Why are some societies characterized by pro-social behavior?

     They study 15 different societies, including a group of people in Missouri, United States.  What they find offers much hope for human society.

      The researchers use the Dictator Game to study values.  In this game, two players are given a sum of money.  Player 1 must decide how to divide this sum between himself and Player 2.  Player 2 receives the allocation (offer) and the game ends.  Player 1’s offer provides a measure of Player 1’s behavioral fairness.

    They find that the larger and more ‘modern’ societies are, the higher the “mean dictator offer” (as a percentage of the ‘stake’, or sum of money).  In Missouri, U.S., the stake approaches 47 per cent, nearly half.  They find a correlation between the modernity, complexity and size of the population, and also the degree of religiosity,  and the percentage of the stake offered to Player 2.

    Why does such pro-social behavior emerge, and thrive?  Two possible reasons, Henrich and his team say, are, a) ‘innate social psychology calibrated to life as it was in tiny family groups in Paleolithic ancestors’, and b) pro-social behavior enables large complex societies to do better than societies characterized by selfish it’s-all-about-me behavior.  They conclude in favor of (b).

     What this implies, then, is that the global crisis caused by rapacious greedy behavior by a handful of traders, speculators and bankers on Wall St. is not a norm but an aberration, and the society that encouraged or tolerated it will, in the long run, lose out to societies that are more pro-social and respect fairness.

   Apparently,  fairness does convey evolutionary advantage, to societies (and to companies?), by generating social cohesiveness that makes societies resilient, high-performing, motivated and long-run stable. 

   Thanks, anthropologists, for giving us the answer that economists repudiated for centuries.   

[1] Joseph Henrich, et al., “Markets, religion, community size, and the evolution of fairness and punishment”, SCIENCE, 19 March 2010, pp. 1480-1484.