Economics and Ethics

Nobel Prize a Collective Effort

Jonathan B. Wight

At 87, Robert Solow (Nobel Prize 1987) recently gave up his office in the MIT Department of Economics.

Finance and Development caught up with him before his move to survey his career of more than 60 years. Solow's parting comment is worth repeating and discussing:

"[T]he most important thing in intellectual success is being part of a high-morale group. I think that progress comes from intellectual communities, not from individuals generally. That's what's wrong with Nobel Prizes and all that."

Social economics explores the ways in which group interaction and ethics contribute to the creation of (among other things) trust necessary for change and growth. Most intellectual markets involve autonomous--but not anonymous--agents whose group interactions alter preferences and influence choices through framing. Among other things, our colleagues help us reduce procrastination by according (or withholding) status and other social rewards (see The Thief of Time: Philosophical Essays on Procrastination, edited by Chrisoula Andreou and Mark D. White, Oxford, 2010).

The "fallacy of composition" is the widespread but mistaken notion that what is true (or works) in the individual or group situation is also true (or works) in society at large. Applied here, there is a dichotomy between the evolutionarily-adaptable emotional instincts for sociability (and the resulting ethical rules that evolve) and the more abstract and logical duties that are owed to anonymous strangers. The production of intellectual capital has been modeled as an anonymous quest for profit maximization. This is, at best, misleading; the micro-micro foundations of success may have more to do with emotional commitments and duties than with pecuniary motives.

Not that more money hurts -- but it might. A long time ago when I was serving on a search committee for the Dean of a new school that had just been endowed, a top candidate for the job asked about the facilities. "Don't worry," said the provost. "We're building a brand-new building and you'll have the best office in it." The candidate shook his head ruefully and eventually turned us down. He stated: "That's not how you build camaraderie when starting a new program. All the fancy offices and money create jealousies and petty spitefulness, destroying morale. If I start a new program like this, it should be housed in the basement of the worst building on campus. And all of the new hires will draw together as a team, focus on the important things, and get those things done!"

(P.S. -- Don't show this to my Dean, because I like my corner office and can swear my productivity is higher in it. J )

A Bright Side of American Capitalism

Jonathan B. Wight

I wrote a few weeks ago about social marketing and networking. On one level social marketing is shamelessly shallow, leaving many people cringing at the chutzpah of near strangers. Why are you "friending" me on Facebook? Are you networking to get a job or because we actually share genuine moral sentiments?

After two weeks meeting with folks in the Bay Area—the Left Coast—I am more convinced than ever that young Americans, who in many ways drive American culture and hence business marketing, are rejecting shallowness in favor of genuine connectivity and community. Of course, there are lots of exceptions. But the social gestalt does seem to be shifting, so that the standard neoclassical view of "enlightened self interest" is giving way to "authentic selfhood." That is, people are striving to understand how to be true to ideals and virtues.

One manifestation of this might be reflected in the termination of Glenn Beck's show on Fox (ending June 30). Van Jones, who earlier left the Obama White House under the withering criticism of Beck, had this to say:

Good American businesses make a decision about who they want to associate their brands with," he said. "And if you violate the principles of good discourse and fair play in America, good American businesses will not stay with you and you won't stay in the public square very long.

"So it's not just a triumph of American capitalism," Jones said. "It's a triumph of American values."

Another way to say this is: markets are essential for the expression of human interests and to promote change. However, markets are no guarantee that you'll have the right consumer values that will promote human rights or anything else. Hence, markets—by themselves—need complementary institutions in order to create the incentives and values that lead to a desirable society.

Mirror neurons, Adam Smith, and sympathy (at Knowledge Problem)

Mark D. White

Over at Knowledge Problem, Lynne Kiesling talks about mirror neurons, Adam Smith, and her new paper on both, titled "Mirroring and the Sympathetic Process: Some Implications of Mirror Neuron Research for Sympathy and Institutions in Adam Smith":

In The Theory of Moral Sentiments, Adam Smith asserts that humans have an innate interest in the fortunes of other people and desire for sympathy with others. Recent neuroscience research on mirror neurons has now provided evidence consistent with Smith’s assertion, suggesting that humans have an innate capability to understand the mental states of others at a neural level. This capability provides an important foundation for the Smithian sympathetic process, which has three components: sympathy as a synthesis of empathy with reason-based judgment, an external spectatorial perspective on the actions of others (and one’s own actions), and an innate imaginative capacity that enables an observer to imagine herself in the situation of the agent. This sympathetic process, and the neural framework that the mirror system appears to provide for it, predisposes individuals toward coordination of the expression of their emotions and of their actions. In Smith’s model this decentralized coordination leads to the emergence of social order, bolstered and reinforced by the emergence and evolution of informal and formal institutions grounded in the sympathetic process. This paper presents an argument that a sense of interconnectedness and the shared meaning of actions are essential foundations for the Smithian sympathetic process and the resulting decentralized coordination and emergent social order. The mirror neuron system appears to provide a neural framework for those capabilities.