Markets, fairness and bastards
Some fascinating stuff on Economist’s View today. Below are two reposted articles on how notions of equity are deeply rooted in our brains. We may be smarter monkeys but the parallels are all too clear. Also check out this post on neoclassical indoctrination at the Chicago School. Thoma’s condensed version is here and the full pdf from In These Times is here.
Is market exchange morality in action? The author, “a fellow at the Gruter Institute and director of Claremont Graduate University’s Center for Neuroeconomics Studies,” says it is:
Moral ‘bastards’ have brain hormone problems, by Paul J. Zak, Project Syndicate: Recent revelations that many corporate executives have backdated their stock options … are the latest examples of bad business behavior. …[A] cynical public … wonder[s] where big business has gone wrong.
The answer may be quite simple: Too many bosses have abandoned basic human values and embraced the credo famously uttered by Gordon Gekko in the movie “Wall Street:” “Greed is good.” But a growing body of research concludes that greed is not always good, and that moral values are a necessary element in the conduct of business. …
Even though humans have engaged in exchange since before the birth of civilization, the impersonal system of trading is only around 1,000 years old. In impersonal market exchange, we cannot help but personalize transactions, say, with the grocery store cashier who smiles and thanks us. This personalization draws upon regions of the brain that evolved when our trading partners were members of small kin-based groups where moral violations were immediately identified and remedied.
Research by primatologists Sarah Brosnan and Frans de Waal at Emory University has shown that monkeys also have what look like moral values. When two monkeys work for food, a fair split is expected. If a fair division is not received, it elicits cries of outrage and hurled food by the wronged partner.
Moral values have powerful physiological representations in humans, too, and we feel them strongly when they are violated. … In neuroeconomics experiments that my lab has conducted, we have found that when a stranger places trust in another by making a considered monetary investment that can either be returned or stolen, our brains release an ancient mammalian hormone called oxytocin.
Oxytocin is what bonds mammals to their offspring, and in humans makes spouses care about and love each other. We have found that trust causes a spike in oxytocin and begets reciprocation – the sharing of money.
We are “wired” to cooperate, and we find it rewarding in the same way that our brains identify eating a good meal … as rewarding. Oxytocin is active in evolutionarily old areas of our brain, outside of our conscious awareness. We simply have a sense that sharing with someone who has trusted us is the right thing to do.
We have also found that about two percent of undergraduates we studied are pure non-cooperators. When they have an opportunity to share money with a stranger who has trusted him or her, non-cooperators keep all the money rather than share the largess.
The technical term in my lab for these people is “bastards.” Our evidence suggests that bastards’ brains work differently. Their character traits are similar to those of sociopaths. They simply do not care about others the way most people do, and the dysfunctional processing of oxytocin in their brains appears to be one reason for this. Because bastards are out there, we still need government and personal enforcement of economic exchange.
Many believe that market exchange diminishes our humanity. Think of Charlie Chaplin’s film “Modern Times,” in which the little tramp is literally a cog in the capitalist machine. That view is wrong. On the contrary, working together, and trading with each other in markets, is morality in action.