Capitalism is an economic system based on competition and greed–each individual acting in their greedy self interest is supposed to generate the greatest good for the greatest number. Global warming and other environmental problems suggest that unfettered markets can cause serious harm to humanity as a whole, but most economists argue that this results from an absence of clearly defined private property rights (i.e. the so-called tragedy of the commons), and the solution is simply to extend the market. Proponents of the commons in contrast argue that we can develop social institutions through which common property resources are managed in just, sustainable and efficient ways. Economic systems based on common ownership require that humans act as social animals concerned for the common good. Fortunately, an abundance of studies in behavioral economics, neuroeconomics, economics and psychology, experimental economics and so on show that humans do indeed show concern for others, and are not the selfish individuals assumed by conventional economists. And there are of course abundant examples of well-managed commons.
I have tried to argue this month that competitive market based allocation may be appropriate for rival resources that can be exclusively owned, but are inappropriate for non-rival resources or those that cannot be exclusively owned. In this post, I draw on studies in evolution to present another, complementary possibility, which is that competition may work reasonably well when resources are abundant, but cooperation may be more successful when resources are scarce. I argue that capitalism emerged simultaneously with the fossil fuel economy (Adam Smith’s wealth of nations was published in 1776, and the first effective steam engine, used to pump water from coal mines, was patented in 1769). We live in an age of unprecedented abundance. Either because of limited remaining supplies of fossil fuels or because of an extremely limited ability of the atmosphere to absorb more wastes from their combustion, the age of cheap energy is drawing to a close. The current generation is likely to witness the transition from an economy of relatively abundant resources to one of absolute scarcity, and this may have profound implications for the suitability of competitive capitalist economies versus cooperative common property economies.
Even viruses, bacteria and slime molds can work together as social groups, and often do so in order to survive. One adaptation seen in some Psuedomonas sp. is that in anoxic conditions, they are capable of binding together in a film that floats at the surface of the water in which they live, giving them access to both oxygen and nutrients. If the bacteria fail to cooperate, they will suffocate. But once enough bacteria are cooperating so that the group as a whole can survive, some individuals can enhance their reproductive success by defecting–instead of dedicating energy to making the film, they devote it to reproducing, and can do so faster than those using energy to make the film. The defectors are able to remain at the air-water surface by taking advantage of the film produced by others. However, if the defectors become too successful, the film breaks apart and the colony plunges to the depths and suffocates. When there is competition between groups, those groups best able to cooperate will survive, so that the species as a whole becomes more cooperative.
Within humans, studies have shown that our disposition towards prosociality, essentially our willingness to contribute to society and the well-being of others, takes the form of a bell curve. Some people may indeed predominantly act in their own greedy self-interest as economists predict, others are more like Gandhi or Mother Theresa, and the rest of us fall somewhere in between. It would appear the that same is true for most social animals, but that group selection favors a high degree of cooperation. Interestingly, humans have evolved another form of cooperative behavior known as altruistic punishment, through which defectors — those who promote their own well-being at the expense of others — are punished. An interesting game that illustrates this phenomena is known as the ultimatum game. One person is give something, say $100, and is then told to divide it however she wants with someone else, who then has the right to accept or reject. Rejection means that no one gets anything. If we act like the economists say we should, we would accept any positive amount of money, as even one dollar is clearly better than nothing. In the US however (it varies across cultures), if someone is offered less than $20, they are likely to reject it — they will essentially pay $19 to punish someone else for being selfish. This deters selfish behavior in the community as whole, enforces cooperation, and makes us better off as a society. Capitalism, by awarding greedy self-interest, essentially awards the defectors. It is the opposite of altruistic punishment.
An example of what might happen when we select for success through competition comes from the mundane world of chicken breeding. A chicken breeder once took two separate approaches to increase egg production over time. In the experiment, groups of 9 chickens were kept together in a single cage. One approach was to select the one cage out of 9 that produced the largest number of eggs, raise only chickens from that cage to populate 9 more cages, and continue the experiment over generations. The second approach was to take the very best chicken from each of nine cages, then raise them together in a single cage. After 6 generations, the cage containing group selected chickens was producing more eggs than ever. The cage containing the individually selected chickens on the other hand had only 3 survivors, battered, featherless and bedraggled. Egg production had plummeted. To quote David Sloan Wilson’s assessment of events: “What happened? the most productive individuals had achieved their success by suppressing the productivity of their cagemates. Bill [the researcher] had selected the meanest hens in each cage, and after 6 generations had produced a nation of psychopaths.” Are market economies designed to award the psychopaths, to produce a nation of psychopaths? That might be a little extreme, but nonetheless I’m personally grateful that those who succeed the most in the market are not those who breed the most!
It’s hard to argue with the success of capitalism however, which leads me to describe one more experiment. Myxococcus xanthus is a bacteria that hunts cooperatively. Under starvation conditions, they will actually come together in a fruiting body that allows a few individuals to form spores that remain dormant until conditions improve — those who don’t form spores sacrifice themselves for the survival of the species. The species survives hard times through cooperation. When placed in conditions of abundant resources however, after several generations the Myxococcus seize to hunt cooperatively. When returned to starvation conditions, it turns out that they even lose the ability to form fruiting bodies and are unable to survive.
Was society more cooperative prior to capitalism than it is today? Does the success of selfish competition depend on the abundance of fossil fuels, which so dramatically alleviate resources scarcity? When fossil fuel use declines, as it must, will we be forced to develop more cooperative economies or go extinct? Will we still be able to?
It’s worth noting that fossil fuels are available in a finite quantity, but that quantity can be used as fast as we choose. There is therefore intense competition for use. As it is rival and excludable, it fits nicely into the market niche. The post carbon age however must rely on solar energy. Solar energy is available at a fixed rate over time. The challenge to effective capture is information — new technologies — not scarcity of photon flows. Information grows fastest when shared. If we refuse to share knowledge for non-carbon energy and some countries continue to burn coal, we’ll all suffer equally. In other words, will the post-carbon age be better suited to cooperative common property economics rather than competitive capitalism?
It’s hard to argue that humans are less behaviorally complex than bacteria, yet economists make this argument — because some humans defect from group cooperation, economists have assumed that human nature is to care only about ourselves as individuals and not about the group of which we are part. Economists assume that we are “homogeneous globules of desire,” not even part of a group. Our species is competing with all other species for a space in the sun. The way we can remain competitive across groups and across species is to cooperate within our group and to punish defectors whose actions would otherwise drag us all down into the slime. Instead, we have tried to build an economic system that rewards greedy self-interest. This might not be a problem if resources were infinite and there was no such thing as non-rival goods, but non-rival goods such as most ecosystem services are like the film that sustains the bacteria–they are necessary to sustain our species. Many of the non-rival goods are not made by us per se, but we have the capacity to exploit them. Those who exploit them the most will thrive in this selfish world that worships greed. The end result however may well be the extinction of our species.