Limitations of Money: Market Outsiders and Impersonal Systems

Something I have noticed in my own life recently is that I am less patient and less personable with random strangers in stores. My wife and I do most of our grocery shopping on the weekends, but typically each week we have a meal planned that will turn out much better if I pick up a single ingredient the day we cook that meal rather than four or five days ahead of time during our weekend shopping. This means that usually at least once a week (more if I forgot an important item) I am running to the store after work. During these trips I’m usually in a little hurry to pick up what I need, get through the afternoon rush hour traffic quickly, and make my way through the store and everyone else who is at the store after work to get home and start cooking. I know what I want at the store, where it is in the store, and I’m not really interested in chatting with a random person who I may never see again about the weather, local sports, or some peculiarity of the grocery store. Sometimes I feel bad about it, but I just don’t feel like engaging in personal chit-chat with the grocery store employees or other shoppers. I’m simply on a cold and heartless shopping mission.

My story reflects one of the limitations of money and markets. It enables trust between people and helps organize and order our lives, but it doesn’t really build community or relationships between people. This heartless impartiality of money is a fair critique and it is one of two primary critiques that Yuval Noah Harari presents against money in his book Sapiens. Harari isn’t denouncing money, but he is demonstrating that money and economics are an insufficient explanation for human global expansion and dominance. Humans live as a globally connected species, forming relationships and connections with people from Alaska to Japan to South Africa to England and back again. Money and modern economies helped us forge this global path, but there are things within the human experience that lie beyond the reach of money and the markets that currencies enable. To explain how we got to where we are today, we have to consider economics, but also look beyond money.

“Human communities and families,” Harari writes, “have always been based on beliefs in priceless things, such as honor, loyalty, morality, and love. These things lie outside the domain of the market.” There are certain things we cannot buy and sell, or at least if we do, we are aware that they are not exactly genuine. Purchasing honor, love, or loyalty is more like a quid pro quo rental agreement. I provide you with certain financial incentives and you signal a certain amount of honor, love, or loyalty back toward me. Like modern college football coaches, as soon as a better financial opportunity comes along, all the rhetoric around such values is out the window and all those values are instantly transferred to someone else. Humans don’t cooperate on large scales and build massive societies and institutions simply because someone payed a lot of people to do so. Something more intangible to human existence is necessary.

Markets and money don’t seem to be able to reach those intangibles. Money fosters cooperation and trust between people, but doesn’t necessarily get people to connect and relate to one an other or feel any sense of mutual respect and geniality between one another. My grocery store example demonstrates this. The store trusts that my plastic card will transfer sufficient digital numbers to the store in exchange for the steak that I am taking with me. But I don’t have any real loyalty or good will toward the store and it’s employees. Harari continues, “for although money builds universal trust between strangers, this trust is invested not in humans, communities, or sacred values, but in the money itself and in the impersonal systems that back it. We do not trust the stranger, or the next-door neighbor, we trust the coin they hold. If they run out of coins, we run out of trust.”

Money can break down barriers between groups of people. It can facility trade, cultural sharing, knowledge spread, and tolerance. But it isn’t enough for humans to be a globally peaceful and cooperative species. Money is off limits in some domains, as there are certain things that lie outside the realm of markets. Money doesn’t build meaningful relationships between people in a way that forms long lasting and deep trust and engagement between people. It seems to have been necessary for human global dominance, but insufficient to explain exactly how we have arrived at the modern world we inhabit today.

Why We Talk About Human Nature

Why We Talk About Human Nature

I entered a Master’s in Public Administration program at the University of Nevada in 2016. I started the same semester as the 2016 election of President Donald Trump. I was drawn toward public policy because I love science, because I have always wanted to better understand how people come to hold political beliefs, and because I thought that bringing my rational science-based mind to public policy would open doors and avenues for me that were desperately needed in the world of public administration and policy. What I learned, and what we have all learned since President Trump took office, is that politics is not about policy, public administration is not about the high minded ideals we say it is about, and rationality is not and cannot be at the heart of public policy. Instead, politics is about identity, public administration is about systems and structures that benefit those we decide to be deserving and punishing those who are deviant. Public policy isn’t rational, its about self-interest and individual and group preferences. And this connects to the title of this post. We talk about human nature, because how we can define, understand, and perceive human nature can help us rationalize why our self-interest is valuable in public policy, why one group should be favored over another, and why one system that rewards some people is preferable over another system that rewards other people.

 

In Daniel Kahneman’s book Thinking Fast and Slow, he writes, “policy is ultimately about people, what they want and what is best for them. Every policy question involves assumptions about human nature, in particular about the choices that people may make and the consequences of their choices for themselves and society.” The reason why we talk about human nature is because it serves as the foundation upon which all of our social systems and structures are built upon. All of our decisions are based in fundamental assumptions about what we want, what are inherently inclined to do, and how we will behave as individuals and as part of a collective. However, this discussion is complicated because what we consider to be human nature, is subject to bias, to misunderstandings, and motivated reasoning. Politics and public policy are not rational because we all live with narrow understandings of what we want human nature to mean.

 

Personally, I think our conceptions and ideas of human nature are generally too narrow and limiting. I am currently reading Yuval Noah Harari’s book Sapiens, and he makes a substantial effort to show the diversity and seeming randomness in the stories that humans have created over tens of thousands of years, and how humans have lived in incredibly different circumstances, with different beliefs, different cultures, and different lifestyles throughout time. It is a picture of human nature which doesn’t quite make the jump to arguing that there is no human nature, but argues that human nature is a far more broad topic than what we typically focus on. I think Harari is correct, but someone who wants questions to religion to be central to human nature, someone who wants capitalistic competition to be central to human nature, or someone who wants altruism to be a deep facet of human nature might disagree with Harari.

 

Ultimately, we argue over human nature because how we define human nature can influence who is a winner and who is a loser in our society. It can shape who we see as deserving and who we see as deviant. The way we frame human nature can structure the political systems we adopt, the leaders we favor, and the economic systems that will run most of our lives. The discussions about human nature appear to be scientific, but they are often biased and flawed, and in the end what we really care about is our personal self-interest, and in seeing our group advance, even at the expense of others. Politics is not rational, we have all learned in nearly four years of a Donald Trump Presidency, because we have different views of what the people want and what is best for them, and flawed understandings of human nature influence those views and the downstream political decisions that we make.

Transactional Politics

Jonathan Rauch argues that transactional politics is a sign of a well functioning political system in his book, Political Realism. In his eyes, transactional politics, or favor trading and an attitude of “I’ll support your policy here if you support my policy over there,” is key to how things actually get done in government. In his eyes, this mindset is not a dirty and evil nature of politics but more of a necessary ingredient to legislative functioning. Without transactional politics, coalitions cannot be built and finding support between legislators and across bills becomes nearly impossible. According to Rauch, steps that the United States has taken to reduce transactional politics have actually made governance more difficult, if not completely impossible.

 

Rauch writes, “Transactional politics is not always appropriate or effective, but a political system which is not reliably capable of it is a system in a state of critical failure.” As much as we don’t like to believe it, our legislators and elected officials are humans. They have the same motivations and drives that the rest of us have, and therefore need a little extra help in building coalitions and creating groups to support political agendas. I am currently reading The Elephant In The Brain by Kevin Simler and Robin Hanson, and the authors argue that the politics of coalition building is a necessary ingredient in human societies, and is literally one of the driving forces of human evolution that set us on a different course from the rest of the animal kingdom. If we take away a system that allows for trades and back-scratching, then we take away part of our human nature and we limit incentives for group bonding, cooperation, and legislative wheel greasing.

 

Transactional politics does look shady, and we would like our legislative motives to be pure rather than self-interested, or influenced by favors and favor repayments, or driven by the human desire to fit in with a group. Ultimately, however, stable political systems operate well when reacting to human nature in a more flexible manner. As long as the waste and excesses of transactional politics are small and can be generally viewed as serving the public interest, then transactional politics help create a stable system that is able to accomplish the will of the people. Abuse of the system and overtly political projects that violate the mirage of rational politics threaten the system and should be limited, but this is something that societies in the past have managed by grabbing the low hanging fruit of overt political waste or fraud. Without transactional politics however, we end up in a place where governance is impossible and the public becomes frustrated by entrenched ideology and political fighting. Coalitions become increasingly volatile as middle ground solutions are impossible to pursue, because coalitions cannot be built on trades and favors for legislative districts. When transactional politics is impossible, what becomes the main driving force of politics is not getting what you can from the political grab bag of goodies for your district, but instead is adherence to strict political and ideological values, making actual governance more challenging.

Human Nature

In his book Return on Character Fred Kiel addresses human nature and how it relates to business, success, and relationships.  Kiel focuses on basic moral behaviors and attributes that humans display, and he explains that while morality may manifest and be presented in different manners based on culture, there are some key moral ideas and principles that humans seem to show across the globe.  He bumps up agains the idea of a universal human nature bestowed upon us at birth versus the idea that culture and our nurturing shape what we describe as our nature and common behaviors.

 

Kiel quotes Steven Pinker who wrote in his book The Blank Slate: The Modern Denial of Human Nature to express his ideas of nature and how that impacts our lives in business, “Thus, while conflict is a human universal, so is conflict resolution. Together with all their nasty and brutish motives,  all people display a host of kinder gentler ones.” Kiel is suggesting that we have a set of common human behaviors that can be interpreted as human nature, and he is positing those behaviors in a semi positive light.  He uses the passage in his book to explain that human nature is complex and that modern action and behavior cannot simply be explained away as human nature, especially when we have contradicting behaviors that we all share and display.

 

The idea behind Return on Character is that companies that are very forward in thinking in terms of their moral activity within society; the positive treatment of their employees, and the integrity of their leadership, perform better than companies that do not have the same positive values.  For a long time the business world has been regarded as cutthroat and we have valued individuals who can boast about their success even at the expense of the environment, the health of others, and the true wellbeing of the companies they lead.  By accepting that human nature does not simply boil down to conflict and competition, we can see that business and human interactions within a business space can go beyond the typical vision which has produced a bellicose view of the work world. Just as it can be human nature to compete and fight, we can build compassion and assistance. Kiel argues throughout his book that those who integrate better moral goals as part of their company do better because it helps the company foster better relationships internally and externally.