Monday, June 14, 2010

The Evolution of Free Enterprise Values

This article attempted to tackle the question of cultural transmission. That is, how cultural/social norms (such as driving on a certain side of the road, appropriate dress for the occasion, opening the door for women, etc).  stick or fade away.  In fact, when we purchased coffee at Starbucks before the start of the readings group for the article I came face-to-face with a social norm in our culture: women shave their legs. (This revealed something interesting about social norms, that is, you don't notice them until they're violated.)

But, the larger question is not about shaved legs and manners. Instead, the authors try to solve a giant macro-evolutionary puzzle: Markets are known for their success in adaptation (because they allow people to freely choose they adapt quickly to preferences in the population), but, why was cultural evolution over the last 50,000 years slow when markets allow for adaptation? The authors were not very successful at answering their question. Ultimately the article amounts to small patchworks of ideas from different disciplines hastily sewn together in a fashion that leaves the reader searching for more substance.

There are two caveats for why this sharp critique could be made more conservative. One, the field is new.  "We [the sub-field of cultural anthropology] are still near the beginning of this explanatory endeavor, but we know roughly what dots we need to connect and have the means to draw some interesting hypothetical dashed lines between them". Two, they may have been able to reach greater depth in a full length book.

The authors present a myriad of ideas about the transmission of these norms of cooperation that underpin the market economy.These theories about the several forces that simultaneously move to change culture are listed in three categories below:

  1. The Adaptive Advantage of Culture - Humans adapted complex culture prior to other animals and this culture evolved rapidly -too quick for natural selection to have occurred. Once the advanced culture is established other species could not evolve since we house the ecological niches necessary for complex culture.  
  2. Tribal Human Nature, Work-Arounds, and Organizational Management - These ideas amount to what economists would call "Tiebout Competition" and compromise (not a fancy economics word). In tribal human nature people select into tribes that hold attributes that a prospective member believes. When a tribe has attributes that resonate with most people there is an inertia to following the rules of the tribe. But, tribes had inter-tribal warfare. How did we adopt a free market culture based on cooperation and mutually beneficial exchange? We constructed "work-arounds" or compromises between all of the various tribes (consumers, suppliers, producers, etc.) held together by good organizational skills.
  3. The Moral Hidden Hand and the Functioning of Organizations - Humans possess empathy -or- the ability to place ourselves in another person's situation. There is significant evidence to suggest that people operate out of this empathy and that will produce a "spontaneous [moral] order" (by the way, of their extensive reference list they do not talk about Hayek). This moral order plays directly into the ability to cultivate free enterprise.

Quick question. How are these theories falsifiable? That is, how would one select the theory that most appropriately defines cultural transmission in the last 50,000 years? Or, is each correct given certain circumstances? Cultural transmission is an interesting question, but, these are pretty large unanswered questions.Also, the authors offer a number of theories for what speeds or slows the tempo of cultural transmission (geography, disease, new technology, climate, human biology, ideology, etc.). Between these two categories there are enough theories to play a baseball team! 

Ultimately, the author's side with their theory of the moral hidden hand and conclude,"The free enterprise societies' combination of individual autonomy, wealth, and welfare bear a strong resemblance to the preferences that are rooted in our ancient and tribal social instincts." Moreover, they keep with the theme of Moral Markets that our market economy is not primarily based on selfishness but contains a strong component of empathy. Because the market exists in a social setting, and human beings are social creatures,  we act in a market environment with cooperative tendencies.

In the end, I think the following statement the authors make is why this article was so disappointing, "Do we have a serious macroevolutionary flaw in the cultural evoluntary explanation? We think the answer is that we do have plenty of macroevolutionary puzzles to solve but that we also have plenty of candidate hypotheses to explain the fifty millenia." Again, which candidates are best? How will you test them?

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