The Death of Self-Interest Fundamentalism

Have you noticed that a lot of people seem
to think that appeals to self-interest lead to a moral and just society?

No, I'm not merely talking about economists. Self-interest
evangelicals have been spreading the good news for decades in public
policy programs, political science departments, and financial
institutions too. Converts can be found in environmental organizations
that tell us we'll save on our energy bills if only we change those
light bulbs. And blind zealots run polling companies that deploy the
doctrine of self-oriented rationalism when they tell us that the
preferences of individuals exist in a meaningful way to be measured --
with nary an inkling that the way polls are conducted might influence
how people respond.

Is self-interest fundamentalism dying? Cracks are certainly
spreading through its foundations, as I'll discuss in a moment. The
more important questions we need to grapple with are whether it
should die away and, if so, with what should we replace it?
Consider your answers to these questions. I'll share some of mine
below.

Yes, rationalist fundamentalism still has a stranglehold on
society. It's meteoric rise to dominance goes all the way back to the
nuclear arms race that poured truckloads of cash from public coffers
into defense contractor piggy banks through the "game" of mutually
assured destruction during the Cold War. We saw it clearly during the
Vietnam War when "body counts" laid the foundation for an entire
generation of video game players to score points by killing more
enemies -- never mind that we were slaughtering innumerable civilians.

And, of course, it was only a matter of time before schools fell
under the knife of test-based bookkeeping to "hold students
accountable" to rationalist ideals of performance measurement -- at the
expense of actual learning. A web of trans-national organizations have
come into existence -- the World Trade Organization, International
Monetary Fund, and World Bank being the best known -- that push the
ideology of self-interest into the center stage of world affairs.

Theory of Self-Interest: A Creation Story

How could an impoverished model of
human-as-self-focused-calculating-machine have ever come into
being? A
common myth is that self-interest theories rose out of behavioral
studies conducted by psychologists. A nice bedtime story perhaps, but
it isn't true. Would you believe me if I told you the behavioral model
underlying the global economy came, not from the human sciences, but
from mathematics?

Back in the 1940's and 50's, a research center was created to explore
fundamental issues of concern to the Air Force. This Research And Development
institute was aptly named the RAND Corporation. Within the high
security walls of this military think tank, mathematicians developed
abstract principles for nuclear strategy during the Cold War. In the
midst of this particular, historically contingent environment -- and
motivated by concerns of defense contractors in the air combat arena --
the notion of self-interested rational action was born. Proof positive
that the most bizarre stories are found in the non-fiction section of
your local library.

(If you'd like to read the full story, check out S.M. Amadae's Rationalizing Capitalist Democracy: The Cold War
Origins of Rational Choice Liberalism.)

So the birth place of modern market fundamentalism, in the guise of
"rational choice theory", was the military think tank that gave us the
disastrous arms race. Untested and theoretical, it quickly spread
throughout the highest levels of government during the tenure of Robert
McNamara at the Department of Defense, then whipped through the
economics departments of many prominent universities, spurred the
creation of public policy analysis as a "scientific" field, and
undergirded today's global institutions of economic governance.

But things are starting to change.

Looking Forward: 21st Century Institutions

The first experimental studies of rational choice theory by
behavioral scientists, principally Daniel Kahneman and Amos Tversky,
showed that a foundational premise of the theory was wrong. (As a
technical side point, they showed that preferences can be reversed by
merely framing a question differently.) The "prospect
theory"
that arose through these experiments became the bedrock of a new field
-- behavioral economics -- that has grown in prominence since its birth
in the 1970's.

Throughout the subsequent decades, researchers found more damning
evidence against self-interest. Paul Slovic and his collaborators at Decision
Research
have systematically explored how risk perception influences our
decisions in many ways that fly in the face of rational choice theory.
Human beings depend on emotional cues to make decisions. And many of
these cues are associative rather than based on inferences -- thus they
do not fit the paradigm of rationality presumed by rational choice
theory. In fact, human beings cannot manage risk -- especially in the
highly complex social situations we often find ourselves in -- when
regions of our brains that process emotional information are damaged.
Antonio Damasio sealed this argument in his 1994 book, Descartes' Error: Emotion, Reason and the Human Brain.

A new view of human reason is on the rise in academia. Unlike its
predecessor, the new paradigm is profoundly based in the workings of
our bodies. This "embodiment" view incorporates insights from computer
science, linguistics, neuroscience, philosophy, psychology, and
robotics. Its adherents include people like Gilles
Fauconnier, Raymond
Gibbs, Mark Johnson, George
Lakoff, Eleanor Rosch, Mark Turner, and Drew Westen.

Arising with this new view is a profound shift in how we understand
human thought and behavior. Just as the institutions of yesteryear
grew out of the old paradigm, research in the cognitive sciences
beckons us to think differently about the institutions of tomorrow.

This is where I do my work.

I've seen how methods like cost-benefit analysis fail utterly when
applied to environmental challenges. Future costs are weighed against
current gains in a false choice between short-term profit
seeking and long-term sustainability. I've also watched as public
policies built on outdated performance measures undermine that which
they are meant to improve. A key example is the educational paradigm
that gave us No Child Left Behind -- high-stakes testing -- which flies in the face
of what our teachers know about real learning. Any effort to treat
moral pursuits -- like making the world safe for future generations or
educating a child -- will demand broader measures of success than
numbers alone can describe.

In a previous article, I described some things we'll
need our institutions to do in the 21st Century:

In a world based on this new perspective, things work
very differently:

• Citizens recognize fear-inducing news reports intended to
  inflate
  manufactured risks and hide awareness of genuine threats, thereby
  reducing the effectiveness of these manipulative tactics.
• Journalists
  understand the consequences of how facts are presented
  and beliefs are promoted in the structure of news reporting, resulting
  in coverage that enhances-rather than erodes-the democratic process.
• Policy-makers
  abandon contrived and faulty presumptions about
  "economic rational actors" and instead craft solutions to societal
  challenges that improve the lives of real people through deeper
  insights into the human condition, culminating in robust policies that
  stand the test of time.
• Advocates articulate clear and
  compelling calls to action that
  resonate deeply with the values of the citizenry, thereby promoting
  greater civic engagement and community empowerment.

What's more, we'll need to build a new foundation for our economic
institutions. A recent example shows that the old approach is
inadequate. Amartya Sen and Joseph Stiglitz, two Nobel prize winning
economists, led a commission to improve upon the Gross Domestic Product
(GDP) when measuring economic well-being. They spent most of the 79
pages of their personal reflections
describing a long history of criticisms that show GDP to be grossly
inadequate. Yet, very little of substance was offered to take its
place.

What does it mean that a group of leading economists don't know how
to measure economic progress? In the words of Sen, when talking about the limits of
rational choice theory:

It seems easy to accept that rationality involves many
features that cannot be summarized in terms of some straightforward
formula, such as binary consistency. But this recognition does not
immediately lead to alternative characterizations that might be
regarded as satisfactory, even though the inadequacies of the
traditional assumptions of rational behavior standardly used in
economic theory have become hard to deny.

This tells us that many economists recognize the limitations of
rational choice, but they don't have ready-made alternatives. Yet the
old tools are well-known and ready for use so they pick them up again
and again. They are looking for something better, but haven't found it
yet.

I'd like to offer that the alternatives are starting to emerge in
the unexpected corner of academia where researchers study the human
mind. New tools cannot be found so long as the old paradigm of human
nature remains. My colleagues and I are in the process of developing
these new tools. What does our paradigm look like? Here are the key
features:

• Human beings are profoundly social. We are wired
  for empathy and we learn how to act in the world through interactions
  with other human beings and the natural world;
• Human reason
  is embodied. We think and act through
  the interplay of brain, body, and environment. Emotions are vital to
  effective decision-making. And our understandings are shaped by the
  contexts we operate in;
• Human thought is evaluative. We
  interpret the
  world through core values, our sense of identity, and conceptual models
  for how we believe the world works. There's no such thing as "an
  objective world" when dealing with social and political issues because
  we a co-creators of the realities we experience.

Each of these features tells us something about how a human-based
economy should work. It should recognize the value of community in our
dealings with one another. It should be designed around our biological
needs for survival in a world where things like potable water and
fossil fuels are becoming limited and the planetary climate system has
been disrupted in a manner that threatens us all. And it should
acknowledge that interpretations of human well-being are perpetually
contested by competing perspectives.

Yes, it is time to let self-interest fundamentalism go the way of
monarchy and feudalism. It may not go silently into the night, but the
end is nigh. Pretty soon we will have laid the foundation for a
sustainable future -- both ecologically and financially. In order to do
so, we'll have to acknowledge how human beings actually are
instead of how theorists engaged in military strategy presumed us to be
60 years ago.

This is a huge undertaking. It won't be completed overnight. Nor
will it be the sole effort of a few visionary thinkers. But it must
start somewhere. My suggestion is that you'll see it starting to take
shape at the boundary between cognitive science and the world of expert
practitioners at all levels of governance.

Look there and you'll probably find me too.