August 10th, 2007
Friday Rant: Are people self-interested?
by Joshua Porter | 
11 Comments | shortlink: http://bokardo.com/p/664
Nick Carr picks up on an article called The cold, cold heart of Web 2.0 by William Davies in which Davies builds upon the economic theory of Gary Becker:
“Along with many colleagues at the legendary Chicago School of Economics, Becker’s achievement was to see that economics needn’t confine itself to studying markets. Economics, for Becker, was simply a particular way of understanding any social behaviour. What distinguished it from other social sciences was not its domain of study, but its guiding assumption that individuals will always act rationally to maximise their own satisfaction.
The implications of this are stark. All altruistic, moral, cultural or emotional behaviour becomes reconceived as the outcome of individual calculation. It is no longer just businessmen and traders whose behaviour can be understood in terms of rational self-interest, but that of politicians, parents and neighbours.
This is a novel and unsettling way of viewing society.”
Carr pushes further on this thought and suggests the social software in the world (social networking sites, etc) are simply another attempt at reworking our knowledge of manufacturing efficiency toward another goal: bringing efficiency to our social lives. Carr sees this as wrong-headed:
“The problem – and the danger – is that while efficiency may be an intrinsic good in the marketplace of products, it is not an intrinsic good in the realm of society and culture. We do not, and should not, judge the quality of our social and cultural life by its efficiency.”
Both Carr and Davies’ arguments are seriously misguided.
First of all, the idea that we act in self-interest is not in any way novel as Davies suggests. In fact, it is patently obvious if you’ve ever spent any amount of time observing other people. The most interesting thing about this argument is that we’re having it at all…there is no question whatever that people act in their own self-interest. It is observable in all humans. Also, it is explicable in theory. One outcome of the Theory of Evolution is that those species that survive are the ones programmed to keep themselves and their close families safe. Self-interest is this survival instinct manifested. It is how we are programmed at a deep, deep level.
And, to that end, Davies should not have used the word “calculation” in reference to parents. Most parent’s behavior is not calculated, but instinctive. There’s a big difference. It may be in self-interest, but that doesn’t mean we think about it beforehand (it is not premeditated). Ask any parent and they’ll tell you “I would do anything for my child”. This instinct is just there…we wouldn’t think twice or even once about it.
However, I do see what Davies is saying in relation to business and politics. There’s a tremendous amount of fake behavior there, most of which is premeditated. And I think that Davies is right in that this kind of behavior is deplorable. Anytime we are not true to ourselves we make the world a worse place.
Second, Carr’s dichotomy (the one between “markets” and our “social lives”) is vaporware. To even think that efficiency in the marketplace is an intrinsic good is not only astounding, but offensive given the behavior of many companies in the world. Does not Carr see that markets affect the lives of people in the same way that any other social interaction would? Is it not clear that business is society, and society business?
What these two fearmongers need to do is to go read Treehugger for a while. There, on a daily basis, you see the overlapping world of business and society. Here’s a spoiler: It’s all connected, guys.
Here’s another great read: Gong Szeto’s Subprime rant. The problem with business is that too many business people see it as somehow outside their moral lives. This is the real danger…not what Davies of Carr suggests. Technology rarely makes people more or less evil. It mostly enables their already-formed constitution.
This is what designers (like Gong) have understood for years and is just now making its way to public discourse: for every efficiency gained by manufacturers a little society is lost. For every new Wal-mart that sprouts up like a bad weed, several Mom and Pop operations go out of business. Instead of dealing with someone you know, you get to deal with the world’s biggest company who doesn’t give a shit about you or anything except their shareholders. They sell you product at a price their competitors cannot buy wholesale for. I know a guy who ran a store and actually bought his soda at Wal-mart because they were selling it cheaper than he could buy in bulk. He was a store-owner!
There was once a time when the shareholders of a company were its customers…and making those customers happy was job #1. Not anymore. Efficiency has killed off that notion because efficiency distances the business people from the people they do business with.
So this holistic view that we really need to return to has been hastened by the limitless greed of the oil companies (GO EFFICIENCY GO!) and the impending crisis of global warming. We cannot continue to justify the actions of businesses on efficiency or even profits alone. The implications are just too great, as the lives of real people are in the balance. Every business decision must be weighed against the overall impact on the lives of the people involved.
Carr sees a black and white playing field where there is only grey. He warns against social software being efficient (it may on some level be about efficiency, but isn’t the telephone about efficiency, too?). The problem with efficiency is that when companies achieve efficiency it’s usually not holistic. They may be able to produce more plastic widgets for cheaper cost, but are they providing more sustainable value to their customers, the town where they live, the Earth?
Davies makes another interesting point:
“Technologies such as recommendation systems, used most prominently by Amazon.com to help people find books and music they may like, can erode valuable processes by which people discover new authors or artists.”
What are these valuable processes by which people discover new authors and artists? Why talking to people, of course. And its here where I sympathize with Davies’ and Carr’s arguments…we do risk becoming too attached to technology when it does certain things more efficiently. It is plausible that some people will stay inside all day long and play video games. In fact, I know people who do. My question is, if they didn’t have technology could we be so sure that they would be out interacting in a positive way? That’s not clear. But there’s also another side of the coin that Davies doesn’t mention…that people are using technology to make face-to-face meetings more common as well.
Take Meetup.com, for example. Meetup is social software that enables people with similar interests to meet up in public places on a regular basis. It is making an activity more efficient, but it’s not a cold, computer-mediated activity. It’s a face-to-face activity.
And my wife uses social software to plan get-togethers with other mothers in the area. This is a great benefit to her. She’s meeting people (face to face) who she wouldn’t not have met otherwise. She is quickly finding those folks who are like her, and who share the same values as she does.
But my big issue with all this isn’t the social software part. It’s in seeing business as automation, as Carr does:
“The real question, to me, is this: Why in the world would anyone believe that the cultural effects of the internet would be beneficial simply because the internet’s effects on business are beneficial? And yet Shirky is far from alone in making this bizarre association – it runs like a vein of fool’s gold through the writing of the Net’s rose-tinted-glasses set. They want to believe that the processes of culture-making and society-building can be automated and re-engineered as if they were the processes of widget-manufacturing.”
Well, I’m a big Shirky fan but I have never read him as saying that culture-making could be automated. In fact, I bet he would argue the opposite…
Anyway, thank goodness for widget makers. We now have more plastic widgets filling our landfills than anybody could possibly count. While Wal-mart may be as efficient a company as was ever seen on Earth (Carr must love them), they’re also exploiting the hell out of their workers and replacing woodlands with gigantic piles of garbage. Business efficiency an intrinsic good? This may be the world that Carr and Davies fancy, but it sure as hell isn’t the one I want for me and my kid.
Call me self-interested if you must.
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1. Tolana 1:15pm, Fri 10th, 2007
Such an excellent rant. You have a good many quotable moments. Example: “Technology rarely makes people more or less evil. It mostly enables their already-formed constitution.”
Interesting comments about companies and shareholders, too. I work for a company whose parent says shareholders are their primary customers after The Board. I’ve only been here 3 weeks (new to being in the corporate world, too) and have not yet seen how this shakes out in practice, but I can say that they are leaders in the industry and are watched and cited by analysts and competitors alike.
2. Gong Szeto 6:19pm, Fri 10th, 2007
what a fun rant, joshua. if you were to ask me, the anser is yes, of course, people are self-interested. it’s less an economic issue, but a naked darwinian one. all behaviors (human, animal) seek to maximize the survivability of the species. in humans obviously, we can get lost in the subtleties of this, but even behind the veil of “community”, humans seek to maximize the survivability of their tribe or tribes (interest groups, if you will). all this is expressed in politics (religion vs science, left vs right, privitization vs public trust, etc) if there is an advantage to be had, you better believe there is human self-interest (or community-interest, if you will) involved. capitalism at its purest is a darwinian expression of economic activity, where there is a level-playing field of a marketplace where the strongest (in this case the ones with the most consumed products and services stay in business) and as designers, we serve these ends to a large degree. which is not an evil thing, mind you. it’s just that we need to understand our place in all this, and by reading your blog, perhaps understand the role of social constructs in a deeper way so that we may apply this knowledge in ways that are not so overtly economic.
i am a progressive politically, and don’t think everything’s ok. (conservatives typically think everything’s ok). i love that you are promoting ideas from economics because that is the area i am most interested in these days. FYI – there are fairly new branches of thought in the study of economic theory called “cultural economics” and “social economics”, which begin to open up the discussion in interesting ways. neo-classical economic theory merely states a “nothing but” ideology, meaning, there is nothing but market transactions that can be measured in prices, and that’s how we learn what’s going on in the world. very rational. cultural and social economists really want to try to account for the idiosyncratic behaviors of (um, people) and how that affects prices and the nature of transactions. i am reading a book called “talking prices” which is about the art market. if you think about it, there is probably no market more opaque and arbitrary (in terms of pricing patterns) as the art market, and it is social and cultural economists that are the ones cracking this code – not the neoclassical ones.
that being said, i agree that we are all self-interested to a large degree. but we can also be motivated by the interest of others who may or not be immediately in our own personal spheres of concern. for example, i often support entrepreneurs in developing countries via microloans (kiva.com) whom i don’t know, and whose outputs are not even accessible to me. i simply believe that there really is a butterfly-in-beijing-makes-rainstorm-over-my-head effect. hell, and i also believe in karma. is karma about self-interest or is it about the *interplay* between self-interest and interest in the world at large?
again, great post. and good luck getting your new enterprise off the ground – i am really looking forward to *your* output.
3. Ryan Baker 10:36pm, Fri 10th, 2007
Gong points out the more important part of capitalism, the Darwinian allocation of capital. The self-interest argument is used far more than I feel is appropriate. As many studies have proven money is often not as positive motivator, and it is not through mere greed that the most important members of society are motivated. Especially it’s untrue that it is through pure greed that is the driving force behind all beneficial acts are motivated.
What is powerful is, all other things being equal, more capital is allocated to the most rational decision makers. (You can find counter-examples to this argument very easily if you examine it too closely, but that would be inappropriate since it is a macroeconomic tendency)
A good example of this at work is the difference in the investment behaviors of individuals who became wealthy through business success and through fortune (lottery and to a lesser degree exceptional but narrow talents like singing, acting, hitting baseballs).
It’s not as simple as black and white, since business success often involves some or a great deal of luck, and professional athletes need a drive in addition to the natural talent, but one group has rationality as a more significant requirement for success. Those who win by fortune often spend their money quickly, and wastefully. Jets, drugs, cars, expansive homes. Business leaders have some of the same behavior but it scales at a much different rate.
4. Loto 1:52am, Sat 11th, 2007
I highly recommend Neil Postman’s Technopoly (and while you’re at it, Amusing Ourselves to Death).
5. Hostel 11:57am, Sat 11th, 2007
This is a great a angle on the social sides of marketing. The idea that people are self motivated should always in the mind of any good marketer. You have put together a great piece and I enjoyed reading it. These concepts are being used more and more these days and eery good business should take the time to study the theories behind them.
6. Michael Camilleri 6:03pm, Mon 13th, 2007
Nick Carr seems eager to find anyone who will agree that something that’s good for business is not necessarily good for society or culture. The problem is that if Carr is so desperate for support he’s turned to Davies he’s in a lot of trouble.
From the Davies piece:
As Joshua pointed out, this is manifestly false. Technology is almost by definition about increasing efficiency and the car, the telephone and — dare I say it — fire all preceeded Web 2.0 in pushing ‘efficiency criteria’ into society.
When you strip away Davies’ hyperbole what you’re left with is the rather trite assertion that sometimes the journey is the destination and technology threatens to alter the way we get from A to B thereby decreasing the overall value of our experience. Welcome, Mr Davies, to the age of the wheel.
While it’s true that technology is likely to change the ways in which we do things (the argument really is that banal) Davies does nothing to show that this will be negative. As Joshua has noted, technology has altered society previous to this. It can’t just be taken as a given that society is worse now than it was when people had a life expectancy of 35. There are legitimate concerns about human interaction in the digital age (I tried to raise some on my blog a while ago, plug plug) but Davies doesn’t even bother. He just throws his hands in the air because — oh my God — Amazon suggests books I might want to buy.
And while it’s hardly more than a throwaway remark I couldn’t resist pointing this one out:
Yes. This never happened before 2003. Curse you, MySpace.
7. Bill H-D 4:45pm, Tue 14th, 2007
We shouldn’t confuse a Darwinian imperative to advance a genotype with an individual organism’s will to survive and prosper either. Take dogs, for example. It turns out that, as a species, they’ve been successful in large part by becoming suck ups to humans. Adorable, irresistable suck ups, yes. But who among the early dogs would volunteer to become a Pomeranian for the sake of the species?
Individual self interest and the survival of the species are two different things, is all I am saying. And that’s why Josh’s Del.icio.us lesson is an impressively nuanced design premise:
individual value precedes social value
Note that he doesn’t say individual value supercedes social value.
8. Will Davies 5:26am, Sat 18th, 2007
This is a pretty poor representation of the argument in my article. You have missed the fundamental point, that it is not me that sees society as a network of selfish calculations, but the people I am criticising.
You write: “Davies should not have used the word “calculation†in reference to parents. Most parent’s behavior is not calculated, but instinctive.” Exactly! That is the whole point. But if you apply an economic/calculative lens to view intimate social interactions (as Gary Becker does), you will start to perceive them in instrumental terms; the genie will be out of the bottle. This is what I am accusing some aspects of web 2.0 of doing as well. They take areas of our lives which we hadn’t thought about in selfish terms, and suddenly present them to us as transactions to be efficiency-maximised.
Is that clearer?
9. Amy 1:19am, Sat 24th, 2007
I’m surprised nobody’s brought up Adam Smith! We have been down this road before (we, as an intellectual society; this road being questions of self-interest and social good).
Adam Smith argued in _The Wealth of Nations_ that simple self-interest in an individual can lead to better outcomes for society at large. Although he seemed to backpedal a bit in _Theory of Moral Sentiments_ and suggests that sympathy is necessary for that to be the case. Nevertheless, Adam Smith’s economic theories can be said to have fathered the United States’ capitalist, free-trade economy.
Since his first book (Wealth) was written in 1776, you can safely assume there’s also been plenty of debate since then.
But when it comes down to it… people often don’t act in their own self-interest because they are ignorant, not paying attention, or swayed by emotion. For example, there’s been big brouhaha in the US in the past few years about why people are voting against their own self-interest. And you only have to look at people who approve the deforestation of the rainforests, belching of noxious chemicals into our water systems, etc., to know that it’s not just poor southern voters who have this problem.
There seems to be a disconnect in companies because people become psychologically removed from the outcomes of their behavior. Research has seemed to show that the larger the group, the less responsibility any member feels for any adverse decision the group comes to—including the action the group takes. And when it’s just part of your job, apparently most people find it easy to justify doing things they wouldn’t consider in their private lives. And when contemplating the actions and nature of human beings, we can never forget things like the Stanford Prison Experiment.
I also feel that human beings, in general and on the whole, have a serious disability to think long-term. What else can explain the predicament we find ourselves in? There isn’t a baked-in evolutionary value to very long-range planning: as long as you live long enough to reproduce, and can rear your offspring successfully until reproductive age, you’re a genetic winner.
This has gone on longer than I intended
In conclusion, I think we’d all be better off if we were aware of the history and research behind these topics. There’s very little new under the sun (and human nature seems rather unchanging). It saddens me to see this kind of discussion going on without reference to the big thinkers who have come before.