Evolution, Compassion, and the Corporation – Gordon Gekko's greed speech got it all wrong

Posted on 04/01/08

A conversation with Michael Shermer, author of The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics, who believes we acquired compassion in the evolutionary process. Mr. Shermer is publisher and editor-in-chief of Skeptic magazine and a founder of the Skeptics Society. The society takes its cue from the philosopher Baruch Spinoza, who said, “I have made a ceaseless effort not to ridicule, not to bewail, not to scorn human actions, but to understand them.” Well, if we’re so compassionate, what’s the explanation for Enron?


IC: You present a kinder, gentler view of evolution. You seem to challenge the idea of evolution as being “red in tooth and claw” (to borrow Tennyson’s famous description of nature).

SHERMER: It’s not that the “red in tooth and claw” interpretation is wrong — it’s just that there is a whole other side to it. Being fit may mean being better camouflaged, being smaller, or having a smaller brain. Fit just means getting your genes into the next generation. Therefore being pro-social, being cooperative, or altruistic, or being a good team member may be characteristics that make you more fit. And, in fact, this is what we find in social animals.


So why is it that the word evolution conjures up for many a sense of the ruthlessness or cruelty of nature?

The English evolutionary biologist T. H. Huxley, who was known as “Darwin’s bulldog,” saw natural selection as competition to eliminate the unfit. There’s also the creative force, natural selection to create characteristics. The Russian anarchist and commentator Pyotr Kropotkin’s book, Mutual Aid, published in 1902, was a rebuttal to Huxley and Herbert Spencer, the British philosopher who immortalized the phrase “survival of the fittest,” one of the most misleading descriptions in the history of science, embraced by social Darwinists ever since, who apply it inappropriately. Kropotkin wrote about the cooperative nature of social animals, particularly social mammals. It would be the unsociable species that would be doomed to decay. But Kropotkin’s book was largely ignored and the English view won out. That is the key to the myth of social Darwinism, which has been used to justify war, revolution, capitalism, bigotry, and racism. So no wonder that in the second half of the twentieth century scientists turned away from evolutionary explanations of human behavior, simply because social Darwinism had such a bad rap.


Despite the inclusion of capitalism on your list of bad things social Dar­winism has been invoked to justify, your book is intensely pro-capitalism.

The Mind of the Market argues that trade, free trade between strangers, is the best way to establish trust between people who would normally be suspicious of one another. In nature, we’re tribal and xenophobic and we’re naturally suspicious of strangers. One way to break down that natural inclination is to do something with them — throw a potlatch, have a feast, exchange food, or share a tool. In these instances, I am talking about indigenous, hunter-gatherer groups. Those kinds of behaviors establish trust between those who normally would not be considered trustworthy. In principle, the spread of market capitalism employs that most basic human psychology of establishing trust between strangers. It’s not perfect but it’s the best system yet devised for doing this.


Your title indicates that apes are capable of compassion. Would you elaborate on this? In what way are primates compassionate?

By compassion, I mean altruistic, working together, not fighting, cooperating, interacting in a positive social manner — grooming, conflict resolution, making up after fights. Conflict resolution could be a female coming over after two males have been fighting, consoling one and making nice with the other, bringing peace.


But you don’t mean the primate’s compassion is the same as ours?

Why not? We can’t know exactly what they are thinking because they don’t have the language to tell us. On the other hand, I don’t know if when you feel love it’s the same as when I feel love. There are certain epistemological problems, but I think it’s reasonable to infer that, when elephants are moaning and groaning around a fallen comrade, it’s grief. Primates feel affection for each other.


And how does this relate to the market?

Studying primates is another line of inquiry that shows that we have in our natures a capacity to be pro-social, to make exchanges with one another in a positive fashion. Don’t think of an economy as markets and money. Think of an economy as a social environment in which exchange takes place. Compassion in this context has to do with trust — you have to trust to trade. Trust is the basic human emotion that is the basis of all social interaction. Distrust is the default option. You have to build trust through social exchanges. When exchanges go well, we build trust and this bodes well for the future.


One of the most interesting points you mention in the book is that trust is the predictor of a society’s prosperity, that trust stimulates development.

You can ask people in different countries around the world, “How trustworthy do you think your fellow citizens are?” You can ask them in different ways, and you can develop a trust score that shows how much people in different countries trust one another. The Northern European countries have relatively high scores and the South American countries have lower scores. The United States at 36 percent and the United Kingdom at 44 percent fall in the middle. [It is more expensive to do business in countries with low trust scores] because you have to charge more, bargain more. There are more externality costs built into trade. If there is no rule of law, I have no means of enforcing our deal, so I may have to charge more for my products and services. What [prosperity] takes is a relatively free market married to a liberal democracy with institutions that reinforce trust. These include the protection of private property, civil liberties, and a strong currency.


Free trade — like capitalism — has a bad rap in some circles. When I was in school, I vaguely remember one theory of the Trojan War was that it was in reality a war over trade, not female pulchritude.

Trade attenuates the likelihood of there being violence between countries. The psychology behind defusing inter-group aggression involves turning potentially dangerous total strangers into honorary friends. This process is enabled through the creation of social institutions that encourage, enable, and enforce social interactions that lead to trust. I quote the principle of Frédéric Bastiat, the nineteenth-century French economist: “Where goods do not cross frontiers, armies will.” If Bastiat’s Principle holds that where goods do not cross frontiers, armies will, then its corollary dictates that where goods do cross frontiers, armies will not. This is a principle, not a law, since there are exceptions both historically and today.


You write about “moral emotions” that develop in us competitive human beings. What are moral emotions?

All emotions are means of getting organisms to behave, to act, in a certain way. Therefore hunger and thirst drive an organism to seek water and calories to replenish itself. When an animal is hungry, it becomes more active and that burns more calories. The reason is that the more active it is, the more likely that it will find food. All moral emotions are the same thing, including a sense of fairness or unfairness in an exchange.

In the book, I describe the Ultimatum Game. You offer a subject a pile of money, say $100, and he has to make an offer to split it with another person in the room — 70 to 30, 50/50, or 80/20, whatever he decides. If the other person accepts, they both get to keep the money. If the other person rejects the offer, then neither person gets any money, and the experiment is over. What should happen is that the first subject should make an offer like 90/10, some outrageously asymmetrical, unfair offer because, if we are rational and selfish, I should give him as little as possible and he should accept that $10 because he’s a poor, starving student who has just walked into my lab with no money at all — and for $10, he can just say yes and walk away with a free $10. Most subjects refuse the 90/10 split and get no money. He’s willing to pay $10 to punish a guy from making an unfair offer. That emotion, that sense of fairness or justice, is a moral emotion.

We have a deeply innate sense of right and wrong when it comes to human relationships and social exchanges. The moral emotion of fairness is hard-wired into our brains and is an emotion shared by all people and primates tested for it. We now have a sizable body of data from peoples in non-Western cultures around the world, including those living close to the way our Paleolithic ancestors lived, and although their responses vary more than those of modern people living in market economies, they still show a strong aversion to unfairness.


Compassion produces charity. You write that the working poor are more generous than recipients of public assistance when it comes to giving money to charity. Why?

If you earn it, you have a deeper sense of the moral obligation to help others than if it’s just given to you. Money goes into a different category if you earn it than if you didn’t earn it. If you didn’t earn it, you don’t feel you should be giving it away because you got it for free, and somebody else [should be able to] get it free, too, from the same source. Earning money puts it in a whole different category.


Why, if capitalism is so great, did the Enron scandal occur? Some have suggested that it was a few bad apples in the corporation.

The “bad apples” theory doesn’t explain what really happened at Enron, and it doesn’t explain the nature of corporate evil. Jeff Skilling, the CEO of Enron, set up what he thought was a Darwinian marketing environment. Skilling was a fan of Richard Dawkins’s important book The Selfish Gene, which Skilling misread. He took it to mean that evolution is driven by cutthroat competition and self-centered egotism. He liked the notion of the “survival of the fittest.” Skilling set up a Peer Review Committee, which became known as “rank and yank.” Everybody was ranked on a scale of one to five, and 20 percent of all fives had to be fired. The reviews were posted on a company website with a picture of the employee, increasing the potential for personal humiliation. Good luck being able to go out and have some fun with your teammates. Teammates! These are people who may be taking my job. Once you set up an environment like that, people begin violating rules. Skilling’s evaluation system led to a lot of behind-the-scenes wheeling and back-door dealing between department heads and managers, swapping review evaluation points. In addition to his belief in an outdated and untenable doctrine of social Darwinism, Skilling was a high-risk taker — short on dopamine, we might conjecture. What causes corporate corruption is an environment of evil established by the founders, corporate executives, and managers — a corporate psychology — that creates situations that encourage our hearts of darkness to beat faster.


But a large portion of the public does regard corporations as suspect, if not downright evil, right? One thinks of Gordon Gekko’s famous speech extolling greed in the movie Wall Street.

I can see why people think that. It’s what gets presented on TV. The Enrons of the world make big news. But if these were commonplace things and never got reported, then that would run counter to my thesis on market capitalism, and market capitalism would not work. In fact, it would have imploded centuries ago. There are other reasons capitalism has gotten a bad rap. It’s counterintuitive. It’s not in our nature. We evolved in these hunter-gatherer groups that were largely egalitarian.