by Roger Bourke White Jr., copyright October 2015
Human instinctive thinking develops to deal with realities that are recurring from day-to-day and generation-to-generation for thousands of generations. Instinctive thinking develops and thrives when it can deal with a reality faster, better and more comfortably than analytic thinking (learning thinking) can.
One of the long-standing realities of the human experience is that resources run out -- the good times never last -- so our thinking is well adapted to that harsh reality.
But modern technology has changed that reality, which means this is another place where instinctive thinking is not providing the best solutions to solving civilized problems.
Neolithic Village mankind lives in a world of limited resources. The limits come quickly and they are harsh: food to gather gets all gathered, a season changes, mysterious calamity such as fire, flood or plague strikes, less mysteriously, neighbors can strike to steal or get vengeance.
So human thinking expects limits. This means that the concept of "growing the resource pie" through increasing productivity that goes on over decades is an alien one. (increasing productivity in this usage means making things more efficiently, as in, using up less resource to create the desired object or service) In Neolithic Village you can discover new pies, such as a new hunting ground, but to actually create one, a big one, is something for the heavenly afterlife, not real-world reality.
Agriculture changes this a bit, with hard work you can clear a field and farm it, and store the excess, and do this on the same collection of fields year-after-year. But you can only make one new field on a particular plot of land, and the field can decline in fertility over the years -- the pie still has harsh limits.
The game changer is Industrial Age technology. Increasing productivity increases the "resource pie". (as I will call it in this essay)
The hope for a bigger and better pie was expressed indirectly as early as the late 1700's by William Godwin, the Marquis de Condorcet and Jean-Jacques Rousseau (and scoffed at in the next generation by Thomas Malthus). In their time these people were talking about possibilities -- just that -- possibilities.
But all through the 1800's more and more pieces of that pie-growing possibility showed up -- railroads and mechanized textiles being two icons of the period. This was the time in which the "Protestant Work Ethic" started to match real world possibilities.
In the 1920's the first big real-world game changer came into existence: It was mass production developed as a widely applicable technique. It was effectively developed first in the US and then exploited around the world. Its icon was Henry Ford and the Model T automobile. (Interestingly, in his promotion style Ford played the fairness card prominently, not the innovating card. He famously paid his assembly line workers above average wage and stated that Model T buyers, "Could have any color they wanted, as long as it was black.")
This Miracle of Mass Production was marveled at by writers and thinkers of the first half of the 20th century. It was the miracle that the size of the pie could change! They wrote a lot about what this change would mean to human living. (This is also an example of the power of adaptation in human thinking, in the early 21st century we take this miracle completely for granted.)
But instinct thinking is not based on humans' 20th and 21st century Industrial Age experiences, so it hasn't caught up, and it is still pretty sure there are harsh limits. This instinct that there must be limits puts a lot of oomph into the 21st century environmental movements, in particular "peak movements" such as Peak Oil, and the Club of Rome reports on Limits to Growth. These stress, "We must beware! In spite of how good things look now, things will run out!"
In sum, this growing of the resource pie that Industrial and Information Age technologies makes possible is alien to human instinct thinking.
Now let's look at some ramifications of how this mix of instinctive thinking and new alien reality interact.
The main social tool for growing productivity in human communities has been entrepreneurship -- the building of new organizations that make things and service things in new more efficient ways. Entrepreneurship produces exciting results, but in the process it steps on the toes of powerful instinctive thinking. In particular the harsh limits instinct and the fairness instinct. (and its tight buddy, prescriptive thinking, "There's one right way to do this.")
As a result entrepreneurship makes a lot of people uncomfortable -- only a few people can get around their instinctive thinking in this regard. Those few people are mostly those who also have a good adaptability to commerce -- because of that the thinking needed for commerce and entrepreneurship are closely tied.
And the instinctive thinking surrounding this activity is strong. In the 18-1900's anti-pie growing instinct flowered as the feeling that entrepreneurial-based growth wasn't fair. In one form this shows up as periodic anti-change movements such as the Luddites who were violently opposed to mechanized looms replacing human weavers in 19th century England. But being pro-fair has proved a much more enduring concept than anti-change. Socialist, Communist and Unionist movements have at their heart being more fair about how goods are distributed.
And average community thinking has been caught in the middle.
o On the one hand, the benefits of growing the pie are immense and obvious. It was pie growing that let Western European nations become the colonialists of the rest of the world during the 1800's. It is pie growing that supports the spread of big-store retailers such as Walmart. ("I can get more for my money." = pie growing)
o On the other is the outrage of continued poverty mixed with this growing wealth. An example being the Charles Dickens-style stories which inspired visions of seeing wealthy commerce makers having to step over sick and starving children as they walked down their newly-built avenues lined with smoke-belching factories. And Walmart puts small, inefficient, but neighbor-friendly stores out of business. (neighbor friendly = fairness)
This is an issue that see-saws communities, and the governments that run them. And this see-saw makes for good history stories.
Those who are enthusiastic about commerce often cry out for a "laissez-faire" environment -- one in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations to protect property rights against theft, fraud and aggression.
No community has ever granted this much liberty to its commerce people. The Curse of Being Important and the instinctive thinking fears mentioned above combine to always produce lots of government involvement in how commerce is conducted. But from time-to-time and place-to-place there are big differences in how the involvement is enacted. And these differences have produced dramatic differences in the lifestyles of the communities.
Many of these differences become lessons of history. Here are some examples:
o Ancient Egypt compared to Ancient Greece
o Medieval Western Europe compared to Renaissance Italy
o Asia and Africa compared to 19th century Western Europe
o Soviet Russia compared to United States during the Cold War
In these examples the first mentioned held fairness as more important in the community legal and moral framework and the second mentioned respected commerce more. In all these cases, though, these times were "Golden Ages" for the second mentioned. In spite of their brilliance in the historical record, in all these cases the balance shifted with time and the frameworks of the two became more similar, and more fairness oriented. Instinctive thinking is powerful.
New styles of enterprise thrive where new styles of thinking are tolerated. When a person pulls up roots from their home community and travels to a place where they have to learn new ways of doing things, they have taken a giant step towards tolerating new thinking styles.
Mix in the brand new ability of Industrial Age technologies to grow the pie and you have one pillar for why America and other "immigrant nations" of the 1800's became the "developed nations" of the 1900's. These were communities that had a steady steam of incoming people who were first willing to tolerate new ideas, and then willing to take risks to exploit them. And they were living in communities that were not filled with instinct-thinking prescriptionists... well, not too many anyway, the instinct was still there, and it was vigorously expressed -- vigorous unionism being an example -- but it was not acted upon as vigorously as it was back in the "home country" where these people came from.
The essence of business financing is, "Trust me... but be very careful when you do." It is about giving resources to another person on the promise that even more resources will come back in the future.
One of the things the Agricultural Age lifestyles and beyond have done is to dramatically expand the ways this trusting can be done. In Neolithic times there were only barter goods to hand over and oaths to get in exchange for them. Fast forward to the Information Age and we are developing lots of methods to pay for goods and services with smart phones. Every decade brings new ways to cooperate, and with those come new ways to finance.
The attraction of finance is the potential to get more in the future. The fear of finance is the potential for failure or fraud to reduce that future return to little or nothing. The good intention of regulations is to reduce the prospects for failure and fraud. Sadly, because finance changes so constantly and quickly, it is difficult for regulations to keep up. Like investing itself, there is a lot of confidence built into the regulatory framework, it is far from a certain thing.
This 13 Oct 12 NY Times book review, The Self-Destruction of the 1 Percent by Chrystia Freeland, reviews the book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” by Daron Acemoglu and James A. Robinson. In the article it describes in fair detail how the Golden Age of Venice in the early 1300's came and went. The thesis is that the plutocrats of Venice cut off their own continued growth by over-controlling the disruptive economy that was at the heart of their growing prosperous in the first place -- the "winners" made up a list of winners, and gave that list legal teeth.
I like this article's analysis, but think their thesis is half the answer, not the whole answer. The other half of the answer is that the average Venetian city dweller was also getting more prosperous and more optimistic as this Golden Age went on. Their response to this increase in wealth was to "want their fair share". I think what closed off the prosperity was that the plutocrats offered the average citizen their fair share in the form of a "bread and circuses" entitlement state if they would support the plutocrats in stabilizing the system... and that average citizen bought in. That is what allowed the closure to happen.
The advantage of including this second, populist, half to the above equation is that it can explain why all these Golden Ages seem to end consistently and end by declining into a mediocrity that supports a rigid hierarchical social structure -- instead of supporting more exciting growth, the community transforms into happy to "get by" with what it already has.
Yet another interesting point brought up in the article is that the Venetians could see this problem coming on, they were writing about it, but they couldn't stop it. This was also the case for Cleveland as it suffered from the Midwest disease.
Commerce and finance have been around a long time. But they are outliers to the average human experience. As a result they often run counter to human instinctive thinking. In particular, they cross against the concepts of prescriptive conformity and communal fairness that served well in the Neolithic Village environment, and they bring up deep fears of being cheated that Us versus Them instinctive thinking resonates with.
And the Industrial Age brought something brand new to human existence on Earth: the constantly growing resource pie that comes with the steadily increasing productivity.
Given all of the above it is not strange that humans have a hard time figuring out how to make commerce and finance work smoothly. And this conflict makes for interesting history.
Making a historic boom happen takes both "outside the box" thinking, and a community that is willing to tolerate such strangeness even though it can be gut-level scary and not prescriptively fair. This kind of toleration is difficult to achieve. Any community experiencing dramatic changes in how things are done is also going to experience dramatic calls for that changing to be "fair" and "respect Mother Nature". When the boom time ends it is because these calls have become effective wet blankets on progress.
--The End--