How Might a World of Altruists Function Economically?

In my last posting, I noted that one of my readers, Annie, a biologist, suggested that as long as we were hypothetically splicing altruism into our genome, we might as well make it dominant. In that posting I evaluated research bearing on that issue, and concluded that the dominance of an altruism gene may well matter, but it is not conclusive. See Altruism and Tipping Points for that discussion: http://theverylongview.blogspot.com/2009/09/today-i-turn-to-comment-made-by-annie.html

As promised, I said I would later turn to her follow-up questions. Paraphrasing, Annie reflects: would a fictional future world of altruistic humans then implode under the weight of the sort of forces that thwarted past efforts at creating Utopian communities? That is, once H. sapiens was stripped of his single-minded selfishness, doesn’t social science theory, especially economics, predict that he will fail to have the incentives to make an economic society function effectively? Might we see altruistic humans gravitate first to socialism, and then to the dismal denouement of past socialist experiments?

I have spent a bit of time reflecting on this knotty set of questions, and cannot promise a comprehensive answer, but will try to do some meager justice to these questions today.

The main idea, as I understand it, is this: doesn’t economics (a la Adam Smith) say that it is not through our mutual benevolence, but instead through our collective self-interest at work in markets, that leads to the greater good? And, if we cannot any longer count on self-interest exclusively driving our behavior, might we not then lose the benefit of market systems, turn perhaps to socialist alternatives, and then fail for the reasons that socialist systems generally fail (in part due to a poor alignment of incentives between effort and reward)?

I think the answer, simply, is that this is actually not something to worry about. Unfortunately, the argument is complex and a bit long-winded.

First, indulge me in a quick review of Adam Smith, the broadly acknowledged founder of economics. Students of economics know that in 1776 Smith published his Wealth of Nations, in which he argued against Mercantilism and in favor of a market-based system that encouraged and rewarded productive economic activity (as opposed to the accumulation of precious metals and other accounts reflecting long-term trade imbalances). Smith is unfortunately remembered for having famously said:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.

This was a bold assertion, and a brilliant one. Economists spent the following century or two showing that an economic system that met certain qualifications – for example, one in which rational self-interested people interact without compulsion and with all the information they need to conduct their work related affairs – had the potential, quite remarkably, to do as well for society overall as any other system could possibly do. With the help of late 19th century engineers, the mathematics employed in this so-called general equilibrium analysis was sound, and the result was downright Panglossian; this is the best of all possible worlds. In formal, mathematical analyses of this problem, the equilibrium result was actually called – and I am not making this up – “the bliss point.”

And all of this without an altruistic gene in sight.

There may be no more powerful idea in the history of political economy. That a society could actualize its economic potential without calling upon its citizens to do any more than selfishly interact in the marketplace is, not remarkably, quite palatable. Smith’s original idea that selfish individual behaviors could lead to a collectively moral result has great appeal – as selfish behavior is surely easier to count on than altruistic behavior.*

Again, this was a bold assertion, and a brilliant one – but also one taken terribly out of context.

Adam Smith held university teaching posts in logic, jurisprudence, and moral philosophy – economics was not yet an academic discipline. Before The Wealth of Nations, Smith had written the critical and well received Theory of Moral Sentiments in which Smith had very carefully examined the philosophical question of human virtue. This is not the place, and I not expert enough, to do justice to Smith’s contribution to this branch of philosophy. Suffice it say, he rejected his teacher, Francis Hutcheson’s, idea that moral virtue constituted a sixth sense, and replaced that idea with one of an internal spectator – what we might today call a conscience. Smith thought that people are concerned with how their conduct will be judged by others and they sought to anticipate moral condemnation by reflecting in advance on the likely reactions of others to their social and economic conduct. While Smith did recognize that there was a risk of partiality (what we today may call motivational bias) that might lead people to judge themselves too lightly, Smith felt that human beings were by nature invested with an “original desire to please” and an “original aversion to offend.” Smith in fact argued that men became fit for society only when they learn to control their self-regarding passions in favor of social rules of conduct. In his writings on jurisprudence within TMS, Smith clarifies this for me by arguing that justice “is the main pillar that upholds the whole edifice” and the rules of conduct with respect to justice are actually the clearest. (Smith argues that the rules of justice are comparable to grammar while the rules of virtue are more akin to an aesthetic code. If he had access to Chomsky two centuries later, he might have pursued the analogy further, and asserted that the desire for justice is hard-wired into human beings. I suspect Smith believed this.)

Adam Smith felt that these desires were so strong that when he wrote the Wealth of Nations seventeen years later, he may have worried that the altruistic tendencies of people would be so strong as to possibly interfere with their economic activities. On the other hand, Smith did not appear to doubt that if their economic system failed to be just, men would not rush to remedy those injustices. Smith was never remotely what would be later called a Social Darwinist; Smith did not imagine that injustices wrought by markets were somehow virtuous, nor, as far as I can tell, did he think that his followers would ever come to such a crude and selfish belief.

There are two points I must make at this juncture. One, the use of Adam Smith today to justify the idea that men are selfish, and this is as it should be, is very sad, as it is a terrible misreading of Smith. For anyone to argue that free market capitalism, as they imagine was described by Smith, is meant to rule out universal health care, or economic injustices of any sort, would mortify the old professor, who argued that justice was the number one concern of any civilized society – he felt it was in a category of its own. In modern political discourse, in which we are asked to choose between the Right’s emphasis on liberty and the Left’s emphasis on justice, Smith sided with today’s Left. It is an interesting intellectual twist that he is a hero of the Right.

Two, Annie’s point has deep intellectual roots. The very man who gave us homo economicus (or economic man, as we understand him today) thought long and hard at the outset about whether or not excessive moral sentiment (a form of altruism) might interfere with economic activity.

Unfortunately, as I understand Smith, he never answered the question. For an answer, I need to move ahead from the late 18th century and discuss markets and incentives. Remember that the question is this: even if we could all become altruists in time to solve our biggest problems, won’t that interfere with the workings of our political economic systems and lead to ineffective results anyway?

Let me first look at the question of markets and when and how they work (and when and how they fail).

When do markets work? They can work when the social and private marginal costs and benefits are equal. That is, when all the costs and all the benefits of an action accrue to the decision-makers involved. When two people are trading money for product, and the total costs of producing the product – and earning the money to pay for it – are fully internalized by the two parties, markets can be best. If social and private costs diverge, as in the case of pollution, markets can still work as long as taxes are used to re-align those diverging costs. If polluters pay a tax that reflects the cost imposed on those not party to the transaction, then the market can still work. If social and private benefits diverge, as in the case of providing music on the town green for which villagers pay and outsiders do not, markets will provide the right amount of music if it finds a way to charge the right sort of fees to the outsiders. (And the challenge of doing so is not actually easy.)

If innovation leads to market share, profitability and value – those who paid to innovate capture the benefits and pay the costs – markets can work, but even then they may not. Sometimes the fixed costs of the innovation are very high and the actual cost of disseminating the benefits after innovation are marginally low (think pharmaceuticals) – so the needs of the market to fully internalize costs and benefits leads to an inadequate provision of the product (e.g., medicine) to the poorest segments of the market.

Markets tend to fail outright in many cases. They fail to provide for so-called public goods. The classic example is National Security: free riding would be too easy, as those who did not pay would be protected by the same intelligence and military system protecting those who purchased national security in its market. National Parks suffer, but not as dramatically, as do the Arts. Clean air and water suffer greatly, as they are obvious public goods. The cost to me of cleaning the waterways in my community far exceeds the benefit to me individually, or to all the people I could charge in a private market under most circumstances. Markets also fail in cases of so-called Natural Monopolies, in which the optimal scale of the firm is so large that it would dominate the market and distort the allocation of benefits through its pricing power.

But markets have even a smaller chance when some of benefit and cost devolves to participants who have no say at all. They have no say because they have no role in the market. This can be because they have no money (markets are “one dollar, one vote”), they have no right (perhaps they do not have citizenship and therefore cannot participate in the provision of the public good), or they are not yet born. Climate change due to carbon emissions is imposing its burdens not only on those of us emitting lots of carbon, but on those who are too poor to emit much carbon at all but are unable to force us to behave (poor sub-Saharan farmers may pay the starkest price during the next forty years, and they have had little capacity to influence the US into signing the Kyoto protocol). The least able to speak up are those who are not yet born. Our great grandchildren will pay a significant price for our pollution today, and in what market in 2060 shall they impose a cost upon us today?

Keep in mind those Seven Generations and the Iroquois who did keep them in mind (if we can believe them). It is not free enterprise that solves intergenerational problems of distributive justice. While one may believe that socialism is in theory capable of it, only the very young at heart could hold out hope for a socialist solution. If there is an alternative way to that end, we have not yet discovered it.

Today we sometimes witness a nearly religious version of market fundamentalism. Many politicians and businessmen are in this camp, and this fervor has recently been at the forefront in the health care insurance reform debate. The idea that collective good can come from individually selfish behavior, while an arguably good thing, does not imply that additional good cannot come from selfless or at least socially aware behavior. Somehow, many market fundamentalists adopt the view that if selfish behavior is good, unselfish behavior is somehow bad. There is no need to treat the common rhetoric behind this convoluted idea, but we do need to deal with their strongest case. Their best argument is that the attempt to implement selfless behavior will distort market incentives and push us away from the bliss point. This idea connects back to Annie’s idea that incentive structures may fail if we navigate away from selfish interactions in market based systems.

So what do we expect would happen if altruists took over? Would markets fail?

What is the argument that they might? We do know that when selfish individuals interact (although, descriptively, we do not know if there has ever really been a case of purely selfish people interacting in a market for long) markets can only do their magic if at a minimum the costs and benefits devolving from market actions accrue exclusively to the decision-makers. That is, there are no externalities. This applies to labor markets, of course, so people should be rewarded in proportion to their efforts for optimal labor supply to be induced. (According to economic theory, markets can at best reward workers in proportion to the value of their marginal labor productivity, which is not the same as effort. It is a function of a host of individual factors, as well as a host of other factors completely out of the control of the worker. So a perfect alignment of effort and incentive is not ever really feasible.) The Marxist maxim, “to each according to his ability, to each according to his need” violates this principle, at least in spirit, as the ablest are presumably subsidizing the neediest in such a system. The long term implied effect, in a world of selfish individuals, would be that the ablest would withdraw some of their effort as they perceive that it is not fairly rewarded. But, it also has to be noted that Neo-Marxians spent considerable time arguing that such slacking occurs in capitalist systems, too, so this is not actually a condemnation of socialist work relations per se, although most economists would still argue that the misalignment of compensation and productivity was indeed greater in socialist systems, and so slacking was a greater problem there than elsewhere.

Modern theorists such as Herbert Gintis make a point of asserting that a descriptively accurate view of H. Sapiens must account for some altruistic tendencies but it need not abandon the notion of optimization. What this means is that while honest researchers must accept the definitive conclusion of a generation of behavioral science research that has shown that most people are not maximizers of a personal utility function which is purely selfish in content, researchers need not abandon the convenience of optimizing behavior altogether. Annie’s query about the future of markets and politics in the face of an onslaught of altruists has actually received some attention in this limited sense. Folks such as Gintis have been asserting that assessing the behavior of economic agents who optimize a more complex utility function – one that is partly selfish and partly something else – is not insurmountable. In fact, they have begun that work. While there is no evidence that they have gone so far as to help us with Annie’s question, they have given us a good starting point.

That starting point is this: if we place our optimizing agents into formal models – replacing selfish agents with altruistic agents – what really changes? The mental experiment might go like this. Our new agents care about their own well-being, to be sure, but they also care about other things. We know they care about fairness. They care about justice of both process and outcome. They don’t want to see some people suffer terribly. They care about those whose voices are too weak to be heard by markets and politicians – the poorest, the outsiders, and the unborn. If we simulate this model, what might we expect to change – now and in the long run?

In the short run, we expect that optimizing altruistic agents will expend somewhat less attention on the maximization of their income, and more to advance their values. They will remain committed to the desire to have their rewards respond to their efforts: this is critically unchanged. Now, however, they perceive reward more broadly, so whereas the purely selfish agent might care only about his personal compensation, our (optimizing) altruist will be well motivated if his self-interest plus his other values are advanced in proportion to his labors. When they discuss their own labor contracts, they will show a tendency to favor a fairer distribution of rewards (say bonuses or use of sick days) than they did before. To the extent that they are altruistic, they may even be willing to sacrifice something small in order to advance a fairer distribution overall. Just as in the case of purely-selfish workers, they may slack off in their efforts if they perceive that their work effort is not being fairly rewarded (unless their altruism takes the form of an enhanced work ethic – which there is little evidence to support). Or they may wish to reciprocate good behavior on the part of others, even if this means some self-sacrifice to do so. Further – and this is a topic I have not yet addressed in this Blog – altruism, in the formal sense, also means that people are willing to pay something to punish those who violate their values. (This is actually a critical part of the theory of altruism –altruists are good enforcers of social norms, and they both reward and punish.) So in a world of altruists in power, the huge Wall Street bonuses might have encountered even more of the resistance the House Republicans and Blue Dogs gave to the proposed bailouts under Bush 43 and early Obama – as they clearly violated most people’s sense of fairness. (We only gave in because we were told we had to in order to avoid even worse consequences. No one argued it was fair. A so-called reciprocal altruist would have been willing to pay an even greater cost, let's say in terms of time to economic recovery, in order to punish Wall Street than would purely selfish people. Think about that.)

On a public level, our society of altruists might promote more progressive taxation, more justice in foreign policy, more environmental conservation on both individual and political levels. It might also involve more social safety nets for the neediest, so in some ways it will certainly resemble a more socialistic approach, but the key difference is that the system is now meeting their desires more than such a system would serve purely selfish egoists.

So far, so good, I think. In our mental experiment, a world of altruists would have the private impact of making compensation systems more just and public investments both more just and more far-sighted. We would probably come to resemble Sweden’s social democracy over time. One cannot say ex ante that these changes would not for the good. I am inclined to think they would be.

In the long run, the critical question seems to be whether a polis of altruists would choose entirely different social-economic methods or even systems. Would they fall prey to a form of naïve socialism in which they come to believe, as did many economists at one time, that they can do a better job of planning for the general well being, including the future, than does the market-based, socially-oriented, altruistically-motivated democracy at their disposal? I don’t see why this would be a risk, but perhaps it is. An old adage is often mistakenly attributed to Churchill, but the real idea was written by Francois Guisot (1787-1874): "Not to be a Republican at twenty is proof of want of heart; to be one at thirty is proof of want of head." A contemporary of Churchill, Georges Clemenceau (1841-1929), revived it: "Not to be a socialist at twenty is proof of want of heart; to be one at thirty is proof of want of head." I assume it goes almost without saying that Guisot’s double entendre works better in his era than did Clemenceau’s careless adaptation in his.** I need to share Clemenceau, however, as my question is this: would our world of altruists be so “full of heart” that they are “young at heart," and thus vulnerable to the naivete that leads to optimism about socialistic arrangements? And if so, what would be the likely result?

There are two questions relevant to our argument. One, would altruists be inclined to choose to abandon a Swedish style social democracy in favor of a socialist planning system and, two, would socialism fail in the hands of altruists?

I have no answer for the former, although I see Annie’s point. If the level of altruism was sufficiently other-regarding (and self-sacrificing) I suppose such a society might choose to believe that the vagaries of the capitalist business cycle is such – and their sense of the injustice of some paying a higher price than others so great – that they wish to do what others have done before them, and seek to isolate themselves from a capitalistic, globalized world. I do not find this compelling, and imagine that a world of good hearted people are not so naïve as to ignore the lessons of the past, but that is not to say that this fictional society would not come to believe that they, in all their goodness, could do better than Soviet or Chinese style socialism – and better than being part of a market-based world system in which others, less generous than they, have great influence on the state of their economy.

Would socialism, if adopted, fail in the hands of altruists? Even modern (or even futuristic) altruists – who would presumably avoid the temptations of unequal access and privilege that has plagued socialist systems – and have at their disposal the best super computers, would probably fall prey to the informational burdens of socialist planning. See http://theverylongview.blogspot.com/2009/09/today-i-turn-to-mitchells-second-major.html for a more detailed argument. In this case, the road to hell may well be paved by the very best of intentions, but the outcome may still be unfortunate.

In the end, however, even if altruists tried to make socialism work and failed at it, would they be inclined to stay that unfortunate course? I would like to think that such a society, one in which every member cares so much about the well being of each other, would be moved to try something else. Further, along another line of thought, the best arguments for socialism have to do with the removal of a socio-economic system from the world wide forces of capitalism and its business cycles. But true altruists care about future generations, and if they are thinking clearly, they would realize that worldwide, multilateral cooperation is necessary to stem climate change sufficiently to assure future generations everywhere of a habitable world. Even if a society of altruists were perfectly clean and green, they cannot save the planet without moving others to their cause. This would mean that altruists would need to stay actively engaged, and not withdraw. I know this no proof, but I think that it is most likely that a world of altruists would not be likely to withdraw unproductively from the world economy, and neither would a market-based democracy implode due to poor incentives. Further, I think the logic is good that altruists would not find market incentive systems incompatible with their well being. They would revise those incentives, favoring values such as fairness and justice, but this would not be at all harmful.

So I think the Blog's "case" remains that one, altruism is both necessary for successful climate change policy, and two, not incompatible with economic effectiveness long term, as long as we are hopeful that altruists would not be both youthfully naïve and stubborn about the dangers of planned economic and social systems.

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* Nonetheless, this moral idea held little sway with Smith’s contemporary Scottish enlightenment moral philosophers.
** Other versions are easily found on the web: This one is common. Not to be a Democrat at twenty shows lack of heart, not to be a Republican at forty shows lack of head, and attributed to Churchill, who might have thought the terms meaningless in this context.

Altruism and Tipping Points

Today I turn to the comment made by Annie Rhodes on the first posting on this Blog (Disappearing Bonobos and Our Faint Hope for Altruism). Recall that in that post I recalled a conversation with John, the molecular biologist, in which we speculated about the possibility of splicing the altruism gene (recently found in our closest cousin, pan paniscus) into the human genome. (In subsequent posts I have argued that altruism is necessary to rally us to make the sacrifices clearly needed to leave the planet in shape for future generations. No known form of cooperation or reciprocity will do. Altruism is necessary, although not sufficient.) I also noted in that first post that if the altruism gene is somehow successfully introduced in H. sapiens, it would then have to be isolated and protected, as ordinary humans would surely eradicate our better brethren before they could reach critical mass and make a difference.

Annie, also a biologist, suggested that as long as we were hypothetically splicing altruism into our genome, we might as well make it dominant. But then she poses the very creative follow-on question, and I am paraphrasing: would a fictional future world of altruistic humans then implode under the weight of the sort of forces that thwarted past efforts at creating Utopian communities? That is, once H. sapiens was stripped of his single-minded selfishness, doesn’t social science theory, especially economics, predict that he will fail to have the incentives to make an economic society function effectively? Might we see altruistic humans gravitate first to socialism, and then to the dismal denouement of past socialist experiments?

This is an immensely creative and challenging set of questions, to which I do not wish to imply that I have answers, at least not to the whole of it. But I am excited to try to break this problem down into its parts.

First I will look at the premise: would making the altruism gene dominant change the likely result that the good guys would be killed off by the rest of us before they could save us? To examine this question, I need to backtrack and return to one of my favorite topics these days – my idea of a Cooperative Tipping Point or CTP.

Imagine a structured social experiment in which there are only two types of people. The first type is the Pure Competitor, PC, who is rational, self-regarding and competitive, and seeks only to maximize his own payoff. The second is the Contingent Cooperator, CC, who also seeks to maximize his payoff, but is aware of social norms or understandings that may create opportunities for expanding the set of opportunities available to engender cooperation, and so enhance the well being of both him and others simultaneously. (This experiment can be written down mathematically, and can be played experimentally, and both have been done many times, so this is not remotely speculative.) Note that the CC player is not a glutton for punishment. He wants to maximize payoff to himself, just as the PC player does. But he is willing to take a chance and initially offer to cooperate at some cost to himself. If accepted, he will continue to cooperate, but if rejected, he will compete. In Robert Axelrod’s The Evolution of Cooperation, this strategy is famously called Tit for Tat: TFT cooperates if his rival cooperated with him last round, and competes if his rival competed with him last round. Not a noble affect, but one that experimentally does the job quite nicely.

The way this experiment is usually designed, the PC player ties other PC players (they compete with each other throughout their time together). The PC player also beats the CC player (the PC player takes advantage of the CC player in their first interaction, and afterward they compete with each other – but the PC player retains the small upfront gain). Hence, the PC strategy is a dominant strategy in the parlance of game theory: it is the better strategy against other PCs and it is the better strategy against CCs.

Yet, in a wide variety of social and experimental settings, many people “irrationally” behave as if they are CCs – Contingent Cooperators – rather than PCs. Further – and this is the big kicker – they often do better than the “rational” competitors in the long run.

It is actually not hard to see why this is true. Imagine a version of this experiment in which two people meet and earn $1 for competing, $3 for cooperating, and $5 if one competes and rejects the cooperative advances of the other. The rejected cooperator earns nothing in such an interaction. If people live in a large, anonymous society in which they never meet the same person more than once, the only sustainable behavior would be non-cooperative. If you think the next stranger to come along will compete, it is better to compete as well ($1>$0). If you think the next stranger to come along will cooperate, it is still better to compete ($5>$3). No matter what that next stranger will do, you do better not to trust him, and to just compete. You – and everyone else eventually – earns $1 per interaction.

But what if society is smaller than this? What if you can be expected to meet people on ten occasions, and they will remember how you last treated them? As so many academic disciplines know well, the size of the social unit and the values placed on one’s reputation in that group, are critically important on many levels. To see how it might matter here, think about it this way. Now a PC earns $10 in total from his long term relationships with other PCs ($1 each of ten times). He earns $5 the first time he meets a CC, but then $1 afterward for nine interactions, for a total of $14 (=$5+$1(9)). The CC in turn only earns $9 from his interactions with PCs (as he loses a dollar trying to solicit cooperative behavior unsuccessfully each time he meets a new PC, but then he competes with him when he meets him again). Note that the PC earns $10 from other PCs and $14 from CCs. The CC earns only $9 from interacting with PCs but what does he earn in his relationships with other CCs? When they meet, they both tentatively cooperate, hoping against hope, and they each earn $3. Having learned the other was willing to “irrationally” cooperate, they continue to do so, earning $3 each time they meet, and thus $30 overall.

Assume further that if one strategy proves better in a given environment than the other strategy, then a selection mechanism akin to evolution takes place, and the less successful strategy is partially replaced by the more successfully strategy and the next phase of the experiment begins.

What happens in our experiment? We know that PCs do somewhat better against one another than CCs do against them – as the cooperators get at first taken advantage of at some cost to themselves. But the CCs do much better with other CCs than the PCs do with CCs. Even though the CCs tie each other, and the PCs beat the CCs, the CCs do so much better with one another that they do much better than “winning” competitors do against them. So it should be clear that if there is a critical mass, or tipping point, of cooperators in society, then cooperation will thrive.

In our example, it turns out that as long as the initial population of CCs is greater than about 5.9% of the population, the cooperators will do better than the competitors. (Do the algebra for yourself; it is not hard.) After all the dust is settled, some competitors will “go extinct” (convert to cooperation) and the share of cooperation will go up. What happens then? Well, the more cooperators, the better it is for cooperation, so cooperation evolves even more dramatically in later phases of the game. On the other hand, if at the outset the population of cooperators is less than 5.9%, then the PCs will do better, and in the next phase of the experiment, there will be even fewer cooperators. This makes it even worse for cooperation, and in each subsequent phase the share of cooperation shrinks even further.

This is an unstable equilibrium. This means that if cooperation begins with a share of behavior above the cooperative tipping point (which in this example is somewhat small), cooperation eventually takes over, and you have a very rich cooperative society with an average income of $30 per lifetime interaction. If, on the other hand, cooperation is just a small share of the initial society, it doesn’t stand a chance, and eventually dies out, leaving you with a poor, purely competitive society, with everyone earning $10 from each interaction. Everything depends upon the good luck of having a critical mass or tipping point of cooperators at the outset of the experiment. Too few, and society becomes aggressively competitive; more than enough, and society moves to a blissfully cooperative equilibrium. Further, a completely cooperative society is stable against invasion: there is just no point to a cluster of PCs to jump in, as they will do less well in the minority than they would do if they cooperated like everybody else.

Before I move on there are interesting points to be made. First, I would argue that this example does not excessively value reputation, and hence cooperation. I think it is quite common to interact personally and professionally many more than ten times with others in one’s community. So the CTP may well be overstated: perhaps only 1% of a society needs to begin cooperating to lead the way? The actual % is impossible to pin down, but cooperative tipping points, as critical as they are, may be quite small. Two, the payoff figures I used are not entirely arbitrary: they are the numbers used in thousands of such experiments. Nonetheless, one should care about whether the results are robust to changes in those numbers (for example, what happens if PCs earn $2 from each interaction?) Some simple algebra will show that the CPT is still rather low. Three, the size of the community is critical. In very large societies, random meetings of strangers occur frequently and the number of expected interaction with most people is low. This makes cooperation harder to sustain. In small communities it is easier to maintain the like-mindedness and high levels of interaction needed to sustain cooperative behavior. The folk myth of the small town life, or the ethnic enclave, is actually based in solid theory. Four, and this is a more subtle point, one must not forget that the CCs above are contingent cooperators, meaning they cooperate long term only with those who cooperate with them. They are not unnecessarily self-sacrificing (although they take a chance at first). If they were universal cooperators, UCs, and cooperated with everyone, without contingency, the results would be very different. In fact, perhaps surprisingly, UCs cannot survive against PCs in any number, and if an invading force of PCs comes upon a happy community of UCs, the result is a disaster for cooperation. The only way universal cooperators survive is by isolating themselves. Think of the Amish for the clearest example of this (and think of the character John book in Witness for a brilliant example of how an outsider to that value system cannot in the end conform, despite great motivation to do so.) Five, and this is related to the last point, universal cooperators, UCs, actually make it harder, not easier, for CCs to survive. Imagine a small wagon train of UCs come upon our earlier experiment of CCs and PCs and ask to join the society. You might think intuitively that this will advance the cause of long term cooperation – after all, a wagon train of Amish are surely not going to advance the cause of competition, are they? But you would be wrong. Keep in mind that the CCs only lose a little bit in their interactions with the PCs ($5) and gain a lot from engendering maximal cooperation with their own kind ($20 relative to PC-PC interactions). But UCs are easy prey for the PCs, and vastly increase the payoff to their non-cooperative behavior. PCs earn $50 against every UC they meet, but CCs only earn $30 (they treat them as cooperators, not suckers). After the UCs arrive, the CTP goes up! There is even a chance that a community formally destined to be fully cooperative in the long run will now, instead, plummet towards pure competitive behavior.

For an example of this, consider a city plagued by street crime largely consisting of the mugging of defenseless victims. Suppose the police successfully reduce the levels of muggings (with police decoys, for example -- woe be the mugger who tried to outrun Dennis Pelkey, formerly of the Schenectady PD, as Dennis was many times the police world champion in the sprints). And then imagine that overnight a flock of defenseless old ladies took to the streets with their life savings in their pocketbooks. You can see that the mugging life strategy would be re-invigorated by a new and more profitable incentive structure.

There is a sixth point I need to make of a different sort and most relevant to our discussion. I have not even defined altruism technically, but I ask that you consider the following suggestive idea first. Consider the community in which cooperation is below the CTP. That is, cooperators are doing worse than competitors, and expect that in the long run, unless things radically change, they are doomed. But they stick it out, anyway, perhaps because they are “activists” hoping to change the hearts and minds of a critical mass of others. In so doing, they may actually believe that they will, even selfishly, profit from their hard headed commitment to cooperation, even when it doesn’t pay.

Or they may feel, as did Martin Luther King, Jr. in 1963 that they would not get to the Promised Land themselves, but they had to sacrifice to hasten the arrival of others. In other words, early below-tipping point cooperators may actually be altruists. They may be sacrificing their interests now and even long term to keep up hope. After all, every contingent cooperator makes it more profitable for and likely that the next one will come along. My very first comment came from Anonymous, who said rightly, I think, that some people are now clean, green vegetarians not because they think they can themselves save the planet, but because they know someone must be first – and altruistically blaze that path for others.

In this sense – the sense that below-tipping point cooperators (such as people who are still fighting to create multilateral, effective climate change action plans against what our commenter Richard rightly noted were astonishingly bad odds) – might be altruists holding on for the rest of us to join them. In that sense, Annie’s idea that making the gene dominant – which would obviously vastly increase the share of population expressing the gene – might get us over the tipping point and make all the difference in the world. So by this version of altruism, I think it can be said that Annie may be right that the dominance, or increased expression, of altruism could well matter.

I must not deceive, however, and this is not the ordinary use of altruism in the research literature. What most researchers mean by altruism is that altruists care about themselves, but they also care about other things. Just what those other things are varies by research project, but common ideas include these ideas: one, altruists care not only about their own direct well being, but they care about the fairness of the process by which people are rewarded; two, altruists care about the fairness of outcomes, whatever the process; altruists care about the well-being of others enough to at least pay a small price to make a big difference in the lives of others. These are just a few, and the most interesting definitions of altruism I will actually save for another posting, as they need more preparation to be understood. But for now let me be clear that altruists are not identical to cooperators (who see a chance to profit themselves by expanding the capacities of human relationships to create win-win situations). They are instead willing to pay a price out of their own rewards to serve other ends (such as fairness). In more experiments than can be recounted, it has been shown that people of all walks of life from all over the globe refuse to take what they consider an unfair share of the rewards, even if they have the power to do so without fear or any recrimination. Not everyone, of course. But most of us care about fairness, and in this sense must of us are altruists. There is hardly a reader among you who has not watched the tearful fundraising efforts of charity groups soliciting your coffee money to save a child from a harsh existence in the slum of a developing nation. The appeal is clear: won’t you give up something small to make a big difference in the lives of someone else? This is an appeal to altruism of the third type.

Some people still argue that altruism is not real, that people behave altruistically in order to capture reputation effects, for example. (When a beautiful female student plays class games with a nerdy male quant, I have not failed to notice that the male often bends over backwards to play nicely, and I have not ascribed those results – at least not entirely – to altruism.) But the evidence is actually quite clear that even when no one – not even the researcher himself – can know of one’s actions, people still sacrifice substantial portions of their own rewards to satisfy notions of fairness of process or outcome or both.

There’s hope here. But if the hope is that the share of altruistic behavior in society is large, is that enough? The first part of Annie’s dominant gene argument suggests that if we can increase the share of altruism that could be what is needed.

Unfortunately, unlike contingent cooperation, and more like universal cooperation, altruism is not very stable. That is, even large communities of altruists – much like large communities of universal cooperators – do not generally do well against invading competitive behaviors. In most mathematical models of altruism, altruists are not ESS (evolutionarily stable strategies). That is, they cannot defend themselves well.

The exceptions involve a less extreme form of incubating altruism entirely in isolation. The idea is that altruists need to find themselves in communities where they can identify one another readily and interact with one another much more than they are forced to interact with the rest of us. For reasons that I should put off until later, these altruists have internalized norms and beliefs that create a values-based community that tend to restrict both their interactions with others in both number and nature. You should be thinking of religious enclaves embedded within larger cities, as a good example. If the number of costly interactions with outsiders can be kept small enough, and the nature of those interactions structured in ways that minimize damage to the community’s values, then the altruists can survive and resist invasion by competitive behaviors that would ordinarily wipe them out.*

In this sense, Annie’s creation of a dominant gene for altruism would do three things: one, insure that everyone in the altruistic enclave carrying the gene expresses the behavior, thus increasing the behavioral intensity and therefore the “profits” from their altruistic interactions; two, identify anyone not carrying it (those not expressing it) and somehow cull them from the population; and three, increase the growth rate of the enclave population, and thus the share of the total population. All three might help, but none actually guarantees the success of altruism.

Altruism is a delicate behavior, unlike Contingent Cooperation. Unfortunately, CC is not helpful for behaving in ways that reflect caring for future generations. For that, altruism is needed.

In a future posting I will turn to Annie’s additional and very creative questions about what social science theory has to say about a society of altruists constructing and running an economic society. This is an area in which I believe very little research has been done to date, which is quite a shame, as it bears in one way or another on much of what is going on around us in today's virulent political climate as well as on our prospects for putting aside our trivial bickering and get to work on what truly matters. We will not get away with rearranging deck chairs on the Titanic much longer.

_____
* See Gintis, Herbert, "The Hitchhiker’s Guide to Altruism," Journal of Theoretical Biology, 2003.

Shall We Give Up and Fiddle While Rome Burns?

In this post I would like to turn to the comment Richard left in reply to the post The Problem is Unilateralism, not Ideology. Richard advances the rather compelling view that the problems of multilateral cooperation are so huge, and so dizzying, that there is really little reason to maintain very much hope. Rather than invest in a futile task, Richard suggests that we might accept our fate and fiddle while Rome burns, concentrating on playing a pretty tune.

I will take his argument even further. First, the timetable is short. Technically, our climate models are not precise enough for us to know just when, if ever, we will deal with a catastrophic change (examples touted include a 14 C increase in global temperature in a single decade which would make unprepared human life unsustainable). So we do not actually know precisely how much time we have. But as we know it is possible that the critical timeframe is short (on the order of fifty years) it might seem prudent to act as if our problems have to be under control in that timeframe, or give up entirely. This is not an airtight argument, but it will do for now. Second, if the US has to take the lead in dealing with climate change, a review of the state of our political environment is not promising. Currently, the far right fringe of the US, a group that might, frighteningly, be as much as one-quarter or even more of the voting electorate, appears to be following religiously the rantings of hate-mongerers such as Rush Limbaugh and Glen Beck, who are far more interested in disrupting Obama's White House than in solving problems. (Let me make clear that I am not referring to legitimate conservatives who have a very important role to play in American politics. I remain confused as to why Conservatives have not yet abandoned the GOP, especially after the smirking treatment from GOP leadership dealt out to Ron Paul in the party debates.) Placards being waved around in DC this week reveal that many people, virtually all white, who did not read the 1,017 pages of HR 3200 -- thus joining the outspoken Steny Hoyer, Mitch McConnell, and other congressional representatives who said this week that they don't read bills, either -- are nonetheless convinced (is it by Beck and Limbaugh?) that the Health Reform bill wants to euthanize their grandmothers and drive them into the equivalent of Nazi Youth Parties. Further, and this is partly the fault of the bill writers, one has to read all the way to section 246 of HR 3200 to discover that the bill does not intend to subsidize illegal residents of the US. In section 152, it says that one cannot be discriminated against in the provision of insurance, so for 94 sections, readers dying to know that their hard earned cash isn't going to be used to help sick, undocumented aliens, have to sweat it out. If they don't get to section 246, they remain unhappy. In any case, there are millions of Americans today who think they are being taken for a ride by Obama and his secret plan to serve illegal aliens looking for a health care handout. (The fact that HR 3200 has been criticized by the left as a combination of Romney's health care system with McCain's tax subsidy plan, is not part of this discourse.) As well, people who could not possibly define "Marxist," "Socialist,"or "Communist" are for all appearances nearly rabid in their peculiar accusation that President Obama is all three -- and a racist traitor, to boot. If we tried to bring Limbaugh, Beck, and other influential rightists on board for a collaborative solution to climate change, we would have to first get Al Gore to recant global warming. And even then I am not hopeful.

I am also unclear about Obama's committment to solving climate change. I just don't know if Obama would advocate strongly enough if his hands were not tied by the real or apparent need to screw his courage to the sticking point and try to hold this political maelstrom together -- is secession in the works? (If so, I wonder if we should let the red states go this time.) But as it is, we certainly cannot count on him to do enough. Obama's climate change legislation earlier this year was tepid and there is no sign that more is forthcoming soon. And just this week, Obama chose to impose a tariff on Chinese tire imports -- on the face of it, because tire manufacturers in the US are suffering economically and Chinese tires appear to be cross-subsidized by complex and opaque Chinese economics -- which immediately set off a wave of Chinese Glen Becks on Chinese TV, vociferously slamming the US and demanding that the government dump all its US government securities overnight. I don't even want to think about the repercussions if that were to happen. As I hope to make clear to those who do not yet understand this, cooperating with China on climate change is absolutely essential if we are to succeed. The bottom line here is that I don't think H. sapiens (and many similarly situated species who will live or die with us) can depend on US leadership or on the state of the US - China relationship today.

Finally, we may wish to reflect on a portion of Annie Rhodes' comment in reply to an earlier posting (Skin as Thick as the Bark of a Pine). In that comment, she advances the idea that we have already passed the tipping point, that we cannot avert climate change. We can merely learn how to cope with it (and presumably mitigate it). There is more to Annie's comment relating to the capacity of capitalist systems to solve these problems, but those issues need to be addressed in a later posting.

Nonetheless, despite the heavy burden of the argument, I am going to offer an argument that we should not fiddle while Rome burns. I offer this argument largely for the sake of discussion, but also because of its enormous import.

One, think back on the short-lived but brilliant polymath Blaise Pascal (1623-1662). For the first half of Pascal's life, he made enormous contributions to mathematics. Then, following a religious conversion, he wrote in the fields of philosophy and theology. Apparently, despite his self-proclaimed faith, Pascal was first and foremost a logical fellow. In explaining why everyone should have faith in God, and perhaps so explaining his own turning away from a lucrative career in mathematics, Pascal presented what has been known ever since as Pascal's Gamble. Pascal figured that we all faced a simple choice: you could believe in God, or not. And you could turn out to be right, or wrong.

If you chose to believe in God, and you were right, Pascal thought that the rewards would be significant. Eternal salvation and all that. (Please forgive me for ignoring the important theological niceties here -- I am just trying to convey the Gamble itself.)

If you chose to believe in God and you were wrong, the costs were low (you missed out on a little dishonesty, gluttony, wine and women, perhaps, but compared to what could happen in an infinite afterlife, this wasn't very important).

On the other hand, if you choose not to believe in God, and you were right, the rewards were just those cheap and insubstantial rewards I noted above. (On the other hand, Woody Allen might say that as cheap and insubstantial rewards go, they are some of the best.)

Finally, and this is the biggie, if you choose to not believe in God and you are wrong: watch out! This is expected to be a big, negative payoff. In fact, Pascal asserted that the positive benefit of believing in God and being right, and the huge cost of not believing in God and then being wrong, swamped the other outcomes. The wicked are illogical. The faithful have made the right choice.

Note that Pascal did not have to attach probabilities to his model. That is, the expected(average)payoffs of behaving logically (believing in God and taking your chances) were asserted to be larger than the expected (average) payoffs of behaving illogically (not believing in God and taking your chances) whatever the degree of belief you attached to God's existence. For this to be logically coherent, one had to actually believe that eternal salvation was of infinitely positive value, or eternal damnation was of infinitely negative value, or both. But in any of those cases -- and they are not unreasonable assumptions -- believing in God was the logical thing to do even if you thought there was only an infinitesmal chance that God existed. To believe in God logically did not require that you thought God was definitely real, or even that there was a better chance that he existed than not. To believe in God logically only required that you thought there was a tiny chance God existed, nothing more.

This is actually a compelling case for belief, as modern epistemologists, as I understand it, argue that one cannot prove that God exists, but neither can one prove that God does not exist. The only truly logical belief state is agnosticism. That is, you need a divine revelation to believe in God with certainty -- and you need a divine revelation to be an atheist (a case that should give you a headache). Agnosticism, of course, means you attach a probability of between zero and one to the existence of God -- not zero, not one, but something in-between. This is also the conclusion of modern-day Bayesian reasoning if applied to faith in God. According to Bayesian logic, no rational person ever attaches zero to the probability of any hypothesis which is not on the face of it logically false. (An example is 2 + 2 = 5.) If you attach a probability of zero to an hypothesis (for example, that Zooey Deschanel is going to walk up to you tomorrow and give you a big kiss) then this hypothesis can never logically be changed -- even if Zooey Deschanel approaches you on the street tomorrow with outstretched arms and puckered lips, you cannot raise your probability that you are about to be, miraculously, smooched. In class I call a null hypothesis with probability zero "a pig" and the idea is that no matter what new information comes along that bears on the likelihood of a porcine hypothesis, you cannot change it. (I should probably have named it a corpse, instead, as it cannot be revived, but it is too late now.) I have named this the Lipstick on a Pig Lemma. That is, no matter how much lipstick you put on a pig, it is still a pig.

Belief in God cannot be an hypothesis of this sort, for if God or an angel or other divine intervention appears to you tonight, you will surely want to upgrade your probability of belief.

But by Pascal's argument, if you attach any probability greater than zero to the existence of God, you must logically believe in him.

What does this have to do with the choice to fight on in the face of terrible odds with respect to climate change? Well, it all depends upon how severely you weight the risks of extinction of the human species and many other innocent species who will be carried along. If you attach an infinite cost to that scenario, then no matter how small a probability you attach to it -- and anyone logical by 17th century much less Bayesian rationality standards must attach a positive probability to that scenario -- you must conclude that it is worth believing in the possibility that we can avert at least the extinction scenarios.

This is a big assumption. I understand that without altruism, some people may not attach very much weight at all to the extinction of H. sapiens and many other species, and certainly not an infinite weight to that case. But if you attach a very large negative payoff to human extinction (which, according to catastrophe experts at Oxford, means we are left with fewer than 100 humans afterward -- and I think they are optimistic that 100 remaining humans can survive as hunter-gatherers in a horribly parched environment) and you also attach a non-trivial probability to catastrophic climate change, you must also join the cause of screwing your courage to the sticking point and fighting on.

So much for Pascal's Gamble. My second argument is this. Imagine the following scenario. You are standing in the hospital ER with your grand-daughter and the doctors give you sobering news. She may die despite their best efforts but there is a chance they can save her. They can't actually estimate the probabilities of life or death at all, as it is a brand new procedure. (You are thus aware that there are also positive externalities: if the procedure works on your grand-daughter, others are more likely to be saved.) It will be costly, but to you, not her. She will feel no additional pain and suffering. In fact, if the procedure fails, nothing more will come of it. But if it succeeds, she will live an ordinary life, filled with all the happiness and pain you yourself endured. The price to you? No more than 3% of your lifetime income -- say one year's earnings. Perhaps as little as one third that if all goes well.

Before you rush to answer, there is a catch. You need to collect signatures from all sorts of people, all over the world. They all must agree to do the same if and when their grand-daughters are in trouble. Meetings will be arranged with Wen Jiabao, Manmohan Singh, Angela Merkel --please don't massage her without her permission -- Gordon Brown, Barack Obama and Dick Cheney (just to make it disagreeable to everyone), and, of course, Ban Ki-Moon. The hospital in the meanwhile will cryogenically store your beautiful granddaughter for 50 years, and will give you a wonder drug that keeps you alive for another 51 (so you can have a little time with her if and when she recovers). Your travel expenses will be paid in full, but you will still be obliged for the treatment costs (again, up to one year's earnings).

I would argue that you should take the petition and begin the task. If you agree, I think it is unarguable that this scenario is closely although not precisely analogous to the situation we face. Recall that Sachs has said that it will take no more than 3% of GNP to avert the worst of climate change. If you disagree with this, and with the application of Pascal's Gamble, I have only one more argument to make.

Three, I point you to Peter Ward's Medea Hypothesis. In this provocative work, Ward argues against the prevailing view, widely known as the Gaia hypothesis. In the Gaia hypothesis, earth is a system analogous to a loving mother. In the strong version of the Gaia hypothesis, the earth is functionally homeostatic; that is, seeking over time to rectify disturbances to the overall environment and regaining healthful equilibria. In the weaker version, the one to which most of us probably subscribe, Gaia is a balanced, harmonious ecology, only upset by deeply upsetting factors (such as industrializing pollution). In this view, if we can only stop making a mess of the planet in time, and let nature take its course, we will live on, clean and green and happily.

No such luck, says Peter Ward. Our earth mother is far from the loving Gaia, but is, instead, the child killing Medea. Life is its own toxin, according to Ward, and life itself is fundamentally limiting. Life brings its own death. Ward admits freely that carbon emissions are killing the habitat, but he argues this was inevitable.

Ward's main advice to us is, at least implicitly, to stop feeling guilty that we are killing ourselves off -- and taking thousands of species with us. He argues we were all doomed anyway. In fact -- and this is the clincher -- Ward argues that instead of thinking of the human species as the planet killer, we should reverse that idea and recognize ourselves for what we really are: life's last hope. That is, Ward argues, all life on Earth will kill itself off unless human beings do something to save themselves and those they care about. Human beings have for the first time on the planet demonstrated that they just may have the technological wherewithal to save us from our terrible earth Mother, Medea.

Although Ward is apparently turning ecological wisdom on its head, for most of us the course of action offered is not so different than it was before. Mankind must still mobilize. But if we think of ourselves as the planet killer, we can imagine that the sort of soulless, selfish monsters that got us here can't change overnight and get us out of here. On the other hand, if we realize that all life on the planet was going to die off sooner or later (the Sun only has a finite lifespan with perhaps another five billion years, for example) then we do not need to look for a miraculous transformation. In Ward's view, we were destined to face just this life-saving choice in just this dark forest. And if it is our fate to be the one species on the planet capable of fighting off mass extinction, why give up before the battle begins? What if there is even a very small chance that we can win?

I know what Pascal would have said.

If that doesn't compel the most reluctant to follow along, I am afraid I cannot offer much more. I do hope some of my readers may add to the cause if they see even more reason to hope.

In the Middle of the Journey of OUR Lives

The term has just begun and, after a term on medical leave, the return to work is both enriching and exhausting. Further, my daughter has surprised me with a side trip from her studies in Cuernavaca, Mexico to El Salvador, where Anti-Americanism is admittedly low, but violent street crime is “critical” (in the official language of the US State Department) and this has distracted me for a few days. And so I am already behind in responding to seven serious comments.

I do not wish to ask my readers to endure a disjointed response to them all at once, nor do I dare try to weave them together into one unified reply. I have neither the talent nor the energy to pull that off. So I will jot off a few short postings, dealing with them individually and in natural bundles.

In response to my last posting (The Problem is Unilateralism, not Ideology), Annie Rhodes, an MIT-trained biologist who has lived and studied in Italy, noted that a literal translation of Dante would be “In the middle of the journey of our life…” I had translated the line more cautiously as “In the middle of the journey of life.” I am quite pleased that this point has been noted. As my wife, Carol, can testify, I agonized over this very word in the draft of my post. While it is clear that “nostra vita” should be transliterated as “our life” – and therefore gives even more weight to Dante’s prescience (or at least relevance here as Annie points out) – I failed to note this in my original posting, and I owe you my reasoning now.

Dante was literally inventing the Italian language in the La Divina Commedia. In fact, it may be safe to say that this is the very first sentence ever written in Italian; at least we know it is the first written sentence preserved until today. Therefore, as the true meaning was seven centuries removed, I could not decide if “our” life was standing in for “life” generally, for Dante’s life (as it seems in the Canto), or for the lives of all of us when he hit the middle of our journeys (or even our collective journey – here, the journey of H. sapiens on planet Earth). So I took to the web, checking on multiple translations, and to my dismay, most of the standard translators chose to pass over “nostra” and use the first meaning, instead. I fell in line, disappointed, and changed it from the clearly trans-literal “our life” to the weaker usage, “life.” My father always said the scholar of highest integrity presents the weakest, not the strongest, version of the evidence that clearly support’s one’s position. To this day I try to convey to my best students that if one’s case can be advanced with the sparest, least controvertible form of the argument, it is made most convincingly, even if less flamboyantly. And I have had the lifetime habit of discounting researchers whose literature review bypasses the strongest criticisms of their positions.

But there is nothing whatsoever wrong if a careful and astute reader notes that you have left out something that seems to advance the case on some important level. So I am thrilled that Annie, whose Italian is far better than mine, has given me a chance to raise the point more strongly: perhaps Dante was telling us that in the middle of our collective life we come upon a dark wood (a deeply obfuscated decision) and must make our way – with significant consequences if we get it wrong. Shall we choose the wrong path and enter El Infierno?

For untrained readers (as am I), Dante appears deeply sympathetic to the sufferings of many of those he encountered in the Inferno. Modern critics have a long tradition, however, of criticizing naïve (soft-hearted) readings such as my own, arguing that Dante presented the cases of the condemned impartially and generously not to evoke sympathy from us, but to invoke a greater conviction among us that the sins were real and the punishment correct.

Which brings to mind two things. One, my father apparently learned something important from Dante, as the less inflammatory path was thought to be the more compelling. And two, according to whose diety shall we expect sympathy for ourselves if we condemn future generations to a severely damaged environment?

The Problem is Unilateralism, not Ideology

Today I turn to Mitchell's second major point: that while the nature of the system of government might be expected to matter, the realpolitik suggests otherwise. Mitchell is probably right that it is not the nature of national government that stands in the way of solving the biggest problems we face as a world community. Indeed, our focus should be elsewhere.

Nonetheless, I think at least a handful of readers would not prefer that I dismiss this issue out of hand. For example, one cannot deny that there is still a surprisingly active, ongoing investment in advancing the merits of competing political ideologies and their respective systems of government.* This remains true twenty years after the fall of the Berlin Wall and the failures of Soviet-style socialism in Eastern Europe and Russia became plainly visible to those of us in the West. A system of government that was in theory meant to wrest the control of the means of production from a privileged class and instead advance broader social, communitarian and national interests did not work in practice. While there was an ostensible improvement in the distribution of wealth and income behind the Iron Curtain, there was a distribution of privilege that was unequal enough to rival the grosser inequities of capitalist systems, and the overall quality of life was far worse than we might have expected.** We knew it wasn’t working much earlier, of course, but the first few years after the fall of the Wall confirmed that something had gone terribly wrong with Marxism-in-action. It is noteworthy here that even the environment, a resource shared by the community and therefore expected to be more effectively protected by socialist regimes than by systems of private property, was in a shambles. Air and water quality was horribly decayed in much of Eastern Europe by the late 1980s.

So much for the hopes of the intelligentsia. The historian Eric Foner wrote that his thesis advisor (the late historian Richard Hofstadter) reported that when he graduated from college in the 1930s, every thinking person asked: Shall I subscribe to liberalism (in the broader sense than we mean it today) or communism? (Hofstadter first chose communism, then switched.) Lionel Trilling’s post-War novel The Middle of the Journey is set in the 1930s, and Journey’s young intellectuals anguish over the hopes and fears they have for socialistic alternatives to the cruel capitalism of the Great Depression. Trilling’s title is, of course, a reference to the opening line of Dante’s Divine Comedy:

Nel mezzo del cammin di nostra vita
mi ritrovai per una selva oscura.

In the middle of the journey of life
I came upon a dark forest.

I share the rest of that opening line to make a point. For Trilling, I would hazard a guess that the implied “dark forest” is that which obfuscates our troubling choice between opposing ideologies, between giving first priority to freedom on the one hand or to justice on the other. Hofstadter, Trilling, and throes of 1930s intellectuals turned away from socialist hopes of justice (in favor of democratic capitalism’s freedoms) during or shortly after WW II. Joseph McCarthy’s witch hunts only a few years later (ironically following the abandonment of communism by most former party members in the US) must have made them wonder if pinning their hopes on US-style capitalist democracy was correct. (When we fail to protect the First Amendment rights of even our most strident dissenters, we fail to live up to the promise of this system of government.) Nonetheless, while there has been a small contingent of American radicals who have flirted with communism since (for example, during the Vietnam War), communism has never been a political force in US politics comparable even to its relatively small role in post-War Western Europe. Even those with the least market pressure to change, academic Marxists, have in large numbers de-emphasized their old texts, or have even more substantively changed their focus (some quite productively), since the fall of the Berlin Wall.

I am an economist and have a duty to discharge. Economists have a precise but limited view of the comparative merits of socialism and capitalism. If you ask a traditionally trained economist if the failure of socialism was surprising, you can expect to hear something akin to this: Quite to the contrary, the failure of socialism was to be expected, and this “problem” has a name. It is called the socialist calculation debate. A century ago economists worked out a mathematically elegant system to describe the state of an entire economic system, a method of analysis called general equilibrium. At the same time some economists, noting that unfettered market systems were both unjust in the distribution of rewards, and ineffective at allocating resources and setting prices in markets in which there was not a perfect alignment of private and public interests, thought that the mathematics of general equilibrium could, at least in theory, allow good economic planners to replicate the results in a non-market system. This would be what socialist planners would do, but they could do better than markets because they would have the interests of everyone, not just the owners of capital, in mind. The success of nations (all capitalist systems at the time) at suspending normal market activities and replacing them with planned war efforts during WWI emboldened these proponents of socialist planning. As late as the 1930s (when Hofstadter and Trilling came of age) – when an alternative to the apparently cyclic, painful capitalism was desperately sought out – it was still thought that this could be done well. (For example, Oskar Lange was still maintaining this view in his On the Economic Theory of Socialism in the mid to late 30s, but apparently no longer after the war.) Some went so far as to argue that properly trained socialist planners could do as well or even better than capitalist-market systems, with the chance for improvement invested in the prospect of better aligning private and public interest in markets subject to externalities or spillovers. These spillovers by the way are central to our worries about climate change. The idea here would be that a planner could explicitly weight the importance of a clean environment for future generations whereas a private market will only give priority to those who have cash in hand today. In this sense, then, the system of government could matter, and matter greatly, for a problem such as global warming.

Critics however launched a number of attacks against the feasibility of good socialist planning. The arguments were usually but not exclusively mathematical and nuanced. The critical thrust of these arguments was aimed at the informational demands of a system of planning that lacked market prices as critical guides to action. How could socialist planners create a system comparable to a market system when markets are the equivalent of gigantic information-crunching machines and planners are merely people with far more limited capacities? In today’s terms, market systems are the equivalent of chess playing super computers and socialist systems are human players. The latter may be able to guide the process with greater intentionality, but the former will ultimately win because they can evaluate trillions of positions in the time their human counterparts can evaluate only a handful. (What needs to be remembered is that it is only recently that machines have beaten the best human players. Thirty years ago, when I was in graduate school, even I, a player of no special merit, was able to beat the Harvard Mainframe Chess Program in a match that dragged on into the wee hours of the night. Luckily for me, I had an appreciative audience, ignorant of the likely course of future computing power. Today there exist many PC-based programs that can thrash me quite handily.)

Proponents of socialist planning argued in return that the tools of (then) modern economics could stand in for markets and work just fine, as long as certain conditions could be met. (For example, as long as socialist manufacturers could be directed to minimize costs. It turns out, quite clearly, that this simple directive was not generally adhered to in socialist regimes, and although I can say that this was a serious deficiency of socialist planning, I cannot say why it happened.) Further, these proponents argued, the separation of control of capitalist enterprises between their owner and their managers – an increasing phenomenon with the growth of large firms – meant that capitalist systems would not solve the correct problems anyway.

Critics of socialist planning fought back and the determination and talents of one in particular, Friedrich Hayek, left many with the ultimate impression that the socialist calculation debate was won by the critics of socialist planning. It would surprise most economists today, but the debate was never actually concluded on the informational (calculation) terms on which he had been conducted.*** The determination that socialist planning would fail because the informational demands would exceed the capacities of any planner in a non-market system was never actually proven mathematically. It was merely asserted. Although fans of Hayek may say even today that his arguments on the need for market prices qua information were compelling, I think it can be said that Hayek actually won the debate by broadening the debate to include something at least as important. Hayek addressed the larger humanistic issues in works such as The Road to Serfdom, “The Use of Knowledge in Society,” and Individualism and Economic Order – work that conveyed Hayek’s deeply felt sense of human nature and what (socialist planning) power would do to people. That is, Hayek felt strongly that such enormous power would prove dangerous and lead to totalitarianism.

It may be said that Hayek was right, not on the narrow grounds of the economic debate, but on his sense of what socialist planning would mean for the agglomeration of power in a few hands. Whereas capitalism may well be characterized by the troubling adage, “One dollar, one vote,” socialism may be characterized by the even more troubling “One seat in the Politburo, one vote." And the effects go far beyond economic decision-making, of course. As we saw in Russia, Eastern Europe and in China, control can, and perhaps must, extend far more deeply into social, cultural and religious experience. If society invests in one’s education and then pays a below world-market wage for educated services, can society then allow the educated and well-trained to leave for greener pastures? A closing of borders follows. Borders are also closed to trade flows (imagine the challenges of predicting what needs to be produced after trade?) If the plan calls for more tractors and fewer passenger cars because of the relative social weight placed on agricultural productivity and domestic convenience, there is not much that even pent-up demand for passenger cars can do if trade is blocked. (When the Berlin Wall fell, in the DDR there was a waiting list for passenger cars – and we are talking about a queue for terrible little Trabants and Wartburgs – that was fifteen years long. That queue disappeared overnight – and so did the Trabants and Wartburgs – when East Germans were freed to buy VWs and Opals from the West.)

Many may agree with me that this leaves us with democratic capitalism. Not necessarily or even likely US-style democratic capitalism (in which social safety nets are small and aggressively fought over) but some sort of social democracy, perhaps along the lines of the Scandinavian model. The pain of experience tells us that the forest is really not so dark anymore; our path is clear. Unfortunately, just because you can see where you are going, it doesn’t mean that you like where you are going. Democratic capitalism in its current, nationalistic forms is not terribly promising. The bottom line is that it doesn’t much matter what sort of political ideology motivates our national governments as we have global problems that need to be addressed with complex, cooperative problem-solving tools, and so far it is not clear that national governments can learn to coordinate well enough to deal with challenging global problems. Our problems require that we communicate and understand the true risks we face as a species, and in our current environment our information flows are (ironically, given the nature of the debate waged over our political ideologies) heavily distorted by a pernicious politicizing of our science, technology and policy. Further, our capacity to solve multi-lateral global problems has, at least so far, proven to be quite challenging in the current environment of competing, national entities.

But there are still many who hold out hope that there is still time to solve the biggest problems facing us as a world community. Sachs paraphrases JFK in reminding us that our greatest enemy is cynicism. If we have no hope of solving our problems, we cannot solve them. Further, there are many cases of successful global problem solving that we must remember and from which we can learn valuable lessons. Those of us who read comic books as children can’t fail to recall that in the world of our comic books, our civilized, advanced future (one we fully expected to have as we did not yet fear for our very existence) was governed by a global government of erudite, soft-spoken, reflective, peace-loving men and women. (If it was an interplanetary government, it included non-humans, as well.) It’s too bad we didn’t get there in time, but it appears that we are going to have to solve our current global problems without the global government (although the UN is trying to help) and without the erudite, soft-spoken, reflective and peace-loving leadership (although some of you may beg to differ).

The global problem solving challenge falls instead upon national governments (of varied ideologies), the UN, enlightened corporations, enlightened individuals (such as Bill Gates and, depending upon your tastes, Al Gore), NGOs, including academic institutions, professional organizations, and a wide variety of activists, working in a complex web of organizations and movements. The tools for communication and organization are expanding rapidly; the internet and now social networking has made it much harder for political or corporate interests to dominate public discourse. Scientists have been trying much harder and much more successfully of late to get through to us that we face a number of serious risks (climate change being only one of them). Dr. Paul Farmer’s work in Haiti, Jacques d’Amboise’s work raising money and consciousness in youth dance circles for African aid, Muhammad Yunus and the micro-finance revolution that has had an astonishing impact on the lives of poor women around the world. The trend to more energy-conserving automobiles has recently spiked. Who can doubt that something important is happening? And who can deny that each of us could do more (I have been a vegetarian for over 25 years, but I still don’t drive a hybrid vehicle)?

The European Union offers a promising model, this one an example of rapidly improved cooperative decision making over a small period of time. There, the deficiency of old nation-state negotiated solutions to continental problems led to a surprisingly easy and significant transition to much greater regional integration. Few would have imagined even a generation ago that European nations would be able to cast aside their independence for this level of cooperative integration.

It may be said by some that the UN (as articulated in the Millennium Promises) is overly focused on the solving the problems of the poor and indigent and insufficiently motivated to focus on the survival of the species on the planet, and I think there is some truth to that. But Sachs, who has historically been at least as invested in poverty policy as he now is in climate change in his work at the Earth Institute, has argued that mitigating some of the worst problems in Africa (and in the rest of the impoverished world) is not only a matter of moral compulsion, but it is an essential part of the solution to climate change. The carrying capacity of the planet is about 8 billion and without population control in the poorest parts of the world, we will overshoot the planet’s limit. If we do reduce unwanted pregnancies in places where contraception is scarce, it has been estimated that we can reduce the number of births by 75 million per year. As I have written in other media, this is just about what is needed, in total, to prevent us from overshooting our planetary limit. Further, the greening of the planet needs to include the greening of the poor. Deforestation accounts for about 19% of the damage leading to global warming but in Africa forests are cut down not even to provide building material, but to burn for fuel. Increased incomes and the use of sustainable energy can therefore help doubly in the poorest parts of the world.

As you think about the challenges of dozens of competing governments seeking to advance a cooperative solution to problems such as climate change, think about this technological advance: e-Parliament. This project is trying to make it possible for legislatures everywhere to meet simultaneously with a strong videoconferencing platform and make collective, cooperative, coordinated decisions. These are decisions that will require sacrifice for the greater good, and are therefore likely to break down due to mistrust if one government needs to commit in advance of others. (This creates incentives to defect – a well understood phenomenon in economic theory.) Instead, we may see the day when every civilized government in the world (and we have to work hard to make sure the US government is one of them) can agree almost simultaneously to a cooperative, coordinated solution that will cost each of us something (about 1-3% of GNP according to some estimates) and will lead to a better long term outcome for all of us.

I have gone on much too long today. I will return to some of these themes soon. Until then, let me remind my readers that activism is being heard in all corners of the world. There has been real progress – a reason to hope that we can do this in time. I am not sure that I would go so far as to say I have the audacity to hope, but I am open to arguments from my readers that I should. As Bill Maher has said, he's tired of the audacity to hope and he thinks its time to hope for some audacity. I will lend a hand and make this more specific: the audacity that we are hoping for is the sort that will compel our political leaders to put aside their pretensions to cultural superiority, their nationalistic impulses, their distrust, and their ideological biases, in order to get to work cooperating multi-laterally to solve the problems facing all of us. That takes some audacity, I know, but what's the alternative?
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* See, for example, below which argues that all systems of government thus far tried are capital-centric. The conclusion is that the alternative, a labor-centric system, has not yet been given a fair chance. http://www.progressiveliving.org/economics/capitalism_socialism_communism.htm. For a more immediate and compelling debate about the merits of and role for government policy within capitalist systems, see Krugman’s recent piece (How Did Economists Get it So Wrong?) in which he lays out the gross failures of Chicago-style Anti-Keynesianism and their overly accommodating rivals, the so-called Saltwater Neo-Keynesians, who failed to stick to their guns well enough to protect us from a second global depression in eighty years. Krugman’s piece can be found here: http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=8. Finally, it must be noted that one of fastest growing economic powerhouses in the world today is the People’s Republic of China.

** All aspects of life were not worse under Soviet-style socialism. Athletics, the Arts, and some aspects of education were well supported by state systems.

*** See this simple summary of the debate for details: http://homepage.newschool.edu/het//essays/paretian/social.htm.