“It is easier to imagine the end of the world than to imagine the end of capitalism.”
-- Frederic Jameson, quoted by Kim Stanley Robinson in “The Ministry for the Future”
Broadly speaking, capitalism is a system for enabling collaboration among distributed economic actors using independent ownership and competitive markets to balance the needs and desires of individuals for self-advancement with that of society for material progress.
I just made that up. I’m sure there are lots of other definitions I could use that involve the distinctions between capital and labor, modes of production and some such. I don’t want to talk about capitalism at that level. I want to talk about capitalism as a social system that relies on markets to optimize distribution of goods and services and depends on independent ownership as incentive to create those goods and services to begin with.
These two forces, balanced against each other, have created the most productive economic engine in the history of the planet. In fact, these forces have created an engine of human productivity so vast and complicated that we have lost control of that system and even have forgotten that we are the system’s creators and are responsible for managing it, even if we don’t exactly know how.
This is one aspect of what Frederic Jameson meant in the above quote. Judging from our current behavior, it is far easier for us to continue on our current economic path which plunges right over several cliffs -- climate disaster, refugee crises, social disintegration, and authoritarianism – than it is to do the work required to change direction. I feel it in myself. I am worried about the climate and unsustainability and the world’s poor, but how much am I willing to change my behavior? Sadly, not very much.
Can Wisdom bind Power?
As I have written elsewhere, our world today is playing out a giant version of a game-theoretic model called “The Prisoners Dilemma.” For those unfamiliar, a quick review: two prisoners are accused of a crime, if they cooperate and stick to their story they are both better off in the long term. If they defect and blame the other, the defector gets better treatment in the short term. Decades of exploration of this thought experiment reveal that many complex situations boil down to this fundamental dilemma: Cooperation is the winner in the long term, but defection has short-term benefits.
Hence, in the long term, Russia wins by joining the collaboration known as the world economy. But in the short term, Putin and his cronies can reap huge benefits by plundering the economy, annexing Crimea, and invading Ukraine. Similarly, in the long term, Donald Trump could be considered a great American president by bringing us together to solve our problems collectively, but in the short term, he wins by dividing us and promising to be “retribution” for his followers. In the long term, businesses win by creating great quality and value for customers, but in the short term, price gouging and share buybacks pay handsomely. The prisoners’ dilemma is everywhere.
Individually, each of us has a similar choice, we can devote ourselves to communal progress or we can join the self-maximizing game in progress and accumulate what we can while we can. One of the corollaries of the Prisoners Dilemma is that if everyone around you is defecting, then defection is the only rational choice. In reality, each of us plays many different roles in many different games every day and our choices in our families and communities may strongly favor cooperation. Still the larger game continues around us.
This is the challenge of systems that are built on self-maximization. We may feel that our choices to buy the cheaper import at Wal-mart or drive a gas-guzzler or minimize our tax bill don’t matter that much, and in the context of the systems we have built they are perfectly rational and legal and, by most lights, ethical. Except that they roll up to poverty, oppression, environment degradation and war at the global level.
Global. That’s the problem. In the past, if it got too bad, some humans would always up and move and set up elsewhere where the rules were better or they could make their own rules. We don’t have that option any longer.
Collaboration Predates Competition
Recent research has begun to uncover a previously unrecognized level of cooperation on the forest floor. Trees, it seems, collaborate, sending messages and resources to each other through an underground network. And not just to their fellow elms, which would be expected in our popular version of species competition and “survival of the fittest,” but across species, in ways that make the entire ecosystem stronger. Similarly, ecosystems with their apex predators intact are significantly more productive than those without. Even in its most competitive, “red of tooth and claw” form, Nature is a cooperative enterprise. Every ecosystem, from fungus to apex predators and prey, is a collaboration.
In the 21st century, we are far more like a stand of trees, unable to pick up and move, than we are like our former human selves. And, like a stand of trees, it is time to rediscover that our “roots” of collaboration predate the invention of competition by millennia – eons, in fact. Collaboration, according to Yuval Noah Harari in “Sapiens” was the invention responsible for the rise of humans from “an animal of no significance” to our current position astride the planet – a powerful but poorly equipped steward.
Changing the Rules
In the process of this rise, we created our own prisoner’s dilemma, where the obviously optimal path for all, collaboration, is fragile and easily disrupted. But we made the rules for this game, especially the assumption that defection always works out better in the short term for the defector and that it is human nature to want to defect and self-maximize.
Who says? Where is that written? I have become convinced that we have been sold a story that all we we are capable of is acting as self-maximizing machines. On the contrary, I am now quite certain that the “default mode” of human behavior is collaborative and our deepest desire is to make a contribution to the human endeavor. Our systems that assume otherwise drive us to behavior that is ultimately destructive, unsatisfying and alienating from each other and ourselves.
So, what would a different system look like? I have ideas and that is what this substack is about – to test those ideas with my fellow humans and see if we can change the world. Since collaboration is the theme, your ideas are needed and welcome. Join in.
Excellent name: Reinventing Capitalism. Good “pillars of change”: devolving power to lower levels; treating communities more than individuals as key agents of progress; developing an ethos of freedom and responsibility.
This overlaps strongly with my own interests and efforts.
One constant concern I have is how best to define and distinguish between capitalism on one hand, and market system on the other. Many pundits seem to conflate the two: in my view, they are different.
Capitalism and the market system should go hand in hand, with dynamics that are open, free, and fair. That’s when matters work well for society as a whole. But there is also a kind of capitalism, and far too many capitalists these days, that aim to distort, rig, and corrupt the markets which interest them. The resemble those plundering prisoners of your post. Not good for society as a whole.
Which raises questions about proper limits and balances among all realms and sectors of our society: civil society and its social sectors, government and its public sectors, and the market economy and its private sectors. At this point, America looks increasingly off- and out-of-balance, in trouble across all realms and sectors. All in part because capitalism itself seems broken, going in excessive directions. Lord Acton once said that “Absolute power corrupts absolutely”; I’m inclined to add that absolute capitalism can corrupt absolutely too.
The market form of organization is fundamental for the long-term evolution of complex societies. Getting the market form right is crucial for a society’s evolvability. America was the first to do this well, with solid assistance from “democratic capitalism.” But I’m worried about the dysfunctional domestic dynamics of today’s “late capitalism.” I’m also worried that the global struggle between democracies and autocracies is, at a deeper level, a struggle between those societies that are disposed to get the market form right, and those (a majority?) that are not yet inclined to do so.
I agree: Reinventing capitalism is essential. Onward we go.
I am in directional agreement with your project, so offer this nit-pick not to undermine it but in hopes that clarifying the mechanics of the problem may help illuminate solutions. (Also, because I like to pick nits.)
In the classic Prisoner's Dilemma, there is no concept of short-term versus long-term. This game-theoretic thought experiment has a single, one-time pay-off matrix in which each player has an incentive to defect because if one player snitches on the other, that player will go free while the other player will get the maximum jail time. If both players stay silent, each will get a light sentence for the lesser crime on which they were actually arrested. But knowing that the other player has that incentive to snitch, when both players rat each other out (defect), they both get a harsher sentence than if they had both stayed silent (cooperated), though not as long as if only the other player snitched. So, it's "rational" to defect knowing that the other player has an incentive to do so to avoid the maximum sentence, but it's "superrational" to cooperate knowing the whole payoff matrix, which requires that one can squelch reverberant doubt and trust the other player to be "superrational".
I think the short-term versus long-term dynamic comes in only with the iterated prisoner's dilemma, when cooperative strategies can compete against strategies of defection in repeated prisoner's dilemma interactions between the same agents and benefits and losses accrue across these interactions. The work of Axelrod (*The Evolution of Cooperation*) and others in gaming this out demonstrates that pure cooperation is not the dominant equilibrium. The evolutionarily stable solution is something like "tit-for-tat": Start by cooperating, but punishing defection with defection so that the defectors can't keep accumulating winnings and become dominant.
What I think this understanding points to in terms of solutions is the following:
1. Avoid prisoner's dilemmas when possible.
2. Find ways to build trust when one-off prisoner's dilemmas are inevitable to promote the superrational choice.
3. Promote iterated prisoner's dilemmas when the dynamic comes up to make the possibility of future interactions with the same agent factor into the calculus of the current round.
4. Put measures in place to punish defectors to keep them from destroying the cooperative equilibrium.