Yves here. This sort of post drives me nuts, because while it makes some useful observations, it gives the impression that there are ready solutions to complex problems that actually still remain unsolved.
This article takes the questionable point of view that the problems of loyalties at different levels of society can be magically solved by more teamwork, and by focusing on teamwork at the highest level, meaning globally.
Firs, this cheery view that teamwork always prevails ignores the fact that all social species engage in cheating as well as altruistic punishment of cheaters. Anyone who has been in involved in rea world “teams,” like sports and debate teams, political and charitable organizations, and work groups, knows that they are full of petty jealousies, personality disputes, turf wars, and other competitions for resources. They rarely run happily or well despite management blather otherwise, and when they do, it is the result of that rare commodity, decent leadership.
While cooperation helps in making a society more effective, any individual or subgroup will gain by “cheating” on that system. The amount of vigilance to ride herd on all abusers winds up being a large cost that undermines some of the advantages of teamwork. A certain amount of malingering and other “taking advantage of the system” usually winds up being tolerated; the alternative is constant spying, ratting out, and punishment. Not exactly a great basis for cohesion either.
The article claims, without offering any supporting evidence, that positive social norms can be enforced at the scale of a village. But how do you have commerce without having rules that allow anonymous parties to deal with each other and have some method of having disputes arbitrated? This requires a great deal in the way of institutionalization, something the authors appear to reject.
Moreover, there is nothing to assure that the resulting norms will fit into the implicit liberal ideals that the authors seem to value. Intentional communities, which would seem to be a textbook manifestation of this desire, nearly always fail, typically in remarkably short order.
Japan stands out in the world for having created a society where social norms are well understood and enforced actively. Yet there are downsides to this sort of culture that most Westerners would reject, such as its emphasis on conformity (more complicated than that but that will have to serve as shorthand; the net result is a high degree of self-censorship), hostility to foreigners, severe bullying of misfit children, and its 99% conviction rate by virtue of police beating confessions out of prisoners. And Japanese companies are not nicer or more cooperative internally than Western ones; Sumitomo Bank, where I worked, was rife with backstabbing, spying, and jockeying for political advantage.
Similarly, on a mundane level, it does not seem credible that individuals would come to treat family loyalties and duties as subordinate to those of an abstract mankind or planet. Look at all the deep-seated norms around having and caring for children, for starters.
As the famed social philosopher, Jamie Lannister, said in the Game of Thrones:
So many vows…they make you swear and swear. Defend the king. Obey the king. Keep his secrets. Do his bidding. Your life for his. But obey your father. Love your sister. Protect the innocent. Defend the weak. Respect the gods. Obey the laws. It’s too much. No matter what you do, you’re forsaking one vow or the other.
Similarly, the article criticizes Norway for not being a sufficiently virtuous investor because some of its holding fail the test of social responsibility.
But if you were to be a strict social responsibility investor, there would be very little in which to invest. Among the things you’d have to rule out: virtually all emerging economies (the advanced world is outsourcing its pollution and often taking advantage of sweatshop work conditions) and as a result, companies who have a significant portion of their manufacturing or wholesaled product coming from these countries, tobacco producers, commodity producers (environmental destruction), companies that sell drugs in the US (price gouging), big box retailers (for exploiting local communities by pitting them against each other for tax breaks that are so large that the communities don’t come out ahead), large financial services firms (as we’ve documented, they are purely extractive by virtue of creating periodic financial crises), firms with a poor record of paying and promoting “out” groups, firms that pay workers less than a living wage, monopolies and oligopolies (increasingly acknowledged to be major contributors to income inequality which is bad for growth and political stability as well as political corruption), arms makers, companies that sell products and services to the surveillance state. The dirty secret of CSR is that “socially responsible” investors wind up nixing only some categories of bad conduct.
By David Wilson, a SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Dag Hessen, a Professor of Biology at the University of Oslo, Norway. Originally published at Social Evolution Forum; cross posted from Evonomics
Life consists of units within units. In the biological world, we have genes, individuals, groups, species, and ecosystems – all nested within the biosphere. In the human world, we have genes, individuals, families, villages and cities, provinces, and nations – all nested within the global village. In both worlds, a problem lurks at every rung of the ladder: a potential conflict between the interests of the lower-level units and the welfare of the higher-level units. What’s good for me can be bad for my family. What’s good for my family can be bad for my village, and so on, all the way up to what’s good for my nation can be bad for the global village.
For most of human existence, until a scant 10 or 15 thousand years ago, the human ladder was truncated. All groups were small groups whose members knew each other as individuals. These groups were loosely organized into tribes of a few thousand people, but cities, provinces, and nations were unknown.
Today, over half the earth’s population resides in cities and the most populous nations teem with billions of people, but groups the size of villages still deserve a special status. They are the social units that we are genetically adapted to live within and they can provide a blueprint for larger social units, including the largest of them all – the global village of nations.
Groups into Organisms
The conflict between lower-level selfishness and higher-level welfare pervades the biological world. Cancer cells selfishly spread at the expense of other cells within the body, without contributing to the common good, ultimately resulting in the death of the whole organism. In many animal societies, the dominant individuals act more like tyrants than wise leaders, taking as much as they can for themselves until deposed by the next tyrant. Single species can ravage entire ecosystems for nobody’s benefit but their own.
But goodness has its own advantages, especially when those who behave for the good of their groups are able to band together and avoid the depredations of the selfish. Punishment is also a powerful weapon against selfishness, although it is often costly to wield. Every once in a great while, the good manage to decisively suppress selfishness within their ranks. Then something extraordinary happens. The group becomes a higher-level organism. Nucleated cells did not evolve by small mutational steps from bacterial cells but as groups of cooperating bacteria. Likewise, multi-cellular organisms are groups of highly cooperative cells, and the insects of social insect colonies, while physically separate, coordinate their activities so well that they qualify as super-organisms. Life itself might have originated as groups of cooperating molecular reactions.
Only recently have scientists begun to realize that human evolution represents a similar transition. In most primate species, members of groups cooperate to a degree but are also each other’s main rivals. Our ancestors evolved to suppress self-serving behaviors that are destructive for the group, at least for the most part, so that the main way to succeed was as a group. Teamwork became the signature adaptation of our species.
Extant hunter-gatherer societies still reflect the kind of teamwork that existed among our ancestors for thousands of generations. Individuals cannot achieve high status by throwing their weight around but only by cultivating a good reputation among their peers. Most of human moral psychology – including its other-oriented elements such as solidarity, love, trust, empathy, and sympathy, and its coercive elements such as social norms enforced by punishment – can be understood as products of genetic evolution operating among groups, favoring those that exhibited the greatest teamwork.
From Genes to Culture
Teamwork in our ancestors included physical activities such as childcare, hunting and gathering, and offense and defense against other groups. Human teamwork also acquired a mental dimension including an ability to transmit learned information across generations that surpasses any other species. This enabled our ancestors to adapt to their environments much more quickly than by the slow process of genetic evolution. They spread over the globe, occupying all climatic zones and hundreds of ecological niches. The diversity of human cultures is the cultural equivalent of the major genetic adaptive radiations in dinosaurs, birds, and mammals. The invention of agriculture initiated a positive feedback process between population size and the ability to produce food leading to the mega-societies of today.
Cultural evolution differs from genetic evolution in important respects but not in the problem that lurks at every rung of the social ladder. Just like genetic traits, cultural traits can spread by benefitting lower-level units at the expense of the higher-level good – or by contributing to the higher-level good. There can be cultural cancers, no less so than genetic cancers. And for teamwork to exist at any given rung of the social ladder, there must be mechanisms that hold the wolves of selfishness at bay. A nation or the global village is no different in this respect than a human village, a hunter-gatherer group, an ant colony, a multi-cellular organism, or a nucleated cell.
Modern nations differ greatly in how well they function at the national scale. Some manage their affairs efficiently for the benefit of all their citizens. They qualify at least as crude superorganisms. Other nations are as dysfunctional as a cancer-ridden patient or an ecosystem ravaged by a single species. Whatever teamwork exists is at a smaller scale, such as a group of elites exploiting the nation for its own benefit. The nations that work have safeguards that prevent exploitation from within, like scaled-up villages. The nations that don’t work will probably never work unless similar safeguards are implemented.
Accomplishing teamwork at the level of a nation is hard enough, but it isn’t good enough because there is one more rung in the social ladder. Although many nations have a long way to go before they serve their own citizens well, a nation can be as good as gold to its own citizens and still be a selfish member of the global village. In fact, there are many examples in the international arena, where nations protect their own perceived interests at expense of the common global future. We will address some of these issues for Norway, which serves its own citizens well by most metrics and also has ambitions to serve the global village well, but still sometimes succumbs to selfishness at the highest rung of the social ladder.
The Norway Case
Norway functions exceptionally well as a nation. Although it is small in comparison with the largest nations, it is still many orders of magnitude larger than the village-sized groups of our ancestral past. Seen through the lens of evolutionary theory, the dividing line between function and dysfunction has been notched upward so that the whole nation functions like a single organism. This is an exaggeration, of course. Self-serving activities that are bad for the group can be found in Norway, but they are modest in comparison with the more dysfunctional nations of the world.
Norway’s success as a nation is already well known without requiring an evolutionary lens. Along with other Nordic countries, it scores high on any list of economic and life quality indicators. The success of the so-called “Nordic Model” is commonly attributed to factors such as income equality, a high level of trust, high willingness to pay tax, which is tightly coupled to strong social security (health, education), a blend of governmental regulations and capitalism, and cultural homogeneity. These and other factors are important, but we think that viewing them through an evolutionary lens is likely to shed light on why they are important. Our hypothesis is that Norway functions well as a nation because it has successfully managed to scale up the social control mechanisms that operate spontaneously in village-sized groups. Income equality, trust, and the other factors attributed to Norway’s success emanate from the social control mechanisms.
Our evolutionary lens also sheds light on Norway’s behavior as a member of the global village. Not without reason, Norway prides itself as a “nation of goodness.” Norwegian foreign policy no doubt plays a positive role in world affairs, also aiming for a “civilized capitalism,” and Norway is the country that has pressed the UN to accept guidelines that make not only states, but also multinational companies, liable for violation of human rights. Also, Norway is currently the world’s most active advocate of corporate social responsibility on all international arenas. Hence, in this context, Norway has done a great deal to behave as a solid citizen of the global village. On the other hand, for all its success and wisdom, the management of the state pension fund illustrates that even Norway is sometimes guilty of selfishly feathering its own nest at the expense of other nations, the planet, and, therefore, ultimately its own welfare over the long term.
The Norwegian Government Pension Fund Global is by far the world’s largest sovereign wealth fund, currently exceeding 800 billion USD, and rapidly growing. The fund is owned by the state on explicit behalf of current and future generations. It is administrated by the Ministry of Finance, which gives guidelines to the investment branch of the Norwegian State Bank (Norwegian Bank Investment Management, NBIM). A separate Council of Ethics (appointed by the government) serves the role of advising the Ministry on which companies to divest from due to serious ethical misconduct (details in the structure and mandates can be found here).
The fund has two major ethical concerns: It should provide good returns to future generations, and it should not contribute to severe unethical acts. The major emphasis has been on the first goal. A core management issue is the rule of maximum spending (handlingsregelen), i.e., that no more than 4% of the annual income can enter the annual state budget for public spending. This ensures that the fund will be used for the long-term welfare of Norway, not just short-term welfare.
This is admirable management of common goods and can serve as an example of how natural resources can be managed for the benefit of an entire nation. At the opposite extreme, consider Equatorial Guinea, which allocates almost the entire income from its oil to the benefit of a single family (the president and his close relatives). For the rest of the population, the life expectancy is 51 years, and 77% have an income of less than 2 US dollars per day. Most other oil-producing nations direct at least some of their revenues to collective goods, but much of it is diverted to political and corporate elites and/or short-term spending. In this context, the Norwegian Pension Fund is quite unique with is long term investments.
However, if we go further and ask whether the investments are to the benefit of the long-term welfare of the global village, the answer is very close to a “No.” The main goal of the fund is maximum return, and although Norway has set up to 3 billion NOK aside for preservation of rainforests, it has also (at least up to now) invested heavily in logging companies replacing rainforest with palm oil. There are also heavy investments in mining industries, coal and oil companies, and other activities that do not contribute to a sustainable future. There is no overall “green,” sustainable, or ethical profile for evaluating investments. There is only an Ethical Council that advises the Ministry of Finance, which decides (often after considerable delay) whether or not the bank (NBIM) should divest in certain companies that perform major, unethical practices. Such divestments are made public, so at least they are open to the gaze of Norwegians and the rest of the world – no doubt increasing their impact. The problem is, however, that the investments per se are guided almost solely by the principle of maximum returns, not by principles of long term, sustainable (environmental as well as morally) investments that would benefit the global village – as well as Norway. So, if even Norway fails to recognize the long-term benefits of a strategy beyond narrow national self-interest, what kind of mechanisms can be invoked to the benefit of the global village?
Organizing the Global Village
Norway’s double standard at the highest rung of the social ladder is typical of most nations. Around the world, politicians talk unashamedly about pursuing the national interest as if it is their highest moral obligation. Double standards easily trigger a feeling of moral indignation. How could persons or nations be so hypocritical? But wagging fingers at nations is not going to solve the problem. A smarter approach is to understand why moral indignation works at the scale of a village, why it doesn’t work at the scale of the global village, and how it can be made to work with the implementation of the appropriate social controls.
Imagine living in a village and meeting someone who talks unabashedly about her own interests as if no one else matters. As far as she is concerned, the other villagers are merely tools for accomplishing her own ends. How would you react to such a person? Speaking for ourselves, we would be shocked to the point of questioning her sanity. We might entertain similar thoughts, but we wouldn’t be so open about it. Moreover, our selfish impulses are tempered by a genuine concern for others. Empathy, sympathy, solidarity, and love are as much a part of the human repertoire as greed. We would probably experience the same feeling of moral indignation welling up in us that we feel toward Norway’s questionable behavior. Even if we remained dispassionate, we would avoid her, warn others, and feel moved to punish her for her antisocial ways. As would most of the other villagers, so despite her intentions, she would probably not fare very well.
Moral indignation works at the scale of villages because it is backed up by an arsenal of social control mechanisms so spontaneous that we hardly know it is there. The most strongly regulated groups in the world are small groups, thanks to countless generations of genetic and cultural evolution that make us the trusting and cooperative species that we are.
The idea that trust requires social control is paradoxical because social control is not trusting. Nevertheless, social control creates an environment in which trust can flourish. When we know that others cannot harm us, thanks to a strong system of social controls, then we can express our positive emotions and actions toward others to their full extent: helping because we want to, not because we are forced to. When we feel threatened by those around us, due to a lack of social control, we withhold our positive emotions and actions like a snail withdrawing into its shell.
This is why people refrain from unethical acts – to the extent that they do – in village-sized groups and why cooperation is accompanied by positive emotions such as solidarity, empathy, and trust. The reason that nations and other large social entities such as corporations openly engage in unethical acts is because social controls are weaker and are not sufficient to hold the wolves of selfishness at bay. This is why politicians can talk openly about national self-interest as if nothing else matters – even though a villager who talked in a comparable fashion would be regarded as insane.
Understanding the nature of the problem enables us to sympathize with the plight of Norway when it chooses how to invest in the global market. Like a snail, it might want to emerge from its shell and support the most ethical enterprises. But to do so might be too costly in a market environment that rewards naked selfishness. Norway might be required to shrink into its shell and make selfish investments to survive. After all, snails have shells for a reason.
A third option is available to Norway and all other nations, which is to create the same kinds of social controls at a large scale that curtail selfishness in smaller groups. This is also costly, like investing in ethical enterprises that don’t yield the highest profits, but it has a more lasting benefit because once a social control infrastructure is in place, it is the ethical enterprises that yield the highest returns. Norway has come a long way to employ this principle in its official foreign policy, but it is clearly lagging behind on the global business scene when it comes to own investments.
There is evidence that village-like social controls are starting to form at larger scales without the help of governments. In the United States, a nonprofit organization called B-lab (B stands for benefit) provides a certification service for corporations. Those that apply for certification receive a score on the basis of a detailed examination. If the score exceeds a certain value, then the company is permitted to advertise itself as a B-Corporation. Xiujian Chen and Thomas F. Kelly at Binghamton University’s School of Management recently analyzed a sample of 130 B-corporations and compared them to a number of matched samples of other corporations. The samples were matched with respect to geographical location, business sector, corporation size, and other variables. In all cases, the B-corporations were either as profitable or more profitable (on average) than the corporations in the matched samples. Engaging in ethical practices did not hurt, and might even have helped, their bottom lines.
More analysis will be required to pinpoint why B-corporations do well by doing good. One possibility is that they have become like villages in their internal organization so there is less selfishness from within. Another possibility, which is not mutually exclusive, is that consumers are increasingly adopting a norm that causes them to prefer to do business with ethical companies and to shun unethical companies, exactly as they would prefer and avoid people in a village setting. Certification as a B-Corporation makes it easier for consumers to evaluate a company’s ethical reputation. Knowing someone’s reputation comes naturally in a village setting, but work is required to provide the same information at a larger scale. Adherence to other codes performs a similar function, such as the UK Stewardship Code (FRC 2012), the International Corporate Governance Network´s Code (ICGN) or the Singapore Code of Corporate Governance Statement on the Role of Shareholders (SCGC) to mention a few.
There are even indications that the corporate world is becoming more village-like without requiring formal certifications. As an example, Apple chief executive Tim Cook was recently criticized by the National Center for Public Policy Research (NCPPR) for failing to maximize profit for its shareholders by investing for the benefit of the climate and the environment. Cook became strikingly upset and advised those with such narrow self-centered goals to sell their stocks. He was behaving precisely as a good villager would behave – and if his reaction became the norm among large corporate entities, the global village would become more like a real village without the need for formal certifications.
It might seem too good to be true that consumers and the corporate world are spontaneously starting to hold the wolves of selfishness at bay by implementing the same kinds of social control that we take for granted at a village scale. If this did come to pass, then Norway would no longer be faced with difficult choices in how to invest its vast wealth in the global market, because the most ethical companies would also be the most profitable. But if this is happening at all, it is still in its initial stages. At present, it is still the case that some of the most profitable investments are of the cancerous variety.
Therefore, Norway is faced with a difficult moral choice similar to that of most investors. It can remain in its shell and make the most profitable investments to maximize short-term returns for its shareholders (in this case, the Norwegian population) without regard to worldwide ethical concerns, or it can emerge from its shell, live up to its ideal standards in domestic as well as foreign policy, and join with other right-minded individuals, corporations, and nations to help create the social control system that can make ethical practices most profitable. The crucial point is that this is a win-win situation in the long term because, ultimately, we are all in the same boat, and what is good for the world, in a long-term sustainability perspective, will also be good for Norwegians.
A New Narrative
In this essay, we have sketched a surprisingly simple solution to the apparent conflict between self-interest and mutual benefits at all hierarchical levels. We are suggesting that the social dynamics that take place naturally and spontaneously in villages can be scaled up to prevent the ethical transgressions that routinely take place at a large scale. Why is such a simple solution not more widely known and discussed? Although we immediately realize this solution when it comes to cell-organism relationships or individuals within villages, we do not realize that the same principles also hold for companies or nations. One reason is because of an alternative narrative that pretends that the only social responsibility of a company is to maximize its bottom line. Free markets will ensure that society benefits as a result. This narrative makes it seem reasonable to eliminate social controls – precisely the opposite of what needs to be done. Governments have been under the spell of this narrative for nearly 50 years despite a flimsy scientific foundation and ample evidence for its harmful effects. We can break the spell of the old narrative by noting something that will appear utterly obvious in retrospect: The unregulated pursuit of self-interest is cancerous at all scales. To create a global village, we must look to real villages.
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“There is evidence that village-like social controls are starting to form at larger scales without the help of governments. ”
This reads like an opening salvo in support of TTIP and TTP trade deals, wherein non-state actors, aka the Investor-state dispute settlement (ISDS) or investment court system (ICS) , will organize at the very highest level, for the good of all mankind, of course.
“It might seem too good to be true that consumers and the corporate world are spontaneously starting to hold the wolves of selfishness at bay by implementing the same kinds of social control that we take for granted at a village scale. If this did come to pass, then Norway would no longer be faced with difficult choices in how to invest its vast wealth in the global market, because the most ethical companies would also be the most profitable. But if this is happening at all, it is still in its initial stages. At present, it is still the case that some of the most profitable investments are of the cancerous variety.
Therefore, Norway is faced with a difficult moral choice similar to that of most investors. It can remain in its shell and make the most profitable investments to maximize short-term returns for its shareholders (in this case, the Norwegian population) without regard to worldwide ethical concerns, or it can emerge from its shell, live up to its ideal standards in domestic as well as foreign policy, and join with other right-minded individuals, corporations, and nations to help create the social control system that can make ethical practices most profitable. ”
humbug.
“opening salvo in support of TTIP and TTP trade deals”
True but what’s ironic that apparently author of this article forgot that Norway would have been part of neither.
And for specific reason Norway is out of EU while in NATO.
All those great loving nature, decent honest and organized like ants Norwegians, would not give up their addiction to whale killing, denouncing noble human causes of preserving global environment for simple protection of their own whaling industry, to keep jobs.
No, there is no free lunch anywhere, and while Norway is doing great there is always a dirty kitchen hidden somewhere where all this greatness is cooked up for mass consumption. And you really do not want to see how it is made. So let’s just enjoy it thoughtlessly.
“Norway is out of EU while in NATO”. Great point. I know personally a Norwegian IT professional–highly skilled programmer–who works in a no-windows building in Norway on classified work related to US/NATO military things. This kind of employment is another important contributor to Norway’s GDP–prostitution to the “greater” NATO organism.
If you think about it, it is a failure of capitalism.
So long as the system is designed to make a small elite on top richer at the expense of the rest of us, it is little more than a plutocracy where the rich call the shots.
While the Norwegians have done a better job at balancing this than most of the rest of the world, there is still a lot of progress that needs to be made. Michael Hudson has criticized Norway in the past, arguing China and Singapore have done a better job.
http://michael-hudson.com/2011/03/norways-oil-fund-is-it-realizing-its-full-potential/
I agree that this social responsibility talk of corporations is all PR. There would be no outsourcing, no playing of countries or municipal governments within countries against each other if there was any social responsibility. There would be no denial of global warming or anything along those lines with real social responsibility.
Ultimately, I think that we need to design a system that works to make life better for most people rather than an elite on top.
The China / Singapore strategy is a better analogy of how to build stable coalitions. Which is closer to Williamson’s idea of ‘asset specificity’.
Wilson & co don’t really address the key problem of values heterogeneity (value conflict) – think wicked problems – which is more than just having values other than ‘profit maximization’ or ‘self-interest’.
Yves’ example of Japan is a classic example of what happens when value conflicts are suppressed through social norms. It’s not necessarily a better outcome.
adding:
We will address some of these issues for Norway, which serves its own citizens well by most metrics and also has ambitions to serve the global village well, but still sometimes succumbs to selfishness at the highest rung of the social ladder.
so, sovereignty = selfishness ? o-kaaay…
Thank you, Yves. Your critique of this post is exceptionally well-written and persuasive. Your point about the near-impossibility of actually “socially responsible” investing, in today’s world, is very important!
Yet I’m not very convinced by this one comment:
This seems to imply that there is an inherent conflict– between having children and working to ensure a better future for humanity, and the planet Earth.
Is this actually the case?
I suppose that an argument could be developed, that we as a species don’t deserve to continue, and should cease procreating, so as to leave what’s left of this planet to worthier plants and animals. Yet then why include the words “abstract mankind” in your remark?
My own daughter will turn 21 this summer. My desire for her to live in a better world is far and away the strongest motivation for me to struggle, however ineffectively, against the predatory neoliberal world order that is destroying both the planet and humankind right now.
If not for my daughter, in other words, I might well have rationalized continuing to live a comfortable life, surrounded by other comfortable academics.
In this life my primary “struggle” would have been to persuade others, like myself, that my interpretation of the consequences of the 1499 French invasion of Italy had merit. A harmless life, perhaps, yet contributing little beyond possible intellectual stimulation to mostly wealthy aficionados of Italian history.
Macro: This is one-dimensional hammerism. (All social problems are nails.) I recognize the analysis of pro-social behavior they are arguing from, but argument by analogy (global village) is loosey-goosey. More biologists going from individual motives to social outcomes without addressing the layers upon layers of mediation.
Micro: The most important point about Norway’s oil fund from a sustainability perspective is that it’s an oil fund. I’d be happier if they invested the money in the Bill McKibbens of this world rather than REDD+ (which they bankroll).
>More analysis will be required to pinpoint why B-corporations do well by doing good.
Why do we need more analysis? So we can eliminate the good things they do that don’t lead directly to financial remuneration I would guess. Sigh.
“More analysis” is higher ed shorthand for perpetuating the careers of academics and the institutions that employ them.
I’m not sure how to interpret that quote. Is it plain naive or meaningless or?
As for scaling village behaviour up it does not seem to work.The rulers are almost by definition a bit above/outside the village. The bigger the village the longer the distance is between the villagers and the rulers. The rulers are instead closer to each other and are therefore in their own little village where they live and take care of each other.
All in all it seems like the scaling up from quantuum physics to the macroscopic world we live in. The grand unifying theory is easy if we can just use a magic wand, wave it around and say it is just to scale it up…….
If there is no such thing as “socially responsible investment banking”, then ultimately the tact taken in this post becomes an argument against interest payments on loaned funds. This is really an argument against modern capitalism and against the banking industry itself as an economic system.
The obvious problem is that without a system like this, how does one produce large-cost items of obvious social value (clean air and slowing global warming), such as solar PV roofs and electric cars? Communism was notoriously poor at manufacturing and production for this reason. A person would have to save money from income alone for decades to purchase a home, a vehicle, etc. This is the basic dream for the average working person – a home on a plot of land that no state or corporation can take away from them, a reliable means of transportation, and a secure source of income to provide for the daily necessities. With a stable commercial banking system, this means that the person can acquire all this immediately and then gradually pay it off over say 20 years, and the commercial bank’s income is due to the interest on the original loaned amount. That seems like a “social good”, an efficient means of getting positive things done.
That’s local commercial banking, though, not global investment banking. It’s the global investment banking system that is associated with rapacious environmental destruction, promotion of wars and arms races, wholesale looting of national economies, corruption of local political systems, etc. In this world there is no “socially responsible investing”, period.
The means of opposing this system, widely known today as neoliberal globalization, are obvious enough – restrict capital flows between nation-states more tightly than the trade in real goods and migration of people between nation-states. The investment banks work their destruction via the rapid flow of cash into and out of economies (seen in Greece, etc.). Tight restrictions on such flows would force all investments to be locally productive over the long time frame. This forces the investor to take an interest in the local economy, to make sure it doesn’t collapse and destroy the long-term value of the investment. (See Asian crisis late 1990s, Greece, etc.)
Ultimately this becomes an argument for long-term productive investment strategies in which profits are not realized until say 25 years after initial investment (the quarter-of-a-century vs. the quarter-of-a-year).
The casino operation on Wall Street is of course opposed to this, they’re fueled by manic greed and cocaine fever and are looking for the big quick payoff, which is why they do so much damage.
Excellent post. Especially the subtle notation that states and corporations are in same power strata.
“to do so might be too costly in a market environment that rewards naked selfishness. Norway might be required to shrink into its shell and make selfish investments to survive. After all, snails have shells for a reason.
A third option is available to Norway and all other nations, which is to create the same kinds of social controls at a large scale that curtail selfishness in smaller groups. This is also costly, like investing in ethical enterprises that don’t yield the highest profits, but it has a more lasting benefit because once a social control infrastructure is in place..”
Doesn’t the latter just transfer the former problem to a global scale? Woudn’t nations not willing to adapt to the new standards?
Furthermore, profits cannot arise in a vacuum. There is no global equilibrium state that can provide profit to all participants:
P=R-C, and as revenue is ultimately made up of wages -with wages being only a part of C-, profit can only be made locally and usually proceeds for large part by means of government subsidies; the cheap selling-off of communal lands and other resources, waging war and conquering new resources, housing bubbles and mortgage-lending, artificial wage deflation, etc.
. . .which is to create the same kinds of social controls at a large scale that curtail selfishness in smaller groups.
Yes, exactly. And what’s the most efficient, easy-to-implement large-scale social control imaginable? Restrict capital flows across nation-state borders. This is what the media won’t discuss in terms of Brexit, GATT, TPP, NAFTA, etc. – the global ‘free trade’deals implemented since the 1980s have very little to do with trade in real goods; they’re really about this open-border policy to monetary transfers. Put your money in to control local economies, pillage as much as you can, and run back home with the loot leaving the godawful mess behind you for someone else to deal with – that’s global investment banking in a nutshell. How to stop it? Force long-term capital investment; don’t allow investors to cut and run whenever they want to.
This is of course a topic the investment banking sector won’t discuss; nor will their pet media outlets on the left, right, center, etc.
Woudn’t nations not willing to adapt to the new standards PROSPER RELATIVE TO OTHERS?
I noticed one thing when I moved from Louisiana to northern Iowa, an area that is heavy with Norwegians (Iowegians) and Lutheranism. That is, small towns in this area appear to take some sense of social responsibility for the outward manifestations of the economic misfortune of others. A run-down house or poor kids is perceived as a shame on the town. Of course, the emphasis on appearance has negative effects in other ways, but the differences in attitude were certainly starkly different from Louisiana, and there are positives like the willingness to be taxed for good public education.
This was so good on both a metaphoric level and an economic level – I’d almost have to quote the whole post – and I agree with every point.
I don’t see much wrong with what the authors are saying.
I wouldn’t say “[t]his is why politicians can talk openly about national self-interest as if nothing else matters…” I’d say that how politicians talk about something is part of the norms in place and the norms do not support acting cooperatively with an eye towards the whole, as they do in a village.
The issue isn’t that norms aren’t well understood or enforced actively, as in Japan. The issue is that the norms support national self-interest almost exclusively with very little regard for the global community. The authors say “…the social dynamics that take place naturally and spontaneously in villages can be scaled up to prevent the ethical transgressions that routinely take place at a large scale.” Well, maybe they can be or maybe they can’t be; maybe only some can be or maybe none can be.” But no one except these guys is saying that—that’s part of the prevailing normative framework—and saying that at least opens the possibility of that they might. There is nothing wrong with examining behavioral contingencies that work well in one area and seeing how they might work in another area.
You are misconstruing my point about Japan. It comes closest to achieving the “large scale” village that the authors see as ideal. The fact that they are optimizing for Japan is consistent with that being their village.
The point is that many people outside Japan would find the degree of conformity and lack of diversity (for instance, in acceptable conduct in gender roles) as intolerable. And the Japanese prize hierarchies, although theirs operate in a different manner (the top guys are not in charge; those senior roles are largely ceremonial. Decisions are hashed out at the “bucho” level, several ranks below, and passed up the chain for ritual approvals. You can always tell when a Westerner hasn’t boned up on Japanese decision making. He asks to see the CEO as if he’s the decider. Unless you are dealing with an owner-controlled company, this is not how it works.
This post is ludicrous. Even a cursory knowledge of anthropology reveals localized norms are wildly culturally specific, ethically chaotic and radically contradictory across cultures. If there’s an implied insinuation of an existence of universal values these need to be made explicit and traced to an origin somewhere and a method of propogation. Deep thinkies time for stoners of the world.
The one approach that is mentioned is the restrictions on the international finance activities. In the short term I agree. Tthe long term seems apparent to me approachable only through non-profit enterprise structures. Employee owned business won’t take the money and run, and have inherent “vested-interest” in the town, village, community, neighborhood quality of life. The shortest term that comes close to describing “socially-responsible investing” is the word “socialism.” It’s capitalism, meaning “profit-seeking” that is the sum of the problem.
Reference: The Compelling Conclusion About Capitalism That Piketty Resists. Thursday, 26 June 2014 By Fred Guerin, Truthout | Op-Ed.
I found Yves critique of this article much more compelling and more on the point that author was trying to make and actually failed. However, my critique of author’s “Panegyric for Globalization” is for perhaps different reasons than Yves’s.
The current wealth of Norway is as we know due to its strategic location between Western Europe and Russia/SU which resulted with continuing western support for Norway in political, military and economic/financial realm, as for so-called historical Iron Curtain border state, as well as vast under North Sea oil and natural gas reservoirs.
But that would have been not be enough for Norway to develop so-called internal “Nordic economy” heavily socialized, subsidized economy and socialist or social-democratic society of substantial sharing and caring embedded in it.
They needed more and somebody had to pay for it.
In order to do that they, as much as China, used old Hamiltonian policies and mass tariffs, barriers to protect internal market, while allowing for strictly controlled immigration, while massively invested abroad in the third world countries where they hired workforce with no rights and for slave wages (much more than local wages but still) also in the USA, EU and to add to profits they unleash several huge even $1T sovereign funds aimed to preserve and grow their capital they gained from exploration of a global village.
In last 25 years whole world was working for Norway prosperity.
And now joining Yves critique; these are not only suppose Norwegian “angel like” qualities of goodness, altruism, professionalism, Nordic organization and sense of close community, or ability to create great Pythagorean utopia that brought so much success to their society of several millions but enormous wealth gained via one way globalization, exploitation of the world economy and global financial system for their profit and benefit.
There is a second bottom to everything if we dig deep enough.
This is intriguing but can you explain how Norway exploited third world labor? I can see the point with respect to its sovereign wealth fund, but are you alleging this took place with respect to domestic companies? I’m not aware of Norwegian companies being big on outsourcing or offshoring, but that does not mean it wasn’t happening.
I appreciate your comment Yves.
I myself worked for small Nordic corporation [listed on Oslo stock exchange] here in the US in 1990-ties and this is my conclusion from conversations I had with my Norwegian, Danish and Swedish colleagues I worked with as it was official strategy of Norwegian (Nordic) business since collapse of Soviet Union, namely global expansion of capital, management and technical expertise into third world as well as former eastern bloc that has been incorporated into global financial system.
It is hard to argue that Norwegian economy did not benefit from globalization and also exploitation of cheap labor since they focused especially on exporting their capital and expertise to developing countries as a measure of diversification from oil production and world leading Norwegian fishing industry facing increase competition.regulations, and environmental limitation.
Even in my case having being paid competitively in the industry with many rare in the US perks like small expense account per regular employee not management staff only, paid gasoline and free cell phone etc.,on the top of all very generous US workers benefits (Disability, healthcare, life insurance etc.,) I found out that the business cost for US employees was at least half of that in Norway. They came to US to be close to their clients and save a lot of money.
I can image the saving they had doing business of third world and Eastern European countries in 1990-ties.
Many other Nordic countries engaged in globalization directly or via multinational corporations supply chain like well known example Finnish Nokia and Swedish Ericson, Ikea, Norwegian Statoil and many Norwegian corporations in fishing, shipbuilding and shipping industry that operate abroad.
My point, aimed for explaining not as much criticizing, was that increased Norwegian wealth in last few decades was coming in substantial part from globalization of their industry and capital not only via internal economic development.
I hope that address your question.
This is a useful start to a preliminary discussion.
Certainly, as long as some social and economic costs are treated as ‘externalities’ by less responsible corporations and by societies as a whole, then these corporations will appear more profitable to investors in contrast to more ethically responsible ones.
Perhaps, Yves, the ethical answer is to cost those externalities back to the corporations who ignore these as costs.
I’d love to see your discussion continued on those lines.
Readers might like to know that Davis Sloan Wilson is a fervent champion of the importance of group selection in evolution, a possible mechanism (differential survival among groups, distinct in genetically-based socially-mediated characters) often deployed as an ‘explanation’ for altruistic behaviours. He also sees an understanding of group selection as crucial to the solution of myriad human social ills: “Evolutionary science,” Wilson argues, “will eventually prove so useful on a daily basis that we will wonder how we survived without it. I’m here to make that day come sooner rather than later, starting with my own city of Binghamton [NY].”
After decades of effort, he has so far failed to make many converts, and the prevailing view is that, while group selection is indeed a mechanism that might possibly operate in some circumstances, those circumstances are generally very limited in most organisms, and, moreover, the strength of group selection will almost always be much lower than that operating among individuals. As Jerry Coyne put it in a commentary on Wilson’s “Neighbourhood Project” in the NYT: “Group selection isn’t widely accepted by evolutionists for several reasons. First, it’s not an efficient way to select for traits, like altruistic behavior, that are supposed to be detrimental to the individual but good for the group. Groups divide to form other groups much less often than organisms reproduce to form other organisms, so group selection for altruism would be unlikely to override the tendency of each group to quickly lose its altruists through natural selection favoring cheaters. Further, little evidence exists that selection on groups has promoted the evolution of any trait. Finally, other, more plausible evolutionary forces, like direct selection on individuals for reciprocal support, could have made humans prosocial.” see http://www.nytimes.com/2011/09/11/books/review/the-neighborhood-project-by-david-sloan-wilson-book-review.html?_r=2&pagewanted=all
Has anyone here lived in a small village? I’m looking for an Agatha Christy quote about small towns having every human evil as well as selfless qualities in their make up. I used to think that things were diferent at the top but have been disabused of that. It is now obvious to me that the highest levels of government are no different then village pecking order. The smartest guys in the room are certainly not calling the shots. Government is an exercise in power for large and small. Teamwork is very difficult to sustain over time. Everyone may swing in the same direction for a while but it always seems to degrade into “small town” mentality.
In addition to the country-specific “ethical/social responsibility” classification systems mentioned in the post, readers may be interested in the Integral Trade certification program. It lists their values as:
● Conflict and Oppression Free
● Ecologically Sound
● Shared Risk and Reward
● Productive Economic Purpose
● Transparent