We have some idea about reality which is not quite true. […] I yet suspect t­­­hat there is something much more important and much more real which produces the Cadillac, refrigerator, atom bomb, and what produces it, after all, is something which we don’t seem to want to look at, and that is the person.

James Baldwin

Economics is sometimes accused of being cold and dry, underserving the potential thrill of its subject matter. To remedy the ennui I view the discipline as a series of superhero franchises. In this spirit allow me to reintroduce the classic…or more precisely, Neoclassic hero of humanity’s uniquely successful pursuit of material welfare. Originally cast as an independent and rational consumer, the infamous Homo Economicus (HE) was placed in a perfectly competitive marketplace with flawless prices and legal ledgers.  Picture, instead of the ability to fly, Clark Kent consistently pursued his own preferences.  Instead of his superhuman strength HE possessed rational thought. Instead of the colorful comic home of Metropolis, HE lived in a black and white land of perfectly informative prices and well specified property rights. Indeed, a cold character set in a dry land. Yet this narrative never intended to be a precise or full picture of humanity, it aimed to bring systematic rigor to questions that have haunted human society since the dawn of civilization. In this it succeeded, albeit through a good dose of skylarking.  Ultimately bringing to the forefront what it means to be human by ironically assuming away what it means to be human.  HE’s simple city  not only frames our economy, but gives us a window into the ecological and cosmic environment that formed our species.  The failures of the Neoclassical model, combined with conceptions from information theory and thermodynamics, offers a narrative of our material civilization, our cognitive development and ecological dominion.  To bring these insights forward I propose we reboot this under appreciated yet tragically misunderstood franchise.

This remake includes, as remakes tend to do, an origin story. Exploring how a meek primate moved beyond its drive for individual consumption and subdued the earth with interdependent production.  Whose own preferences and material well-being are intertwined with the preferences and well-being of others.  Whose market prices and contracts are but two informative signals in life’s journey to beget order and reduce uncertainty.   The preservation and prosperity of earthly life depends on protection against the environmental and cosmic force of entropy,  protection in the form of powerful shields. Enabling constraints that govern behavior and facilitate cooperation. Organic institutions that organize its interiors and signal to its environment.   Molecules constitute order, or information, by maintaining their structure of steady state equilibrium beneath solid matter. Layers of lipids harness the genetic code of earthly life and signal its cellular identity to its neighbors, facilitating the growth of complexity that underlies life’s success in the battle against chaos.   Vertebrates inhabit societies bound by the intimacy of individual recognition, imagining a shield that protects its members from the harm of disorder. 

Hominoids gently parted ways with the animal kingdom beneath a shield of shibboleth. Picturing social cohesion using audio and visual markings triggered an emotional response towards those that deviated from this allegedly shared vision. This gave way to the sentimental aversion to the harm of others with whom we identify and cultivated moral values.  Morality was reified in reputation, a projected partitioning of social behavior along the dimension of intention.  Beginning as a simple binary classification, good versus evil.  Distinguishing between faithful adherents of a shared symbolic identity from the selfish deviants. This value system was further generalized to conventional norms distal from the moral requirement of proximate harm. These elements became a recursive model at the heart of our cultural evolution. Fortifying a  web of institutions that collectively mill our hominoid virtue grist.

Humanity created an imaginary community precisely by imagining a community. Evangelizing a shared fantasy and discouraging deviations from its picturesque harmony. Homo Economicus is recast from its role as the protagonist in this Neoclassical tale into its author.  An author who stitched the original song and dance of morality. More precisely, as a storyteller whose craft created and sustains the extended ordered civilization we inhabit. A trusted bard whose imagination teaches us who we are, where we belong, and how we ought to behave.  Whose creative ballads take us away from our intimates and beyond the boundaries of our flesh, and into the hearts of inspiring heroes and the minds of cunning villains. Binding strangers around shared fictions. These journeys take us to make believe worlds and inform our understanding of the reality whence we departed. Providing the necessary tonic for a sentimental soul unmoored from its immediate environment and beholden to its increasingly abstract simulations. The experience of our epics represent what it means to be human, catalyzing the cathartic utility of narrating our battle against uncertainty. Our true forbidden fruit is our knack for tales of good and evil. We used stories to establish trust amongst strangers and foster earth conquering collaboration.  Hominoid culture depends both proverbially and literally on stories. Our industry of fantasy has allowed us partial control of our mind’s predictive simulations, placing the threats and promise of nature in our collective third eye.  A power that resides in our costumes and their attendant responsibilities. Introducing Heroic Economicus, a Remake (HER).

I believe that there is one story in the world, and only one […] Humans are caught […] in a net of good and evil. I think this is the only story we have and that it occurs on all levels of feeling and intelligence. Virtue and vice were warp and woof of our first consciousness”

John Steinbeck, East of Eden

Table of Contents

1. Econ & Mores: estranged kindred
2. HE vs HER: remaking a classic
3. HER Journey: Chaos of Freedom
4. HER Journey: Constraints of Culture
5. HER Origin Story
6. Winning Game Theory with Trust
7. HER Blanket: Shield of Shibboleth
8. Moral Halfwits
9. Behavioral Band Brands: reputation
10. The Song and Dance of Morality
11. Seeds of Sentiment
12. Normative Framework
13. HER Causal Pathway: Virtue Grist
14. The Transaction Cost of Free Energy
15. Firms: Branded Bands
16. Institution of Bardship
17. The American Mythos
18. Bibliography

Econ & Mores: estranged kindred

Despite how a certain type of folk speaks of the discipline of late, it was moral philosophers who originally founded Economics. They did so to better understand the causes and conditions of human welfare. The analytical modeling of humanity as a utility maximizing agent and consumer theory generally strove to quantify this age old component of morality. Despite its crude representation of humanity as a selfishly rational agent and overly simplified market assumptions, the Neoclassical model succeeded in bringing analytical rigor, not only to its initial objectives, but also to unpack evergreen questions of Western Civilization, questions that dominated the enlightenment and are remerging with new urgency as we contemplate the current pursuit of general AI. Questions that concern our modern civilization as much as our humanity:

How should society aggregate the wishes, needs, and preferences across numerous people? What are the consequences of governance approaches on well-being?  How do we balance right of individual liberty with greater public good?

At first blush the oversimplified Neoclassical model seems like laughable caricature of commerce and a poor font for civic and anthropological wisdom. Don’t all organisms want to maximize their own utility? If anything dogs seems more consistent in their preferences than fickle hominoids. Gorillas have been shown to be more rational than humans, not to mention amoebas and even ribosomes. It turns out, however, that after all we are in fact nothing but mammals. See our rational hamburger consumption. Not only was much truth said in jest, the model has been most insightful when demonstrably wrong. It fails in interesting ways.   True for both the marketplace perfect competition model and the model of HE as a rational agent. These failures chart an interesting course for a theory for the more interesting side of humanity’s economic activity, production. Indeed, it was never intended as a full portrait of humanity’s behavior or experience, simply as a rough enough approximation whose assumptions were close enough to make the easy analysis it offered a useful starting point.

Often times those who ostensibly assail Homo Economicus end up holding the rational simpleton as an idol. Take for example behaviorism, specifically the sub-discipline that distinguishes itself in large part by challenging Neoclassic dogma. Despite the alleged onslaught from these behaviorists, who eagerly point to our deviations from rational behavior, HE survives even here to provide a necessary benchmark to quantify this deviation. We have a better understanding of our true behavior by comparing ourselves to the fictional hyper rational HE. The main take away for economists of the behavioral revolution seems to be to nudge humans closer to the rationally idyllic Neoclassic Übermensch, defaulting our 401K contributions, measuring the size of the elephants in our irrational brain. It seems the only true elephant-less mind is HE, the individual Utility Maximizer.  One that would better allocate its final heroine trip. We would likely discriminate less and not pay so much for young-adult finishing schools if we were more like HE. However, without our deviations from the canonical axioms of HE we would not have created much of anything.  If we are to move towards any ideal behavior or material achievements we need a more unified view of the wiring that permitted our commercial and cognitive capabilities.

Although the Neoclassical model traditionally begins with a portrait of the consumer, I believe it holds the potential to offer a theory of economic production. An explanatory theory for us supply siders over and above what the model has currently afforded us, challenging assumptions that economists and policy makers hold which do not comport with our social order. Moreover a model that sits on a truer foundation of where we came from and how we are, our phylogeny and ontogeny. Through the collection of Neoclassical spoofs, or market failures, economists have helped chart the contours  between the individual and society.  Analytically separating individual and social choice, distinguishing between private and public goods, delineating internalized costs and externalities.  Quantifying the awkwardness between the principle and her agent. Plotting the distribution of information available to producers relative to consumers, classifying resources and industries as symmetrical or asymmetrical has shed light on how individuals truly navigate society in the absence of the axioms of perfectional rationality and information. 

These failures point to the misalignment of the immediate interest of the individual actor and those of the relevant social aggregate. Combined, they find unlikely kindred in information theory and the free energy principle of the mind.

HE vs HER: remaking a classic

The world as painted by HE is a tale of two economies, one where ownership and costs are effectively internalized and another where externalities spill out into the public sphere and thus have social consequences. What we fail to emphasize, however, is that in each case the long run economic consequences are dominated by the latter. Following perhaps the weak form law of karma every economic activity yields its own and was made possible due, at least in part, to prior externalities. Whether property is physical, intellectual, or digital, whatever it manages to produce of value is a remix of a previous valuable product.  Even goods that were ephemerally (and often impressively!) stewarded within the confines of private property eventually spill back over to the public whence they came.  Every generation of entrepreneurs are beholden to the path blazed by earlier innovators, on which successive technical breakthroughs now depend.   Not only is the distribution of information often asymmetrically skewed, physically/statistically speaking our economy is the highly asymmetrical pursuit of information, the vast potential of our terrestrial and cosmic endowment is bound by our ignorance. It turns out that life itself is, in a sense, a quest for information and intelligent life is driven to minimize uncertainty. Game theory allows us to demonstrate that as with all life, success in achieving order is not, in the fullness of time, determined at least as much by competitive capacity as it is with long run cooperation. 

Well defined, privatized goods are cleanly modeled and represent a good deal of our economy and economic behavior, yet it misses what is most interesting about our marketplace and, I believe, our species. The failures of the Neoclassical model amount to a telling window into the human condition.  We changed our evolutionary lot not by maximizing our own utility but by accommodating multiple individual utility functions.  The most important capital input society possesses is human capital, and the resource that exhibits the most asymmetrically distributed information is the human mind.  Just as we developed institutions to constrain behavior, promote trust, distribute information, and set expectations with governments, constitutions, contracts and industry consortiums,  we developed a foundational institution that does so on a elementary level. We have an identity bounded moral constitution that we leverage to navigate our lives within our social environment. The tale of the commons was less a tragedy and more a Shakespearean comedy. Our success as a species lies in the creation and adoption of governance strategies that accommodate the long run interest of the community over the over short run gain of the individual.  Had our ancestors succumbed to the prisoner’s dilemma and gone it alone, we would never have achieved the profits and subsequent increasing returns that this emergent Game Theory solution yielded. Instincts and emotions motivate us to participate in the normative framework that generated our most primal form of rational thought.

Pyotr Petrovitch: Science now tells us, love yourself before all men, for everything in the world rests on self-interest…firmer are its foundations and the better is the common welfare organized too. Therefore, in acquiring wealth solely and exclusively for myself, I am acquiring, so to speak, for all…

Raskolnikov:…carry out logically [this] theory… and it follows that people may be killed…”

Dialogue from Dostoevsky’s in  Crime and Punishment

Neoclassical ideology at times echoes an overly simplified view of evolution. Darwin’s work is too often reduced to mean that nature favors the fittest individual in the struggle for survival. Implying an independent competitive struggle for dominance. Yet the recurring theme in the evolution of life is that cooperation can be the best competitive survival strategy, or more specifically, interdependence that generates long run aggregate benefits, despite short run cost or sacrifice. Cost born reducing the distinction between disparate elements using a blanket. A blanket that gives rise to an interactive model that governs the interdependent coupling with its environment. Our civilization is likewise the harmony of skillsets bound by common and interacting identities. 

As vertebrate hominoids our information sources can be broken down to symbolic identity, an identity that gave rise to morality and subsequently the practice of social conventions.  Any and all fancy institutions are only a dressed up version of these essential pillars. Though he recognized morality as central to our extensive ordered civilization, the Neoclassical steel man himself stumbled over an incoherent definition of both morality and cooperation in his final attack on socialism’s deceit.  Despite profoundly framing capitalism as an extension of the rule of law and emphasizing the necessary condition of agency in virtue, he subsequently failed to see the driving force behind our moral impulses and practice, and hence missed the true lifeblood of all society’s institutions. If public goods are presented as marginal concerns and costs can be largely made private there is less concern for encouraging the willful participation of the cooperative strategies necessary to sustain the bounty of public commons.

In extremis HE has led some to treat humanity as chattel, an otherwise enlightened thinker, John Von Neuman, inspired by HE created the most well known modeling effort of human behavior, subsequently leading himself to a hawkish foreign policy at perhaps the most existentially dangerous moment in history. Others implemented draconian policing / military occupation based on economic analysis applied to social problems, economic analysis based on HE.   When you look at policing in the US today you cannot help but see the dark legacy of a caricature that was oversimplified and taken for truth, or perhaps used as a sciency-justification for our uglier impulses.  More prosaically numerous firm managers have inferred from HE that employees should engage in ruthless competition.  Excessive competition has been shown to be counter productive, a fact that would be unsurprising to the original titan of industry, John D. Rockefeller, along with Henry Ford, Paul O’Niel, Howard Schultz, nor  Don Draper, but lost on those either inspired by the simplistic inference of HE’s legacy or who exploit it to rationalize their misanthropic views.

The inability to privatize externalities means help and harm befalls the undeserving and innocent alike.  Such are the consequence of life in a society, particularly an enduring civilization in the presence of increasing yet bounded returns.  Consumer theory can accommodate the fickleness of our human irrationality, if our preferences are not always consistent there will be surprises but the analytical misfire will not be earth shattering. However an explanatory theory of economic production needs to plant itself more deeply into our choices,  behavior and minds. Particularly as it relates to the interactions of the most important of economic resources, hominoids. Any social unit achieves a profit when the cost of forgoing individual gains are surpassed by the win-win surplus of cooperation. It was in overcoming the dilemma presented to us in our natural prisons that we learned how to build a civilization. Cooperation, as defined helpfully by HE the original, is the single most profitable ecological achievement of organic life. Humanity has achieved an extended order, and this order rests on the convincing fiction of volition.  The formality of contracts, the price system, and property ledgers are (very) helpful solutions, but they are appendages of a creature already adept at navigating this space, mass producing at scale what was already done effectively locally.  They are like Spiderman’s (in some versions of the tale) webbing, not a result of his biological adjustments from the bite of a radioactive spider but nonetheless inspired by the instincts that bite left. 

Humanity’s original superpower is the convincing fiction that a meek primate ought to be held accountable for its actions. We identified with strangers but insisted that those strangers adhere to an abstract code of conduct. Our moral sentiments and their subsequent generalization into a social framework that became sufficient to achieve the, game-theoretic cooperative profits.  Institutions, from our cultural traditions to our governments to our firms and modern vocations, achieve the negative constraints on behavior necessary for this cooperation by a collection of positively affirmed symbolic identities. Beyond all its jurisprudence and governing tactics, in the persistence of firms, polities and cultures are a function of the belief its adherence has in its existence, and their commitment to its long run persistence above individual interests. 

HER normative framework is the foundational and blueprint for all subsequent institutions. As with all institutions our normative framework led to externalities, these externalities created a development path that led to super wise humans.  Moral norms averted harmful behavior with shared values, conventions expanded these constraints to arbitrary norms, these norms gave way to hominoid niche specialization, allowing us to achieve eusocial levels of social organization.  Conventions that allowed our adoption of arbitrary symbols in our language and uniforms. The most important long run externality of the normative framework was the human imagination.  Our material achievements are grounded in the immaterial stuff of our third eye.   We dreamt a society bound by symbolic identity. Implementing our shared vision by experiencing and expressing negative sentiment in response to (literally) deviants. That is, agents whose behavior from our picturesque harmony. Resolving this surprising discomfort with an initial binary cultural tag, good versus evil.

Heroic Economics, The Remake is more than a instructive allegory.  Earthly life exists along the continuum between order and chaos. It was shown statistically that disparate organic elements collaborate under a shared identity using a Markovian Blanket. This partitions its environment and allows it to form the simulations necessary for its persistence and preservation. Modeling future predictions that serve as self-fulfilling prophecies. As vertebrates adhere to communities bound by individual recognition we maintain ourselves as part of imaginary communities structured with immaterial reputations  and determine our own destinies using symbolic roles that dictates the part we play in order to maintain these societies. The beauty of the Neoclassical model was that it allowed economists to chart an analytical course necessary for a bipedal primate to produce, exchange, and consume goods in an extensively ordered anonymous society.  In spite of the harmful hubris HE unintentionally fed, Homo Economicus has yielded a greater understanding of this epic journey.

HER journey

from the freedom of chaos…

Dagda and Brigid gazed upon one another in wonder, for it was their task to wrest order from the primal chaos and to people the Earth with the Children of Danu, the Mother Goddess, whose divine waters had given them life.

Peter Berresford Ellis in The Mammoth Book of Celtic Myths and Legends

This story goes a little beyond the death of a parent and doesn’t spend much time on generally traumatic childhoods. To best understand HER super power, it is instructive to contextualize the universe’s merciless march towards chaos.  Information, in the technical definition espoused by Weaver and Shannon, is a rampart against this inevitable advance, denoting physical order, a quantified measure of the level of uncertainty. Or the statistical deviation of physical matter from the expectations promised by the second law of thermodynamics . Information theory provided the understanding of structure, order and entropy that gave way to the modern digital world of bits. Allowing us to employ machinery by harnessing electricity with code written in programming languages. Yet it also inspired new insights, by analogy, from biology to evolution, to economics.  Organisms bring the weapon of replication and complexity to the battle against entropy. Hominoids and their civilization, in spite of all its colorful trappings, can be reduced at the physical/statistical level as a step on the continuum in life’s endearing yet fruitless slap box with its destined descent to chaos.

Information Theory allows us to describe the economy as the  mass-production of information. Life itself is a grand cosmic battle in the gloriously hopeless war against entropy (echoing what the Hindu’s Gita, along with Celtic, Sumerian and Grecian Myths have been saying all along.) A self-replicating, multiplying, and evangelizing processor and producer of information. Biologists identified increases in the availability and processing capacity of information as a primary causal driver of several evolutionary transitions of nature. The increase in the availability of and ability to process or transfer information leads to an increase in cooperation amongst formerly competing organisms and organic material.  Order in the form of molecules in steady-state equilibrium captured in solid forms  allows information to endure. Life is the crystalized compounding of structure.

Although information theory meticulously defined and discarded the semantic definition of information, focusing instead on its technical attributes, the Free Energy Principle along with numerous similar theories of the brain, intelligence and sentient life outlines how life processes information and turns it it from structured matter, the technical sense used in IT, into information in the semantic sense, contextualized meaning. Allowing organisms to exploit its structure and expand upon it. The Free Energy Principle frames the preservation, self-organization and replication of organic life as the drive to reduce uncertainty by acquiring sensory data input and creating and updating simulations of its external and internal environment.   Given that the thermodynamic law of entropy states randomness generally increases, life can be viewed as a direct affront against this advance. Organic survival amounts to achieving homeostasis, the maintenance of a relatively few number of states, thermodynamic resistance. Replication amounts to the persistence and expansion of this structure in progeny.

As organisms we, along with the rest of the biosphere are reducible to models of our environment.   Whether we seek to acquire energy from sunlight or navigate the currents of a river, we acquire sensory data to simulate the world from whence we came and define the part weplays therein.  Perception is the pursuit to understand the environment, action is our efforts to make this environment more in line with our understanding.  We identify the causes of our sensory data and increase the accuracy of our models by implementing change through our behavior. Predicting our hand on top of our head allows our nervous system to send the appropriate, error correcting signals to make this illusion a reality. Earthly information has a compounding quality that led to the increasing complexity of life, which together amounts to learning from one another.  Learning that leads not only to wisdom, but to prophecy.  As fundamentally our sensory based simulations are predictions, prediction of sensory data that our nervous system generates.  Predictions that include the persistence of our identity.  The drive of survival and reproduction at the heart of life amounts to a journey to maximize the evidence of one’s own existence. The existence of life can be reduced to blankets and simulations, or identity and models.

…to the constraints of culture

The first phase of apprehension is a bounding line drawn about the object to be apprehended […] Having first felt that it is one thing you feel now that it is a thing. You apprehend it as complex, multiple, divisible, separable, made up of its parts, the result of its parts and their sum, harmonious […]  You see that it is that thing which it is and no other thing…the whatness of a thing.

James Joyce in Portrait of the Artist as a Young Man

Dawkins and Wilson have a history of sparring over the individual versus group selection. The former promoting the idea, for instance, that even human altruism can be explained by the shared origins of genes. We look out for others to the extent their genetics align with our own, i.e. kin selection. The latter, arguing for group selection, that tendencies to sacrifice one’s own self for group members would make the group stronger and in turn make those who are prosocial group members more likely to survive. This debate resolves nicely with the enabling constraints of identities. Specifically the statistical notion of a Markov Blanket applied within the FE principle, to the statistical processing machine of organic life.

Organisms are comprised of other organisms, which are a collection of co-evolved genes.  Just as organisms can be viewed as information they connect using the informative signal of their encasings. Even an individual’s organic drive of self preservation is bound by its understanding. It has to know which organic elements constitute its identity. Often in nature familial broods move closely together, genetic relatedness relies here on intimate knowledge. But even within these circles of trust their are variations, genetic relatedness are probabilistic, and hence caring for kin is a matter of first establishing likelihood. Mothers care for children more naturally than fathers. No mistaking where her children came from. Where fathers do offer reliable parenting, such as the Ngogo Chimp, they know who their children are theirs. Ants use their broods chemical signal in order to signal relations. This information, under various guises, boils down to identity.

 Identity relies on a partitioning of basic components, an enabling constraint that serves as a cosmic shield, or a cozy blanket that wrests structure from chaos. Blankets that, similar to physical solids, capture information, and are themselves information. However, unlike physical solids, they’re worth is in their permeability and yielding. They can be persuaded to collaborate. The blankets of life allow two way traffic that preserves it as an internal unit, and guides its cooperation with other blanketed structures to form greater complexity.  The vessels signal intention in order to buttress collaboration. The origins of earthly life can be traced largely to the formation of the lipid layers that formed membranes, initiating the protein production factories that are eukaryotic cells. These boundaries unify and guide the external, chaotic world by distinguishing an internal versus an external state, allowing it to part ways from the molecular soup around which it exists, allowing its constituents to conspire to harness energy and resources for metabolic processes. Given that lipids are an oily layer, and that cells first evolved in water, life may owe its start in part to the chemical conflict between water and oil.

Cell walls act as a Markov Blanket to bind its denizens with a shared model of reality that harnesses chemical reactions and available energy to persist and proliferate. Cells act with the intention to seek existential evidence, that I exist because you are not me. Organisms can be reasonably reduced to good regulating machines whose persistence requires the acquisition of sensory data to simulate the external state of the world and manage its internal states.  Organisms pursue homeostasis, maintain their structured existence by maximizing the variational free energy or reducing the uncertainty of their defined identity.  Sentient life is of course driven to survive and make more of itself, but it can only do this by playing the cosmic game of finding order in chaos, using information to produce more information, modeling itself in relation to its environment and constantly predicting, updating its predictions, selecting between possible predictions, and finally exploiting these prediction to choose between possible future states.   Humanity, as it happens, is a particularly unique and successful uncertainty reducer.

Organisms are robots inside other robots and so on. Each robot uses the permeable nature of Markov blankets to collaborate with outsiders, ultimately binding together as subordinates to a higher level Markovian identity.  Life is a hierarchy of multiple, collaborating blankets.  Blankets are information signals for its own members.  Organisms, from ants to elephants, form social units and hierarchies, thereby establishing a superordinate Markov blanket using information that they provide.  The internal state consists of ‘us’ and an external state of ‘them.’ Prompting social members to maintain this identity by reducing harm towards group members and protecting it from outsiders. These blankets are on a gradient of information content that tracks with their permeability and yield. Ants and other cretaceous insects employ chemical signals to form pretty impermeable and scalable boundaries that reliably signal group membership.  Elephants and other vertebrates are bound strictly by mental information, their memories. The social blankets of Backboners offer less reduction in uncertainty, they are less able to constrain behavior but do not stifle individuality. Primates are not the Borg.  They are reasonably reliable but costly to maintain and do not scale well. 

Constrained identities allow the accumulation of wisdom. But what puts the second sapien in Homo Sapien Sapiens? It turns out our sentiments, in a Smithian sense. Our moral fervor stems from commitment to one’s social identity. Hominoids broke away by forming an even more porous blanket, a weaker informational signal. We used symbols to identify with compatriots, symbols that required intermediate levels of identity in order to sufficiently proxy individual recognition. They formed the abstract notion of reputation, a shared,  a distributed, peer2peer classification model that initially partitioned conformers  and non conformers, that separated the good from the bad.

This cultivated an affect-tagging practice that fed the fuzzy template of our moral practice.  Humanity’s mental models constitute a normative framework, a collection of behavioral constraints, or information institutions that are the basis for culture.  Our unique proclivity to participate in an interconnected world beyond our skin, kin-group or intimates. We cerebrally simulate an anthropomorphized, sentimental and passionate portrayal of a social environment that determines our individual destinies in various interloping tales of good, evil and self-discovery.   The forbidden fruit gave us the power to guilt, shame, and laud one another’s actions. We label people’s behavior, attaching nouns to other’s verbs, including our past selves. Central to our participation in this cultural narrative, is the idea of moral agency. The exaggerated claim that a meek primate possess free will over its actions. We project sufficient intention to our conspecifics over behavior that warrants subsequent praise or censure responses.  Invoking a responsibility, a responsibility tethered to our perception of identity.

HER Origin Story: separate but interdependent

4-5 million years ago HER arboreal ancestors descended from the safety,  and pleasant savannah views yet poor storage capacity of our tree dwellings.  Confronting cunning primate competitors, ferocious predators yet the enormous tool shed of the tera firma. On the ground our ancestors had more useful things like tools and could more easily learn how to make that from one another, but also had to run and hide from scary things. This also coincided with some challenging climate changes. We evolved to meet these exogenous challenges and became a distinct species, parting ways with Pan, and eventually created our own eponymous geological epoch by achieving a suite of superpowers that set us on a trajectory to earthly dominion.  Engaging in a distinct evolutionary process marked by our culture. The uniquely hominoid practice of cultural evolution is rooted in our vertebrate practice of reducing uncertainty by way of societies. Whereas our more distant crustaceous relatives achieve task specialization of cooperative eusociality by flying away from potential competitors, have a bunch of babies and employ chemical pheromones as signals to expand beyond there founding clan of kindred and enforce service to the colony. Forming a scented identity. Hominoids, as vertebrates, instead rely essentially on a basic form mutual understanding. On trust.

In lieu of chemical signals, elephants, chimps, and us hominoids form societies based on individual awareness.  Our relatively large primate/vertebrate brains, terrestrial constraints and degree of sentience come with a burdensome level of autonomy. In a mental description consistent with Joyce’s depiction of how the mind apprehends objective distinction, individuals need to understand that they are in a society. Each individual needs to recognize, whether by sight, smell, sound, markings, etc. each of its individual compatriots.   Though they may be familiar and even have friends with others outside their social unit,  societies exists based on a clear shared understanding of those that exist within its boundaries and those without. Being friends with one of them does not make that individual one of us. i.e. the internal versus the external state of a superordinate Markov blanket.

Within these social bounds individuals form alliances, long term partnerships, and find mates. Analogous to the cell’s protective (yet permeable) membrane.  Not that each elephant has fond feelings for all its group members, but even with the ill feelings of group members societies prove useful.  Societies are able to govern intragroup conflict among rival members. Long term society membership make it possible to establish a socially recognized hierarchy.  Establishing the position of top dog lets all the betas know who to follow and at least temporarily reduces the likelihood of a competition for the alpha position. Additionally, learning the capacity and disposition of each group member makes it more likely that skirmishes will break out as a result of a member disrupting another.  Social members know who is likelier to get angry, who is generally genial, etc.

At minimum vertebrate societies use individual recognition in order to distinguish society members from out groups that allows the most rudimentary form of cooperation, not killing in-group members. Rudimentary though it is, showing preference for the well-bring or harm of in over out group members is an outward projection of the natural instinct of self-preservation. This practice amounts proto-morality,  vertebrate societies are in effect built on proto-trust. Vertebrates take a reasonable gamble that mutual acknowledgement of group membership will limit the harm imposed on fellow group members and ideally encourage protection against harm from outsiders. These societies are not, however, optimized for cooperation. A chimps ‘community’ is not all love grooming and laughter, Hyenas are keen to kill compatriots from childhood. Indeed competition exists in a fiercer manner than may have ever existed in the absence of a society, but it is competition that came to exist because there are new found cooperative spoils.

The best way to describe the function of society is the extent to which they reduce uncertainty. In this they take on the characteristic of a Markovian blanket, albeit an ethereal one.  Forming a tool for lumbering back-boners to join forces in the fight against cosmic entropy, that not only maintains their individuality but relies specifically on it, unlike  ants or the Borg. Societies do not exist to optimize cooperation, they reduce uncertainty.  Reducing uncertainty, expanding information content increases the likelihood of cooperation and the subsequent ecological profits that makes the whole business evolutionarily worthwhile. Although reliable, individual intimacy is costly. Hence vertebrate societies are typically bound by the number a typical individual can recognize.  

Humanity crossed the proverbial Rubicon by taking two important steps forward. First, we employed symbols as a proxy for this costly intimacy in order to broaden our circle of trust.  Our unique level of evolution did not occur within independent bands, but within an interdependent web of multi-band societies. Bands of close intimates bound with other groups to stand a fighting chance in the Pliocene. Yet for such large anonymous societies, collections of non-related individuals seldom seen in the animal kingdom, we needed more than generosity towards hominoids with familiar accents.   We subsequently partitioned behavioral sets by a new inference, intention.   Foreigner identity allegiances, whether to a common society, a competing one, or a vagrant solo rogue identifying only with himself and perhaps his kindred, determined the boundaries of their cooperation.

Finally, reputation emerged to explain behavior that failed to meet expectations, and evolved as the output of the value system that ultimately bound this anonymous social order. Shibboleth and Morality might seem an odd pair but, like day and night, we could not have one without the other. This pair allowed us to gain safety and eventually the profits of cooperative behavior  by adopting a code of conduct and learning how to learn. Not just from intimates and kin but from strangers and dead people.

Winning Game Theory with Trust

Daniel Dennett uses rationality to define intention in a broad sense. Not only are our primate kindred more in line with HE the original than us, in a manner of speaking so are Ribosomes.  Instead of worrying so much about how humanity is unique in its conscious intention or agency, look at other systems and see where you can deduce intention. Perhaps Ribosomes do not know they are part of a protein production factory, or perhaps they do. Either way they act as-if they had intention. By defining, in the Neoclassical spirit, what a rational agent would do for its own interest, we can usefully infer agency. Though an amoeba’s intentions are of less wit then our own,  it is not clear that we can easily distinguish our agency from theirs, for there is much we do that we are not consciously aware (remember to breathe and blink) and also we must have evolved form less aware creatures.  This means that the increase in organic  complexity in the natural world involved the subordination and aggregation of the goals of individual agents within hierarchies and systems. Each bounded by a blanket, each processing information for reproduction and homeostatic maintenance. The evolution of life proceeds with tiny competitive units joining forces, cooperating to form iteratively less tiny systems. If this is a useful way to think of the biosphere it is certainly useful to better understand hominoid economics.

What is true in biology is also true of our material civilization.  The original HE ostensibly espouses the virtues of competition. But a slightly closer look at HE’s setting and story reveals a perfectly cooperative system. The Neoclassic equilibrium  In the perfectively competitive model there is, ironically, no competition. Prices allow agents to exchange goods and navigate employment with pareto efficiency. All sellers offer goods at marginal cost thus making it unprofitable for any would be competitor.  This applies to inputs of production, including wages, as much as it does for consumer goods. Resources are allocated with precise cooperation and laborers specialize in efficient tasks to pursue wages, toiling away as ants in a colony. Despite the emphasis of many an economist, the neoclassical model is in a sense a hat tip to cooperation.  Consistent with the reliance on information in biology, this cooperation is achieved by assuming perfect, freely available, information.

In reality information is not quite so forthcoming. Not every good and service comes with a  price and those that do are often guarded in services discriminatory gains.  True value is hard discern in say used cars, and information is frequently asymmetrically skewed as it is in medical-care.   Acquiring in advance the productive capacity of a potential laborer, and thereby setting a proper wage, for example, requires substantial transaction costs to acquire and achieves partial certainty. Even consumers are bounded in their knowledge of how best to sate their own preferences. We are under the constant assault of great uncertainty that cannot be assumed away.  So how did we achieve the gains of cooperation evident in our economic system? (See Pencils).  Homo Economicus, The original, encountered its first formal experience with cooperation in Game theory.  A one shot exchange founded on the original’s rationality and selfish assumptions, GT brought three interesting insights regarding how an autonomous primate would approach cooperation.

Firstly, it helped demonstrate that cooperative profits could be quantified, and so provides a technical definition of the concept. Two prisoners, in the canonical example, serve the least total time when they cooperate by not snitching to the cops that caught them. Yet if one does snitch and the other holds out, the snitch get the least time individually and the cooperating sucker gets more. Cooperation is quantified as the years saved between the two if they both decide not to snitch. The collective gain that can be had together over what can be achieved when acting independently.

Secondly, it demonstrated two HEs type agents would never realize said gains. Or at least GT highlighted how difficult it would be to imagine them doing so.  Both prisoners would realize their optimal selfish choice.  No matter what one crook does the other is better off turning state witness.  This illustrates that Neoclassical implicit cooperative description  behavior of the otherwise selfish and rational Homo Economicus are determined entirely by selfish gains embodied in prices or the threat of legal action. In the prisoners dilemma analogy this would be the cost imposed by Michael Corleone or Luca Brazzi.  HE does kind of cooperate but only with these formalized, exogenous encouragements. In this current remake however, we just began with the origins life itself and in this next chapter, Humanity needs to make it out of the Pleistocene before establishing any fancy formal institutions or joining the Cosa Nostra.

We found ourselves in a uniquely challenging position and needed to learn cooperation, and as with all ecological instances of cooperative formations, we needed a change in the availability of information. Given that prices serve as the primary information signal, we needed a reduction transaction costs. This brings us to the third insight GT provided, in a dramatic point of departure from the enlightened yet cynically hawkish creator of game theory, it allowed anthropologists to formally define the way humans do cooperate in society. Our solution to game theory, our initial and inveterate resolution to the dilemma of the prison is  morality. 

Although morality is distinct set of tools, unique to the human toolkit for cooperation, it was not the first tool kit we had that did so nor is cooperation morality’s exclusive remit in our lives today. Cooperation, interdependence is made possible with the availability of information. Our vertebrate cousins and primate ancestors first engaged in a practice that solved the prisoners dilemma, this practice was trust. 

HER Blanket: shield of shibboleth

[Words] are not the only signs which we are capable of employing. Arbitrary marks, which speak only to the eye, and arbitrary sounds or actions, which address themselves to some other sense, are equally of the nature of signs, provided that their representative office is defined and understood.

George Boole

Vertebrate societies exist under a superordinate Markov Blanket, a blanket that binds members in a more predictable environment. Reducing uncertainty and encouraging, at least rudimentary cooperation.   The information typically exploited to sustain this social identity is maintained by the rather costly tool of individual recognition. Limiting the size of societies and hence the extent of potential cooperative gains.  Although they can do a reasonably good job of reducing the likelihood of harm from an ingroup member, it is a far cry from the task, or niche specialization and elaborate colonies of termites and ants. In order to extend cooperation a potential breakaway vertebrate  would need to discover a new information source to form and sustain a wider blanket.

Gaseous and liquid matter forms enduring information in nature by encasing themselves in solids. Solids that  themselves represent information, tightly packed atoms that follow a particular structure.  Life exploits its organic informative blankets to snowball over itself. Nucleotides in DNA solidify the gaseous nitrogen bases that form our genetic code. The first lettering of our programing language, a language that served as the conceptual casing of civilization’s information template took the form of symbolic identification.  Mark Moffett, a prominent anthropologist proposes that our use of audio and visual markings acted as an ecological ‘hack’, enabling a cognitively efficient broadening of group identity.  Binding smaller intimates into multi-band societies. Encouraging trust amongst anonymous individuals. This served as a superordinate blanket, partitioning a higher level dichotomy between internal versus external states, an abstract modeling of the world with a greater potential for cooperative gain, and an expansion of the first do no harm vertebrate social rule.  Critically it allowed us to identify with a social unit more emphatically in our mind’s eye than our relatives.  Inspiring the additional nesting of blankets that would turn the rudimentary social rule into a code of conduct.

HER firsts flags, which likely took the form initially of vocals, were the hominoid proxy for intimacy. Accents preceded language. We went crazy with our version of the chimp’s pant hoot. Shibboleth acted as an informational signal, or sign stimuli. One that reduced uncertainty regarding potential stranger danger, and allowed us to model the behavioral expectations of strangers, using markings as opposed to investing in a time consuming personal relationship.  Bands each saw themselves as part of a greater whole.  Instantiating our unique primate proclivity for anonymous societies.  This hack shows up early in our development in the form of the Minimum Group Paradigm phenomenon.  A phenomenon often derided as a driver of classism, racism, discriminatory and, in the extreme, the pseudo-speciation of outgroups. Yet to pseudo speciate implies the elevation of those who meet the label human earn our basic empathy. This empathy is inextricably linked to our ability to trust strangers and given the general power of symbolism, played a critical role in our cognitive development. 

Shibboleth may act as an ugly bounds on HER humanity but without it there would be no humanity to bound. We can be exceptionally cruel given the tools we have since acquired but our discrimination was our first step outside our intimate vertebrate bands. Allowing each to coexist with others and form our first anonymous societies.  Vertebrate societies instilled the first proto mores, that is, do no harm to an ingroup member. Rudimentary thought it was, it effectively projected the instinctual impulse of self preservation to others. Identifying not with the stuff beneath our skin and near kin but society member as well. Albeit this was limited in vertebrates, by symbolically broadening our social units we further projected our identities.

Given the early arrival of this practice as claimed, i.e. from at least the moment we parted ways with our chimp relatives, it afforded  our advancement as a species. Our symbolic Identity served as the blanket that distinguished our social unit in a way unbound by an individuals intimate knowledge, or any single rolodex.  Symbolic identification was extended at some point to numerous levels of social hierarchy.  Forming nested  blankets that echoes through the Anthropocene. Families, tribes, nations, are all higher or lower blankets that followed our initial band identities. Our symbolic blanket served as a social programing language.  With this language we coded morality and convention. What we achieved was eusocial level cooperation.  The consequence is that our group paradigms are not simply the classification of an outgroup as a competing team, they also identify which teams adhere to a proper code of conduct, and enforce the code amongst their members, to even play the same game.

Moral Halfwits

Hayek, the Neoclassical steel man himself, understood morality as the link between instinct and reason. Foreseeing how our moral impulses and rationalizations gave way to our generalized cognitive capacity.  Seeing it as between our instincts and reason gives way to the notion, I argue here, that morality serves as an essential bridge from our instincts (or sentiments) to our cognitive ability to reason.  Like Adam Smith before him, he saw our civilization as relying on our capacity to follow rules. This led him to be an early proponent of cultural evolution, the notion that our distinction lies in our ability to accumulate knowledge and knowhow across individuals and over time. He even noticed that their was a bourgeoning science behind morality. Noting inchoate theories promised a better understanding of our moral practice, an understanding consistent with an evolutionary view of humanity. Fortunately it seems there has been progress, but some of the insights conflict with a critical assertion of Hayek, one that reverberates in Neoclassical dogma.

Anthropologists, neuroscientists, psychologists, and philosophers seemingly reached a consensus that morality is instrumental tool that allowed humanity to excel in the very ecologically profitable goal of cooperation. This approaches an anathema for the Neoclassical school. Hayek viewed competition as the central driving force in human evolution and hence singularly captured the superiority of capitalism over the inherent hubris of socialism.  Competition was required because neither a benevolent ruler nor the wisest committee could possibly foresee all that is necessary to effectively run an extensive civilization. He explicitly marginalized the role of cooperation in his pointed attack on Socialism’s Fatal Deceit.  Defining it with stringent preconditions:

One revealing mark of how poorly the ordering principle of the market is understood is the common notion that ‘cooperation is better than competition’. […] Cooperation, like solidarity, presupposes a large measure of agreement on ends as well as on methods employed in their pursuit. It makes sense in a small group whose members share particular habits, knowledge and beliefs about possibilities. It makes hardly any sense when the problem is to adapt to unknown circumstances; yet is  this adaptation to the unknown on which the coordination of efforts in the extended order rests…

Hayek

This seems to be a high bar for the word cooperation. Agreement on the ends AND the methods? Biologist label the actions of organelles as cooperative regardless of their alignment on the means of preserving their cellular whole. Nor was it likely that either the organelles or genes themselves have any specific designs as to the elaborate outcome of complex organisms.  When foreign bodies enter an organism anti-bodies are deployed while majority of the organs remain ignorant of the attack.  The line between competition and cooperation was drawn clearly by Oliver Scott Curry, ironically enough by using Game Theory.  Wherein cooperation is defined as actions that lead positive sum outcomes in contrast to the zero-sum nature of competition, where ones gain is another’s loss. 

The true issue though is not a technical linguistic faux pas but what that the exclusive focus on competition implies about human society, morality, and identity. In other words, what our normative framework is and its role in our civilization.   The implication is manifest in Hayek’s emphasis on the unintentionality of our values:

To understand our civilization, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection – the comparative increase of population and wealth  of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be fruitful, and multiply, and relish the earth, and subdue it.

I am fully behind Hayek on the pain and reluctance in morality adoption.  Morality by definition is forgoing near term selfish desires for aggregated gain. HER doesn’t think fondly of waiting to eat a marshmallow nor doing math homework. Babies may demonstrate ‘altruistic‘ behavior yet toddlers must overcome a great deal of reluctance before they play fairly. Even the what may be said as the most natural moral code, parenting, requires a great deal of pain and reluctance management to get through nighttime feedings. He loses me, and I believe the foundation of morality and our civilization, on words like unintentional and unwitting.

Hayek famously wrote (wisely) in Road to Serfdom that to judge any action as morally virtuous, the individual needs to have carried it out in according to his or her free will. Otherwise their behavior would be coerced and morally irrelevant. Hence a society that yielded its citizens freedom was necessary to allow a morally just state, namely capitalistic societies that uphold the rule of law and maintain certain rights for the individual.  In Fatal Conceit, however, in trying to demonstrate the folly of a socialism he loses some sagacity cred by overemphasizing the limits of individual foresight and intention with regard to moral agency.  Evolution generally works without advance design, and this applies to the gene-culture evolution that has played a distinct role in our development as a species.  However culture requires our willful participation, despite Hayek’s assurance our markets. Which are extensions of our cultural practices.

At the heart of our engagement with past traditions and commitment to posterity, stuff necessary for cultural learning, is our willingness to further the cause of something bigger than ourselves, the greater good.  Our normative framework more broadly is distinct from other drivers of evolution precisely to the extent that the relevant agent is wise to its own behavior, its potential social consequences, and the balance between willing conformity to norms and values with experimental exploration of potential norms and values along with their material consequences.  Morality is critical to our participation in cultural evolution. Though we are ignorant of the ultimate bigger picture, morality is the game we play that relies on a shared belief in the causal connection between our actions and their consequences. We simply know that there is or may one day be a bigger picture, even if we cannot personally paint the entire mural. We cooperate not as an unwitting ant. We are, morally speaking, half-wits.

Behavioral Band Brands: reputation

Sentient life parts ways with viruses and thermostats by acknowledging the uncertainty of the world and forming a plan to reduce it.  Modifying reality by envisioning a different one.  A new picture of its environmental landscape that includes a self portrait. Action amounts to a modification of an organisms reality by closing the gap between its own fervently held beliefs of the near future and its current understanding of the state of the world. Hominoids took this practice of active inference and intention signaling a step further.

Imagining a make believe community requires others to share our fantasy, making us emotionally vulnerable when others other do not play along. One way to resolve our sad surprise is to give bands and people their own label, create a more bespoke abstract Markovian identity.  We transitioned from symbolic societies to personal behavioral brands, or reputations. Reputations are bracketed behavioral sets that inform our cooperation, reducing behavioral expectations of bands and people to label, a label that was initially a simple binary tag.   Our curiosity then honed our inference on the intentions of our conspecifics. We woke to a world of free will.

Actions, whether conscious or automatic, are driven by the brains selection of a predictive target, by the mind’s imagination. This envisaged future is reified  by sending messages to alpha motor neurons that represent the deviations between the predictive intentions and reality’s current state of affairs as represented by the senses. Intentionally sending errors through the nervous system in order to harness the uncertainty reducing machinery of the brain and nervous system to achieve its goals.  Statistically the end goal is represented as a causal state and their attendant  proprioceptive sensory inputs. I must predict that my arm is atop my head, my brain then feeds forward the errors between its prophetic vision and the current placement of my arm, triggering the nervous system to close this gap. Bringing to fruition the desired target state by predictive processing. The most elementary action of life, the foundational simulation to which organic life adheres is preserving its own state. Maintaining the boundaries that demark its existence.

Solids encase matter in steady-state equilibrium. Given that solid matter are organized, one group of rock molecules can be used to predict additional adjacent rock molecules, they are themselves information. Life exploits this paradigm to snowball over itself.  Cell walls and a cheetah’s skin signal the statuses of both the internal and external environments it partitions. They gather information for the organism and allow other organisms and the biosphere to engage with it. This signaling makes way for the semi-organized circus of life’s complexity and guides its growth. The blankets that let others know it is a willingly defender of its own existence, but also a potential collaborator.  Ants use chemical pheromones’ to signal group membership. Cell walls evolved to communicate and conjugate with one another, forming the foundation of complex life. In order for group identities to maintain sufficient informative power, they needed to in some way correlate with the behavior of their members. This is critical to ensure the ‘intentional robots‘ that are the Lego pieces of life click into place.  Vertebrates rely on information in a more intuitive, semantic way of thinking of information. Relying on the knowledge of individual intimacy.

Vertebrates actively infer themselves as constituents of a cohesive unit, and hence act to ensure its persistence. Not attacking ingroup members and attacking competitive units. The individual recognition of Vertebrate societies amounts to a form of proto-trust, i.e. trusting at minimum that we will be protected from outgroup members.  This permits in group members to foster selective friendships, form alliances, constrain costly rivalries, replace harmful struggles with dominance hierarchies, and all in all structure a more predictable daily life by familiarizing themselves with society members. This effectively reduces uncertainty in a way that increases the likelihood of fostering the gains from cooperation and manages  harmful competition. From a free energy view of perception and action, simply by recognizing a unit as distinct form its surroundings, and seeing one’s vertebrate self within it, we act to maintain its existence. The way our brain sends error messages to our arm when it is not atop of head as we have envisioned moments ago. This society, or social world as a manifestation of our will, following a convincing idea.

We pictured a broader portrait. Hominoids emerged as the amalgamation of small egalitarian bands under a symbolic identity.  The audio and visual markings signaled their residence in an imaginary community, informing others of a shared recognition and attendant behavioral expectations.  As far blanket signaling goes, however, the symbolic partition offers a particularly faint one. Hence this uncertainty required a necessary complement, an intermediary signal sufficient to proxy intimacy and achieve its envisaged cohesion. As vertebrate social units are bound by the imagination, and hence more permeable than the pheromones’ of ants and bees, and as these are more permeable than the lipid walls of cells, which finally are more permeable than the solids of rocks and stars, symbolic societies are towards the extreme end on the gradient of permeability. They leave the greatest degree of uncertainty on the table.

 We needed to call upon our imagination to identify not only group membership, but mutual acceptance of group membership. It is not enough to make believe you are part of my imaginary community you need to signal your own belief in it and process the information signal of conspecifics. Inferring that particular groups, or band members with whom we were not individually acquainted nonetheless adhere to a shared social identity. Figuring who respected the flag. From team colors we began to infer intentions, to believe in the capacity and ultimately, the volition of conspecifics to behave in a pro or anti-social manner, to adhere to specific imaginary constraints.   This norm signaling, following the inference of intention, amounts to individual and group reputation. Hominoids trust that anonymous, yet in-group member will be reprimanded, in accordance to a shared incentive schemes covered by norms and morals.  Envisioning harmony under a pretend blanket makes us vulnerable to disappointment. One way to resolve this sadness is to label deviants as evil.

Our curiosity, the incentive for an environmental model to refine itself regarding the wider world extended to reputations, assessing the conduct of groups alongside their symbolic markings provides additional data points, information about their future actions. We generalized this practice, and began inferring the intentions of individuals. Personal reputations became rewards bestowed on intimates.  Granting them with higher social station.  We envisioned goodness, and then felt what such behavior would look like. Good and evil were our moral Markovian blankets, our original institutional, cultural constraints.  Reputational tags are an incentive schema made possible by intrinsic, in contrast to the more Neoclassic friendly, extrinsic motivation. The central lifeblood  of Homo Economicus the original. This incentive schema, by contrast, relied on a visceral, emotive reaction tied to our behavioral expectations. Where behavior either deviates from harmonious expectations or that conformed to a lowly reputational identity it triggers negative affect. This affect was exploited to the value set that determined reputational categorization.  A partitioning taxonomy, a target classification that would be trained on observed behavior, coefficients that became moral values. 

Morality is a toolkit for cooperation. It is carried out across cultures with a consistent template.  When we transitioned from group to personal reputation and began inferring the intuition of conspecifics, we combined the recognition of intentional harm with negative affect to deduce the behavioral rules of morality. Subsequently we no longer need to directly observe harm, we simply infer it from rule violation, experiencing the negative affect, the moral indignation, shame and guilt following norm violation.  Morality is thus an iterative model and  a promising candidate for the necessary recursion at the heart of our cultural evolution.  Symbolic identity was transmuted to reputation, and finally to social roles and their attendant responsibilities that allowed us eusocial-level task specialization. 

The innovative, imaginative use of identity markers allowed us to achieve the division of labor noted by Smith and Ricardo, at an ecological level equivalent to niche specialization.  Mother, father, policeman, judge, warrior, nurse, priest, etc.  The modern notion of identity with which all us hominoids are intimately familiar is the recognition of the self as a part of a greater whole. Identities  establish an objective around one’s behavior in the context of an aggregate social unit. But morality isn’t relative, i.e. mainly about duties that correspond to roles, right? No one can kill, maim, murder, rape, or plunder?  Morality is about objective preferences. Yet even these most universal and fundamental of moral values fit into a projected identity. They are based on the binary classification of good and evil.  The foundational social rolls are heroes and villians.

The Song and Dance of Morality

How is it possible that another’s weal and woe should influence my will directly, that is, exactly in the same way as otherwise my own move it? How can that which affects another for good or bad become my immediate motive, and actually sometimes assume such importance that it more or less supplants my own interests, which are, as a rule, the single source of the incentives that appeal to me? […]

I must in some way or other be identified with him; that is, the difference between myself and him, which is the precise raison d’être of my Egoism, must be removed, at least to a certain extent.

Arthur Schopenhauer

The Free Energy Principle is apparently pretty confusing. Perhaps the details are, and more details are likely needed to allow for a full modeling the brain in order to understand neurological disorders and perhaps help replicate the brain’s power (but better) to achieve general AI.  However, on a high level it is both convincing and intuitive. There is a general drive to increase entropy which is, roughly speaking, the degree of chaos or randomness, in a system. It could also be understood as ignorance. However precisely you define the term it suggests that the persistence of organic life structures is a type of defiance.  FE provides a framework for demonstrating how organic life exploits environmental information to learn, persist, and reproduce. Its explanatory power extends to the  curiosity of life, how birds would discover to fly south during the winter. Or why humans and monkeys are so curious despite the cost of curiosity and uncertain rewards. FE explains the intrinsic motivation Bowles and others recognize as crucial in running our economy and addressing the limitations of the price system.  Hominoids bring curiosity to the intentions of conspecifics.  We picture villians and heroes and back into how each would behave.  Morality is a song, or a story. A story based on the stories of the characters within it. These passionate, sentimental dramas gave way to the narrower template for more dispassionate conventional norms. Together, this normative framework served as the initial foundation and remains the engine of our culture.

Morality, the great bridge between our instincts and our reason, is a realm that covers all the target areas of FE. It revolves on perception, frames our action, and can be understood, at least in part, as a desire to reduce uncertainty. For all that it seems to be, Morality boils down to shared expectations of social behavior. Unexpected behavior fails to meet our priors.

What makes our moral practice unique, if not amongst primates than all of sentient life, is the particular expectations we share. As Schopenhauer knew, they revolve around the well-being of others. Compassion, sympathy and empathy are affective experiences generated by events beyond our own flesh. Two questions remain. What was the original Homo Economicus missing in regards to our motivations and preferences that fails to account for this fundamental driver of human action? The second question, is why is this lengthy discussion taking place in an nominally blog on economics? The answer to the first, is our affect, or moral sentiments. The second is a reminder that Adam Smith second book was a sequel to his first. 

The creation of our moral value system  involved the evolution of the first rule of vertebrate society into a three act drama, according to the Theory of Dyadic Morality (TDM).  The first act can be captured in a sentence. The subject is a villian, the object a victim, and the predicate is harm.  Following the observation of a villian intentionally harming an innocent victim,  we experience negative affect as the second act.  This affect follows the discord of social expectation. Finally, the concluding denouement includes our exploitation of our newly developed powers of abstraction to generalize harm into values. Values that allow us to actively infer increasingly distal consequences of social behavior.  

Moral values, the parameterization of our simulated symbolic identities, allowed for the classification of conspecific individuals and groups of people. These were Markovian classifications that provided the necessary information signals in order to sustain the anonymous societies we engaged in.  As our brain sends error messages to our arm, and descends down the error gradient to achieve its desired state, we pictured harmony that led to affect. Then, we broke down our conspecifics according to their observed identity adherence. Determining to what flag, if any, any given hominoid paid allegiance.  Given that the original units of our anonymous societies were intimate, egalitarian bands, early reputations need not have been complicated. The first a simple binary, good or evil. More elaborate, Shakespearean style character trains and hominoid taxonomy followed this original coarse-graining.

seeds of sentiments

Cultural evolution is the idea that the primary driver of the genetic changes, which distinguish our species from pan and others within the animal kingdom, was each other.  We initiated an auto-catalytic process that facilitated gene-cultural evolution over and above the forces of nature.  In addition to family and friends we learn from strangers and dead people.  Accordingly our unique dexterity did not just happen to permit tool making, but our sociality drove an increasing reliance on increasingly sophisticated tools, promoting an evolution in our biology, for example, our dexterity. We can now play the piano because our ancestors encouraged (and selected among) their children to make more intricate Oldowan tools. 

A theory explaining our cultural evolution then needs to explain how we engage in cultural learning. Cultural Evolutionary Psychologist, Cecilia Heyes discusses the categories of cognition that enable this learning, including causal modeling, social imitation, facial recognition, shared intentionality, mind reading, and episodic memory.  She notes, however, that the data show these are more akin to gadgets, tools that we develop within our social cultural environments as opposed to what interest us here, instincts, i.e. cultural ‘grist’ that sit inside our genes and await the milling of our families and social institutions. The question then remains is what genetic instincts lie within us at birth that allow us to learn language, engage in close social contact with strangers and participate in our hyper social world order.

When speculating on what might meet the criteria of instincts, meaning what might be the true origin of the mechanisms necessary for our ‘acculturation’ Heyes points to a constructed emotional theory, and specifically the most distinctly human moral emotions shame and guilt:

This book has focused on four kinds of cultural learning : selective social learning , imitation , mindreading , and language . A fifth type , normative or moral thinking , is ripe for similar analysis […] Morality is likely to be particularly fertile ground to pursue these questions, given the intimate relationship between normative thinking and distinctively human emotions such as shame and guilt.

Cecile Heyes in Cognitive Gadgets

Lisa Feldmand Barrett understand humanity’s affective experience within the context of the simulating, predicting, uncertainty reducing brain hypothesis.  We take sensory data of not only our external world, but our internal milieu. The resulting model of our internal and external environment is neither cold nor dry.  This process of interoception is how our emotions are constructed, i.e. part of this Bayesian update process consistent with the FE principle.  We experience core affect or basic emotion, physiologically and then our social environment guides our conceptualization of that experience.   Our brains receive environmental stimulus, respond to that stimulus, and decide whether/which action to take.  We infer meaning from our responses and label them as the emotions based on our cultural environment. We learn from one another not only how to respond to the affective state of anger but that this negative affect we feel organically ought to be defined as anger and how to express the valence of anger we then feel. Our affective experience is an entry way into our cultural environment. I believe negative affect followed a discord with  expectations, this basic emotion is than tagged in a social taxonomy that provides the necessary scaffolding for further social learning.  I believe the most critical driver of these expectations were set following our transition to symbolic communities, and further, initially binary partitioning that gave way to reputations.  This encouraged our participation in a society that spanned beyond our kin and intimates, allowing us to participate in culture, and cultural evolution.

According to TDM our moral values are grounded in a shared cultural recursive model of harm. If we identify an individual as a intentional agent who slaps an innocent child who suffered harm as a consequence, we likely express our aversion for this behavior in the form of negative affect. Next we establish a rule that serves as a proxy for harm, i.e. no slapping children, and experience the affect as moral rage.   Once we perceive an intentional agent either harming or now even slapping a strong child with no discernable impact, we experience a righteous anger that concludes with, at minimum, a finger wagging moral judgement.  Likely we also have created in our minds a villian that can no longer be trusted.  Although it would be useful to identify which among our intimates can be trusted to cooperate with minimal oversight cost, it is ideal in coordinating behavior in the multi-band societies envisaged by Moffett, societies we engaged in early in our phylogeny. 

This perception of harm then triggers a negative affect and is connected to the violation of a norm or cultural value.  The presence of ‘norm violation’ in TDMs moral template represents a pathway for recursion. In each iteration, values can be created or modified. Noticing than the actions of an intentional agent caused more harm than typically associated with the norm than this heightens the sense of immorality, prompting an increase in affective response.

Weaving in the famous trolley examples, detailed in Joshua Greene’s work and a tad more rigorously in The Good Place, I see the events that demonstrated how we arrived at moral values thus:

1. We see someone intentionally harming another person with whom we identify and this upsets us. Even if this someone is not a true person but instead a modestly anthropomorphized triangle, and the victim is a modestly anthropomorphized square, and the harm consisted of the triangle moving the square in the direction it was not previously moving. We later show a preference for the square over the bad triangle.
2. We not only label that particular action as harmful, but generalize to all shoving actions, developing a moral value. Later on when we see someone shoving someone else with intention we label he action as likewise bad. 
3. When we then happen to see someone shove a man onto train tracks we think bad! And experience the attendant negative affect as moral outrage, righteous anger if you prefer.  Even before seeing whether or not this man was hurt in the fall. This is true even if this person rapidly informs us they have showed a fat man over a train track to his certain death…BUT his weight would certainly (100%! He swears, we trust his calculations) stop the train from subsequently killing 4 additional people. We can’t help but feeling this action was bad, even though we earlier engaged a switch to have the train avoid the track with 4 people and instead hit only 1 person on an alternative track.
4. Importantly we did not have to witness the harm shoving can lead to in order to morally condemn the behavior. We could have learned this from peers, parents or a priest.

TDM provides universal template to explain morality across all human societies.  We apply moral judgements in line with the likelihood the given behavior will lead to harm. We experience guilt over our own actions and expressed moral outrage when others failed to conform to moral and even conventional norms. This template not only sits well within theories of the Bayesian, simulating and culturally constructing emotional tags from core affect brain, it also does a great job of explaining Hayek’s understanding of how morality is bound to both our instincts and our reason. Explaining how morality is often so viscerally felt, including by children as young as six months, to a domain that reaches a fever pitch of complexity.  Plato and Nietzsche can engage with morality, so to can Jane Austen and Shakespeare, so to can a three year-old.   This connection between harm and values grows in complexity in part due to its bidirectional causality.  Norms and values are constantly being updated, as we learn more about the intention of villians, the consequences of the actions, and how others convince us of these values.  Hence it is a candidate model for the recursion necessary for both reducing, and contributing to, uncertainty.

Our ancestors developed this recursive model in the context of multi band societies, boot strapping our way to a complex set of cultural norms and moral behavior and prosocial affect.   A code of conduct that likely gave way not initially to individual reputation, but first to band reputation.  Branding faithful bands, whose likeness was similar to ours yet distinct in their own right. Given that these societies were made up for relatively egalitarian bands, the initial reputation was likely good or evil. Each band within our large anonymous societies would have incentive to conspicuously signal adherence to behavioral norms that facilitated cooperation with the society writ large. While our ancestors could not keep track of every individual in neighboring allied bands in these societies, they could likely maintain an understanding of an entire band as if it were a single individual, or a unified entity and deserving of a specific moral status. Using moral values, hominoids were able to govern larger, anonymous societies, through reputation.  Providing a more predictable environment for its members, and promoting interdependence and collaboration.

Thus the three act play of morality is performed as a song that prompts us to dance. It motivates our movement as Schopenhauer understood.  Distancing us from the proximate rewards of the self to be of service to the whole, the greater good with which we now identified. We are acting in accordance with Dennet’s intentional stance, that is, servicing our rational interest. But given we are partly bounded by a symbolic identity, we, to varying degrees, act as rationally as befits the interest of our imaginary community. Perhaps not always authentically. We are motivated perhaps most directly, to perform as if we place the well being of our fictional family above ourselves, to signal our virtuosity of other-regarding in excess of our true internal motivating preferences.  To the extent that this is successful, however, that hominoids enjoy the game theoretic cooperative gains of a symbolic society, the actors carry out their roles in reality.  HER followed  through sufficiently in her theatrical drama of the tale of morality, performed on the stage of the Anthropocene.

Our ability to create values that prevent harm generalizes to conventional norms, namely by removing the harm requirement.  This facilitates further cooperation by allowing cooking, language, more complex tool use, and task specialization. These moral sentiments and conventional norms allow hominoids a shared, distributed model of reality that provides the blueprint for our civilization. Our use of language and other civil achievements requires rules with no pretense of a connection to harm. All animals and certainly our primate ancestors exhibit behaviors which amount to conventions.  Now, however, HER can applies her new super power, a normative framework, to create, iterate, and enforce conventions with at least a quasi-moral force. Conventions, per TDM, are simply a moral value without harm. Distinguishing between spitting in your own soup versus someone else’s.  The closeness of conventions and moral norms are seen in the affect harmless norm violation garner within us.

Normative Framework: Hominoid Hyperbole

Norms operate at every element of our civilized existence. Our earliest tech involved specific conventions around procuring, modifying and implementing stones to achieve desired ends. The ability to exist in the density of a coffee shop requires a shared expectation of docility that chimps and other primates lack. Language is conventionalized panting, conventions we often enforce with nearly moral vigor. Whatever social instincts we possess, while each consequential in their own right, are all externalities that followed from our initial practice of oughtness. We imagined ourselves as part of a community, discouraging deviants with a dis-incentivizing label of evil, and iterated our affect tagging model by partitioning our social behavioral space with the new adjectives we learned following the evolution in our relatively harmless grammatical conventions.

Humanity exhibits a wealth of practice decidedly different than the animal kingdom. Reduced to its core, however, much our features are simply exaggerations of primate, vertebrate, and even sentient tendencies. Order, structure, or information, persists due to enabling constraints. Liquids and gasses in steady state equilibrium endures  when captured in solid matter, molecules can be harnessed beneath the lipids of cellular walls, insects use pheromones’ to constrain behavior and form a cohesive colony.   These structures are themselves information. Signaling their internal structure to the environment and offering an opportunity to interact with its contents. Vertebrates imagine themselves as part of an intimate band of conspecifics, their individual behavior is constrained to promote its endurance. Homo Economicus is in many ways an accurate depiction, not on only of hominoids but of all sentient creatures, provided we understand individual rationality is bounded by these constraints. Binding the individual’s rational selfish calculus. Amoebas and ribosomes move through the world with the rational intention to pursue their own interests, they increase their chances of preservation and replication. Yet under threats of predation individual Amoebas sacrifice themselves to help their fellows.  Hominoids to, are equally rational, in a sense. We take the intentional stance to increase the likelihood of our existence. The difference is in our fantasy. We imagine blankets that span the reaches of our minds eye, a blanket we tether to under personal cloaks.

HER active inference evolved to intention inference.  Reputation alleviates the surprise we experience as negative affect when others deviate from harmonious expectations of the cohesive unity that exists in our minds eye. Boxing in villians and heroes allowed us to back into a respective codes of conduct tied to these labels. A code that became generalized, applicable to harmless conventions. Moral agency is the hominoid hyperbole of vertebrate agency. A hyperbole that gave way to cultural evolution.  As organisms produce actions from the expectation, of a target state, i.e. I must envision my arm atop my head by first envisioning the end goal and altering reality such that this vision becomes a reality, the societies we envisioned in our shared imagination reified through reputations.  Allowing us to tag our volitional conspecifics with a simple tag.   Given the egalitarian starting point of our anonymous societies the state space of our initial reputational tag was likely a binary. Good or evil. Friend or Foe. Negative affect, the uncomfortable surprise we experience when social behaviors discord with the harmony within our envisaged structure follows from our mind actioning, turning the vision of the unified whole into a reality. Groups were reified with reputations, reputations were reified using morality.

 The cunningest and most ferocious foes we dealt with came to be one another.  Both within our societies, as we compete for cooperative spoils amongst ingroup members, and between societies, as we out cooperated outgroup members.  Our social status came then to depends not solely on our endowments of brawn or brain, but on our perceived adherence to our particular normative framework. Heroic Economicus, The Remake, presents the grounds for a normative hypothesis of our mind’s development. One that sits adjacent to the Cultural Brain Hypothesis, yet distinct in its focus on our exploitation of volition.  Morality as harm is an interesting low level casual mechanism, as a driver of our morality. Biologically it would seem harm is a highly critical driver of action. Any organism capable of movement will flee from harm. What the Dyadic theory of Morality implies is that this low level  function, universal to all organisms, has been applied in a other regarding manner. At some level we experience morality in a very foundational, evolutionary way. The normative frameworks, where our morality is bounded by identity,  dictates our expectations for behavior within our intimates and anonymous group members. Those that do not conform to those expectations of behavior are then reprimanded. 

In accordance with our intention inference, just as our arms move once we modify the expectation of its current location, slowly correcting the error of its current state in relation to where it ought to be per our target, we default to trust.  Not primarily because we objectively or even instinctively feel all people including outgroup members, are worthy of trust, but because, given the statistical mechanics described in active inference,  our normative model could operate in no other manner. We have in our minds the expectation of cooperative behavior in accordance with these norms, and proceed to chide and shame the behaviors, and the agents of those behaviors, who do not adhere.  Our instincts, our sentiments, these correspond to the expectations bound by group and role identity.  We even allow outgroup foreigners, about whom we possess a negative prior, a degree of trust to help parameterize our perception of their code of conduct. Defaulting to trust, rather than confining us to our intimate knowledge our known compatriots, allows us to collectively participate in an abstract model of harm where behavioral expectations are set for groups, and groups within groups. Given our normative framework each groups exhibits a collectives conscientious regarding their outward perception, i.e. their band reputation.  Likes cells binding to others cells to form tissues, tissues to form organs, and so on. Agents form groups, which are nested in greater social units.

According to Friston, an actively inferring brain is constantly seeking evidence for its own existence. Once we an identity is constituted the instinct of self-preservation manifests as the pursuit for and production of evidence to ensure its fruition.  A cell ensures its persistence by fortifying its walls and fulfilling metabolic processes.  We move by first predicting the outcome of our movements, and slowly minimizing the error between our envisioned target state and where we currently are. Getting our hand to the top of our head, involves predicting it there, and sending sensory-motor signals to our nervous system to ensure the fulfillment of this prediction.  Originally in the Pleistocene we shared expectations around how band members should behave, prompting us to chastise members who deviated from these expectations, or leveraging the reward system of reputation and labeled them accordingly. When we meet strangers we classify them according to a perceived group, and if is one separate than ours we make predictions based on prior knowledge and update these predictions based on their behavior, updating both the code which we perceive they belong and their adherence to these norms.

Reputations cascaded into the archetypal social roles we embody. Some strictly moral, heroes, honest, good guys, etc. Some more conventional but not without attendant moral values.  We select features from role models or exploit our powers of imagination, and gradually bring our reality in accord with our aspiration. If we want to be an Olympic runner we uncover the actions accord with a typically runner, finding stories of successful runners and align our behavior with theirs. Waking before dawn and strapping on Nikes and heading to the high school track. Corporate reputations, professional vocations and social classes are inextricably bound by our sense of identity and their attendant set of moral values and conventions. 

This represents arguably the best and worst within us. Allowing for both the productive behavior in firms but also discrimination in hiring practices.  It intrinsically motivates professionals such as Einstein, Salman Khan and Ada Lovelace to contribute to the greater good despite the miniscule percentage of that great goodness they are able to capture (I don’t think Thiel is missing intrinsic motivation, merely questioning whether it always need be that way or not enforced extrinsically). Identity labels are signals that define behavior expectations, allowing us each to craft our destiny once we know we want to become a doctor, a solider or an athlete. Our prices and ledgers did not create our anonymous society they extended it. It made more formal the informal institution that constrained our harmful competitive impulses, permitted competitive constructive behavior, and celebrated cooperation. It also guides our responses to uncooperative behavior. In Origins of Weird people Henrich and others demonstrate the value of norms that evolved that extended rather than attenuating our moral norms. The reputations that encouraged objective moral values yielded the increasing returns that separated the West from the rest.

Even in our day of uber rationality and much, literally, free information, we cannot comport to a model of freely available information. In lieu of listing out a set of instructions to carry out our tasks and jobs in society, we create songs and stories that challenge our identity. We wear robes and bright uniforms to establish authority. We exploit notions of memetic labels when we aspire towards a future identify. Doctor, accountant, teacher, and solider are all labels that signal a set of behavioral expectations and become the fixtures towards which we initiate our destiny. The perquisites attached to each vocations constrain our actions, encouraging us to forgo other motivations including immediate youthful impulses, or pursuing alternative aspirations. These vocational labels are not so different from the general character and more ostensibly moral labels such as trustworthy, honest, brave, empathetic, etc. 

HER Causal Pathways: Virtue Grist

Following the descent of our arboreal ancestors onto the tera firma they survived, thrived, and parted ways with pan by uniting under the blanket of imagined communities. Identifying one another using audio and visual markings as a proxy for individual intimacy.  Exploiting this new cognitive symbolic toolkit, we reified an abstract moral value system in reputation. A morally good character became an incentivized Markovian Identity. The abstract values were heuristics exploited to maintain the incentive schema.  Values that leverage a simple story prompting a sentimental response.  Cultivating an affective reaction to behaviors with increasingly distal consequences. We used a subset of this template to create and enforce arbitrary but useful conventional norms.  Identity took the form of roles, each role acquiring distinctive marking to form task oriented identities within a broader societal identity.  Achieving eusocial levels of cooperation. HER normative framework, proceeding on the convincing fiction of free will and behavioral accountability, affords us the power of freedom in defining our enabling constraints. The flexibility of deciding how we cooperate at a given time.

Michael Tomasello lays out a list of features that distinguish us from apes in The Cultural Evolution of Human Cognition. Including joint or shared intentionality (i.e. theory of mind), conformity, dual-level collaboration, etc.  As Cecile Heyes pointed out, many of these develop under the ‘scaffolding’ of rearing. Meaning children need to first engage with caregivers in order to acquire these tools, or ‘gadgets.  Hence the true genetic instinct, or driver of these abilities lies in another realm, this realm is our moral sentiments. In Becoming Human, Tomasello does seem to provide support for a view of morality as a casual force for cultural evolution.  He claims from 2-6 million years ago early humans engaged in social self-regulation, what he calls a second personal morality, the tendency to relate to others, face to face, with a heightened sense of sympathy for potential partners and a sense of fairness.  Our moral sentiments are the true motivating force of our normative framework, prompting us to mimic our mothers, and learning the intentions of our peers. Grimacing when others are harmed, and even prompting us to share food with hungry adults.  All these follow a recursive model provided for within a normative framework. Following our binding as a symbolic unit, and the creation of an iterative incentive structure that connected with social status earned by individual and group reputation, humanity evolved with a knack to determine what others are ‘intending.’ Our very sense of self, our pronounced story of our lives follows our normativity. As Carlo Rovelli points out, the starting point of identity is follows the engagement in a social environment.

Evidence for a Normative Theory of cognition would ideally be discovered in both our phylogeny and ontogeny. The latter of course is easier to find. Additionally, the presence of proto versions of the normative framework in our kindred within the animal kingdom provides further reinforcement. Demonstrating how we could iterate our way to super (hero) primates.  Regarding our Shibboleth Shield, Moffet offers the Pant Hoot and various other sensory signals that allow individual recognition, and even other species that seem to use a proto version of symbolic identification, i.e. the meerkat. He openly questions why other species have not taken up the practice, given how efficiently it can broaden group size.   In terms of our ontogeny, young children exhibit Shibboleth, distinguishing between language and showing a preference for one’s own.  They also, shortly after, root for teams with similar uniforms. Minimum Group Paradigm studies suggest this is an evolved instinct.  In-group bias is evident in our brain wiring. On the morality side, although the proponents of TDM, as far as I can tell, have not focused on evolutionary origins but they have pointed to evidence that our moral sentiments appear early in our ontogeny and are followed by our understanding of nonmoral norms. Children six months old have been shown aversion to modestly anthropomorphized triangles who practiced immoral behavior. There is evidence that children act altruistically early on, and proponents of TDM do site a number of studies showing early moral practices in young children. Suggesting there is cause to say we are perhaps born with virtue grist.

Conventional practices are present with children as young as 2 years old, as experiments have demonstrated.  Subjects had to not only acknowledge and enforce novel conventions in a made up game, they had to distinguish between conventions and more ‘universal,’ or objective moral wrongs.  Daniel Dennett and others believe that language is necessary for morality. While language can certainly exponentially expand the complexity of our moral and general normative behavior and practices, at its heart morality can and I believe is, carried out before we learn how to speak (ontogenically) and present at a primitive level in other animals. Many animals follow norms and conventions, dogs can be taught that it is wrong to bite the new baby, and holds his head down in shame when reprimanded. They can also be taught norms, i.e. not to poop in the house. Would hounds be so inclined, that is, through the accumulation of previous transitions to symbolic identity, and eventually to anonymized reputation, they could conceivable deliver moral reprimand in Bark. If morality is directly tied to harm, than early versions of morality did not require much additional complexity. Getting a loud pant hoot (even the meeker hominoid version) in one’s face for not sharing food, seeing angry expressions and the pointed fingers of our conspecifics in the Pleistocene would be enough disincentive to initiate the recursive incentive structure that grew to be the moral practices we observe today.

Our normative mind is the ground work for cultural learning, making possible our unique harness of evolution. Henrich offers two mutually reinforcing pathways that drove our crossing of the proverbial Rubicon into the lofty trajectory of cultural evolution. These pathways involves the ecological conditions that permitted enough social learning that eventually made it cost effective for our species to invest in our gestationally expensive (thanks again, Mom) mind capable of cultural learning.  One side pertains to top line benefit, i.e. the historical contingencies that allowed our recently grounded primate ancestors to accumulate enough useful knowledge and know how, and the latter are the social-care benefits relating to rearing abilities of communities that would allow them to reduce the bottom line expenses of such an investment.  A normative mind fits into both pathways and suggests perhaps a modest adjustment to one.

The modification is on the first pathway. Henrich’s draws a casual pathway from our Pan relatives, beginning with our descent from the trees. Where we came equipped with some necessary preadaptation, e.g. sufficient level of dexterity before cultural evolution took us on a sharper upward trajectory. The predation of the ground-dwelling and finally the incidental environmental flux that took place during this evolutionary important time proved the propitious conditions that allowed our culture to generate revenue. Critical in this pathway is the bridge between our sparse ancestors to the  ‘Larger, denser social groups’ that, according to Henrich, was critical to our cultural learning.  Other apes do use tools but do not sufficiently learn the craft from one another to reap the benefits of culturally aggregated knowledge, and iteratively refined design. However it seems unlikely to me that we remained behind the Rubicon during the period prior to our increased density, given the amount of time we that we existed in more sparse, fission-fusion societies. It seems for much of our development. This would stretch back to periods where he notes we did practice tool making.  More likely, in line with Moffett’s description, we descended from the trees, earned the benefits of fission-fusion dispersal yet were able to affiliate with one another using symbolic identification. This would also make it more likely that we had the necessary ‘blanket size’ that encourage our morality to grow to become the model that bound the imagined communities at the heart of cultural learning.

In the second sociality and care pathway, the ‘cost management’ side to the alluring cultural profits, having the ability to enforce moral norms makes the most obvious sense. ‘Food Sharing‘ was also a critical practice that allowed a risky, unpredictable endeavor to become an important source of nutrition for our ancestors.  Have a normative framework is critical to this taking place. Even a practice that seems unlikely to need a rule at all,  the responsibilities of mothers to their children is listed under the MAC theory as the most universal more rules amongst hominoid society.  This might seem odd, wouldn’t the selfish gene provide all the motivation required for maternity? However not all animals are great mothers, as Ricky Grevais points out, unlike humans, they don’t need to be.  Moralizing a mother’s role in child rearing provides a supplement to a genetic instinct, a supplement perhaps necessary given the unique sacrifice of time, energy, and health in rearing. Additionally, the extra care however cannot entirely be born by mothers. In hunter-gather societies fathers, other relatives, etc. typically take up to 50% of the care. Norms and values can of course help promote and guide this behavior.  Other chimps do practice alloparenting  and pair-bonding, but these practices seem reliant on local factors. Stumbling upon a practice given the ‘individual intimate’ knowledge that increased the likelihood of genetic relatedness. Giving chimp dudes additional assurance of paternity. With morality, HER could promote a culture of relative monogamy and enduring pair bonds that would encourage not only fathers, but other relatives an incentive to share in the costly investment of rearing. Love stories are our favorite, and they likely played a big role in encouraging this unique practice. 

The Transaction Cost of Free Energy

Something beautiful happens when a good or service is traded. Even more amazing though is when someone is around to watch.  The value inside people’s minds, and even beyond it, gets translated into the outer world and others can respond to this observation, in a way that benefits not only both parties but additional ones as well.  Better off are those who barter and all are better with the wisdom of prices. Homo Economicus  describes in a sense a perfect world, at least given an initial distribution wealth .  But the world it describes is too perfect. It’s dynamics too singular. It does not for the assembly of hominoid resources that suppress the beauty of the price system, nor the uneven distribution of capital across people and countries, and finally has little to say about the true glory of our economic system, growth. Its probabilistic transition from one state to another.  The binding elements of these oversights though is the most insightful failure of HE, the original. It turns out prices are informative, when you can get them. Prices too, however, have their own prices. To overcome this potentially infinite loop hominoids created institutions, behavioral constraints that produce predictable behavior, resolve the uncertainty left in the alleged crevices of an otherwise well oiled mechanistic system.  Parliaments, regulatory bodies, Internet Protocols, and firms, these are all nominally costly institutions that do not themselves produce profit, yet they are all central to our economic system. Moreover, their success, as judged by their ability to achieve long aggregate welfare through a reduction in uncertainty, relies on projected Markovian identities.

 As Hayek was an early proponent of cultural evolution he likewise foresaw the importance of information. Before it had a theory. He viewed the information embedded in prices, in changing prices as signals for that allowed for the movement of capital and labor. Prices provided signals necessary for hominoid action. If we view an economy as a singular system, analogous to a organism, then we can view for example excess supply, as the errors our nervous system sends to our body. In both cases action is achieved by identifying gaps between observations and expectations.  The expectations of the latter are the position of an arm, whereas the former is the alignment of supply and demand in equilibrium. A system in which the utility of each agent is known and signaled with demand/supply and quantified in prices, it can act in harmony. That is, efficiently and without the costly bureaucratic politicking of firms. Little is needed in the way of regulatory bodies beyond the establishment of property rights. In the view of prices as information then, the economy is minimizing free energy, or uncertainty when moving to establish equilibrium. The harmonious satisfying of individual preferences.

The problem is that prices have a price. Coase’s introduction transaction costs exploded the promise of equilibrium. Some transaction costs are infinitely high. Some prices could not exist do to the stubborn persistence of uncertainty. The largest font of the unknown is between hominoid ears. Our confounding conspecifics. What will consumers want tomorrow? For that matter what do any of us truly want today. Even confined to a material good answering this question is more or less the whole game for making a profit. The question applies to the most important input prices, wages. Prices can create more uncertainty than they resolve. The relationships between prices and uncertainty is best captured as a see-saw. A recursive relationship in which each successive iteration resolves one piece of uncertainty but includes an addition component of complexity, at least equivalent to the initial component resolution.  The largest transaction cost that presents the economy from (ever) reaching Neoclassical equilibrium is what it would take to foresee the future preferences and productive potential of the hominoid agents that make up the economic system.

When bringing a new product to market or hiring a new employee the prices of competitive products in the former and the wage in the latter are only partly informed. The underlying dynamics that characterized both cannot be sufficiently captured using market prices. Instead, Douglas North and others see Institutions as the intermediary that brings us from the Marshallian supply and demand curved equilibrium that appears on chalk boards to a closer model of our observed economy. A market with pockets of inequality, inefficacies, yet also with growth. That is, how we transition from what state to another, and why capital and productive capacity does not distribute with uniformity from developed to developing nations.  Institutions address these gaps. They are, however a frustratingly broad concept that feels somewhat of a catchall in civics and economics. Samuel Huntington’s definition of them as representing not a material thing but a behavioral pattern explains at once their impossible breadth, and relates it to the minimization of uncertainty. North defined them as a constraint on behavior, mostly leads to the same outcome, given constrained behavior is more structured, less chaotic, and more predictable. From an economic viewpoint it does not require the deep knowledge of individual utility curves and inner most preferences. It is also easier to see how they are a conceptual extension of Markovian Blankets, and how are normative framework with behavioral norms and rules bound by symbolic identities determines our economic and civil systems but also why they are important in the Homo Economicus original story. Or the bridge between HE and HER.   

The Societies of Ants and chimps, in this view are institutions. Given that Vertebrates engage in social life primarily not to optimize cooperative behavior, but to minimize uncertainty, they can be thought of as an institution. The behavioral pattern are there removal of harm from ingroup members, collaboration against outgroup conflict, and dominance hierarchies, alliances, etc. Hence our multi band societies and all that followed are more elaborate versions of our primate past. Institutions bind individual and short run gains to the long run interest of the aggregate, i.e. the community. Whether human or chimp.   They constrain the original Homo Economicus’ axiomatic, selfish pursuit of preferences, such that he is able to engage in cooperative behavior.  Set to his own devices HE would over-graze the communal pasture. Informal institutions allow the pasture to endure to the next season and to posterity.  Regardless of species, institutions offer the individual trust, and in turn only endure with it. 

Our modern economy is propelled and sustained by a public finance system that relies on various rules, norms, and a far from immutable public trust, in the perceived abidance and relevance of those rules and norms.  The SEC, FASB, and private agencies likely have each have a larger  impact on aggregate wealth than any individual, private participant.  Even when not explicitly under a public charter, e.g. the HTML/IP addresses themselves were far more important than Apple or AOL in the development and success of the internet.  The public goods of education, journalism and most of all, parenting, echo the externalities that influence long run economic outcomes.  Economic Sociologists, along with Sam Bowels,  have expounded on the ability of moral trust to attenuate the failures of HE.

The most successful and enduring cultural institutions are extensions of the normative framework. The NF constitutes what North and others label  ‘informal institutions.’ The main trouble, however, with the formal/informal taxonomy is that it suggests a clear dichotomy. An easy demarcation between the two. The truth is that there was no specific time in history that  humanity transitioned from informal norms into formal ones. Viewed another way formality is not a single line but many. Relative to the arbitrary starting point a social unit found itself.  The British Parliament was a formalization of unofficial advisors to the king known as the Witan, which was itself a formalization of a more informal, early Germanic egalitarian thing. This became the basis for the American revolution, possibly the reason in part for the persistent divergence between south American and North American GDP.

The initial practice of merchants recording debits and credits required ecclesiastic sanction before it was culturally adopted. The catholic church had to bless Christians to engage what was likely ‘identified’ with numerous anti-Semitic tropes. The Origins of WEIRD People, lie in the Catholic Church’s campaign against cousin marriages. Encouraging a further move beyond our kin and intimates, an acceleration of the anonymous society that demarks us from Pan. Promoting objective moral norms and reputations. The British Parliament and the Roman Republic offered stability of behavior with the rule of law. Property rights, which are not the product of enlightenment era parliamentary formality, and are instead have their basis in the informality of our normative framework,  grant the expectations necessary to invest in improvements and allowed society to continue to flourish.  Institutions succeed where they demark Markovian identities in an expansive way, and where the norms they promote uphold a more expansive identity. As Bowles notes individuals do not compartmentalize perfectly between individual and social identities, they are intertwined. The institutions that treat individuals as knaves tend to produce them.

Institutions bind chasm between private profits and the externalities that made those profits possible in the first place, and will influence the potential for profits in the future. It is in this chasm where a bureaucrat’s abidance of norm enforcement  determines the trust necessary for cooperative surplus, determining long run levels of collective wealth and well-being. This binding is the tradition of our normative framework, of our cultural evolution. It is instructive to view our institutions through the upstream lens, of norms that flow from moral practices, and moral practices that flow from a sense of identity. Without the upper stream of identity, no institution would be successful at earning the trust of its constituents, nor the success at constraining behavior and ultimately producing stable patterns of behavior.

Firms: Branded Bands

Institutions govern the chasm between privatized profit and long run externalities that are necessary for profits in the first place.  Successful ones leverage our normative framework. Our bespoken uniforms, our flags, our oath binding rituals in order to set behavioral expectations and initiate a system of rewards that bind agents to the greater whole. Apple and Walmart are institutions as well. Customers buy their new products without much knowledge in advance of quality or utility. They certainly do not rely exclusively on the price to signal this information, but instead use past experience and, of course, reputation.

The uncertainty between hominoid ears is evident in the fact that labor hardest to clear, i.e. reach efficient equilibrium.  Firms Garry Miller described firms as essentially extended games of cooperation.  By using Homo Economicus, demonstrated that even in a firm dominated by cooperators. Noting that the formality economists traditionally held responsible for competitive advantage are, even analytically, insufficient to explain the success and profits of firms. Firms benefit, if not require, a degree of inspirational leadership. Robust norms of cooperation bound by a believable identity.  A consistent morality to prevent the cheaters from exploiting the trust required to achieve their game theory profits.

Henry Ford not only distinguished himself  by the assembly line, a process that already existed in Germany. He distinguished himself because he figured people would prefer the unreliable but now cheap cars. He was willing to bet that preferences would change, and that he would be responsible for them. Don draper understood that consumer preferences are neither fixed nor exogeneous to a firm’s profit maximization objective.  In this theory then, employees join firms because they are led by leaders with wisdom regarding future consumer preferences? Not exactly of course. Steve Jobs and Henry Ford are rare, however. Don is at least modestly fictionalized.   They do however, have specific knowledge of business and consumer areas that make it valuable to acquire talent, making labor more productive than it would be without a firm. However, a more general theory is that firms exploit a number of conventions, symbolic identities, and even morality in order to reap the game-theoretic gains of cooperative behavior. Permitting interdependent production possible in a way the price system is incapable.

Who knows the most about customer preferences at the firm? Often its a sales person. At least that’s not a bad start if you have no other source of information. Perhaps one can leverage the ‘VP’ title in the company directory.  This would be a fine proxy to resolve uncertainty for the product development team. More likely and more frequently individual reputation serves the trick. “Jake has been in the business for 15 years and has no filter, he will explain…” one’s mentor might say. How do I communicate with employees within a firm? Even with employees with whom I am not intimate?  Although some firms may be the size of an Ape community many are larger. Even the small start ups exist in an ecosystem, suppliers, vendors, and of course (hopefully) customer.  Hence they have to communicate with anonymous strangers. They do this by using  a combination of firm’s band brands, individual reputations, and archetypes.  The network of firms on which they rely,  firms whose firmbytes  are reduced to a conceptual reputation. This reputation will signal internal dynamics, competencies and dictate interaction. Firms spend a great deal of time on reputation. Not just the immaterial blanket they project but the physical logo. Employees care greatly about reputation.  Regardless of what tech culture has done to business casual dress is important, as are titles.

Firms mange their commons with vision statements and culture. Since Rockefeller corporate America has shorted the literal view of Homo Economicus in favor of Heroic Economicus, the Remake. Implementing the  normative framework by promoting a shared purpose bound by symbolic identity. As the clergy of America’s modern self-help religion has emphasized, firms win when drilling down to the core of what it means to be human. David Wascha, a seasoned product manager, understands that even customers navigate to brands with whom they share an imagined identity. Certainly plenty of firms don’t get this.  But Alcoa and Starbucks do.   As do Amazon and Apple. Investors who slept through their business school sermons on complete contracts and invested, despite Friedman’s admonition, beat the rational benchmark as a result.

When Paul O’Neil joined Alcoa, he could have told a boardroom of investors that he was focused on  improving workplace safety would reduce costly accidents including the terrible waste lost in the death of employees. But he chose not to, and sent investors fleeing the room.  He signaled to his employees and chain of command that he was concerned for their welfare. He earned a benevolent reputation. Inspiring them to break the bureaucratic bonds, whatever near term incentives they had to fill quotas were subverted to evaluate safety risk. Additionally employees felt inspired by their leader and the organization flattened, their employees worked to optimize their firms logistics as opposed to their intimate bands within the firms, i.e. their own reputation with their manager, who was worried about a short term objectives. Embodying the essence of morality.

One institution to Rule them all: bardship

Some managers have even unsheathed the true Arthurian blade of hominoid institutions, lifted Thor’s hammer of humanity, flung Lugh’s spear of inspiration, and wore the elven rings of unity, the story. Before we scoured Etsy for fairly priced of goods and services to sate our preferences we scavenged the earth for food and shelter. Before we cultivated crops we transitioned form meek prey to ferocious predators. A capricious approach to niche specialization required a creative scaffolding. Metamorphosis made possible first and foremost through our role as storyteller.  Each element Cultural Evolutionary theorist agree are required for learning seem to be present in our story telling. They are pieces of information, that consist of a predicable structure that spans our hominoid habitats.

The best way to understand HER success is to think not of one species coming to dominion but rather of the earth itself as having peopled. We are an exaggeration, different to other creatures in degree and not kind. We share with chimps, amoebas and ribosomes the drive to minimize free energy or reduce uncertainty, manifesting itself as the homeostatic preservation of our phenotypes. We survive as simulations of our environments.  We never ate our brains in short, because we were confounded by conspecifics embodied in part by imaginary archetypes. HER models its intimates and strangers in reputations and symbols. It seeks evidence for heroic and villainous behavior. Uncertainty often lies in  intentions and minimized through moral narratives. Villians follow from the discomfort of behavior that does not accord with these harmonious expectations, creating a Markovian box around the deviants and letting our mind rest. Yet the respite is fleeting.  Reputations expanded to more complicated moral and ultimately conventional practices. Until we ended up keeping tabs on swarms of people with uniforms and language. Oaths and secret handshakes. Salutes and parades. To navigate this complexity we may have used songs and stories at an early time in our development.

The course of hominoid growth was not linear. Its fits and starts can be explained  by the transitions of HER institutions, by the shifting constraints on behavior. Constraints bound by identity.  The first formalization, or better put, our initial appendage was the narrative. As Paul Zak puts it they have the power to bind humans, even those who, a genetic/selfish view of the world we find unnecessary, that is, binding a father to an ailing son. This story inspired the beguiled to donate more to charity. Smarter firms have employed stories to manage their commons.  I originally thought that stories were a handy analogy for our normative framework, the combination of symbolic identity, moral values and even conventional norms wrapped up into one. It seems, from Zak’s research, that stories ironically play more than a figurative role in our development as a species. The literal impact on our lives extends from our brain chemistry to our wallets.

The sociological function of narrative structures are sell evident. We use fairy tales to keep kids away from the forest, inform them of stranger danger and the consequences of moral behavior. The reason they are able to achieve this is that narratives offer catharsis for our pscyhe, sharing in the fiction of our identified self in the fleeting destruction of entropic time.  Early on  we likely began the practice that exists through today, using stories to join arms with one another. Expand our identifies and maintain this expansion with a set of behavioral values. The lascaux cave paintings reveal, at one hand a static image. An image though that tells a story of a storytelling creature. Giving hominoids the magic to transform themselves from meek prey to fierce predator. The image of Bull with a human head is straight from a comic book. A comic book that binds not only hominoids to one another but extends their reach to our species on which they relied.

Mythology are built on Markovian identities, elementary social roles, or Jungian Archetypes, wrapped in different costumes. These archetypes illustrate reputations, boundaries that specify a behavioral space.  The most foundational archetype is that of the hero. Heroes are the affirmative complement to the tag of negative affective experience of witnessing a social deviant. Mythological heroes gave service to something bigger than themselves.  Joseph Campbell described mythology as the song that guided us from meek prey to fierce predators, and then from hunters to farmers. Allowing us to play our task oriented roles with a sense of identity. Combinging morality with our daily tasks for survival.

Songs and stories serve a sociological function, inspiring a sense of belonging to societies that span beyond our skin and intimates. They do this in a fractal manner that echoes the snowballing structure of life. The Dramatic arc is simple, and reduces a causal sequence of events, and places us in the shoes of the protagonist. However they also seem to serve as a intellectual tonic. To the extent there is truth in the social brain hypothesis, myths were an early luminosity. Gossip occupies much of our speech, and certainly much of the subject matter in Mythology. Einstein was on too something by suggesting telling your children fairy tales too boost their IQ. From an FE point of view they format the recursive manner of reducing uncertainty. Providing a tidy ending for a conflict that involves confusion and danger, but opportunities to iterate on the initial story until you have a simple battle that evolves into the original Odyssey.

The American Mythos: sharing a dream

I first endeavored to rethink the quest of Homo Economicus by reflecting on the frustratingly bland vocabulary economists use to discuss what was then (2016 ish) the most important economic issue, immigration. Empirical dispassion is one thing, but for a profession as inveterately connected to morality there is far too much reticence in fervor. For all the many topics that deal with the impacts of immigration on growth my favorite remains The Accidental Superpower. Peter Zeihan models the macroeconomics of a majority of human history on a single explanatory variable, navigable rivers. He then takes a hard switch to demographics. A society’s material prospects fell from the remit of Danu to a country’s birthrate and immigration policies.   Economists generally agree, at least on the importance of demographics, and should be screaming at policy makers of the moral imperative of having babies and welcoming immigrants. The inputs extend even to other areas of social justice and family policy. Inclusive institutions, combined with child bearing and rearing make up the balance of economic outcomes beyond natural and technical bounds. Yet the truth is more tricky. As Zeihan notes, however, it is more than policy. It is culture. Attitudes towards immigration and child rearing cannot be holistically resolved in legislation. Nor can movements along or shifts of supply and demand curves be described in changes in supply, demand or prices.

The truth of our material, cognitive, ecological, and even cosmic distinction lines in our ability to tell our own stories. We are not bound by the evidence of our environs and history. Our prosperity and success lies in our third eye. The most important element is not in the particulars of our stories, but who they ultimately bind.  Hominoids gained distinction by moving towards anonymous societies. This required our songs to trust others beyond our intimates. The west was won and filled with WEIRD people when the catholic church, an authority on morality and identity, pushed humanity further from their intimates, returning to earlier hominoid practices of anonymity.  Moving from genetic ingroups to a broad identity that relies on a greater degree of objectivity in norms and constructing the reputational incentives bound to behavior over genetics.  A great strength of the United States is our founding myth that we are all created equally.   If we are to survive the inveterate recurrence of populace, the backsliding to tribal politics built on a fixed world view, than we need a more convincing story.

The Neoclassical gift of Homo Economicus is an analytic demonstration that HE cannot not exist. Life amounts to precarious harmony. The ultimately doomed prospect of preserving and promoting structure in the face of chaos, structure technically defined as information. We know information as the effort to reproduce structure in a communication system, by exploiting its own reduced structure as a signal for a more elaborate one.  What good is information though if it knows no bounds, in that case it fall to entropic equilibrium and loose its identity.  Freely available information and fully specified contracts would make our material existence remarkably unremarkable. Transaction cost make life as interesting as it appears. Constraints are, as economist have always said, are good. Not just income restraints, and not just resource scarcity, but cell walls, intimate bands, and as well as flags and accents. Our irrational trust in strangers is only a problem when we loose this irrationality and raise our fists in ire at our conspecific cooperators.  The aim of society is finding a convincingly inclusive story.

Part of the American myth is that the balance of outcome is merited by a combination of competence and character. Regardless of how much is constrained by accidents of birth, it is still a useful story to tell ourselves. However certain economists, however, have gone too far in promoting this myth. Acting as if this story were hard science. Which economists? If Hayek is the steel man then the question is who is the strawman? Which Neoclassic economist is a good candidate to  be the punching bag of the new order? The answer is obvious. His influence remains vast. He convinced many that the world was filled with knaves. An attitude literally dagerous in foreign policy and policing, but it is also poor business advice. Believing your employees are only motivated by selfish material reward makes for a bad manager and certainly not a leader.

Firms, as Gary Miller demonstrated, can be exploited even by a relatively few free-riding knaves. We should not short companies whos management does not adhere to a knavery world view and define its existential purpose in ROI.   Products, whether software or salt-shakers are bought with trust. Not trust in broad this won’t do me harm sense, but in a you a part of my tribe sense.  Customers invest time, attention, and often times their reputation alongside their money when acquiring products.  Corporate commons are the trust and enthusiasm of their customers and employees. We should recognize that yes, moral good is harder to quantify then prices but it has always been.  Many Alcoa employees believed Paul O’Neil had their best interest at heart, and their belief in him preceded and perhaps caused the positive price action that followed. Many pay exorbitantly for Apple and Tesla, and may not be so inclined if those brands were not inspirational and morally sound.

The truth of capitalism’s success is not that private property places the individual over the collective, but that property rights and other civil institutions have been able to formalize,  however imperfectly, the informal norms of our expansive society. They  aligned customs that have long promoted individual participation in the longer run, aggregate social utility over the conflicting impulses and incentives that serve shorter run, disaggregated selfish interest at the expense of the greater good.  Essentially anonymizing and hyperextending rather than attenuating the consequences of moral behavior.   Achievement of personal gain, whether the material profits of an entrepreneur or the immaterial social prestige of a scientist or civil rights leader, are both viewed, ceteris paribus,  if not as just rewards that at least morally appropriate given their positive social output. 

The way we practice morality, the way we view our identity, and the conventions and norms we follow impacts GDP. Whether that is divvying up credit for a successful project within a profit firm (or taking the fall for an unsuccessful one), whether that is a bureaucrat enforcing standards in the interest of the financial system on a lowly salary, not toeing the line for the promise of a high-paying Goldman Sachs job, the long run productive capacity of the economy is a function norms and mores.  That is, choosing the longer run over the shorter run, the social over the individual, the economy over the interest of one firm in the economy. Economists, in spite of their discipline’s provenance, have for too long avoided the messy world of individual virtue and its implication for society.  

Given the occupation of its founders the cruel irony of HE’s legacy is that when taken literally  it marginalizes the role of individual moral agency. These oversight are emblematic of a philosophical challenge that echoes from near the dawn of western civilization. That of squaring the desire to create a morally good society while ensuring that each of its members is permitted sufficient freedom for moral agency.  In order to act morally good each of us needs at least a certain degree of freedom to be wrong. HER moral practices have economic consequences than extend beyond our private property. Economist have convinced the modern world they are in league with knaves and should so behave. That was the originally purpose of economics. To bring greater nuance to moral understanding and not absolve ourselves of responsibility that does not yield personal gain.  Homo Economicus was a useful caricature in understanding our true nature.

Accidental Superpower was one of two father-in-law books I have read. While I took to this one with alacrity the other one was The Secret.  A  book that claims we are in control of our material destiny by the power of our belief. This idea I was less enthusiastic about. I remain profoundly skeptical and put off by some of its implications.  Yet the idea of reputations as abstract Markovian identities that support our imaginary communities gives me pause. Although there are more constraints on our personal beliefs, without them we would never have experienced the genesis of our extended ordered civilization.

Institutions that can seem permanent are merely very convincing fictions. The Civil Rights movement brought the south closer to removing the extractive institutions of Jim Crowe, Slavery and its caste legacy. In order for institutions to gain inclusion and enjoy the cooperative behavior that follows a more unified identity a single dream needs to be shared. Business and civic leaders alike can accomplish this, however in order for imaginary communities to endure they need participation. We all need to tell the story.

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