The stupid society

Culture, covid and crises to come

In a recent dispatch, I described how I’ve found the world less intelligible over the past year or so than in the past. I also said that I worried about an erosion in our capacity to communicate effectively with each other. I want to elaborate on that point just a bit. One might suppose that elaboration isn’t really needed. It’s not particularly difficult to see how problems with communication could negatively impact a society, after all. Just think about vaccination, and the way in which an inability to persuade a substantial share of the population of the value of getting vaccinated has left America vulnerable to another major Covid wave. That’s plenty bad all on its own. But it seems to me that one might be able to characterize what’s happening in a different way which would be, certainly, more complicated, but which might also be more revelatory. You be the judge.

Start with this: humankind is a lot richer than it used to be. In wealthy countries, full-time work which is rather less burdensome than was common a millennia ago easily satisfies basic needs and provides quite a lot more consumption opportunities besides—and we enjoy longer and healthier lives in which to take advantage of these consumption opportunities. There are lots of ways to think about how we have managed to make ourselves richer. What it all boils down to, I would argue, is the improvement of our capacity to sustain complex cooperation. 

There is more to it than that, of course, like the discovery of new technologies. We can produce more per person than we used to, for instance, because we invented clever machines which do a lot of difficult tasks for us. But to make use of those machines requires sustained complex cooperation. The useful knowledge needed to gather the raw materials used to build and power those machines, get them to where they need to be, and operate and maintain them is distributed across vast numbers of people all over the world. Unlocking the power of the technologies we have invented is a demanding, ongoing act of civilizational collaboration. We could teach everyone alive all the basic knowledge they needed to build and operate a car, but if we were unable then to perform the carefully orchestrated processes involved in gathering the iron and rubber and copper and so on, transforming them into appropriate components, assembling the components, fueling the vehicle, etc, etc, then that knowledge would be useless, at least in so far as the manufacture and utilization of cars was concerned.

Sustained complex cooperation lurks behind every aspect of our world. Its imprint is there in the goods that surround us, the ready supplies of food and energy we need to live, the peace and order of our communities. The world is an extremely messy place, but the really astounding fact about it is how mind-blowingly well-ordered it actually is: that we can enjoy the luxuries we enjoy while almost never circling too close to the abyss of social breakdown. 

How do we pull it off? To say that we communicate with each other doesn’t quite get at the magic that we somehow manage to collectively conjure. What’s really happening is that as we live our daily lives we—each of us, individually—take in information and respond to it in ways that yield, in aggregate, these dazzlingly cooperative outcomes. Civilization is information processing. And the question that’s really fascinating is how it is that we play our roles—live our lives—in a way that transforms the inputs we receive as individuals into the complex, cooperative outcome we observe: a world of nearly 8 billion people—most of whom live lives considerably more comfortable than was possible a millennia ago—and which is generally not focused on tearing itself apart, for the moment at least.

I work in economics, and lots of economists would say that the most important mechanism through which we coordinate collective activity is the market. You’ve heard Milton Friedman’s pencil riff, yes? 

Literally thousands of people cooperated to make this pencil. People who don’t speak the same language. Who practice different religions. Who might hate one another if they ever met. When you go down to the store and buy this pencil, you are in effect trading a few minutes of your time for a few seconds of the time of all those thousands of people. What brought them together and induced them to cooperate to make this pencil? There was no commissar sending out orders from some central office. It was the magic of the price system, the impersonal operation of prices that brought them together, and got them to cooperate to make this pencil, so that you could have it for a trifling sum. That is why the operation of the free market is so essential. Not only to promote productive efficiency, but even more to foster harmony and peace among the peoples of the world.

Harmony and peace! The idea here is that we all have some idea what resources we have or can get our hands on, what skills we possess, and what we want and how badly we want it. When we interact with others in a market setting, that information is incorporated into a market price. Market prices, in turn, convey information to others while simultaneously providing incentives to behave in a way that contributes to an aggregate outcome with particular properties. Under the right circumstances, the properties of the aggregate outcome are broadly desirable. 

To try to make things a bit less abstract, markets generate prices for different kinds of goods and labor. If I’m hungry, I can find a market price for a food item that will satisfy my hunger, and I can also see what objects I’ll need to sell or what tasks I’ll need to undertake in order to obtain enough purchasing power to buy the food item that will satisfy my hunger. Self-interested people can generally be assumed to act in ways that obtain the necessary purchasing power with the least sacrifice: so I’ll either sell something that the market says is valuable but I don’t care that much about, or I’ll engage in work which gives me the most purchasing power for the least effort. If most everyone behaves in this way, then under the right circumstances people end up providing to the market the services they are comparatively good at, and resources flow to the places where they can be used to generate the most value.

What you end up with, then, is a thing—the market—through which individuals’ responses to incoming information yield an aggregate outcome which is desirable, from the perspective of society as a whole.

Now I really ought to append all sorts of caveats to the discussion above. Let me start by focusing on one in particular. Both markets and oxygen are useful to humans. But whereas a person who needs oxygen can (usually) just breathe in, markets need to be created and maintained. Perhaps not the very simplest of markets, with no more than a few individuals agreeing among themselves to abide by certain rules; but those sorts of markets won’t get you a global economy like the one we have now. For that you need something else: institutions.

There are many ways to define institutions, but for the moment let’s treat them as organizational forms with an explicit mission to coordinate collective activity. To get global markets working in anything like the way Friedman describes, you need all sorts of these things. You need governments to provide order and invest in infrastructure, and perhaps to provide some regulation and standardization. You need firms, which are hierarchical institutions and also generally pretty important to global commerce. And so on. 

Markets, the way I’ve described them so far, coordinate collective activity by transforming individuals’ penchant for behaving in a self-interested manner into happy aggregate outcomes. What about institutions; how do they coordinate collective activity? Most of them operate as hierarchies: tiered power structures, where information flows up and orders flow down. So at your place of business, you report to some superior or set of superiors, provide them with different kinds of information, and receive instructions to do x, y and z tasks. 

When we think of the tools we use to gather information and act upon it in a collectively coordinated way, we tend to focus our attention on these two things: markets and hierarchical institutions. That’s not really the end of the story, though. If it were, we might expect different places with similar institutional set-ups to fare similarly in terms of economic and political outcomes, but they don’t. Across democratic countries with market-based economies we see everything from rich and stable societies to poor and massively dysfunctional ones. And when we zoom in on the operation of markets and power hierarchies, we see vast differences in the way that they work, across countries and over time, which do not seem to be associated with changes in their underlying design. 

So, you know, sometimes bureaucracies are pretty functional: there’s not much waste or corruption and the organization is broadly successful at playing the role in society it’s intended to play. In other times and places, bureaucracies are highly dysfunctional or run-through with corruption. Markets aren’t all that different. Sometimes you get an efficient allocation of resources and useful innovation. Other times markets function badly and direct resources to places where they don’t do much good, or actively do harm, and sometimes the innovation markets foster is mostly associated with finding new ways to rip people off or earn rents.

How do we account for these differences? Institutional design certainly matters to some degree. But I would argue that design isn’t really the explanation for the massive performance gaps we see at different times and places. For one thing, we really don’t understand the operation of complex systems very well, such that it would be highly surprising if variations in the performance of our institutions actually came down to differences of design. And if you look at different institutional structures through the lens of the fields of knowledge that are supposed to understand how incentives work, for example, you’re going to find lots of cases where not-so-well designed institutions function reasonably well despite seemingly poor design and lots of others where seemingly well-designed institutions nonetheless perform terribly. Similarly, we see all sorts of cases in which companies and governments attempt major shake-ups of dysfunctional organizations which end up having remarkably little effect on those institutions’ behaviors.

There is clearly some other thing at work which allows some bizarrely structured firms or bureaucracies to do what they do pretty successfully, and which in other cases causes what look like well-designed institutions to fail badly. There’s some other stuff floating around that’s involved in the operation of firms and governments and other organizations and society at large, which matters a lot for the way these things perform. 

What is it? In my last book, I described it as shared, context-specific knowledge, and I called it “social capital”. It’s really just culture. A culture is a collection of values and behavioral norms held in common by a subset of society and which structures the aggregate behavior of that subset of society. So for instance, a company has a particular culture: maybe it’s back-stabby and shouty, or collegial and deliberative. What that culture is is the knowledge people have about how they’re supposed to behave in that particular cultural setting—the company, in the example above—if they want to fit in with others and be successful. And the actions of the individuals within the company, informed by these guidelines, add up to the performance of the company itself. 

Some of what falls under the rubric of culture is just ethics, professional or otherwise. These sorts of guidelines make very clear how much of a load culture carries, keeping organizations of all sorts functioning. Perhaps you have been in a professional setting in which it is not particularly challenging to do very little work, and/or take credit for others’ work, and in so doing reap professional rewards. There are ways to try to address things like that by monitoring workers, keeping track of various performance metrics, etc. Responses like that don’t always work perfectly, can create their own skewed incentives, and moreover are not particularly popular among workers themselves. But many companies never feel the need to make use of them at all, because a powerful firm culture effectively solves the problem for them. That’s not to say that no one ever violates the unwritten cultural rules in such places. Sometimes they do, and sometimes their stratagems pay off professionally, and sometimes their colleagues all glower when the boss lavishes praise on them, and sometimes the rogue worker cashes their checks and doesn’t give a shit. The sense of injustice you feel when you witness this, and the weird bonding you experience with colleagues who are equally frustrated: that’s the power of culture you’re feeling. Those sensations are what make it work. 

So to review, culture is just setting-specific informal rules; we act one way when we’re at work (which is not necessarily the way other people act when they are at their jobs at other companies), and another way when we’re with family, and another way at church, and so on. These rules are subject to change, for all sorts of reasons. Cultures evolve over time, but they’re also subject to sudden shocks. The MeToo movement, for example, delivered a shock to the prevailing cultures within many workplaces and industries. Culture also applies at higher levels of society, like countries. The informal rules and values which shape everyday life are a little different in America relative to, say, France, or China. To be very clear, cultures are not innate or unchanging. To say that France has a particular culture is not to say that there is something “inherently French” that is somehow attached to babies born in France and which has been constant through the ages and cannot ever be amended. Culture doesn’t work like that, and if it did, the argument I’m about to make wouldn’t make any sense. 

So, to get back to the point: cultures affect our behavioral responses to incoming information. They are part of the information-processing system. I don’t want to call it programming, because that suggests that we aren’t at liberty as individuals to depart from the cultural guidelines stipulated by a particular culture when of course we are. But people generally follow the guidelines because we’re humans who want to fit in, and because in many contexts following the guidelines is the way one raises one’s status: which could mean the respect of fellow parishioners or a promotion or something of that nature. 

And it is really important that people follow the guidelines. Because to recall; prosperity is about managing complexity, managing complexity is about collective cooperation, and collective cooperation is about each one of us, individually, responding to incoming information in ways that, when you put us all together, yield a socially desirable outcome. America isn’t perfect, but it is undeniably a rich country and a mostly-functional-for-now democracy. Those attributes partly reflect the way that the work of resource allocation is divided up between markets, formal bureaucracies, and other sorts of informal organizations or “civil society” broadly defined; and they partly reflect the particular way in which those mechanisms function; and the way those mechanisms function reflects how each of us individually behaves. At root, we all wake up each day and do what we do and the end product is the state of America. We talk about markets and government and special interests and all sorts of things, but all of that is just you and me and everyone else behaving in certain ways in some settings and in slightly different ways in other settings and in so doing conjuring up these collective spirits.

But as I noted above, the cultures which allow this magic to work are subject to change. They mostly change slowly. Like here’s one type of change that I worry about. The fuel that makes markets go is self-interest; markets work because people are supposed to prefer more money to less. But sometimes the way to get more money rather than less is to behave unethically. And unethical behavior can cause markets to function badly: because people are misled and end up buying things that don’t provide the benefits they were expecting, or perhaps because people become wary of being taken advantage of and stop participating in the market altogether. You can try to solve these problems with laws and regulations, but it’s impossible to fix every problem this way, and then of course you’re also relying on ethics to keep legislators and regulators performing in a particular way as well. 

So a society which relies on markets needs people to behave in a self-interested manner, but not in too self-interested a manner, such that the desire for more money overrides the ethical guardrails embedded in culture. That’s a really hard balance to maintain, though, and I worry that economic and political philosophies which have emphasized the overriding importance of profit maximization may have undermined respect for other values and eroded the ethical guidelines that kept markets functioning effectively. I’m soft-pedalling this for some reason, and I shouldn’t. I think this has happened in America, I think it’s one of the legacies of Milton Friedman and the neoliberal revolution, and I think it’s a huge problem that so much of American society has become an ethics-free zone.

But culture, as I noted above, is also subject to shocks. Shocks like a powerful politician who flouts all sorts of norms of governance and in so doing rewrites the rules of the political game. Shocks like the pandemic, which placed immense pressure on prevailing norms at an already fraught moment, and which just as importantly left us all alienated from the normal patterns of daily life that reinforce all our many and varied cultures. So there we are, finally, at last, back to the fact that I find the Discourse distressingly unintelligible.

Let’s try to sum up. What makes America America is nothing more or less than what the individuals who make up America do each day. What those individuals do is profoundly shaped by all the different sets of cultural norms they have in their heads, which provide them, me, us with, basically, an idiot’s guide to what’s appropriate to do in this setting or that. Think about that, then stand back, and what you’ve got is a kind of information-processing system which is fed inputs (the stuff that happens to us each day) and produces outputs (the collective effect of our responses to those inputs). Some fortunate societies have a way of turning inputs into desirable outputs. You might call them smart societies: not in the sense that individual members are all brainy, but rather because the individuals work together in a way that yields something marvelous. 

But if that cooperation were to falter, if the ways the individuals behaved in response to inputs changed and the quality of the output deteriorated, then what? If that society became less capable of managing dazzling feats of collective cooperation, then what? If the markets didn’t work as well (because we behaved differently when engaging in market activity) and the government didn’t work as well (because we behaved differently when engaging in political activity) and the day-to-day business of living didn’t work as well (because we behaved differently in everyday settings) and so despite all of the clever people in our society we became less capable of wielding the magic of collective cooperation? What kind of a society would we be then?

I mean, I think in that case we would be at risk of becoming a stupid society. I think we might discover ourselves behaving in ever stranger ways, ever more socially destructive ways, to the point that we put the peace and prosperity of the country itself at grave risk. Maybe.