247 | Samuel Bowles on Economics, Cooperation, and Inequality

0:00:00.2 Sean Carroll: Hello, everyone. Welcome to the Mindscape Podcast. I'm your host, Sean Carroll. And you know, economics is always tough for me to cover here on the podcast. I love it. I think it's fascinating. It's also kind of intimidating and difficult. I don't think that there's any other field which is simultaneously as quantitatively rigorous and deeply involved with the complexities of social life as economics is. It's a story of theorems and results, but also one that is supposed to apply to the real world. And as we all know, economic theory has both successes and kind of dramatic failures. Happily, today's guest, Samuel Bowles, is super easy to talk to. I don't do that much talking in this particular podcast because Sam is so good at explaining what he's thinking about. And it's very, very interesting stuff about how to think about the role of human beings within economic systems, but also going backwards, what thinking economically can teach us about human beings, how human beings actually behave, not just the simple toy models of very oversimplified economic models.

0:01:12.8 SC: Now, Sam has been a long time collaborator of previous Mindscape guest, Herb Gintis. Sadly, Herb passed away back in January at the age of 82. But he and Sam have been working together since their graduate school years in the 1960s. It's a fascinating story. I have the impression that if Sam were here to tell you his biography, it would last many, many hours. It'd be super fascinating. He's led quite a colorful life. But one part of that story is that Sam and Herb Gintis were asked by Martin Luther King to help him study up on economics to ask a bunch of questions about economics and inequality, in 1968, just before the Poor People's March, just before Martin Luther King was assassinated. And apparently the story goes that the two of them, Sam and Herb, were kind of chagrined that their expert training in economics, I think they were still graduate students at the time, was completely inadequate to answer these questions about inequality.

0:02:16.5 SC: So they really started thinking deeply about these questions that were being ignored by mainstream economics. And they both taught at Harvard for a little while before being stolen away by UMass Amherst, who hired a group of people. There was this famous radical group of economists that UMass Amherst hired, and they worked together for a long time. Herb and Sam wrote a quite well known book called Schooling in Capitalist America, about how the educational system interacts with and serves our capitalist system of economics. And certainly both of them, Sam included, are identified as members of the left wing of economic thought. But as you will see, as you will hear anyway in the podcast, Sam is scrupulously fair when he describes the contributions and the shortcomings of different aspects of economics. He's very, very quick to give credit to the free market to Adam Smith, even to sort of 20th century neoliberal economics. But he thinks that we can do better. He thinks we can go further and we'll talk about that.

0:03:27.2 SC: But also, this particular conversation is not very political, to be honest. We're really thinking about how to analyze systems economically, what we learn about human beings by doing experiments that are informed by economics, by thinking about game theory and interactions. Why are human beings as cooperative and altruistic as they sometimes are? In fact, a much more recent book, maybe the last book that Sam and Herb wrote together is called "A Cooperative Species: Human Reciprocity and Its Evolution." And there's a very short motto for the lesson of this book that you'll have to listen to the podcast to hear about.

0:04:08.1 SC: But, we human beings we're complicated. Sometimes we're kind of selfish, self-interested, as Adam Smith assumed for the purposes of his models. By the way, as Sam points out, Adam Smith didn't think we were always perfectly self-interested, just that's a good starting point for the model. Sometimes though, human beings are kind of nice to each other, sometimes. How do you fit that into the model? What does that have to say? How can that help us? How can we use these insights to tackle some of the global large scale problems we have today? All that and more in this episode. So let's go.

[music]

0:05:00.8 SC: Sam Bowles, welcome to the Mindscape Podcast.

0:05:02.9 Samuel Bowles: Great to be here.

0:05:04.2 SC: So I'm gonna start off from my perspective a little bit. You'll forgive me, but there's at least a cliche or a stereotype or a story that economists kind of love physics, right? There's [chuckle] even physics envy. Number one, is that true? And number two, does it come from somewhere respectable?

0:05:22.8 SB: I think we used to love physics. And we loved physics in the '30s and '40s of the last century because some economists, Paul Samuelson notably, borrowed a lot of ideas from physics and used them to formalize ideas of economic equilibrium and some of the basic ideas which hadn't been mathematized yet. I was fortunate to be in grad school in the early '60s. And so I was part of the wave that mathematized the standard canon in economics. And of course, it was very exciting, and we got to do things that were mathematically pretty simple, but seemed powerful and seemed like a real advance over the more narrative approach to economics, which it held sway prior to them. When I say "used to," I say that because there's another analogy in the physical sciences, which is to biology.

0:06:20.3 SB: And it's interesting that Alfred Marshall, founder of the Neoclassical School of Economics, which I would say has recently been deposed as the convention in economics... Alfred Marshall used biological analogies. He wanted to think about growth and decay and copying and so on. And that view has also now become quite prominent in economics. Now we know how to do constrained optimization. We start to think about, well, how do systems move as a whole? And we want to get away from just thinking about the stationarity of something in equilibrium, but what does it do when it's not in equilibrium, or maybe if there is not an equilibrium to which the system can be attracted? So I think we are really borrowing analogies from lots of fields. It's also true, by the way, that other fields have borrowed analogies from economics. So it's probably well known to most scientists that Darwin got his idea of natural selection from Thomas Malthus, the economist. And in fact, he said, "I'm just applying Malthus' ideas to all species." So there's been a lot of fruitful interplay.

0:07:38.8 SB: But I think none of the physical science analogies really work perfectly in economics. And the real problem is that people, when they act, are trying to accomplish something. They've got an objective. Their intentionality really matters. And very often we find ourselves running up against the intentionality of somebody else. So we have these interactions which are... You can model them as if they were particles or as if they were alleles in a biological setting. But there's an intentionality part of the story that isn't well captured by non-thinking particles or genes that are only said to as if optimized, but they're not really thinking about optimizing and trying to do so. So the subjectivity of human beings, our intentionality brings something new. And it's only in the last 30 years that we've begun to see just how different that is. And so we've been moving away from some of the more physical analogies, making economics, more of a social science, if not the social science that it was 30, 40 years ago.

0:08:49.0 SC: The role of intentionality is very important. I wouldn't have put it that way, but I get where you're coming from. I recently had David Krakauer on my podcast, and we disagreed a little bit on the definition of complexity because he put, I guess what he would call "teleonomy," front and center. He thinks of complex systems as systems which have goals, which have interests, which I guess is the same as what you're saying about intentions. Whereas physicists maybe think about systems that are so intrinsically simple that they just bump into each other. They don't have goals when they go about it.

0:09:20.3 SB: Yes, Murray Gell-Mann, a founder of the Santa Fe Institute where we're having this interview today, said, "Think how hard physics would be if particles could think."

[laughter]

0:09:30.9 SB: And yes, that's right. And so I think the reason why in economics we've had this big boom in game theory, is because game theory is basically the applied math of intentional interactions in which each party recognizes that what they get in a interaction will depend on what the other does. And the other person also knows that. So to summarize, a strategic interaction is mutual interdependence recognized by both parties. And I think that's like society. I mean, there was a great dissertation by a great economist, Irving Fisher, and he included in his dissertation a hydraulic model of the economy. And that was obviously a physical model. And gravity was doing the work of optimization there, so that the water in the various parts of the model, unless it was impeded, the water found a similar level and so on.

0:10:29.2 SB: Now, there are all kinds of models like that in economics in which the metaphor really is transportation, things moving from here to there. But in recent years, some economists, myself included, have been more attracted to the idea that economic interactions are more like a conversation. So we should really be thinking about linguistics. That is, I'm having a conversation with you, and in saying what I'm saying now, I'm anticipating your response. And very often I'm having a conversation with somebody with some intention that I would like this person to agree to go to see a film with me, or to agree to work on a paper, and so on. But I'm anticipating what that person's intention is too, of course, in endless regress.

0:11:15.9 SB: So, I think as we move forward in economics, metaphors like language rather than transportation, and metaphors coming not from biology or from physics but actually from society itself, from the way that we intentionally interact, will come to the fore. But it's really raising hell with the standard theory in economics because once you recognize that people are not just interacting with nature like Robinson Crusoe, it's actually a different story. And so economics is being fundamentally rewritten and has been so over the last 30 years.

0:11:55.1 SC: Well, that's very, very interesting. But for those of us, including myself, who are not surrounded by economics all the time, let's remind us what is being replaced, right? There is this tradition going back to Adam Smith, I guess, of thinking about collective behavior and individuals do what they want for their own sakes, and that comes up with something good for society.

0:12:17.8 SB: Yes, that's right. But let me go back to Robinson Crusoe.

0:12:20.9 SC: Sure.

0:12:21.5 SB: In an economics textbook, you don't lose anything if you represent most of the models as a single individual interacting with nature. Robinson Crusoe on his island before Friday, the enslaved person showed up. And the reason for that is the way we represent choice, we have an individual, and he or she is facing a set of prices. So there's a vector of prices, and that's given, and then the person decides what they'll buy or sell. They've got some goods or some capacities to produce, and they're looking at that vector, and they're optimizing against that surface. Now, that's no different from Robinson Crusoe and his island. The surface is Robinson Crusoe's island, and it's remarkable how many, many results in the standard paradigm of say three decades ago, can be represented as if it's just one person operating on an island.

0:13:15.7 SC: [laughter] Okay.

0:13:17.0 SB: Now of course, that was pretty easy to mathematize because it was basically just constrained optimization. And when I began teaching advanced microeconomic theory at Harvard, all I was just teaching constrained optimization with lots of different clothes on, different applications. Now, there were some very powerful results of that, and it was really, there are some quite remarkable ones. The most remarkable probably is Adam Smith's invisible hand. Everyone knows that Adam Smith said that society would be led as if by an invisible hand to outcomes which everyone would appreciate as a good outcome even though people might be completely self-interested and have no interest in the wellbeing of others. Now, that is a radical thought, and it's a very surprising one. It's very difficult to teach that to undergrads. They think it doesn't make much sense. And that's why we think of Adam Smith as a great thinker.

0:14:22.6 SB: Now, a few provisos. Adam Smith didn't think for one second that people were entirely selfish. He was simply saying like many political philosophers did, let's think of a constitution. Let's think of a way of organizing our society which would work even if everyone was basically a jerk.

0:14:40.9 SC: Exactly.

0:14:41.3 SB: So jerk-proof constitutions is what classical economics was all about. Now of course, that view, the invisible hand, has now been applied to public policy in a number of areas: In some cases for the better, in some cases for the worse. There are some areas in which it works very well, and there's some areas in which it doesn't. And I think one of the main tasks of policy making over the last couple of centuries has been trying to figure out which areas may be buying and selling shirts, is an area in which it works pretty well. In some other areas like hiring and firing employees and labor, or the use of land, or perhaps how we devise our money and monetary instruments, there are many areas in which we know it doesn't work very well.

0:15:33.8 SB: But that's not the main problem with the theory. The fact that the invisible hand turned out to have a rather limited realm of application was, of course, that's just how science progresses. We figured out, through actually mathematical analysis, partly the work of Kenneth Arrow, another founder of the Santa Fe Institute, that the domain over which the assumptions of the invisible hand would work was really quite restricted. But that wasn't the problem. I don't think economists were ideologically wedded to the idea of the invisible hand. Many people were. Conservative people liked it. But economists, for the most part, it was something that we thought about, we thought it was a remarkable hypothesis, and we explored its application. I think the problem is that there were some results of that theory that we just didn't observe in the world. That is, it had a prediction problem.

0:16:28.5 SB: Now, the most obvious prediction problem was about supply and demand. I sometimes ask people in a public lecture, I say, "With your arms, please show me one thing you've learned in the economics course that you've taken." And inevitably, a good number of people cross their arms and say, "Supply and demand." And I say, "Yes, that's it. That's what you learn." And of course, what you also learned is the answer is where the lines cross, and that's where supply equals demand. Now, this is a powerful theory, and as I said, it might work for shirts but it certainly doesn't work for labor, that is, for people searching to find work and people searching to find employees, because we know we typically have a substantial fraction of the population that is unable to find work. It differs from country to country, but it's always there.

0:17:21.3 SB: Now, a major change in economic thinking took place during the Great Depression. Because obviously when you have a quarter of the labor force unemployed, that's too big a problem to just ignore and say, "Well, it's due to frictions, or it'll fix itself, or whatever." And that's when we had a big innovation. John Maynard Keynes came along and said, "No, actually, that model doesn't work for the labor market. We have to have a different theory for that." Now, Keynes didn't explain exactly why it didn't work. He observed that it didn't work, and he proposed an alternative. By the way, Paul Samuelson also said the same thing in his introductory textbook written right after the Great Depression. He taught about supply and demand rather briefly. And he basically said, "Don't try this on the labor market. You're gonna have to have a different theory for that."

0:18:16.9 SB: Now, it took a long time to figure out what was wrong with the standard theory. But what it comes down to is that how you get the supply and demand model to work is that you have to assume something about how we transact our business. And what seems like a really small point turns out to be of mammoth importance. And it's this: If we're transacting something like, say a shirt, and I agree to pay $30 for the shirt that you have, and you give me a box which is said to have a shirt in it, and I get home and there's no shirt or it's not the shirt that you said, I can get my money back, and probably pretty costless-ly. So that's what's called a complete contract. A complete contract means that everything that you and I care about in this transaction is actually gonna be taken care of by the law. And it's not exactly you call 911, but you do get redress if the contract isn't met.

0:19:19.0 SB: Now, again, that works for shirts, and it works for a whole lot of other things. But now think of what it doesn't work for. If you were to employ me to work on some project, let's say, and you offered me an hourly wage or a salary, what you would have done is you didn't purchase my work as a researcher; you purchased my time. So you're essentially renting me, but you're not renting my talent, you're not renting my ideas, you're just renting my willingness to come to your research institute and sit there at the computer and appear to work. Now the problem is, to get your project done, you need me to get the work done.

0:20:02.4 SC: Yeah.

0:20:02.8 SB: And so to see why that's an incomplete contract, your promise to me to pay my salary, that's a complete contract; that's enforceable. My agreement to show up at your place, that's also enforceable. My agreement to work is not enforceable. Now, this is where the Game Theory comes in, because if I'm at your institute and it turns out after a couple of months you notice that I haven't been getting any work done, and you find out that I've probably been just communicating with my friends, there's really nothing you can do about it. Well, there's one thing you can do about it. You can terminate my contract. And that's about all you can do in a liberal society, I mean, philosophically "liberal society," you can't beat me, you can't imprison me, but you can say, "Okay, that's it, Sam. You're out of here."

0:20:55.9 SB: Now, that's roughly the way it works. That's something that's part of the motivation of an employee. Now, in order for that to work, you know, as my employer, that you should have offered me a wage or a salary superior to what I would get if I'd been fired, otherwise I wouldn't care. You'd come in and say, "Sam, you're out of here." And I'd say, "Make my day, I'll go across the street to the research institute over there." And that would be the case if supply equals demand, 'cause if supply equals demand, it means there's nobody who wants work who doesn't get it. That means you can cross the street. Well, now, of course, people finally figured out that that's why the supply and demand model didn't work. Keynes knew that it didn't work, but it took until the '70s or '80s for a whole bunch of writers to figure out, "Oh, the employers are actually paying more than the minimum because they wanna get the person to work."

0:21:58.2 SB: Now, that fact, that they're paying more than the minimum, is tantamount to saying that there have to be other people out there just like me who could have my job. You could replace me with that person. They're just like me, but they don't have the job. Now, that opens up a lot of new things we could think about. I'll come in a minute to how the same problem applies in a credit market and so on, but let's continue with employment.

0:22:29.0 SB: So you're now paying me a lot more than I could get somewhere else. And what that means is I'm afraid of losing my job. That also means that you can essentially tell me what to do, for example, "Work hard, Sam." You can tell me what to do with the expectation that I'll do that thing, which I wouldn't have done otherwise, and perhaps which I wouldn't even want to do. Now, a situation in which one person can threaten someone with a sanction, some cost, to get them to act in a way which is advantageous to them, when the reverse ability isn't true, that I couldn't threaten you, that's pretty close to what we mean by that "A has power over B." So all of a sudden, a whole bunch of non-economic things get front and center in economics, like the exercise of power by private actors.

0:23:26.6 SB: And another thing comes in which economists have long tried to rule out, let the sociologists deal with the question of social norms. We don't really care about social norms. I don't care about what you think or what you value. But obviously, you do care about my social norm 'cause you can't watch me all the time, and you know that threatening to fire me isn't gonna do the whole job, so you kind of hope that I share your love of science. Or maybe I just share an obligation to work hard because I said I would. So you start to care about sociological and value characteristics of me.

0:24:04.2 SB: Now, so what that means is that economics, which had been really pretty intolerant of insights from other disciplines, now it really needs to go to the political science people and say, "Well, okay, this power that is being exerted, what do you know about that?" And then maybe the sociologists or anthropologists can help us out on why do some social norms emerge and survive and so on. So the idea of the contracts being incomplete, which it seems like a small legal distinction, has actually really shaken the whole house, and it leads in a different direction from the old theory.

0:24:43.9 SC: Well, it's very frequent in math and physics that when you take a theorem you've proven and then slightly violate one of the assumptions, you get completely different results.

0:24:52.1 SB: Yes, in fact, in the '70s and '80s when I started working on this, I knew that I was gonna get radically different results, and so I changed as little as possible. So I adopted all of the standard assumptions: A perfectly competitive economy, no monopolies, nothing fancy, just the fact that there's something that one party to an exchange wants to get but they can't secure by means of a contract. And then the whole house comes crumbling down.

[laughter]

0:25:24.6 SB: And it was kind of fun.

0:25:25.8 SC: Well, and just going back, 'cause I am a physicist, to how physicists would think about this, and it's not just that elementary particles don't think, but the economic actors you're pointing out, they have goals and intentions, they also have a theory of what the other economic actors have in mind and their goals of intentions, and they also have this ability of sort of counterfactual reasoning: If I were to do this, here's how I would be punished and everything. And so even if we treated human beings as kind of perfectly model-able, those models are gonna be way more complex than any physics theory would have to deal with.

0:26:03.3 SB: Yes, and I think most people, myself included, some years ago, didn't really appreciate just how hard those models get. And I think that my students, my advanced students, after a semester of working with me, they really wish they could go back to Robinson Crusoe...

[laughter]

0:26:22.0 SB: Because at least we know how to do the math with that; it's a simple question. But suppose you have an interaction like this. You and I are gonna interact, I don't know you, I have never met you. And we're gonna interact in some way that we're gonna produce something jointly, and then we're gonna share the benefits, and maybe it's a partnership, or maybe we're a couple sharing a household or whatever. We're some kind of partnership. Now, my attitude towards you is that, if I think you're a pretty good guy, well, then I'm willing to work hard and I don't mind the benefits being shared with you, but only if you're gonna reciprocate that. Now, imagine I started off thinking that you were a pretty good guy, and so I start off and I work pretty hard. Well, then you pick up from that that I'm a pretty good guy, and that reinforces your view. And off we go, and we have a very productive partnership.

0:27:16.3 SB: But notice also, it could have gone the other way. If we come to work the first day and neither of us had done much of the project, and you don't have to think too hard about this. It could have gone... There are very, very many equilibria of this problem in which we don't really know how it's gonna happen. And so I have found, for example, just doing the math is hard, just with two people. And sometimes you can turn to simulations. And so the students learning this, they understand that, look, we're talking about a view of society in which it's fundamentally more complicated than economics has realized in the past. And that's great because it really is fundamentally more complicated, but it has some implications.

0:28:03.8 SB: For example, economists, myself included, really love to prove theorems, but I think we're gonna be the last discipline that really relies on theorems, because we use theorems because we constructed an artificial world in which relationships were simple enough that theorems could apply. Now, once you get outside of that world, there are a few things you can say, and some pretty clear propositions that are true. But for many, many important problems, when you do the math, you can do the math; it's not that the math is hard, it's that you don't understand analytically what it means, you don't get intuitions by this massive expression that may go on for a page or two. And therefore you have to start experimenting with discovering there's some surface that you're exploring, you wanna know what it looks like, and you use agent-based models or other kinds of simulation methods.

0:29:02.2 SB: So it's changing a lot. But I think I hope it's also having the effect of making economists a bit more modest about what science can do. That is, we really are faced with deep uncertainties and deep inadequacies of our understanding, and we shouldn't be teaching students that we've got this tool for understanding society. We have a box of tools that help in some cases, and in some cases, really quite amazingly. And in other cases, are quite powerless to give us the kind of analysis that we really would need.

0:29:37.2 SC: The other thing I wanted to get on the table about the old school way of doing it is, there is a back and forth between description and prescription, right? You've talked about how in the neoliberal way of thinking about things, that comes along with, I don't know whether it's customs or morals or whatever, but there's an idea of procedural fairness, an idea of freedom to do things, etcetera. Number one, is that true? Am I exaggerating? And number two, do you therefore see it changing?

0:30:07.2 SB: No, you're absolutely right about what's called the neoliberal economic paradigm. It's not primarily an academic paradigm but it's a policy paradigm, a way of looking at the world. And this is very interesting, I think, that to your readers or listeners, there is... One of the reasons why this conservative political movement was so successful was that it integrated very powerful moral intuitions about liberty, self-determination, and so on, a set of ethical principles with a model of the economy in which if you left people to themselves and gave them the liberty, the economy would work out pretty okay.

0:30:52.3 SB: And so that was... I mean, I have to also give the, what are called the neoliberal school, credit because very often people say, "Why were they so successful?" And on the left, you'll hear people say, "Well, they had all these think tanks and they had all this money," and so on. And I don't think that's the case at all. Yes, they did have a lot of money but of left of center scholars, intellectuals, have a lot of universities which also support them. I think they did some very good economics, and they relied on really powerful economic arguments, starting with Friedrich Hayek and coming on to some of the more modern people, who really fundamentally posed a set of arguments about why some favored left alternatives wouldn't work very well, and why markets worked if not optimally, probably better than the alternatives. And so, in other words, there were some real economic theory advances.

0:31:52.9 SB: I mentioned Hayek because his central idea, which is that information is local and limited, is very important to understanding why some favorite leftist ideas like central economic planning wouldn't work very well, because the planner could never know enough. But interestingly, Hayek's ideas about information are also the key idea behind why contracts are incomplete. The reason why the contract between you and me is incomplete is because you can't know what I'm doing all the time. And even if you did, your observation that you don't think I was working hard enough would not be admissible in a court of law as a way of recovering wages 'cause it would be your word against mine. "No, no, no, I was really working hard."

0:32:39.8 SB: And so I think the... It's so ironic, that is, Hayek, who wrote about information to show why central planning wouldn't work, also initiated this new wave of economic theory of which I am a part, which takes information as being a key problem in economics. And we have gone on to show that an economic theory which recognizes Hayek's insights about information, is really very, very different from the economic theory favored by the neoliberal school. Because it shows, for example, that supply doesn't equal demand in many cases. And if supply doesn't equal demand, then the invisible hand argument of Adam Smith is wrong. Then we have, as I said earlier, the uncomfortable fact of the private exercise of power, sometimes immense powers, of employers over employees and so on. So Hayek and information economics opened up a whole new arena.

0:33:41.2 SB: But yes, indeed, that was what the neoliberals pushed. It was a coherent set of economic theories and moral principles. And I think we can conclude from that, that anything which is going to replace the neoliberal paradigm as a policy paradigm, has to do something like the same thing. That is, it has to have a model of how the economy works, that is a good model, is that it predicts outcomes and it helps us understand the workings of a modern economy, but at the same time, is one which recognizes the importance of things that people who are opposed to the neoliberal prescriptions would think.

0:34:23.6 SB: So for example, if you think that there is something questionable about the exercise of immense powers of one individual over another, if you think that's something which we should interrogate from a Democratic standpoint, is that really okay? Is it even okay from the standpoint of liberty? If that's on your mind, well, then you better have an economic theory which shows that, oh yes, that kind of power really is consistent with an equilibrium in the economy, even ideally. And you can't get rid of it, as long as you have employees and employers and so on. So I think the challenge facing economics today is to find a set of economic theories, as economic models, economic concepts, which represent the economy in a way which we recognize empirically, both experimentally and in other ways, but which also give us space in which to express and recognize the kind of moral dilemmas that are there in the economy for everyone to see, but which economics has been a bit blind to because of the particular assumptions about what humans are like and how we interact.

0:35:33.9 SC: One of the blows to the neoliberal paradigm was the financial crisis back in 2008. Am I gonna guess right to say that we can interpret that as being due in part to this information incompleteness issue?

0:35:47.9 SB: Yes, I think that what happened there is clearly a case of taking a market, of financial markets in general, treating it like it was an ordinary market for shirts, and something in which the standard model works okay, and then de-regulating it in such a way that you're almost certain to have a speculative bubbles and instability. So that was the case of applying the neoliberal medicine to a problem in which didn't work. And it so obviously didn't work and it so obviously caused a lot of havoc to people, that everyone was saying, "Well, what went wrong, and why didn't you guys get it?" The Queen went to the London School of Economics and she scolded them and said, "How did you guys get it so wrong?" And they kind of sheepishly had to answer and try to explain how they got it so wrong.

0:36:50.3 SB: And I think from there, there was just an openness to thinking, "Well, I wonder what was wrong? And if we were wrong about that, maybe we were wrong about some other things." I think there are a couple of other things which were also building up, and one is growing inequalities. Somehow, since the '80s, the US economy, most of the high-income economies, have been coming significantly more unequal both in wealth and in terms of income. The US is an outstanding example of this, a bit extreme compared to others. But people care about inequality. They care about the suffering that inequality inflicts on the people who are less well off. And I think there's a sense that well, our apparatus wasn't really allowing us to ask questions about that. A lot of the inequality comes from the things which we said that didn't exist like unemployment. And if supply equals demand, we couldn't even talk about one of the problems that people face, which is finding a decent job.

0:38:00.8 SB: And I'm virtually certain that the other thing, in addition to the financial crisis and inequality, is climate change. Climate change is frightening everyone. And if we go back in economics and look at the last time we had a big change, it was the Great Depression. That did it. Keynes and then Paul Samuelson, his great textbook. And so what that did is that that whole configuration of events, we had a big economic problems that the standard paradigm didn't explain very well. We had some new economics that did seem to explain it pretty well. And moreover, we had a set of social movements, Trade Union movements, in some parts of the world, Communist movements, which were challenging the status quo. And so there was a sense of urgency that we had to address these problems, both because they were urgent and they were causing human suffering, but also, and what was on Samuelson's mind, was the Cold War. And there was an alternative to Capitalism, which was of course Communism, which was doing, at the time, quite well. Had not had a Great Depression like the capitalist countries had had, and so on.

0:39:18.0 SB: Now, so, when I think about, well, where are we in economics today? Are we at a similar moment? I sometimes call it a "Samuelson-ian moment," for Paul Samuelson. I don't know. We surely have a set of new problems that economics is not equipped to deal with in its conventional form. The ones we just mentioned: Financial instability, climate change, inequality, and some others, future of work. We have a set of theories that have been constructed not by a great thinker like Keynes, but by literally hundreds of mostly economic theorists and others developing this idea of the economy in which markets don't necessarily clear, people are not necessarily selfish, and equilibrium is not the the only state the economy will be in, and so on.

0:40:16.9 SB: I don't see a set of societal movements pushing for change that would require us to adopt this kind of new view of society. If I were a bit more utopian, what I'd say is this: In a well organized society, given the fact that we have these new problems and this new knowledge, we should put the two together and implement them. And that would be a good idea. But obviously there are a lot of people benefiting from the status quo just the way it is. And so you're not gonna implement a whole new set of ways of understanding things and new sets of policies and so on without organizing a fairly significant set of social movements in the US and around the world and so on, which will be calling for change. If that happens, then I'm pretty sure that we'll want to adopt the new economics because otherwise we won't have the tools to fix the problems.

0:41:19.1 SC: One of the things you've been working on to try to develop this new economics is a better model, more realistic model of the individual actors, right? If Adam Smith says everyone can be self-interested and things are still okay, nevertheless, not everyone is always completely self-interested. So tell us how we can try to understand that better.

0:41:37.9 SB: Well, oddly enough, we take off from Adam Smith. He wrote a book not as famous as the one in which he announced the invisible hand called The Theory of Moral Sentiments. Moral sentiments, to Smith in his 18th century language, were simply caring about other people, caring about their wellbeing. And he said, we often just care about other people without expecting anything in return. And he also emphasized that one of the things we take very seriously is our own dignity. Many students will remember from Smith that he said... He's talking here about self-interest. He said, "It's not from the benevolence of the butcher or the baker and the brewer that you put your dinner on the table, but it's from their regard for their self-interest." And in everybody's texts, including mine as an undergrad, I underlined that. In fact, I put an exclamation point next to it 'cause I thought that might be on the exam.

0:42:45.2 SB: Anyway, it was a pretty important idea. It's not their benevolence, it's their self-interest. And so this then was a sort of groundwork for thinking of how the economy works. But when I went back to look at that a couple of years ago, I found something amazing. Which is, the very next sentence in Smith's book is he said, "Nobody but a beggar would rely on the benevolence of others for their dinner." So Smith's argument about self-interest and the market and so on, it had nothing to do with efficiency. It didn't really have much to do with the invisible hand, really. It had to do with the market as being a way of organizing society that's consistent with people being dignified and having equal dignity.

0:43:33.2 SB: Well, then you look today... I mean, that was Smith's idea, the alternative to the market was a kind of feudal society in which some people were said to be naturally superior to others and capable of ordering them around, where you had tremendous gender differences in the rights and freedom of people, not to mention the people who were enslaved, and so on. So the idea of interacting in markets had a great appeal because you had the right to say no. Now, running that forward, of course, we have a slightly different view. I remember thinking and watching with horror as some during the COVID epidemic early on, there was women working in a meat packing factory in the Midwest in the United States. And they were frightened about going to work as well. They should have been. And they were ordered to go to work or they would be fired. Well, and of course, there you see an exercise of power by the employer placing these women in grave danger, a danger by the way that the employer himself was not exposed to because he could easily keep himself away from crowded circumstances and so on.

0:44:52.3 SB: Now, just watching that, you think, "Oh, there's something wrong here." Now, the idea that people are self-interested has a funny history to it. Smith didn't think it was true. He just said, "Let's see how it would work if it was true." Many other people who've tried out this idea of, "Let's see if we can get laws and regulations that can't be foiled by selfish people, and therefore design a constitution for people as if they were selfish," they've said immediately, "But that's not really what people are like." Now, a predecessor of Smith, David Hume, he went so far as to say this: "In designing a constitution, we must assume that everyone is a knave." He used the old word.

[laughter]

0:45:48.0 SB: Everyone is a knave and has only their interests at heart. And then he went on to say, "By his avarice, we shall rule him for the greater good." So the idea of harnessing the avarice of the the selfish person is a big idea in economics. Now, interestingly, Hume, in the next sentence said, "It may seem odd that that an axiom which is true for the design of constitution," namely the knave idea, "wouldn't be true if you observe society." So this idea of designing a knave-proof constitution has a big history in economics.

0:46:27.8 SB: Now, it's always difficult as a teacher. You teach students, "Well, this is what we think," and the students think, "Well, do you think I'm like that? Are you like that?" And so a lot of confusion. "No, we don't think that, we're just assuming that," and so on. Psychologists have always been a bit dismissive of economists in the score because psychologists do experiments and they've been doing experiments since the '50s on this. And they found out a lot of stuff. For example, in the early '70s, they found out that people care a huge amount about self-determination.

0:47:03.0 SB: For example, this is a wonderful one, if kids are playing and some are painting pictures and some are doing other things and whatever, then the ones who paint pictures, if you pay them a dollar for their picture, "Oh, Johnny, what a nice picture." And then in a control group, the ones who painted you say, "Oh, Johnny, what a nice picture," but you don't pay them anything. And then you look and see what happens later. It's extraordinary. Even two weeks later, the ones who were paid for their pictures have stopped painting. They're not painting anymore.

0:47:35.4 SC: Really?

0:47:35.9 SB: Yes. Now, the interpretation of that experiment was, kids... These are actually little kids; they're elementary school kids. Kids have a sense of self-determination. What the psychologist said is, the payment is what they called in their technical language "overjustification." It provided another reason why I did it. Maybe I just did it for the money. Oh, if I did it for the money, but they're not paying now, well, I guess I'll play in the sandbox instead. Now it wasn't until the '90s that economists started doing experiments and I have to say, I think the experiments that economists did were actually better than the psychological experiments.

0:48:18.2 SB: They were better for two reasons. One is, by the time the '90s came around, we all knew game theory, so we knew how to design an experiment which clearly isolated one set of incentives as opposed to the other and so on; so we were trying to use experimental behavior to back out from the experimental behavior a function called the "utility function," the thing which the individual's maximizing, which would explain that behavior so that all of our experiments had... For us, the holy grail was reverse engineering what must have been the thing which was being optimized. That was a pretty good idea. And the other one is, we always played for money.

[laughter]

0:48:58.8 SB: That is, you basically...

0:49:00.8 SC: Oh, those economists. Count on 'em.

0:49:00.9 SB: Yes. And so we had... If we were dividing up a pie between me and you and I get to do anything I like with it, it wasn't hypothetical. It's actually a $100, or $10 and some cases much larger sums. And now, those experiments, some of which my team did, a team of which I was a part around the world, they were really remarkable. What we found was that in the experiments that we conducted, the entirely selfish, consistently selfish person, was really a minority. Very few people acted selfish in the way that economists had assumed. And what we had was a bunch of other kinds of behaviors. Some people were kind of unconditional altruists, sort of Mother Teresa types. Other people were "I'll be generous with you, but if you're not generous to me, I'll be vindictive towards you." There's some kind of really tough reciprocity.

0:50:08.0 SB: We also found out, which didn't surprise us but it's very distressing, that people are very group-identity-oriented. And so we found out a lot of things that were not in the economic model. And then one of the things we've been doing for the past 30 years is saying, okay, well, suppose this field called behavioral economics, suppose that those findings are true, how should economics be different if people really do care about others? Not all the time, not when they're shopping, but perhaps when they're interacting with neighbors and perhaps when they're interacting with the people they employ or with their employer or with their loved ones, and so on?

0:50:46.2 SC: A radical idea that people could care about the welfare of others.

0:50:49.1 SB: Yes. Now, the problem with in doing these experiments is, after we did these experiments, we were pretty excited and pretty proud of ourselves. And so we'd go around and side sometimes lecture in anthropology or sociology departments, and I would announce this newfound knowledge that I had that not everybody's entirely selfish. And they would say, "Well, tell me something I didn't know." Now, I pushed back pretty hard on that because I do think that the kinds of experiments we did, the design of them, the fact that they were for real payoffs and so on, meant that we did have a much more solid set of findings about the importance of altruism and the importance of reciprocity and the importance of another thing that comes through in the experiments.

0:51:37.4 SB: People really are fair-minded. They not only don't like it when they're treated unfairly, they don't even like it when they're advantaged from being from unfair treatment. And so I think that's made a difference. But I was never very good at designing experiments. I had ideas about what we'd like to find out, but the actual design of a good experiment, it's a real skill. And I of course participated with the team in doing this. But I pretty quickly moved on because my interest in sociobiology led me to ask an obvious question which is, how could a species ever evolve with a substantial fraction of its members being altruistic? And this wasn't just a hypothetical question that came to me.

0:52:36.0 SB: A reaction that I had when lecturing was often from economists and from biologists. "Well, look, I don't know about your experiments, but what I do know is that natural selection cannot produce an altruistic species." And the reason for that is pretty obvious. Altruism is defined as benefiting somebody else at a cost to yourself. Now, in a population genetics model, the benefits and costs are fitness. So if I'm contributing to the fitness of some other at a fitness cost to myself, then my share of the population, an altruistic type, will fall and the non-altruist will grow. That reasoning is correct, by the way. There's nothing wrong with that reasoning, and it's a pretty good definition.

0:53:19.8 SB: So I went to work on what was a substantially new project which is, well, I was pretty convinced that we were altruistic. It might not be that we're genetically altruistic, that we're altruistic for cultural reasons, but it's pretty surprising to find it so universal because we had done experiments with hunter-gatherers in the Amazon, with herders in Mongolia, with farmers in India, with truck drivers in America, and so on. Not just students or canned populations like you have access to. So a lot of what I worked on was studying models to ask the question, could humans possibly have become altruistic from a genetic standpoint? That it's genetically predisposed towards helping others?

0:54:14.2 SB: And that comes down... That's an empirical question. It surely could have been the case. Here's a narrative about how it could have happened. It's true that in any group, the altruist would be doing poorly because they'd be helping others and not getting help. But a group that was composed mostly of altruists would do very well as a group, for example, in competition with another group. If the other group had no altruist. It doesn't have to be a matter of warfare, but suppose the two groups came into conflict. Well, the altruistic group would all be willing to help each other. They'd all volunteer for military service or to go into combat. The non-altruist would all be, "After you, Alphonse." And so all you have to have is a past, a period of time in our past in which small groups competed for resources either during environmental crises or because of just doing military competition. And then that could be an environment in which if groups were different enough genetically, and if the ones with altruist won and the ones with not altruist lost, that could more than offset the fact that within every group, the altruist would always be losing a little bit.

0:55:38.9 SB: And so I developed a set of mathematical models, and I did... Actually I learned population genetics and I did some research on the genetics of hunter-gatherer groups as a way of trying to figure out what we might've been like in the Pleistocene, prior to the change in temperature about 11,000 years ago in climate. And somewhat to my surprise, I found that humans possibly... Well, certainly unusually, possibly uniquely as a species, we're capable of constructing institutions and living in a situation because of our technologies and so on, such that this process called a group selection could actually be a very powerful evolutionary force.

0:56:23.8 SB: And so we end up, I think with a... Now we have strong experimental evidence that we are generous in many circumstances. We have models and data which suggests that that might even be a genetic predisposition. And of course, we know there are many cultural reasons why we'd be taught to be that way. So I think, that's my corner of some of the research that I've done about the question of what human beings are like. And if you're thinking of a new economic paradigm, you have to come down on that somehow. You can't say we're selfish and really smart. The bumper sticker for my paradigm is "People are a lot dumber and nicer than economists think."

0:57:08.2 SC: [laughter] I guess we'll take that "dumber and nicer." Maybe that's a good trade off. But obviously you're wading into treacherous waters here because biologists have debated for a long time over whether what levels of selection there are, right? There's Hamilton's principle. I'm willing to do altruistic things for my close relatives, not for my far relatives, but the idea of group selection where I'm just in a group and I'm willing to sacrifice for them even though maybe they don't share so much of my DNA, do you think that this economic viewpoint on it has strengthened the case for that even in biology?

0:57:44.0 SB: Well, I think that it has strengthened the case for group selection properly modeled in the Hamilton way, that is... I think Hamilton's way of modeling individual-based selection with individuals competing for fitness is the right way to model any evolutionary process. We can improve all of what Hamilton said and wrote. I think that group selection was in the dog house for a long time among biologists for two reasons. One is, they didn't think it was empirically likely that genetic differences between groups would be large enough so that one group winning and the other one losing would make enough of a difference to offset within group erosion of the altruist. But there was another reason, which is that the idea of group selection seem to be that people were doing things for the group, and it was the groups that were being selected and not the people.

0:58:48.0 SB: "Group selections" are rather unfortunate term 'cause it looks like the unit of selection is a group. Now, there are models in which you can have the unit of selection being a group. And they're not nonsensical, but some of the ideas about group selection and the groups being selected didn't make a lot of sense formally and mathematically. So they were both mathematical and empirical reasons.

0:59:12.0 SC: Ultimately it's individuals who are reproducing.

0:59:14.2 SB: That's right. And people like to express that in terms of the genes reproducing, but it's the individuals who bear the genes. And so I'm fine with an entirely individual-based model of the evolutionary process for human behaviors. And that's what I and now many other people have shown, that is as long as the groups are different enough genetically, then the process works. Now, what does that mean? Well, if they're different enough genetically, it means I am actually more closely related to the people in my group than I am to a randomly selected member of the population. If that were not true, group selection couldn't work. So the connection to kin selection is that this is kin selection but large. It could be people who are quite distant really related to, but all it takes is that the groups are more like kin than the random population.

1:00:16.2 SB: I think, again, in my mind, kin selection got a bad name because it was a good theory, Hamilton's theory, but people interpreted it to mean that our generosity extends only as far as our immediate family. And of course, we observe that's not true. It's not just our sisters and brothers and parents and kids. And so I think that actually, I think the biology of the evolution of human behavior has really made huge advances. And it's interesting now that, for example, group selection has become a much more widely accepted idea partly because E. O. Wilson endorsed the idea of group selection before his death. And his status, of course, helps a lot.

1:01:05.4 SC: I guess when we talk about game theory and its use in these analyses, well, what I have in mind, which is completely unaffected by actual knowledge, [laughter] what is going on is something like I have a population of a lot of people, they interact pair-wise with other people, and they all have strategies. And there's payoffs for their strategies, and maybe they're mixed strategies rather than pure strategies, and I could run some giant simulation and find equilibrium distribution of strategies. Is that anywhere close to what you actually do?

1:01:38.8 SB: That's right. I would add there's a missing part of that which is, how does the population fraction of strategies change? And all you have to add to that is the idea that people who are... That is, strategies that on average have higher payoffs are going to grow.

1:02:01.0 SC: Yeah.

1:02:01.8 SB: Now, there could be the higher payoffs, there could mean greater fitness, if it was a genetic model. But it could also be a cultural model in which people who do better get copied just culturally. So non-smokers actually seem to be pretty happy and they live longer, maybe they're more likely to marry, and maybe non-smokers' kids are more likely to copy their non-smoking than a smoker's kid would copy their smoking and so on. So you can take this idea of what's called in mathematics, a replicator equation or replicator dynamic, and then say it's pay-off monotonic. All that means is that the fraction of that strategy will go up if it's above average, and go down if it's below average, and that's just a standard formalization of natural selection with fitness, and all you do is change it to any kind of copying.

1:02:56.3 SB: So then you have a cultural model and a biological model. The math is the same at the most abstract level, but then obviously, if it's a cultural model, then you might want to amend it a little bit. You might say, "Well, pay-offs are one thing, but I'd like to take a kind of the fact that people also tend to copy things which are most common in a population." So fine, then it's very easy to amend the cultural fitness equation to include two weighted terms. One is the payoffs, and the other is how many others in the population there are. And once you realize that... You have a machine there. It's just a mathematical expression that you can add stuff to, that's pretty intuitive. And we know for each of those things, there's probably some truth to it. You copy people who are doing well. You copy the majority. So that's basically the way the standard models work. And there's some big puzzles, 'cause there are things that are culturally successful that are biologically disastrous.

[laughter]

1:04:02.8 SB: I mentioned smoking. People annually convert to smoking and, yeah, and people die, and... Or consider cities. Until two centuries ago, cities were a biological disaster and a cultural success, and the death rates in cities were higher than in the countryside. And then people kept flooding to the cities, and the way we got cities was the cultural selection process was swamping the biological one. And we really need to see... A good sociobiology is one which takes the cultural and the genetic or biological together, and what I said is mathematically, that is not hard to do, we need... As in many areas, we think, "Oh, this is very complicated, very advanced, very novel." It isn't any of those things. It's standard theory that just we need to know more facts.

1:04:57.0 SC: I guess one of the issues with any system that depends on cooperative behaviors are there will be free riders, right? People who skate by on the goodness of others. And maybe a slightly depressing implication of what we're talking about here is, sure there will be some fraction of free riders, but as long as there's not too many of them, the group as a whole will do okay.

1:05:18.9 SB: Well, that's certainly right. And the last thing you said is true as long as there're not too many of them. Now, it's interesting to see how societies really deal with free riders. And let's go back in history and pre-history and think about maybe 100,000 years in which biologically modern humans were primarily foragers, that is mobile hunter-gatherers. We have very good reason to think that they shared food. That's in part because they acquired food in very large packages that is large game. They didn't have a fridge, so obviously they're gonna share the food. They rarely got their prey. I've actually hunted with hunter-gatherers, and the group I was hunting with, the hit rate, the likelihood of getting something was extraordinarily small, maybe once a month. So you gotta share.

1:06:14.8 SB: Now, in those societies, of course, there's somebody who says, "Well, okay, I'll share at the pot but I won't go hunting." Well, the free rider problem must have been there, and they found ways of dealing with it. What we know from modern ethnographic studies is simple things, like for example, you eat in public.

[laughter]

1:06:35.9 SB: You eat in public so everybody knows who's getting the stuff from the pot. And the other thing is, again, from modern ethnographic studies, the free riders are not treated well. They're joked about, they're ridiculed. And eventually, if they insist, they're actually physically punished. Now, what can we learn from that today? Well, let's think about public goods or any kind of common things we have. We've studied in experiments how do people contribute to these things. And there're always free riders. So in a what's called a standard public goods game, that's just a prisoner's dilemma with a lot of people, so it's an in-prison prisoner's dilemma in which it's in everybody's selfish interest to not contribute, but it's in the interest of everyone, if everyone contributes.

1:07:27.8 SB: Now, in those games, typically, if you play them consecutively over many periods, people start off hoping for the best. They contribute a fair amount to the public good. But then they noticed that other people aren't contributing, and they think, "Well, the only way I have to do to avoid being a sucker is I won't contribute." Now, if you stop the game after say 10 rounds and you say, "Okay, from now on, you're all gonna see the contributions of the other members, not by name, of course, but just by some symbol, and you can take some of your pay-offs that you've already won. And for a cost, you can actually punish the people who are... " You can punish anybody. We don't say who they would punish, and we would never use the word "punish." We just say, "You can pay 1 euro to reduce the pay-offs of anybody else by two euros," or something like that.

1:08:26.4 SB: And what happens is extraordinary. They punished like crazy. And so in the second set of 10 rounds, the amount contributed which had gone down almost to zero, goes up much, much higher up to 80% or something. And by the end of the game, almost everyone is contributing. Nobody's punishing. And so now, let's think about that. There's a lot to unpack here. The most obvious thing is this. The second game has a public goods game contributing to the public good. But then it has punishing, but punishing is also a public good, because if I punish this guy, everyone benefits if he or she shapes up. So in the first public goods game, it collapsed and they all end up doing nothing. But in the second public goods game, the combination of the what's called the public goods game and the punishment game, everybody punishes a lot until it's not necessary. Well, that's interesting. Are we genetically or culturally predisposed to be really irritated at free riders? If given the opportunity, we're willing to actually pay out of our pocket, so is to punish them? Well, it turns out that we are. And so that we can think about.

1:09:53.1 SB: Oh, in other experiments, by the way, we've found out that even if the target of the punishment won't even know about the punishment until after the game is over, people wanna punish. Now, that's crazy because it can't possibly affect their behavior.

1:10:10.9 SC: It makes them feel good.

1:10:11.4 SB: They just wanna punish the free riders. So we know a lot about the punishing of free riders. But it's typically done better if it's done by peers who share your situation and for whom it seems like an altruistic act. So imposing punishments from the top often backfires. We found out, for example, that during the COVID epidemic, mandating vaccines incurred a very hostile response, whereas your neighbors saying, "You know, I really feel a lot better if you go and get vaccinated," was more effective. So when we think about this, what I think is that we're missing out in terms of our resources for making society better. Typically we have two tools: We have the state and we have markets. And then the state basically has a set of regulations and laws which it implements based on elections, if you're in a democratic society. Those are obeyed because of some notion of obedience to the state or maybe fear of punishment.

1:11:19.9 SB: The markets have their own ways of implementing things through buying and selling stuff. And those things, the buying and selling, is motivated by self-interest or some combination of self-interest and other preferences. But it strikes me that if we look at what works in society, we're missing another dimension. The debates that we have are really, imagine a line running from state over on the left, market over on the right, and then where there's a tug of war between the Democrats who're trying to pull it over towards the state and Republicans are trying to pull it over towards the market, or at least that's the way Republicans used to be.

[laughter]

1:12:00.9 SB: And now, when I say there's something missing, I guess the expression I would use is community or civil society. That is, that's the place where people gossip about each other, where they point a finger. That is, you have an opinion of your neighbors and you express it. That's the place where... How do communities work? Well, they work through... People really caring about each other often in negative ways. For example, a lot of our communities have to do with wanting to live in a relatively homogeneous place, and for example, having a racist or homophobic attitudes towards other people.

1:12:41.6 SB: So I don't put community here forward as a normative ideal, anymore than I see the state and the market as a normative ideal. It's just an arena in which our moral ideas and our very high-level information, because we're neighbors, can be brought to bear so as to control things like free riding, and perhaps make possible a more effective company, a more effective cooperative enterprise of some kind, because you have a group of people who actually we know what each other are doing, and we praise each other and we occasionally sort of deride each other if we're not doing a good job. That's how a well-functioning economy has to work.

1:13:22.1 SB: And that's increasingly the case today, because if you think of the economy at the time of Adam Smith or for that matter, of Karl Marx, producing steel and textiles and grain and so on, those were mostly things which you can measure. You know how much grain was produced and you can tell pretty much how much textiles this person made, and so on, and you can sell this stuff. This stuff can be packaged. So it's sometimes... Why am I contrasting this to today? Well, look at the work of today. Well, a lot of work today is just like what we're doing: It's people talking, we're expressing ideas, we're entertaining people, we're doing cultural production. But much more than that, we work in restaurants, we're waiting on table, we're engaged in the care of the old and the young, the teaching of people. That is, the vast majority of people in the modern economy are doing the things I just mentioned.

1:14:24.2 SB: In the United States, one in seven works in manufacturing, mining, and things which have smokestacks and you would think of as being on the cover of your economics textbook. So most of the things we're doing are really hard to measure. And what it means, that in most of what we're doing, contracts don't really work very well. And for the same reasoning, neither do government fiats, because for the same reason that you can't contract for my work effort, the government can't force me to work either. And the government can't force me to be a good citizen, and they can't force to be tolerant of my gay neighbor or of my Republican neighbor, and so on. So having a decent society requires that we mobilize all of those things we've learned about free riding, and to bring to bear the kinds of moral pressures that people have, and to find a way also to minimize the repugnant moral pressures that often go along with the word "community."

1:15:26.4 SC: Let me just ask one question which is sort of looming in the background here. We're in a situation in the world where we have these kinds of challenges that are larger in scale, maybe then we've used to be thinking of either global scale things or long-time horizons, whether it's climate change or future pandemics, nothing that I can think of in the socio-biology or even our local cultural norms equips us to deal with those kinds of things. Do you have either more prescriptive things to say or just some room for optimism there?

1:16:01.9 SB: Yes, I do. That may surprise you, and it will surprise you even more, the analogy that I'm gonna use as the basis of my optimism. I think we can learn from nationalism. Nationals...

1:16:14.0 SC: Okay.

1:16:14.1 SB: That we should be optimistic about the possibility of a more global mentality. Let's go back and think about what nationalism did. Now, by the way, to start with, I hate nationalism. I think it leads us to be narrow-minded, to hate outsiders, and so on. But I wanna talk about the constructive role that nationalism had. I'll take the case of Italy that I know quite well. The Italian language has existed for a very long period of time. And in that sense, Italians have existed, but Italy didn't exist. The people from Naples didn't really talk to or care about the people from Milan, and the people from Milan were quite disparaging about the people from the South, and even little communities actually spoke somewhat different dialects, and so on. There was no sense in the world that a person that any [1:17:08.2] ____ would be willing to risk their life on behalf of a person from Venetsia or a distant place like that.

1:17:15.2 SB: What nationalism in Italy and France and the United States did is it created a sense of togetherness, of an "us" that is really remarkable. Now, France and Italy is not so remarkable, really. What about the United States? The "us" of Americans, just take a picture, look at it. Look at the people who are willing to essentially go to bat for each other. There are grandparents, maybe spoke different languages, were in different countries, and so on. Nonetheless, that has happened. Now, what do I learn from that? Well, one thing I learned is that kind of "us and them" sentiment is the basis of many wars and many horrors that have been imposed on humanity, but it also means that as a cultural animal, human beings are capable of overcoming the past differences, the old antiquated "uses and thems" for a larger "us." Now, whether or not it's... And I think it's possible for us to extend that to others in other countries.

1:18:20.1 SB: Now, whether it's possible that we do that soon enough to essentially minimize the risk of warfare and also economic disasters in parts of the world, it's hard to say. But I think we have that capacity. I worry more about our capacity to feel the same way about future generations. That's because, of course, we say as well, can't you imagine your grandchildren and your great-grandchildren, but yes, but we're talking about a very long future when we talk about climate change and the need to preserve a livable planet. But I think there generally is good news in the sense that if you go back to where economics was 30, 40 years ago, we were still back in the dark old days of homo economicus, economic man, the one who was really smart and selfish.

[laughter]

1:19:19.4 SB: And I don't think anyone believes that anymore. Not even economists don't believe it. And I even think among biologists, there is an interest in the conditions under which a species may become even genetically predisposed to care. Now, if we can care about someone in Bangladesh or someone in Norway, distant place, of course, we can also... I care about somebody who may live 200 years from now, but I think it's a little harder to imagine that, and I think we're gonna have to work very hard to achieve that.

1:19:53.4 SC: But being dumber but nicer is at least one step in the right direction. I have to agree. It sounds good to me. So Sam Bowles, thanks so much for being on the Mindscape Podcast.

1:20:01.8 SB: Okay.

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