Homo Economicus

Evonomics – How to Destroy Neoliberalism: Kill ‘Homo Economicus’

Some great ideas in this
“The last 40 years of research across multiple scientific disciplines has proven, with certainty, that homo economicus does not exist. Outside of economic models, this is simply not how real humans behave. Rather, Homo sapiens have evolved to be other-regarding, reciprocal, heuristic, and intuitive moral creatures. We can be selfish, yes—even cruel. But it is our highly evolved prosocial nature—our innate facility for cooperation, not competition—that has enabled our species to dominate the planet, and to build such an extraordinary—and extraordinarily complex—quality of life. Pro-sociality is our economic super power.”

“Viewed through this prosocial lens, we can see that the highly specialized division of labor that characterizes our modern economy was not made possible by market capitalism. Rather, market capitalism was made possible by our fundamentally prosocial facility for cooperation, which is all the division of labor really is.”

“I’d like to close by offering four simple heuristics to guide your own actions and activism:
Heuristic number one: Capitalism is self-organizing, but not self-regulating.”

“heuristic number two: True capitalism is not shareholder capitalism.”

“Thus, the true purpose of the corporation is to build great products for customers, provide good jobs for employees, provide a fair return to shareholders and to make their communities stronger—in coequal measure.”
[Maybe – but deeper changes make it more complex.]

“Heuristic Three: Capitalism is effective, but not efficient.”

“heuristic number four: True capitalists are moral capitalists.”

This seems to largely be a great piece, as far as it goes.

Most of it seems to be a very useful approximation to the reality we currently find ourselves in.

One bit I don’t align so strongly with is:
“Capitalism is the greatest problem-solving social technology ever invented.”

This one I take issue with.

It was, arguably, a useful approximation to an optimal solution when most things were genuinely scarce, and when most computation required the use of human intellect.

Neither of those conditions currently hold.

The value measured in markets is only a useful approximation to human value more generally when things are genuinely scarce.
Now that we can fully automate the production of a large and exponentially increasing class of goods and services, that is not the case any longer.

We need to go much deeper.

It seems beyond any shadow of reasonable doubt that what we each experience as reality is a subconsciously created model of reality that is vastly more simple than the thing it models.

Reality seems to be not only more complex than we appreciate, but to be more complex than we or anything else can appreciate, ever, even should we live the rest of eternity with exponentially increasing computational abilities.

And we all have to exist in it, so we must all make our simplistic models, and we do so with the biological and cultural and conceptual tools at our disposal.

We each have to accept our own fallibility, our own propensity for error, without letting that reality set off some sort of anxiety or panic that prevents us from acting. And that can be far from a trivial problem once you start getting a few levels away from the cultural norms.

I say that capitalism is fundamentally broken by automation, and we need to be seriously looking for what comes next, and at managing the transition.

Anything less than that seems to be a high probability path to sharing the fate of most species that have existed over deep time (extinction).

When you look seriously at the geological record, very few species get to survive long term.

If we want to be in the very select group that does, then we need to be able to go beyond the bounds of simplifications that served our ancestors well, and accept that we are on a permanent journey of exploration of novel territories.

We need to learn all the lessons of our past, but not be bound by the heuristics that worked in that past. We need to be able to see them as the contextually useful heuristics that they were, and to learn the lessons embodied in the heuristic, to generalise it, and bring it to our future as a possibility, not as a Truth.

We need to accept the heuristic nature of everything that passes for knowledge of reality, and take an approach to the future that is simultaneously humble, cooperative, accepting, forgiving, brave, curious, cautious, confident and adventurous. That is not a simple set of things to balance successfully, and it does seem to be what reality demands of us.

[followed by – different sub thread – reply to Rory Short]

Hi Rory,

To a degree I align with what you say, but it’s what you don’t say that is most important.

Yes, exchange systems work when the exchanges are voluntary, and that requires that all participants have their non-voluntary needs met.
If one party to the exchange is simply trying to survive, then that introduces an asymmetry that is fundamentally destabilising.

The other aspect of this is the ability of people to deliver value in our exponentially changing technological present.
Our ability to automate processes is increasing exponentially, and the cost of such automation is decreasing exponentially, meaning that many people can no longer deliver enough value from their labour to even feed themselves, let alone house themselves or have a reasonable freedom to exercise their creative abilities.

As someone who started programming computers over 45 years ago, and who has owned and operated a software company for over 30 years, I have some practical experience (as well as theoretical knowledge) in these matters.

In this environment, of rapidly expanding automation of both computational complexity and physical productivity, any system that does not deliver a reasonably high basic level of income to everyone fails to create the requisit condition of “voluntary exchange”.

If basic needs are not met, then an exchange is not voluntary, it is compelled by necessity.

The idea of an “atom of wealth” needs to be explored more deeply also.

What is it?

It cannot simply relate to things required for human existence, because we all require air to breath, yet air has no economic value.

The atom of wealth you write of relates to some function of human need multiplied by some function of perceived scarcity.
Many of the laws currently in force (like intellectual property, much of qualifications, most of “health and safety”) are there primarily to create a scarcity in a market system and thereby retain some sort of value (which would disappear without them).

Wealth measured in markets has no direct relationship to its value to humans, or its cost on the environment, but is always multiplied by some function of scarcity, and that scarcity function has to be non-zero for there to be value.

This is the fundamental problem with our current definition of money.
Using markets and exchange to measure it means it must have scarcity present as a dominant factor.
In such a system of value, universal automation that delivers universal abundance to everyone has no value – actually has a negative value – as it destroys all scarcity related value.

Historically, when most things were genuinely scarce, a reasonable case could be made that market value was a reasonable proxy for human value. That case can no longer be made in our technological present.

Creating a Universal Basic Income (UBI) that gives everyone a high basic standard of living (water, food, shelter, health, education, communication, transport, and some reasonable level of options above that) is actually required if we are to avoid complete systems failure.

The double exponential of improvement in price performance of computation has been steady for over 120 years. My IQ is over 4 sigma high, and that will not have enough value alone to feed me in another 12 years – based on current computational and energy trends.

This is fundamentally different from anything that has ever happened in human history.

It requires very close examination of the implicit assumptions present that few have ever bothered to consider deeply.

It is solvable, but not by a “business as usual” approach.

This is different, and requires new levels of cooperation and openness.

The sorts of deceit that underpin our current systems cannot be stabilised into the future, it is a mathematical impossibility. There is too much computation present, nothing so fundamental can stay hidden for long, ever.

[followed by]

Hi Rory,

We seem to agree about quite a bit, yet still have some fundamental differences.

I don’t see UBI as any sort of solution, I see it only as a useful transition strategy.

There is certainly a sense in which it makes sense to focus attention on those things that are scarce, and to improve their abundance (or develop alternatives). That aspect is great about markets.

The problem with markets, is that they do not and cannot value those things that are present in abundance, and are necessary, and thus they tend to create conditions that destroy universal abundance, until it reaches some sort of level of scarcity that creates the greatest economic activity.
That is not actually healthy when it comes to things that are essential for survival (like air, water, food, health, education, etc).
Those things need to be universally abundant (and can be).

The other fundamental issue, is that fully automated systems can deliver universal abundance of a large and growing set of goods and services.
That should be a great things for people who need those goods and services, but it is a bad thing for the economic system.

I agree that charlatans are a problem, and they are a problem easily solvable in today’s world by having publicly trusted databases of treatment and reported efficacy.

When you look at the details of how people actually learn in complex systems, most learning is done at the subconscious level by our neural nets. The training systems we have are a very poor system for most people. Most people learn best by actually engaging in things that interest them. Most qualification systems are justified in the name of public benefit, but if you actually look at the systemic benefits closely, they tend to flow much more strongly to the professional associations that were the greatest political lobby for the formation of those laws.
In my 40+ years of political experience in New Zealand, that has been my first hand observation here, and I have noted similar activity in all other nations I have looked at.

Laws tend to benefit minorities, even if the public rhetoric about their creation was about public benefits.

And we certainly have many problems that need to be addressed, that have no easy economic way of being addressed (like pollution at many levels).

I see many levels of benefit in free markets that von Hayek and others have identified – particularly in distributed governance, distributed decision making, distribute risk mitigation; and the changing computational environment is fundamentally changing all of those.

Most people have very low resolution models of the complexity of the systems that we are and within which we exist.
For many the resolution is so low that it comes down to a simple binary (good/bad or right/wrong).
The systems are vastly more complex and subtle than that – all levels.

We are pushing the biophysical systems within which we exist towards a series of very complex tipping points.
There is no simple economic response possible to such complexity.

We have to go beyond economics, to look at and value highly all the many levels of abundance that are essential for our survival and the reasonable expression of freedom.
Markets simply cannot do that.
They are anathema to that!

And I really value many of the complex distributed functions that markets currently perform.
I also value many of the important social and network functions that markets perform (they are very complex, and do a lot that is very valuable); and they also do a lot that is, in the context of our exponentially expanding computational ability, creating existential level risk.

So UBI can buy us some time to develop real solutions, and that is all it can do. It is not, in and of itself, a real solution to the extremely complex issues pointed to above.

In the interests of individual life and individual liberty, and their responsible expression in social and ecological contexts, we must do better – soon!

—-

Hi Rory,

There is one other element I meant to address – the desert island example.

Agree that if we put a person and money on a desert island – it is of no use.

However, if we put a person, and a fully automated machine capable of using sunlight (for energy) and local rock/sand (as raw material) to produce a vast (and expanding) array of goods and services; then the situation is very different.

Machines like that, that deliver universal abundance in practice, have no economic value, yet huge human value – and your desert island example beautifully illustrates the profound difference.

And I agree that money has many socially useful functions, but we really can do much better when it comes to the delivery of essential goods and services.

About Ted Howard NZ

Seems like I might be a cancer survivor. Thinking about the systemic incentives within the world we find ourselves in, and how we might adjust them to provide an environment that supports everyone (no exceptions) - see www.tedhowardnz.com/money
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