Does altruism have a place in modern economics?

Tuesday, January 27th, 2015
Where do kindness and altruism come from? Nature or nurture, culture or evolution?

These are the questions that George Price sought to answer, and in the process became one of the most respected evolutionary biologists of the 20th century. I’ve been reading about Price and his life story in a compelling book, part biography, part scientific history by Oren Harman: The Price of Altruism.

Price’s life is fascinating. He did not lead a happy life, struggled with his purpose in life, was plagued by health problems and depression. Yet this did not stop him being a truly insightful and original thinker, and in the latter years a true samaritan for the downtrodden, before committing suicide, alone in a cold London squat. The man was quickly forgotten, but his greatest contribution to science is enduring:

In a nutshell, Price succeeded, armed with great intelligence and curiosity, yet with no training in evolutionary biology, to solve one of the great moral riddles of our time: Is altruism part of our DNA and therefore selected over the history of life on earth as a characteristic that would promote the survival of a species, or are we genetically neutral towards altruism, and is our propensity to do good – and evil – purely a result of culture and environment.

George Price, building on the work of great scientists before him and in particular Bill Hamilton,  devised a mathematical formula that showed that cooperation and kindness would evolve not just within families (kin selection) but also within groups (group selection) as long as there was an expectation of return. However, this return did not need to apply to the individual. In other words, a ‘fitter’ species – to use Darwin’s terminology – is likely to evolve if individuals within that species show altruism towards others, as long as this is returned to the species as a whole.

In other words, altruism has an equal mathematical chance  in the natural process selection than selfishness. Survival of the fittest does allow for altruism.

This was surprising to me. I’d always assumed that the dynamics of natural selection applied to physical properties, not mental ones. These findings led to 2 further questions:

  1. Does it matter that altruism is driven by group selection, i.e. enlightened self-interest?
    Many writers since Price’s principle was first published – and Price himself – believed that altruism should be ‘pure’ and the thought that kindness was driven by a genetic need for survival was a depressing insight into the selfish nature of the species, including the human race.
    I’ve always been a pragmatist when it comes to these things. What matters is the outcome, not the rationale. There is nothing wrong with doing good deeds because it helps us, as long as the ultimate outcome is that more good gets done. For instance, there is nothing wrong with companies embracing sustainability because they believe there is a strong business case supporting it. The outcome remains the same: more sustainable outcomes and a more sustainable economy. Which leads to the second question:
  2. Do these insights have anything to teach us about how we achieve a better economy, an economy that works?
    Shortly before his untimely death, Price had expressed a wish to turn his attention to the relevance of altruism in economic thought. Sadly, he died before doing so, but I can’t help but wonder what he would have thought of our current economic paradigm. Many people have described neo-classical economics as a form of Darwinian economics, where only the strongest survive through the judgement of the markets and that optimum outcomes for society will be achieved as a result. It is interesting to note that Adam Smith, the spiritual father of capitalism was a proponent of enlightened self-interest, believe that economic actors are more likely to succeed if they meet the needs of the many – and acknowledging that some level of government intervention is needed to maintain a strong society.
    It is only since Milton Friedman and the Chicago school that a genuine ‘survival of the fittest’ economic model has taken hold, and has become the dominant political and cultural meme of our time. Altruism and collaboration, have a very limited role. We live in a ‘Me’ society.
    But if we apply Price’s theory to economics, we realise that groups (i.e. economies) are more likely to succeed if people act in accordance to the needs of the many, rather than the needs of the few. The evidence from both economic and social sciences supports this:

Thomas Pikkety demonstrated in ‘Capital in the 21st Century’ that without some form of regulation inequality within society will increase as wealth grows faster than income.

Wilkinson and Pickett have shown in ‘The Spirit Level’ that unequal societies are less likely to produce desirable outcomes over time for both rich and poor.

Enlightened self-interest does seem to work at this level too. The difference is that time is on the side of evolution. It takes thousands, if not millions of years for new behaviours to become part of a species’ DNA.

Time is not on the side of healthy economies. We need to act fast to avoid mass extinction or the consequences of runaway climate change. This was a red thread at this year’s World Economic Forum, with many world leaders calling for action. Yet within our ‘Me’ society, nobody seems willing to take the first bold step. Something has to shift before the Paris Climate summit, and maybe George Price’s most enduring legacy will be to help us realise that we’re all better off in a ‘We’ society.

Not bad for an obscure evolutionary biologist.

One thought on “Does altruism have a place in modern economics?” 4 thoughts on “Does altruism have a place in modern economics?”4

  1. Jeff Mowatt says:

    Yes, it does have something to teach.

    My late colleague was influenced by those like Erich Fromm, Carl Rogers and Rollo May in his perception of an economy that puts people. first. Alluding to the primary focus of his efforts, he wrote this several years before his death on mission:

    “Allowing that some people do not matter, as things are turning out, allows that other people do not matter and those cracks are widening to swallow up more and more people. Social enterprise is the first concerted effort in the Information Age to at least attempt to rectify that problem, if only because letting it get worse and worse threatens more and more of us. Growing numbers of people are coming to understand that “them” might equal “me.” Call it compassion, or call it enlightened and increasingly impassioned self-interest. Either way, we are all in this together, and we will each have to decide for ourselves what it means to ignore someone to death, or not.”

    His argument for a people-centered form of economics began with a critique of neoliberal economics and debt creation which concluded:

    ‘It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.’

    It was his work on A ‘Marshall Plan’ for Ukraine that he spelt out for the last time:

    “This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way. “

    1. It is indeed very true that we are all in it together – and ‘we’ includes actors – such as governments, corporations and non-profits and also the beneficiaries – the rich and powerful and the poor and marginalized. These conversations always remind me of the Chief Seattle’s Quote: Humankind has not woven the web of life. We are but one thread within it. Whatever we do to the web, we do to ourselves. All things are bound together. All things connect.

      As mentioned in your post, it is indeed encouraging to see action by different groups to change existing business practices. While many of these maybe at initial stages or not perfect, they definitely offer hope. I also see it necessary for different sectors to learn from each other, especially learn to talk each other’s language, so that it becomes easier to convince different groups to get onto the same boat. Currently, a siloed approach to sustainability is a serious impediment.

  2. This is a very interesting piece which juxtaposes research on altruism by evolutionary biologists such as George Price with the economic theories proposed by neo-classical economists to examine the subject of sustainable economies.

    George Price proved mathematically that qualities of cooperation and kindness could evolve within groups, and not just individuals, as long as there was a prospect of return to the group. This is, in fact, expected to lead to the evolution of groups that are ‘fitter’ as per Charles Darwin’s terminology, i.e. groups that can adapt better themselves to the current environment.

    This concept of “enlightened self-interest” is indeed very relevant in today’s context, given that many corporations are engaging in sustainable business practices, not because they are good for the people and the environment, but mainly because they are in the interests of the company. Companies are becoming increasing aware of the risks related to resource scarcity, rising costs and reputation and are therefore realizing the need for their business to build safeguards against these risks. Organizations which are adaptable to these changes and exploring new business practices are essentially setting themselves up for sustainability in the long term. Today, adopting sustainable business practices with respect resource use, fair labor and employee engagement is not just a matter of choice, but increasingly becoming an imperative for organizations. Very often, companies of a particular sector are seen to be working together to find solutions to challenges they face as a sector, thereby again seeking to further their interests as a group. However, since corporations have a large resource footprint, their practices often benefit the environment and communities and therefore have social and environmental impact as well, apart from just driving profits for companies.

    To examine how the altruism theory fits in with building sustainable economies, the author refers to the ideologies of key economists. The author refers to Adam Smith as the economist who advocated “enlightened self-interest” and who believed that economic actors are more likely to succeed if they meet the needs of the many. This indeed lines up with the trend that is leading sustainable business practices, as mentioned above. By doing so, the author seems to acknowledge that Adam Smith’s ideology was slightly different from that of other neo-classical economists who chiefly rely on the market to achieve optimal outcomes in society, even though Adam Smith is often viewed as the father of modern capitalism.

    On the other hand, he refers to Milton Friedman as the economist who shunned the need for any additional social responsibility by corporations, other than the focusing on increasing profits and delivering value to a company’s shareholders. The author characterizes him as a proponent of a ‘me’ society where altruism and collaboration have little space. He further highlights that given the growing challenges of climate change and social inequality, Milton Friedman’s theory will not hold good and that society would need to graduate to more collective, ‘we’ based approaches where corporations will have a significant role to play.

    I find the references to both these economists relevant, more so since the author highlights the subtle differences in their ideologies. Very often, both these economists are clubbed together as having identical capitalist views, and are often quoted as the ‘textbook’ reasons for corporations not shouldering the challenge of creating more sustainable economies. However, it has been often pointed out in economic literature that Adam Smith also extensively believed in the altruistic impulses of human beings to help each other and their communities. His ideas have been published in his book ‘The Theory of Moral Sentiments’ (1759), which in fact pre-dates his famous book ‘The Wealth of Nations’ (1776).

    It probably would be useful if people explored further the views held by Adam Smith on altruism and its parallels/differences with the altruism theory put forward by the biologists to build a sharper contrast against ideologies posed by Milton Friedman and similar thinkers.

  3. PS Vijayshankar says:

    The comment by Madhyama Subramanian adds a new dimension to this “engaging” discussion!! The issue of “self interest” (ever since the publication of the book by Richard Dawkins, called “The Selfish Gene”) versus altruism (differently conceived as “trust”, “mutuality”, “collaboration” and “love”) has been a topic of raging debate between economists and evolutionary biologists. It is still an ongoing debate but the broad conclusion, as enunciated by Price, is that altruism can be as much the basis of life as selfishness. And altruism need not be pure selflessness – it can be a commitment to the group and its survival needs. But the group, again, need not be defined just as “family” – which is ME by extension, but the whole social group that one is part of. It is clear that human beings would not have survived without co-operative effort to face the adversity and survive at any cost. Evolutionary biologists say that this behaviour has got encoded in the human gene over centuries and has now become part of our genetic make-up.

    Economics is still slowly waking up to these discoveries. As usual, the economists are constrained by their “received wisdom” of the neoclassical economics, which is individualist in orientation as well as method. Methodological individualism of NE is that it is incapable of analysing behaviour of a group and can only look at individual behaviour – whether in consumption, demand, supply, price determination or profit maximisation. Even when they talk of collective entities like “the firm”, they speak as if it is one person and look at the firm’s choice ignoring the possible conflicts within the unit in terms of their own choices. As shown by Arrow in his famous “impossibility theorem”, there is no possibility of aggregating individual preferences into a ranking of social preferences in a democracy – i.e., the social preference ranking cannot be established by putting together individual preferences even on the basis of voting and majority; it can be done only arbitrarily, by suppressing democracy through a dictatorship. The recent debate on land acquisition in India brings out this conflict between individual freedom and collective needs – for dams, canals, roads etc, for which private land may need to be acquired. Caught in the grips of this dilemma, neoclassical economists always believed that individuals are selfish and individual freedom necessarily involves competition and “survival of the fittest”. The new economics, arising by incorporating the insights from evolutionary biology, will show the way out of this impossibility theorem and that a truly “trusting society” is indeed possible even with the current genetic make-up of the human beings. .

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