How Animals Do Business

Scientific American: How Animals Do Business [ BEHAVIORAL ECONOMICS ]
Humans and other animals share a heritage of economic tendencies--including cooperation, repayment of favors and resentment at being shortchanged

In summary, communism is the norm while capitalism is the aberration. However, you will look in vain for that in the above article. This is my conclusion from reading the article.

I have heard people describe nature as extreme competition between species and within species. This is said to justify their extreme version of capitalism of individual competitors. Yet we see in nature animals who cooperate to raise their young, hunt together, defend their herd. Cooperation is the norm rather than the exception. The article gives an example of cooperation between species with the cleaner fish who eat the parasites of other fish even predators. The latter are guaranteed faster and better service.

Instead of being "...profit maximisers driven by pure selfishness..." (Hobbes), we are social animals that overcame our competitors by our cooperative nature. Cooperation is an competitive advantage.

An interesting point in the article is:

Claiming another's food by force is almost unheard of among chimpanzee's - a phenomenon known as "respect of possession."

Private ownership has evolutionary roots! However, this is the private ownership of possessions. The concepts of commons still apply to the pack or herd. Everyone is allowed to graze or eat within their territory without restriction. The animals stop eating when they are no longer hungry.

The conclusion is:

All economic agents, whether human or animal, need to come to grips with the freeloader problem and the way yields are divided after joint efforts. They do so by sharing most with those who help them most and by displaying strong emotional reactions to violated expectations. A truly evolutionary discipline of economics recognizes the shared psychology and considers the possiblity that we embrace the golden rule not accidently, as Hobbes thought, but as part of our background as cooperative primates.

The problem of freeloaders is solved by free association of individuals. If you break the rules, the victim will refuse to deal further with you. Eventually, you will run out of partners to do business with.

One big problem with freeloaders in the capitalist system is that they run it. They are the bankers, CEOs, shareholders, landlords, and their associated parasites. Apparently, the possession of money allows you to be a bludger.

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Evolution and Economics

The Economist asks whether we survived as a species because we are Homo economicus?. Jason Shogren, of the University of Wyoming, had posed the question "Did Use of Free Trade Cause Neanderthal Extinction?" in a press release at NEWSWISE. The Economist writes

... For Dr Shogren is suggesting that trade and specialisation are the reasons Homo sapiens displaced previous members of the genus, such as Homo neanderthalensis (Neanderthal man), and emerged triumphant as the only species of humanity.

Is this really a case of a Capitalist Economist projecting back onto the past the current economic system? We are in the midst of political upheavals centring around "free trade". Is The Economist trying to say that trade is intrinsic to human nature? And that the antiglobalisation crowd going against human nature. The article continues.

One thing Homo sapiens does that Homo neanderthalensis shows no sign of having done is trade. The evidence suggests that such trade was going on even 40,000 years ago. Stone tools made of non-local materials, and sea-shell jewellery found far from the coast, are witnesses to long-distance exchanges. That Homo sapiens also practised division of labour and specialisation is suggested not only by the skilled nature of his craft work, but also by the fact that his dwellings had spaces apparently set aside for different uses.

These trade networks were also found among Australian Aborigines of ochre among other things. However, the NEWSWISE press release emphasised the cultural exchanges for the diffusion of innovations among Homo Sapiens. I think this is the more likely than what The Economist was proposing when they continue thus:

Initially, the researchers assumed that on average Neanderthals and modern humans had the same abilities for most of these attributes. They therefore set the values of those variables equal for both species. Only in the case of the trading and specialisation variables did they allow Homo sapiens an advantage: specifically, they assumed that the most efficient human hunters specialised in hunting, while bad hunters hung up their spears and made things such as clothes and tools instead. Hunters and craftsmen then traded with one another.

According to the model, this arrangement resulted in everyone getting more meat, which drove up fertility and thus increased the population. Since the supply of meat was finite, that left less for Neanderthals, and their population declined.

Unfortunately, there is no supporting evidence among the many indigenous societies studied over the past few centuries. The problem is that of food preservation. Sea shells may well have been traded up from the coast but the shellfish would have stayed behind in the stomachs of the original gathers. The only way you would give prawns to your inland neighbour if really hated their guts.

The idea of a finite supply of meat is a bit simplistic. Australian Aborigines increased the supply of meat by increasing the amount of newly green grassland that their prey fed upon. Here the judicious use of fire increased the number of animals by keeping forests at bay and encouraging green shoots in the grasslands.

From a Marxist point of view, human evolution was driven by the need of humans to labour to get their food. That is, we cannot eat many things directly. We have to make tools to catch, kill, skin, and cook meat and some vegetables. There are not many things we can go outside and eat: the birds and animals are too fast; carrion makes us ill; we cannot eat leaves and tubers; our teeth cannot cut through animal hide; nor tear off chunks of flesh. Without tools and knowledge, we are helpless. We developed tools and knowledge, and those things help us to develop further. It was the free flow of knowledge throughout the human world that helped out compete the Neanderthals.

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Capitalism and Greed

Pat makes the following interesting point in a comment about Sackcloth and Ashes

Re. wealth - I, like any Christian, oppose greed and exploitation but I strongly believe in the power of the free market to deliver the greatest amount of public welfare. I have found that many Christians, and especially RCs, conflate capitalism with greed - self-interest with selfishness and in doing so resign their faith in Christ for a faith in Socialism.

Here Pat is quite correct that Capitalism is not about greed. The fundamental dynamic of Capitalism is an individual accumulating capital in order to generate more capital in a manner that they choose. The person that provides what people are prepared to buy prospers over those do not. A capitalist has to accumulate capital faster than their competitors lest they be wiped out. So the motivation for capital accumulation is not greed but survival.

Compared to primitive communism (tribal societies), barbarism (communes), slavery, feudalism, Capitalism has advanced humanity both materially, legally, intellectually, and spiritually. This is most manifest in the premier Capitalist nation today: the USA. Nowhere else has yet produced such material wealth (5% of the world's population producing about 30% of the world's GDP); the Bill of Rights and the ongoing debates about its meaning and intent; the number of Nobel Prize winners, scientists, engineers who are or want to become Americans is amazing because that is where the action is; the most intense and diverse debates about religion happens in the USA (just read the blogosphere).

What then are the reasons for this powerhouse? Freedom of the individual is probably a good starting point: no longer can a human being be owned by another human being as in slavery, or be tied to the land and lord as in feudalism. The rule of law is another: the law applies equally to everyone. Compared to earlier societies, these ideas and others were mind blowing. The only political system that accomodate these ideas is democracy.

This brings us to Pat's other point about self-interest not being selfishness. In a society of equals, it is in my self-interest to be fair to everyone else lest they gang up on me. If I cheat my customers, word gets around and I will keep losing more customers until my business is ruined. So it is in my self-interest not to selfish.

Notice that I mentioned equals. Capitalism works best when everybody is roughly equal in power and resources. There has to be choice for Capitalism to work to the betterment of everybody. That is why monopolies have to be suppressed even though monopolies are the natural accumulation of capital. Hence the interference of the State in the running of the economy.

However I think Pat blinds himself to the exploitation in a Capitalist society. One of the exploited groups of people is small business owners. These are the people who work the longest hours and work the hardest. They are also the worst paid for their work. They know this and know that they can make a better living working for someone else. But there is really no subsitute for being your old boss. There is that certain buzz to life as you make your own future. On the other hand, failure can be a terrible thing: loss of home; loss of family; and even loss of life through suicide. If Pat wants to see exploitation, he should see the small business owner as they try to deal with innumerable government rules and regulations, uncaring bank managers, defaulting companies, etc.

Yet the engine of past revolution have been these very people be it the French Revolution of the Capitalists against their feudal overlords, the Russian Revolutions of 1905 and 1917 (February and November), and the American Revolutions of 1770 and 1860. The petite bourgeois will defend their rights and beat the living daylights of anyone who tramples on them.

Here endeth the rant for tonight.

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Sackcloth and Ashes

Pat dons Sackcloth and Ashes as he muses over the socialist teachings of Pope John Paul II. He does some very honest soul searching. In particular,

One of the primary difficulties I find with Catholicism in practice is the antipathy driven into one since baptism against wealth - or the accumulation thereof. The Church's approach to wealth is one that concords with leftist thinking. Yet, I have found that money can be a powerful tool for charity but moreso general well being and happiness - in this life. The Church seems to have taken the leftists view that wealth is finite and that if one man is rich another must necessarily be poor. That to me is a fundamental misunderstanding of wealth creation.

Pat is right in that Capitalism is a prodigious generator of wealth, but the problem is in the distribution of that wealth. Pat is also right the totality of wealth is not a constant. He is also right that money performs a useful social function of allowing people to meet their needs, and that proper use of money can alleviate the suffering of others.

In a Capitalist economy, the concentration of wealth can lead to greater wealth through investment in more productive machinery. This concentration of wealth is essential to the growth of capital. Distributing wealth amongst people dilutes this dynamic and leads to stagnation and even regression of the economy. This is the logic of Capitalism. And this logic leads people against charity because it reduces the accumulation of capital.

Pat continues by asking

And where is the Church's concern for the downtrodden and oppressed when it speaks against the military liberation of oppressed people's under the guise of "A Just War"? I do not recall Christ speaking against the Romans and if there were ever a more imperialistic state than Rome it certainly is not the USA. As a matter of fact, I recall Christ curing a Roman Centurions slave and saying to render unto Caesar what belongs to Caesar. Again, this is because Christs' kingdom is not of this world!

Pat is honest in admitting there is a gulf between the teachning of the Church and what the USA did. For Pat, the USA was right and the Church wrong in this matter. (The Romans were circumspect in their imperial ambitions: the USA wants to control the whole world and outer space. And it is true that Christ did not incite rebellion against the Roman occupation of Palestine.) Thus, Pat is lead accomodate these contradictions by splitting life in twain: the material and the spiritual. This is, of course, the common response when the needs of Capitalism collide with Christian teachings: the Christian must give way by confining themself to spiritual matters.

In conclusion,

But enough for now. I'll think over "The Gospel of Life" and try to leave my baggage behind. Certainly Pope John Paul II was a very great and good Pope. My arguments are against certain ingrained socialist tendencies my Church has which I feel mislead people into error.

Yes Pat, there are these inconvenient teachings of the Church. What to do about them? Ignore them and hope that the next Pope has the good sense to recognise that Capitalism is correct, and the Church is wrong? And of course, the error is that there has to be another way besides Capitalism.

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It Was Gorbachev, Not The Pope, Who Brought The System Down

Johnathon Steele argues that It Was Gorbachev, Not The Pope, Who Brought The System Down because

...The [Polish] government sat down to negotiate with Solidarity again only in August 1988, by which time Mikhail Gorbachev had already launched the drive towards pluralistic politics in the USSR itself and publicly promised no more Soviet military interventions in eastern Europe.

The impetus for Gorbachev's reforms was not external pressure from the west, dissent in eastern Europe or the Pope's calls to respect human rights, but economic stagnation in the Soviet Union and internal discontent within the Soviet elite.

And

Nor was John Paul's attack on liberation theology in the 1980s motivated primarily by the fact that the so-called "option for the poor" was infused with Marxism. The Pope was worried by other features too. He felt it was being used to justify violence and leading Catholic parish priests to support armed struggle by peasants against repressive landowners and feudal dictatorships.

...

John Paul also opposed liberation theology because he saw priests defy their bishops and challenge the church's hierarchical structure. Even while communism still held power in Europe, he had more in common with it than many of his supporters admit. He recentralised power in the Vatican and reversed the perestroika of his predecessor-but-two John XXIII, who had given more say to local dioceses.

This is why democratic change cannot come from the top. The people must want it enough to force those in power to accept the new reality. It is no good hoping that the new pope will be liberal. The power structure is authoritarian and must be smashed so as to be replace by a more democratic structure.

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A conservative Pope ahead of his time

Alan Andersen sees John Paul II was A conservative Pope ahead of his time because he stuck to the doctrines.

The liberals believe the church must reform its absolutist approach to such issues. The Catholic writer Tom Scott labels the Thou Shalt Not concept as "simplistic", arguing that Australian Catholics are abandoning the church because the late Pope and Cardinal George Pell "cannot provide any guarantee that their simple steps will result in salvation, or even just a meaningful life".

Yet can the church survive if it abandons such rules? Are doctrinal principles, such as the sanctity of human life or the 10 negotiable guidelines, subject to repeal or even wholesale revision when out of step with the latest trends? Scott argues that many ex-Catholics left the church in search of a "more authentic 'truth"'.

I think the writer forgets that the New Testament had Jesus replacing the whole of the Mosaic Law by the two commandments of love. These were positive commandments: something to be done not forbidden.

The doctrinal positions of the Catholic Church are derived from a particular theory of humanity. The doctrines do not exist in isolation. As scientific knowledge advances, so will the doctrines be examined in that light. For example, the acceptance of the Theory of Evolution means that the Church now considers the first eleven (11) chapters to be myth not historical truth. Those chapters are not discarded but kept as part of the ecomony of salvation.

I think the writer is ignorant of the doctrinal developments within the Catholic Church. The Marian doctrines emerged in the Middle Ages and were not wholly accepted by the Church until the late nineteenth century. Priestly celibracy was introduced in the Middle Ages as well. If anyone is looking to the Catholic Church to be rigid in everything, they should look elsewhere.

The core truths of the Church do not change but the responses to those truths change over time. Doctrines on homosexuality, abortion, women priests are not core truths but a response to those truths. The Nicene Creed is that statement of core truths.

Even on homosexuality, the Church's doctrine has shifted in response to advances in scientific knowledge. In the middle of the last century, homosexuality was seen as a disease to be treated and the Church responded by outright condemnation. As evidence mounted that homosexuality is not a choice for some, the Church responded by admonishing homosexuals to accept themselves and to be accepted by the community while living a chaste life as expected of all unmarried people.

None of this is an endorsement of the church's rulings on social issues, some of which I find distasteful. Most social liberals don't care about the survival of the church; they care about undermining what they see as regressive social mores.

Fair enough. But liberal Catholics should not delude themselves that their church will survive as a liberal institution; as Catholic Lite. The church's appeal lies in its uncompromising values system.

Any good capitalist would find the Church's social teaching more than "...distatseful" - they are revolutionary if anyone cares to read them.

The Church is uncompromising in its adherence to the core truths of Christianity. The values that the Church promotes are a historical response to those core truths.

If the Apostles were to return today, they would recognise the message of the Church but they would find some of the doctrines strange at first until they understand how those doctrines are derived from the core truths.

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Individual approach to land rights only half the answer

Michelle Grattan of the Sydney Morning Herald writes that Individual approach to land rights only half the answer for Aborigines to achieve home ownership. John Howard is pushing the capitalist philosophy of ownership.

Have a look at Howard's rhetoric at the Aboriginal community of Wadeye, 270 kilometres south-west of Darwin, on Wednesday.

"I believe there is a case for reviewing the whole issue of Aboriginal land title, in the sense of looking more towards private recognition," he said.

"All Australians should be able to aspire to owning their own home and having their own business. Having title to something is the key to your sense of individuality, it's the key to your capacity to achieve, and to care for your family and I don't believe that indigenous Australians should be treated differently in this respect."

Land is at the heart of Aboriginal identity. It's also often at the centre of politics involving Aborigines.

In other words for Aborigines to integrate into a capitalist economy, they must develop concepts of individual ownership and striving. Here the Liberal ideal of the individual caring for the family not the family or the community caring for the individual comes through.

But the fundamental problem is: how do you get a sustainable economic base in a tiny, remote town? It's not that there is anything wrong with changing the title system to make individual ownership easier, provided the Aboriginality of the land is preserved for future generations. Indeed, it is sensible enough. It's just that it won't, of itself, give these Aborigines a living or the where-withal (or wish) to own a house.

We have a fundamental conflict between the primitive communism of Aboriginal culture and the raw capitalism of the dominant white culture. The two cannot coexist. The primitive communism must be destroyed and devoured by the superior economic system, Capitalism. This is one of the laws of history.

The sentimental attitude towards Aborigines does them no favours. Their culture will be destroyed no matter hard they try to preserve it just like the Scottish and Irish cultures were destroyed by the advance of Capitalism into their lands.

As long as Capitalism remains the dominant economic system, Aboriginality is doomed to be a tourist attraction. The only real hope is the advance of real communism to replace capitalism.

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As exports boom, China risks global backlash

As exports boom, China risks global backlash from trade sanctions elsewhere in the world.

After years of running large trade surpluses with the United States but showing deficits with many other countries, China is exporting at such a rapid rate that it is shifting its global trade balance faster than anyone had expected. And the resulting boom for China is certain to step up trade frictions with countries around the world and increase pressure on Beijing to let its currency appreciate.

The problem with trade sanctions is that they would their own multinationals.

Computers, clothing and office furniture are now flowing from China to Germany and Italy in ever growing quantities. So are Chinese exports of synthetic dyes to the Netherlands and railroad locomotive parts to Canada, both of which have more than doubled. "January and February were pretty busy," said Li Na, who works in the international sales department at Landbond Furniture, a large furniture company based in Guangdong Province that ships mainly to Europe and the United States. "The exports for those months increased between 20 and 30 percent."

But economists say this is not just the effect of the foreign multinationals building up their Chinese production facilities," said Stephen Roach, the chief economist at Morgan Stanley. "After years of investment, it's all coming together big time."

When the capitalist owned production facilities in their own countries, trade barriers made sense to them. Nowadays, globalisation is making the capitalist concept of a country irrelevant.

This is leading to instability within the international trade system as witnessed by the pegging of the Yuan to the USD. And everybody is worried about how this will turn out.

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You need us and we need you

The Economist magazine tells the Americans that You need us and we need you

America and foreign central banks are locked in a codependent relationship: America is addicted to spending, and the banks can’t stop throwing money at it in order to keep their currencies down. This is unhealthy for both parties, say the IMF and the World Bank. But is there any political will to change it?

The political will is constrained by the possible reaction of the middle classes (labour aristocracy and petite borgeois) to a diminuation in their assets. At present, the petite bourgeois are fighting mad. They are taking direct action as in the Terri Schiavo case and in the Minuteman Project. The Republician Party is desperately trying to gain leadership of these movements by making more and more outlandish concessions: attacks on the judiciary; a lower bar to using guns in self defense (via Tom Tomorrow).

Part of the reason this spending is so hard to get a grip on is that it is happening on multiple levels. With interest rates low, consumers have been tapping into their home equity and taking on credit-card debt—the latest figures from America’s Bureau of Economic Analysis show individuals’ savings were just 0.6% of their income in February. Meanwhile, even after massive tax cuts, the Bush administration has forged ahead with ambitious spending programmes. Thus, in 2004 the federal government’s budget deficit hit $412 billion, a worrying 3.6% of GDP. It is projected to fall only to $365 billion, or 3% of GDP, in 2005.

So much for tax cuts for the rich stimulating the economy. The credit bubble is made up of the housing bubble (fueled by low interest rates), and a consumer credit bubble (fueled by aggressive marketing by lenders and asset appreciation mainly in housing). This is where the middle classes are most vulnerable. No wonder they are nervously looking for a miracle to deliver them from the coming credit crunch.

Unfortunately, like much good advice, these recommendations seem to have little hope of being implemented any time soon. The political pressure in Asia to subsidise exports with low exchange rates is intense. Interest rates in Japan have been near zero for four years, giving the central bank little room for additional action; meanwhile, the European Central Bank seems to be preparing for a rise in interest rates this autumn, to keep inflation near its target of just below 2%, which will hardly do much for demand. And in America, the political will to reduce deficits seems to be all but extinct.

This mess is created by the needs of two different sets of capitalist classes: American to keep accumulating wealth; and the Asian ones to keep up economic growth. The Asian ones are more likely to be hurt more by the credit crunch as they have a weaker base than the Americans.

An idle speculation of mine would be that George W. Bush could use the credit crunch in order to gain emergency powers to solve the problem. If that were to be the case, he would want the crunch to hurt as many people as possible. This could a worst case scenario if the Republican Party cannot control those petite bourgeois movements. If they cannot control them, they would have to destroy them.

My previous rants on this subject are at:

• Crude Futures Rise to New High Above USD57
• The Test
• God Blessed America
• Rice Arrives Just In Time To Oversee U.S. Decline
• Further Thoughts on USD
• Usama bin Ladin and USA's Credit Bubble

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Breaking the Ties

In Vol. 116 No. 2 of Annals Australasia (March 2005) on p. 42, there is a quote from The Fear of Freedom by Eric Fromm (1961):

In contrast with the feudal system of the Middle Ages under which everybody had a fixed place in an ordered and transparent social system, capitalistic economy put the individual entirely on his own feet. What he did, how he did it, whether he suceeded or whether he failed, was entirely his own affair. That this principle furthered the process of individualism is obvious and is always mentioned as an important item on the credit side of modern culture. But in furthering 'freedom from', this principle helped to sever all ties between one individual and the other and thereby isolated and separated the individual from his fellow men. This development had been prepared by the teaching of the Reformation. In the Catholic Church, the relationship of the individual to God had been based on membership in the church. The Church was the link between him and God, thus on the one hand restricting his individuality, but on the other hand letting him face as an integral part of the group. Protestantism made the individual face God alone. Faith in Luther's sense was an entirely subjective experience and with Calvin the conviction of salvation also had this same subjective quality. The individual facing God's might alone could not help feeling crushed and seeking salvation in complete submission. Psychologically this spiritual individualism is not too different from the economic individualism. In both instances the individual is completely alone and in his isolation faces the superior power, be it of God, of competitors, or of impersonal economic forces. The individualistic relationship to God was the psychological preparation for the individualistic character of man's secular activities.

Emphasis Mine

Here Dr. Fromm is postulating that the religious realignment under the Reformation enabled the economic revolution under Capitalism. My opinion is that the Reformation and Capitalism needed each other and therefore grew together. Other than that, I agree with the rest of the quote.

A more rigid Marxist approach would postulate that the changes in the economic relationships between people necessitated changes in the ideological superstructure that justified the existing relationships between people. In other words, people needed justification for oppressing other people in different ways.

The corporate and hierachical nature of the Catholic Church mirrored the corporate and hierachical nature of the feudal system. This is the main reason that the Catholic Church has lost relevence in the modern world. It is looking backwards towards a vanishing past. Feudalism cannot compete with Capitalism: militarially, economically, ideologically, psychologicallly, or technologically. The power unleashed by individual entrepreneurship is enormous.

The ideological warfare within Capitalism is centred around Individualism. The Liberals are defending the untrammeled rights of individuals to make decisions for themselves, and their opponents want to restrict that freedom to comply with whatever strictures they wish to impose. Restricting Individualism restricts Capitalism. One is bound up with the other.

This warfare reflects the shifting balance of power within Capitalist societies. The large corporations are becoming stale and hidebound. They fear the small business people who remain the powerhouse of Capitalism.

These positions within the economic sphere are not reflected in the ideological sphere. The large capitalists and the labour aristocracy remain committed to the liberal ideas and, in particular, the Theory of Evolution because it justifies their position in society as being achieved through the survival of the fittest. In contrast, the petite bourgeois are being attracted to the Fundamentalist sects and their emphasis on Creationism and Intelligent Design. I think that the petite bourgeois is using these ideologies to break the logjam on their upward mobility by destroying the justification for the existing society rather than for their ideological content.

For the Catholic Church to adapt to the changing economic realities, I think it needs to stop pining for the days of Feudalism and challenge the rampant Individualism by expanding on the corporate nature of its social. This means jestioning the hierarchical nature of the Catholic Church and introducing democracy. The current leadership structure of the Catholic Church cannot do this as they are quite happy with the existing arrangement. The change, as always, must be come from those without power.

Yes, I am proposing a democratic revolution within the Catholic Church.

My previous rant on similar subjects is at More on Islamic Reformation.

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