April 2008 Meeting

The next Bastiat Society monthly meeting will be Wednesday, April 2nd. Our distinguished speaker for the evening will be Radley Balko, senior editor at Reason magazine.

Location: 175 King Street, Charleston SC

Time: 5 pm reception , 6 pm speaker

RSVP: Megan Rock

About our Speaker (in his own words):

I'm a 32-year-old writer and editor living in Alexandria, VA - just outside Washington, D.C. I live with my wonderful girlfriend and our dogs, a Sharpei/Lab mix named "Harper" (after Harper Lee) and a bulldog-terrier mix named "Isabel" (after Isabel Paterson).

I'm a former policy analyst with the Cato Institute, now a senior editor for Reason magazine. I'm also a biweekly columnist with FoxNews.com. I've been published in lots of places, from Playboy to the Wall Street Journal, and have done lots of TV and radio interviews. My work has also been cited in a Supreme Court opinion, helped get a guy off death row, and I've testified before Congress a few times.

I'm originally from Greenfield, Indiana. I attended Indiana University and graduated in 1997 with a BA in journalism and political science.

I'm a "small-l" libertarian.

I like to write. I'm a music buff, a sports nut and a political junkie.

One day, I'll teach one of my dogs to retrieve a beer from the refrigerator on command.

What Business is Not

1. The purpose of business is not to promote the public good.
2. Business does not exist to foster employees' physical or emotional well-being; still less is its goal their ultimate fulfillment.
   
3. It is not the aim of business to provide full employment for the nation's labor force
4. Business does not exist to provide jobs for local workers.
   
5. Business's purpose is not to serve the interests of customers or of managers or of the community.
6. Business's definitive purpose is not to produce goods or services, or to add value.
   
7. Business is not a charity or a church, a school or a club
8. Business is not, except incidentally, an agency of government or of social policy.
9. To focus on business's function as a producer, supplier or adder of value is to misconstrue business's purpose. If the nature of the goods or services, or the way they are produced, takes priority over maximising long-term owner value, then the activity involved is not business. An organization whose guiding principle is producing the absolutely best widgets (e.g., engines, books, healthcare) or the very cheapest ones -- independent of the consequences for long term owner value -- is not operating as a business...even if, incidentally, it sells the widgets profitably.
   

From Just Business, by Elaine Sternberg

Trade is Better than Battle

An editorial in Scientific American quoted a United Nations expert, Jan Egeland, who is happy that war is receding around the globe, but who complains that war is getting "crueler" because it now involves civilian populations, not just armies. Egeland says we could end war, if only politicians would muster the will to triumph.

The editorial goes on to warn that global warming might ignite a new round of environmental wars, spinning out of control.

I guess the only way to deal with that possibility is to find politicians with even greater will. I cringe anytime someone calls for a politician with the will to triumph, even when the topic is ending war.

From an evolutionary perspective, war is just one of the ways humans have struggled to survive, as victors on either offense or defense. There is no such thing as a war without cruelty. War is cruelty. United States General William T. Sherman said so when he was waging a war against a civilian population one hundred and forty four years ago.

The reason war is diminishing is that its survival value is declining. We have discovered that market economies and individual liberty are far better social arrangements for human survival. Trade is better than battle.

As for global warming, it need not ignite another war. Market forces are adaptable enough to deal with climate change. However, global warming is dangerous precisely to the degree that politicians try to "will" a solution.

Many lives have been lost in the triumph of the will.

Sternberg on Business Ethics

"There is, consequently, still a need to combat what can most appropriately be called the 'oxymoronic approach' to business ethics. In the early 1990s, this view was commonly associated with social responsibility; now it is more often described in terms of stakeholding. In whatever form it is expressed, however, the oxymoronic view holds that being ethical in business means replacing the pursuit of owner value with the pursuit of some other end -- social welfare, environmental protection or stakeholder interests, for example. Since, however, the essence of business is maximising owner value by selling goods or services, this view of business ethics is literally absurd: it makes refraining from business the condition of being ethical in business."

Elaine Sternberg, Just Business: Business Ethics in Action

Things I Thought I'd Never See

The Ritz Carlton sponsoring a NASCAR driver?

Life Gets Better

"Intellectuals and theorists have long expected, almost demanded, that average Americans would develop political antipathy toward the prosperous and vote to confiscate their wealth. Perhaps average Americans do not do this because they know they have spent the last several generations gaining on the well-to-do in significant ways. Whatever faults the United States and the European Union may have -- they are many -- in recent generations, both have methodically improved daily circumstances for almost everyone. The same social engine that in the United States and Western Europe is producing spoiled and insufferable billionaires is also producing steady, significant gains for the middle and for the poor."

Gregg Easterbrook, The Progress Paradox

Liberty and Economics

Far from being a body of abstract thought, economics is the study of what makes business possible. Get it wrong, and there will be no food in the stores.

This video introduces one of the great champions of free-market economics: Ludwig von Mises. He grew up in an intellectual environment that was even more hostile and contemptuous of business than the environment is today. As he described it:

"By 1900, practically everyone in the German speaking countries was either a statist or a state socialist. Capitalism was seen as a bad episode which fortunately had ended forever. The future belonged to the state. All others would be regulated in a way that prevented businessmen from exploiting workers and others."

Four Views of Human Progress

By any objective measure, life on earth is getting better.

Health? Infectious diseases kill about 50 people per 100,000 – a 14-fold reduction in death from infectious diseases in the last century. Longevity? From the mid-18th century to today, life expectancy in developed countries jumped from less than 30 years to about 75 years. Even in the poorest countries in the world, life expectancies have increased, in some cases by 50%. Infant deaths? In 1900, more than 1 baby in 10 died. In some areas of the US, 1 in 4 died. Today, only about 1 in 150 babies dies within the first year. Mothers dying in childbirth? One hundred years ago, the maternal death rate was 100 times higher than it is today.

The list of indicators goes on and on to an inevitable conclusion. Whether we look at diet and nutrition, the distribution of wealth, the state of poor Americans, the state of children and teens, the American worker, leisure and entertainment, housing, transportation and communication, invention and scientific progress, technology, education, safety, environmental protection, the supply of natural resources, social and cultural indicators, sports, the condition of women, racism, or the freedom of the individual, life on earth is clearly getting better.

Why don’t more people know it?

Why are people convinced the world is bad and getting worse?

Who or what is the agent of progress?

Answering these questions requires that we define the idea of progress. We immediately run into a problem. Not everyone views progress the same way. There are at least four different views of human progress in the modern world. We can classify these views as conservative, libertarian, socialist, and communist. Understanding these views can help clear up much of the confusion surrounding the idea of human progress.

The Conservative View of Progress
The conservative view of progress is profoundly skeptical. Sometimes – perhaps often – it rejects the idea of progress altogether. It may use phrases like “the end of progress,” “the limits of progress,” the “limits of growth,” or “mankind should not play God.” When presented with evidence that the world is getting better, the conservative simply claims we are measuring the wrong stuff, looking the wrong way.

In the conservative view, the present is a degenerate state filled with dangerous ideas masquerading as progress. Mankind has fallen from a Golden Age, an Eden, or a pristine state of nature. This is a view shared by groups as different as radical environmentalists and religious fundamentalists, no doubt to each group’s mutual outrage. The common theme in their world view is that unrestrained progress is a threat to whatever good is left the world. The only meaningful progress is that which restores what has already been lost.

In this view of progress, man’s task on earth is redemption. How this redemption is achieved is the distinguishing characteristic between conservative groups. Some groups see it in nature, some in faith, and some in patriotism. Individuals are not free to decide the path of their own redemption. Redemption must follow a course laid out by a proper authority such as a hereditary aristocracy, a religious leader, a group of secular moralists wielding political power, or a democratically elected official.

Whatever the type of authority in question, it is the driving agent of progress, not the individual. Authority guides the conditions, traditions, institutions and faith of all human activity in accordance with a divine or natural plan for the redemption of a fallen race. Authority sets the acceptable limits of individual behavior. Authority determines the difference between entrepreneurship and crime. Authority defines the social goals and the means to achieve them. Such a world view requires faith more than reason, tradition more than innovation.

The Libertarian View of Progress
The libertarian view of progress is organic and evolutionary. Society is organized by the self-interested economic activity of individuals in voluntary arrangements. Only the most successful arrangements survive. Predicting exactly what will survive in complex and constantly changing conditions is nearly impossible. Knowledge is too fragmented, dispersed, and fragile to collect and use for central planning. Only the decentralized process of the market can effectively use such knowledge.

Progress is messy and unpredictable, but creativity is very high. There are lots of individual goals, but there is no clearly defined social goal. Nor can there ever be one without interfering with the organic order. Social results are the unintended consequences of individual behavior. Business people and entrepreneurs are the agents of progress. The only limits imposed on their behavior are rules against force and fraud.

While tradition, faith, and reason are all present for individuals to use however they see fit, the libertarian view of progress does not require any individual to submit to any of them. What is essential in the conservative view is purely voluntary for the libertarian.

In the libertarian view of progress, there are no infallible guides toward an ideal social order. Progress is not a matter of redemption. It is a limitless evolutionary process with unpredictable social results. The world is always out of balance, in the middle of change, surging in some new direction. Progress is institutionalized innovation.

The Socialist View of Progress
In the socialist view of progress, human activity is best organized by human reason via political action. Its consequences are measurable and predictable. Progress is movement towards a clearly defined, socially desirable goal. The future is what man wants it to be. Reason is man’s essential planning tool, more useful than faith (which a socialist calls superstition), tradition (historical and social inertia), or free markets (chaotic production).

The agents of progress are technocrats who have both the technical expertise for the problem in question, and the political power to improve the organic order, i.e. the power to improve the marketplace of free and voluntary exchanges. In its mildest form, the socialist view of progress co-opts the very word in its name: Progressives. In its strongest form, it sees business people and entrepreneurs as the enemies of progress.

Today, it is almost impossible to imagine the immense confidence that early 20th-century intellectuals had in the power of planning, what was once called “socialist calculation.” They believed that all they had to do to make a better world was plug a few thousand variables into an equation, add a few thousand coefficients, and – voila! – achieve optimal outputs and a just distribution.

Before 1914, many sincere intellectuals praised pre-war Germany as a leading example of an advanced, scientific social order. “Unscientific” was the ultimate intellectual put-down, and it was often used by non-scientists to criticize the work of other non-scientists. Faith, tradition, and commerce were obstacles to progress. Remove them, and reason would achieve, at last, a more dignified life for mankind.

The Communist View of Progress
The communist view of progress is that history follows laws as reliable as the laws that govern the physical universe. History is not a chain of random events. History is the unfolding of the inevitable class struggle over the means of production. Each event expresses a historical necessity. At the present moment, mankind is not sufficiently developed to understand historical necessity. An enlightened few do, however, and these form a Party to act as the embodiment of the will of history. The Party is the agent of progress. Arthur Koestler described this view in his novel Darkness at Noon:

“The Party can never be mistaken…You and I can make a mistake. Not the Party. The Party, comrade, is more than you and I and a thousand others like you and I. The Party is the embodiment of the revolutionary idea in history. History knows no scruples and hesitation. Inert and unerring, she flows towards her goal. At every bend in her course she leaves the mud which she carries and the corpses of the drowned. History knows her way. She makes no mistakes. He who has not absolute faith in History does not belong in the Party’s ranks.”

The Four Views in Action
After nearly a century of ascendance, the Communist view of progress began dying out around 1980. Born out of the socialist ideals of the late 18th and 19th centuries, Communism left a wake of death, misery, and suffering unparalleled in human history, including the deaths of 10 million people from deliberate famine in the Ukraine in 1932 and 1933; the Gulags where millions suffered for crimes as small as making an anti-government joke; the occupation and misery of Eastern Europe; the Korean and Viet Nam wars; and the killing fields of Cambodia where nearly 2 million died. Communism was an intoxicating vision, built on grand ideas, logic, and careful conclusions, but it was an utter failure in the real world. It turned out to be an intellectual fairy tale with a horror-show ending. It smolders on in North Korea, Venezuela, and a few English departments. It has been abandoned in everything but name in China and Viet Nam.

Where did the Communists turn after their faith in the Party as the agent of progress was shattered? They retreated to the solace of the socialist view en mass, and that is where most of them are today. They reluctantly abandoned their belief in historical necessity – and with it, their willingness to sacrifice lives in the name of progress. They adopted the view that progress requires smaller individual sacrifices of liberty and property, offered up to the right people, acting according to the right reasons.

The world today is a volatile mixture of these three views of progress: conservative, socialist (composed of both original socialists and lapsed communists), and libertarian, each vying for supremacy. In reality, there is no clear dividing line between these views. They represent a continuum. However, for the purpose of exploring the idea of progress, it is helpful and not wholly inaccurate to treat them as distinct sets. Indeed, it is usually when these views overlap that trouble begins, because one view can quickly overrun another.

For example, people with differing views of progress might all accept the necessity of some form of government planning for infrastructure (defined here as transportation and communication networks). When a community builds a road, it faces a problem that is very difficult to solve solely by voluntary agreement. All it takes to shut the network down is one holdout. Some degree of enforced social planning, i.e., government, is required to deal with holdouts.

However, once we concede the necessity of government planning for infrastructure, we open the door to all kinds of mischief in the name of progress. Every problem can cleverly become an infrastructure problem. Unchecked, government planning leads straight to a struggle between those who would use it to redeem mankind (the conservatives), and those who would use it to build a scientific state (the socialists). The libertarians are notably absent. They would rather not use government at all.

Is it really true that something as familiar as the local zoning board is actually the scene of a political shootout between one group’s vision of redemption and another group’s vision of the scientific state? Of course it is. Conservatives use zoning to control adult businesses, and thereby moral behavior. The Greens (another brand of conservatism seeking redemption in nature) use zoning to control development, something they view as a moral issue. Socialists use zoning to rationalize unrestrained markets. All of these groups are arguing about the right way to use government, but they rarely argue whether it should be used at all. All of these groups seek the power of government because of the good they believe they can do with it, in the name of progress. They do not see in their efforts the danger of igniting bitter civil disputes. They only want what reasonable people want. In this, they are dangerously naïve.

Government power is not simply a social contract. The Nobel-prize winning economist Friedrich Hayek made that point decades ago when he said that the most minor government functionary has more arbitrary power over another individual than the wealthiest man in town. That is precisely why government can solve network problems: the most minor government functionary can command involuntary compliance under the threat of fine, seizure, or imprisonment. Or, as George Washington said almost two hundred years before Hayek, “Government is not reason, government is not eloquence, it is force.”

Until economics developed a substantive body of economic research on the actual operations of government– what is called public choice theory – the proponents of government planning had a relatively unobstructed field to promote planning in the name of progress. Public choice theory revealed the weaknesses in their plans. Government officials are only human. True to human nature, they tend to use their offices and powers for their own benefit, the benefit of their friends, and the harm of their enemies. Business is tempted to use government to limit competition or fix prices. Labor is tempted to use government to protect jobs and benefits. Consumers are tempted to use government to lower prices and dole out benefits. Politicians are tempted to use government to buy votes and shake down contributors. The end result of this orgy of temptation, self-interest, and force is a zero sum game where someone has to lose.

Public choice theory builds a powerful case against using government as a tool of progress. It teaches us that we must carefully distinguish between those things that government can do well in the name of progress, and those things that are best left to free individuals acting in their own self-interest in the market. Knowing where to draw the line between the two is difficult. Knowing that a line must be drawn is essential.

The future of human progress – defined here as a steadily improving standard of living – depends on well drawn lines. You might consider them guardrails. On one side, the conservative rail emphasizes tradition and culture, the unspoken rules of how we should deal with one another and the world around us. On the other side, the socialist rail emphasizes reason and the unique power of public solutions. Between the two, the libertarian view of progress rushes forward in an unpredictable rush of human creativity and change that looks subversive to the conservative and looks like unreasonable greed to the socialist.

So long as tradition and reason remain the guardrails that direct and contain human creative behavior, they serve a valuable purpose in promoting human progress. But that does not mean that individuals who hold those views – those who form the guardrails -- will approve of the results. There will be inevitable friction and even violent disagreements. The relative influence of each view will wax and wane among populations, but that is precisely how progress is born, where it lives and works, where it delivers its best results, and where it dies.

To summarize, progress is what happens when free men and women act creatively within -- and sometimes beyond -- the fluctuating cultural and political constraints established by their civilization. Sometimes, progress simply improves things. Sometimes, it changes them forever.

In conclusion, let me return to the questions I asked at the beginning.

Why don’t more people know the world is getting better? That fact does not fit into their world view.

Why are people convinced that the world is bad and getting worse? The more conservative or socialist a society, the more likely people will believe that the world is getting worse.

What is the engine of progress? It is the unlimited creativity of free individuals.

Hagrid's Advice

In the fifth book of the Harry Potter stories, Harry Potter and the Order of the Phoenix, the character Hagrid is sent as an ambassador to persuade the Giants to join the fight against the evil wizard, Voldemort.

His job is unusually difficult. Giants are known for being stupid and violent.

After Hagrid returns from his mission -- visibly bruised and battered -- he offers the following explanation that is useful advice for anyone involved in tricky negotiations, "If you overload them with information, they'll kill you just to keep things simple."

That's good advice for CEOs, economists, and anyone else making a presentation.

The Audacity of Hopelessness

Who's in Control?

A defining characteristic of this economy that produces such enormous abundance for us all (and yes, despite the current downturn, it continues to produce prodigiously) is that no one is "in control." Indeed, no one could possibly be "in control." A far greater danger to Americans' prosperity than a President with a poor speaking style and a penchant for standard-fare political shenanigans is the spread of the belief that economic salvation lies in having someone "in control."

Don Boudreaux, at Cafe Hayek

Balzac on The Machinery of Government

The year 1850 marked the death of two notable French intellectuals: the statesman, journalist and economist Claude Frédéric Bastiat, and the novelist Honoré de Balzac.

Balzac was known as one of the founding fathers of French realism. In the following passage from his novel Le Père Goriot, he quickly captures the dehumanizing reality of the French government bureaucracy.

This passage is from a translation by Ellen Marriage, available at Project Gutenberg.

"There is a race of quill-drivers, confined in the columns of the budget between the first degree of latitude (a kind of administrative Greenland where the salaries begin at twelve hundred francs) to the third degree, a more temperate zone, where incomes grow from three to six thousand francs, a climate where the bonus flourishes like a half-hardy annual in spite of some difficulties of culture. A characteristic trait that best reveals the feeble narrow-mindedness of these inhabitants of petty officialdom is a kind of involuntary, mechanical, and instinctive reverence for the Grand Lama of every Ministry, known to the rank and file only by his signature (an illegible scrawl) and by his title--"His Excellency Monseigneur le Ministre," five words which produce as much effect as the il Bondo Cani of the Calife de Bagdad, five words which in the eyes of this low order of intelligence represent a sacred power from which there is no appeal. The Minister is administratively infallible for the clerks in the employ of the Government, as the Pope is infallible for good Catholics. Something of this peculiar radiance invests everything he does or says, or that is said or done in his name; the robe of office covers everything and legalizes everything done by his orders; does not his very title--His Excellency--vouch for the purity of his intentions and the righteousness of his will, and serve as a sort of passport and introduction to ideas that otherwise would not be entertained for a moment? Pronounce the words "His Excellency," and these poor folk will forthwith proceed to do what they would not do for their own interests. Passive obedience is as well known in a Government department as in the army itself; and the administrative system silences consciences, annihilates the individual, and ends (give it time enough) by fashioning a man into a vise or a thumbscrew, and he becomes part of the machinery of Government."

Police State

I do not spend time watching MTV -- although I was young enough to be a member of the target demographic when it began. These two infomercials currently running on the cable channel are so thought-provoking, they may make me tune in again.

The critical question raised by these ads, however, was answered by F. A. Hayek almost sixty years ago. What leads to a police state? Central planning is the road to serfdom.

Via Scott Horton at Harper's Magazine.

Those Who Know Better

"...all poetical imitations are ruinous to the understanding of the hearers"

Plato, "The Republic," Book X

Plato was not the first well-educated intellectual to believe that he knew better than other men, but perhaps he has been the most influential. In his blueprint for a better world, The Republic (circa 360 BC), one of the social improvements he called for was banishing all poets, because poets do not tell the Truth; they just sell a bunch of lies.

Today, there is another group of well-educated intellectuals calling for banishing -- or, at the very least, the irreparable disgracing -- of another group of individuals on the basis of its departure from the Truth. The former group is made up of militant atheists. The latter group includes anyone who is religious.

The new militant atheists believe that religion is, in the words of one of their most outspoken advocates, Christopher Hitchens, "violent, irrational, intolerant, allied to racism, tribalism and bigotry, invested in ignorance and hostile to free inquiry, contemptuous of women and coercive toward children."

Of course, humans have used religion as an excuse to do horrible things to one another. But can we rely on human reason to do any better? Is reason that much more reliable than faith?

Most of the human atrocities of the 2oth century did not occur at the hands of men of faith; they occurred at the hands of men who believed they were acting according to reason and science. Lenin, Hitler, Stalin, Mao, Ho Chi Mihn, and Pol Pot all at least gave lip service to the idea that they were leading mankind away from a history of ignorance and superstition and towards an enlightened future. They believed they were the vanguards of human progress.

Hitchens gets around this uncomfortable fact by claiming that these guys were in fact religious leaders, not political ones. Granted, many of their political movements eventually acquired a religious fervor, but does not that prove that human nature needs a religion, and when it cannot find one it will create one out of whatever raw material is available?

Make no mistake, the power of human reason is a wonderful thing. But it is not great enough to coordinate the actions of six billion people in almost two hundred countries on seven continents. For that task, reason requires a companion, something more adaptable to individual and local conditions; something that does not depend on formal education as much as it depends on local knowledge passed from one generation to another in ways often unspoken.

We call that companion culture, and it is a kind of reason mined from the rich vein of all the human past. Religion is a very important part of culture. Religious forms, practices, and reputations will vary, but religion's universal presence attests to its value. Only a wise man or a fool would insist that we would all be better off without it.

He's Come Undone

The editors of National Review on Eliot Spitzer...

"If there is any comfort at all from this episode, it is that a man who pursued his political ambitions by any means will almost certainly not be trusted with public office again."

Emergence

One of the most exciting new areas of research is an area that crosses traditional academic borders. It is called emergent behavior.

Emergent behavior is what happens when a relatively simple set of rules goes through many iterations, eventually producing a result that is complex and desirable, but completely unplanned by the individual actors themselves.

Take the game of chess, for example. It is a game with fewer than two dozen rules. Yet, the possible game variations are greater than the number of atoms in the universe. Simple rules, complex results.

On a larger scale, everything from corporations to the entire economy appears to work the same way. Individually, each of us operates with a simple set of rules -- some we can articulate, and some we cannot -- distilled from the social and physical processes of trial and error.

Contrary to popular opinion, we certainly do not act on the basis of thousands and thousands of pages of policies and procedures, regulations, and laws. Our brains simply cannot retrieve that much information. Complex rules result in the very undesirable consequence of utterly confused behavior. This is bad news for those among us who believe there must be a policy statement for everything. Human behavior will always default to a simpler set of rules.

The only thing a complex set of rules can achieve is widespread contempt for the very idea of rules in the first place. The lesson for business management is this: keep your rules simple, and measure the success of your rules by the results.

Beyond a certain point, every new rule, added to a new policy, published in a new manual, amended by a new law, established by a new decree, governed by a new committee, enforced by a new official, is a step towards the kind of world Franz Kafka wrote about in this three great novels, The Trial, The Castle, and Amerika, a world of contradictory rules and arbitrary enforcement; a world where an individual can be guilty and still be ignorant of his crime; a world where men live more in fear than in hope; a world where it is safest to do nothing.

Image of Franz Kafka, source: http://www.zeno.org - Zenodot Verlagsgesellschaft mbH

Trust and Trade

"...trade is the best thing we can do to break down the natural animosities between groups. For trade to work, two individuals have to have a certain amount of trust. We know from game theory that once trust breaks down, subjects begin to defect rather than cooperate. What does it take for them to cooperate? Trust. What does trust take? Trust takes a number of exchanges in which there are no defections."

Michael Shermer, in reason, April, 2008

An Introduction to Frédéric Bastiat

The Merchant Ape

by Dori LeCroy, PhD.
Copyright, Dori LeCroy. Reproduced here with permission.

Dori LeCroy (dorilecroy@aol.com) is an independent scholar and board member of The Bastiat Society in Charleston. South Carolina.

Living creatures have adapted to their environments through millions of years of natural selection operating on both physical and behavioral characteristics. Cats climb trees and catch mice because in addition to installing the necessary physical equipment for these activities, natural selection also “designed” cats to want to do them.

Behavioral adaptation is crucial to survival, as is physical adaptation, and natural-selection pressures have influenced the behavior of all the animal species, including the human animal. An inclination to form alliances, greater generosity to relatives than to nonrelatives, mistrust of strangers, and delight in gossip are all examples of human behaviors resulting from millions of years of evolution. They are present, as the norm, in all cultures.

Evolved behaviors are natural tendencies to notice some things more than others, to have feelings about certain things, and to act in certain ways. Behaviors evolve because, more often than not, they foster survival and reproduction in the face of relatively constant environmental challenges. During our evolutionary past, avoiding predators was a constant challenge. This likely led to a human tendency to be nervous in the dark and to lie low at night. The saber-tooth got those who weren’t nervous, and only we nervous ones are left. Nervousness in the dark is an evolved characteristic. So is the human sweet tooth. Those who ate more of the sugary fruits during the ripe period stored more energy, and over the long run had a reproductive edge over those without a sweet tooth. So here we are, the descendants of sugar-craving, fruit-gorging ancestors paying outrageous prices for Godiva chocolate and dieting the rest of the time. But the most interesting human adaptations are the social ones.

We are group-living animals, and we evolved as such. The human mind evolved in the context of a subsistence hunter-gatherer existence in groups numbering upwards of 100 or more individuals. During our millions of years of evolution all the necessities of life emerged from group membership: protective alliances, cooperative hunting, sharing food, all kinds of exchanges of goods and services. And this never was a “one for all” arrangement, but rather one of “reciprocal altruism,” as evolutionary psychologists call it. Goods and services are given to another in the expectation of reciprocation, but not necessarily simultaneously, in kind, or by the same person. Each individual was part of a reciprocation network where a favor in the form of a food donation might be returned with a future gift of food or some other valued item like aid in child-care, support in a dispute, or another endeavor. Also the reciprocator might be a relative, friend, or alliance partner of the original recipient of the food donation. The expectation is that what goes around comes around in one form or another and by one route or another.

For the marginal existence of our ancestors, networking was essential for survival and reproductive success, and those who did it best are our ancestors. Or to put it the other way, we are the descendants of ancestors who were the most skilled in the reciprocal-altruism arena. This means that natural selection favored psychological traits that supported success in this arena—traits like noticing and remembering who gives what to whom, how much, and under what circumstances. When a society is organized around dozens of individuals linked by mutually beneficial exchanges, a sensitive and efficient accounting mind is highly advantageous.

Due to its gradual accumulation in our ancestors over evolutionary eons, we carry the genetic material that supports these accounting capabilities. Our brains evolved under pressures to make efficient neural circuits that serve specific kinds of keeping-track-of-things. Once set in this direction in the context of small-group living, the human bookkeeping brain had no trouble extending its calculating abilities to a broader scope. The migrations of peoples led to intergroup contacts, and although warlike conflicts were common, so were commercial contacts.
Archeologists are constantly discovering new evidence of trade between ancient peoples deeper and deeper in the past and over wider and wider areas. Materials were gathered by one set of exchanges and traded in another set, sometimes at great distances, all prior to the advent of writing or currency. The power of the human mind to keep accounts is extraordinary, and it has been at work for a long time. Our great ape cousins, the chimpanzee, the gorilla, and the bonobo (also called pigmy chimpanzee) are capable of rudimentary versions of this kind of bookkeeping and are also socially organized around reciprocal altruism, but we far outdistance them. We are most truly the merchant ape.

Role of Emotions
All this sounds terribly calculating and cold-blooded, but actually emotions are very much involved. Behavior is motivated by emotion, and natural selection has seen to it that our emotions support our mercantile relations. Gratitude encourages reciprocation, guilt discourages nonreciprocation, and anger discourages nonreciprocation by others. Anxiety is evoked by suspicion of nonreciprocation. Contentment comes through inclusion in a reciprocation network, and happiness through personal achievements (skills, reliability, and other virtues) that demonstrate worthiness and therefore value as a reciprocation partner. From an evolutionary point of view, any evolved characteristic must confer a fitness advantage. There is little doubt that human emotions along with human reason were supported by natural selection to the degree that they successfully regulated reciprocal exchanges in the hunter-gatherer context of ancestral life.

But all this doesn’t imply that we are evolved to follow a golden rule. Skillful participation in networks of reciprocation also included skills for cheating and deceit. Clearly nonreciprocators were unlikely to be carried as free riders by our struggling ancestors. However, stingy reciprocation that escapes detection is another story. Successful cheating gives a reproductive advantage, so selection pressures supported it. And, of course, those best at detecting deception also had a reproductive advantage over those easily duped. As a result, through a kind of arms race, we evolved mental talents specifically “designed” both to detect deception and to deceive. At some point in this arms race a new weapon came along that had a pervasive impact on human nature: self-deception.

What better way to deceive another than to be oneself deceived? No clues in facial expression, body stance, or tone of voice are available to alert the target. We can be so convincing. The division of the mind into unconscious and conscious realms may well have evolved because it supported self-deception in the service of deception of others. Again, to reiterate our theme, those best at self-deception were our ancestors. They were the best at gaining advantages over others in the exchange of goods and services. Escalation of this talent was inevitable as self-deception dealt with ever-refining deception detectors. We are a species of self-deceivers. Freud told us this, as does great literature and our own introspection. Now evolutionary psychology weighs in.

Self-deception is adaptive because it served mercantile cleverness. It allows for storage of information outside of awareness, and authentic-appearing behavior inconsistent with unconscious knowledge. I can make a deal with you that is biased to my advantage and negotiate with you in a belief that it is a fair deal, and by my honest appearance be more effective. You may also have an interest in deceiving yourself about it.

Hierarchic Groups
Human groups are hierarchic arrangements of dominants and subordinates. An individual may be dominant in one context and subordinate in another (at work and in a church group for example), but we are all subordinate somewhere. Let’s say your boss has decided to promote a colleague rather than you. The reason he gives is that you will have time for special training that will be a greater ultimate advantage for you. In spite of evidence that he is really acting out of self-interest, you might benefit from deceiving yourself into believing his story. Self-deception in this case would support authentic-appearing good-humored deference, and you would avoid the costs that might be incurred if suspicion and resentment should reveal themselves. Perhaps, in his own self-deception, your boss also misleads himself and really believes his decision is in your interest. This allows him to behave convincingly toward you and also get the bonus of feeling beneficent.

However, all this isn’t to say that our commercial psyche is strictly designed for manipulation and exploitation, deception, and self-deception. Equally essential for successful participation in exchange networks are empathy, a sense of fairness and of right and wrong, and an inclination to form trusting bonds of mutual support. Warm feelings develop between consistently reliable coalition partners. Feelings that support mistrust are useful when dealing with a new partner, but an emotional bias supporting trust of a tried and true partner will get you past misunderstandings that might destroy a vital alliance.

In other words, reciprocal altruism, the exchange of goods and services, flows on a rich and sensitive current of human emotional life that may itself have been selected for the mercantile advantages it provided. This means that along with cheating and deceit, what we might think of as the worst of the human character, our merchant nature also gave rise to the capacity for social responsibility and for commitment and loyalty between friends and partners in endeavor and trade. One might even speculate that this capacity laid the groundwork for long-term, affectionate working partnerships between men and women.

Perhaps such partnerships were the beginning of divisions of labor. Because of differences imposed by reproductive biology, as with all species, human males and females always did different things. But at some point these differences became coordinated into mutually beneficial systems. We don’t know when or why domestic arrangements changed so many thousands of years ago. Perhaps it had to do with the ice ages when meat became more essential and the dependence of females on male provisioning increased, as would have the need for females to maintain the all-important fire while males hunted. But division of labor is also based on individual differences in talents and inclinations within the sexes as well as between them. In ancient times, for example, one guy might be better at finding promising rocks and another better at chipping the tools out of them. So the second guy makes two tools and repays the first for his trek to the mountain.

However it started, evidence for division of labor or specialization and, by inference, systems of barter date from 1.5 to 2 million years ago. Over subsequent millennia, trade increased in geographical ranges. If we fast forward until about 30,000 years ago we may see awkward barter systems eased by the use of money. The existence of representational ornaments and cave paintings suggest that the symbolic psychological processes necessary for the use of intrinsically valueless items for the representation of IOU’s for goods or services were in place. There is no evidence of these economic or psychological developments for contemporaneous Neanderthals who were then becoming extinct.

We are certainly the symbolic species. But what selection pressures, besides social selection for the exchange arts, could have driven the evolution of human psyche to this level of sophistication? We have been called the bipedal ape, the tool-using ape, the language and symbol-using ape, and we are all of these, but, I suspect, we are most fundamentally the merchant ape.

Economic Harmonies, March 208

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