Society is not imposed on humans; rather, it provides the matrix in which we survive and mature and act on the environment.
Herbert Simon, “Organizations and Markets”, 1991.
What on the surface seem to be archaic, inefficient institutions created by people who just didn’t know any better, turn out to be ingenious solutions to the measurement problems of the day.
Douglas W. Allen, The Institutional Revolution, 2012.
The notion of an equilibrium, a stable resting point that events either tend towards or can be analysed as a departure from, is central to economic analysis. In physics, an equilibrium is a state that persists through time. But economics is the study of action by agents, so an equilibrium is a state of affairs where no agent has any incentive to act differently from what they are currently doing. More formally, an economic equilibrium is a set of mutually consistent, optimal plans of action arising from independently conceived, mutually consistent, optimal decisions. Such an equilibrium is an activity equilibrium if the underlying social structures are taken for granted and the question is whether economic activity, within those structures, has a stable resting point (in that no one has a reason, given the operating constraints, to choose differently).
Stable prices in markets provide an example of activity equilibria, the resting point expressing the balance of supply and demand. Exchange, buying and selling, especially monetised exchange (as money thereby provides a numerical measure) can typically be readily analysed in terms of activity equilibria.
The structures in which exchange or other activity takes place include organisations (groups of people operating within a structure created for a particular purpose, such as firms), institutions (complex social forms that reproduce themselves, such as legal systems), and culture (shared patterns of action and belief transferred by learning and imitation: i.e. not genetically). Organisations, institutions and cultures are all rule-based systems, though the rules may be formal or informal, explicit or implicit.
Rules tend to reflect the patterns of capacity to resist or enforce rules, so tend to evolve over time to reflect relative power in a society as well as changes in underlying constraints (such as environment or technology). Rules are, of course, normative phenomena. Whether we are dealing with organisations, institutions or culture, or the rules thereof, there are various schemata (patterns of belief), scripts (patterns of action), expectations, and norms (if-then behavioural rules) that people are typically operating within. Norms have an across-context generality, but have to applied in context, and it is context-appropriate application that shows mastery of the norm and so reassuring consistency and commitment.
Organisations and institutions can only exist, and culture can only be relatively stable, if those schemata, scripts, expectations and norms are themselves sufficiently stable to persistently structure people’s actions. Organisations, institutions and cultures, as well as norms, can therefore be seen as a series of structural equilibria: sets of beliefs, norms, expectations and incentives that produce recurring patterns of behaviour. Some sufficiently stable mixture of incentives, constraints and sanctions operating so that the patterns are continually reproduced. These stable, recurring patterns of behaviour constitute structures within which people undertake their everyday activity, including buying and selling.
Such structural equilibria are pervasive and often long lasting. Some can be relatively stable across centuries. While they provide the framework within which exchange and other human action takes place, they are generally strongly normative and involve considerable levels of pooling and connection.
Pooling is use of a common resource, such as foragers around a campfire or a backyard barbecue among friends or associates. Connection refers to repeated, mutually acknowledged, interactions that both parties presumptively intend to continue. The more frequent the interactions, and more numerous the lines of connection, the “thicker” is a relationship between two people. Pooling is typically managed through connections. Gifts are classic means to establish, express or strengthen connections. Connections can vary in intensity from recurring nodding acquaintance and other ‘weak ties’ to close friendships, immediate families and stable collaborations. Connections need not be personal: anonymous connections operate on the basis of social identity, impersonal connections operate regardless of identity. Connections can be, and typically are, embedded in larger networks.
Connections can be thought of as paths of (variably) lower transaction costs. Connection (or relational wealth) is the most important asset in mobile foraging societies, as was probably true for our ancestors for hundreds of thousands of years. Information tends to flow more along weak ties than strong ones, as there is less information overlap along weak ties.
What anthropologists call relational wealth economists label social capital. It is built on interaction and norm convergence. Such norm convergence need not be total, but norms, beliefs and scripts have to overlap sufficiently to generate shared expectations fostering cooperation. People can clearly invest in social capital. Indeed, one way to signal trustworthiness is to invest in “hostage” social capital that would be lost if one was expelled from the social milieu. Expensive country residences surrounded by unproductive display parks out in the middle of rural nowhere that would be very boring places to live if no-one visited are an example of investments in hostage social capital.
Firms can be reasonably analysed as collections of contracts to manage risk and minimise transaction costs. A firm typically involves some pooled goods (such as buildings) while labour contracts are a mixture of connections and exchange. In fact, contracts in general are mixtures of connection and exchange as they operate across time and it is impossible to completely spell out all the details of interactions in advance. If people will have to react to new information, then connection has to do the work of managing the contractual interaction. That is why contracts are generally facilitated the “thicker” the relationship between the contracting parties.
Compared to pooling and connection, exchange economises on information. It does so on an offer-and-accept basis; potentially even among people who may never interact again. Information imbalances between bargainers, as well as any later revealed information, can create bargaining difficulties. Hence, sellers offer warranties on complex products to compensate for such products’ information opaqueness, shifting risk to the party better placed to manage it.
The connection element in contracts seeks to cope with information that cannot be explicitly incorporated in the offer-and-accept bargaining for the exchange. If a firm is seeking to significantly reduce labour costs, it can make sense, on connection stability and resilience, as well as information, grounds for an employer to terminate a smaller number of employment contracts rather than attempt to re-negotiate (and so contravene) the contractual connections with a much larger number of their employees.
Organisations, institutions and culture are built around patterns of behaviour that both create, and respond to, incentives. People’s patterns of behaviour can be divided into:
customs (things you recurrently do simply because they work for you),
conventions (things you do because other people do them, such as fashion or language; what we can reasonably call descriptive norms),
social norms (things you do because other people expect you to and there are sanctions if you did not), and
moral norms (things you do regardless of the expectations of others because you hold them to be the right thing to do).
Social norms can be expressed in moral language, but their persistence is based on sanctions.
The test for moral commitment is relatively simple: what cost is being incurred? If no cost is being incurred, or if the behaviour is actually beneficial, then no significant moral commitment is involved, no matter how much the action may be presented to themselves and others as moral. Commitment to a social norm may involve significant costs in order to achieve some benefit.
If behaviour that deviates from a social norm is increasingly not sanctioned, then the social norm is likely to decay, possibly to the point of collapse. A social norm can become so well established that its enforcement by sanctioning decays (people, in effect, treat it as a moral norm), making the social norm itself vulnerable to collapse. Publicly revealed loss of support for a social norm, so that people neither expect to be sanctioned nor are willing to sanction deviance from the norm, can also lead to the decay of sanctioning and the collapse of the social norm.
An apparent shift in social morality can simply mean that social norms have changed, such that what is, or is not, sanctioned has shifted. It can also mean that moral norms have changed in a way that blocks certain sorts of sanctioning or permits others. As those who are defending or criticising particular social norms are likely to use the language of morality, the difference is not always obvious.
The trumping (i.e. prescriptively dominant) nature of moral claims encourages persuasion and rhetoric to be cast in moral terms. This process of justification and persuasion can also apply to the person taking the normative stance. Sublimation of self-interest behind a shield of morality, including as a shield from self-awareness, can make someone a more persuasive and effective advocate. Aggression and competition (such as over status and resources) can be sublimated by expressing moral concern; itself inherently a status move.
We can differentiate between logic, the structure of inference; reason, the ability to purposefully infer; and rationality, the ability to coherently manage inference and action. Thus, psychologist John Vervaeke argues, rationality increases as self-deception decreases and you cannot lie to oneself, as it is impossible to make yourself believe what you don’t believe. But you can bullshit oneself, you can adopt beliefs without regard to their truth value because they are in some other way congenial.
A certain level of self-deception can be a successful strategy, as it allows the more complete and effective use of prescriptively dominant moral claims within a status and resource strategy. Especially if it enables stigmatisation of contrary concerns. Thus, embracing a level of irrationality — for example, adopting standpoint epistemology, privileging experience over inconvenient facts or social complexity — can be an effective dominance strategy, if it is seen to invalidate contrary concerns or evidence.
A highly status-driven environment with weak factual feedback is likely to be highly conducive to the social selection for such strategies. Circumstance that can be found in the less scientific parts of academe and in administrative bureaucracies.
Adam Smith thought status the most powerful of human motivations. As he wrote in The Theory of the Moral Sentiments, (1759), Part VI, Section 1:
Though it is in order to supply the necessities and conveniences of the body, that the advantages of external fortune are originally recommended to us, yet we cannot live long in the world without perceiving that the respect of our equals, our credit and rank in the society we live in, depend very much upon the degree in which we possess, or are supposed to possess, those advantages. The desire of becoming the proper objects of this respect, of deserving and obtaining this credit and rank among our equals, is, perhaps, the strongest of all our desires, and our anxiety to obtain the advantages of fortune is accordingly much more excited and irritated by this desire, than by that of supplying all the necessities and conveniencies of the body, which are always very easily supplied.Smith’s observation has plenty of anthropology and evolutionary biology behind it. Status behaviour is more of a human universal than is (material) wealth-seeking behaviour. We evolved as a pair-bonding, group-living species where status significantly affected breeding and feeding prospects. Prestige (bottom-up status) developed as a basic currency of social cooperation while suppression of dominance (top-down status) is a persistent feature of foraging societies, a pattern that helps preserve cooperative behaviour. Evidence strongly suggests that people are also sensitive to differences in status between groups.
Cooperation is enhanced if status comes from pro-social activities and undermined if it comes from anti-social ones.
The internalising of norms enables both higher and more stable levels of cooperation. Norms express or create automatic, or near-automatic, presumptions in behaviour (both your behaviour and that of others). If norms are operating, then cooperation does not have to be constantly re-negotiated. Rather, cooperation can operate within a widely accepted behavioural framing promoting regularity in behaviour, including shared expectations.
Internalised norms economise on the cognitive and bargaining effort required to sustain cooperation. Emotions (i.e. caring, whether positively or negatively) cut through combinatorial possibilities, enabling us to reason and to act. Norms are socialised caring, cutting through bargaining possibilities, enabling us to cooperatively reason and act. Each level of norms — descriptive, social and moral — provide more effective stabilisers for social interaction as the complexity of social interactions, and the scale of social groups, gets larger.
Biology does not need a concept of rationality, because natural and social selection both deal with stimulus-and-response in a competitive environment yet have a clear metric for success — replication. Yes, there are matters of adaptive structures and adaptive strategies but there is no need of a theory of agent-rationality to underpin that. Agent search with feedback is enough. Indeed, successful replication can often involve actions which run counter to the interests of the biological agents: males offering their bodies to the female to consume in order to have a mating opportunity being an extreme example of this. It is only when one is dealing with a richer range of possible and intentional aims, and their consequences, that some analytical framework for intentional action is needed.
Economics, as the study of choice under scarcity, typically uses some concept of rationality. Unfortunately, rationality has frequently been understood in a way that presumes that there are no cognitive scarcities. Which, of course, there are: notably, scarcities of information, attention and capacity.
Given the reality of cognitive scarcities, that means there are cognitive trade-offs. Hence we have habits, routines, heuristics, etc. These can be understood as involving thresholds, tipping points, where we shift from a lower level of cognitive attention and effort to a higher one. For example, treating money as if its goods-and-services value has no systematic pattern of change through time economises on cognitive effort. Indeed, most of the features of money flow from it, magnifying the degree to which exchange economises on information. Thus, we do not need to know what specific goods and services someone wants, as we can offer them money, a good that can be exchanged for a wide range of goods and services. A monetised economy is an economy that has at least one transaction good (money), as well as goods and services for consumption and use in production, so as to greatly increase the economising on information and cognitive effort that exchange already represents over pooling and connection.
For a certain range of smallness of transactions and/or smallness of shifts in the goods-and-services value of money, it is not worth the cognitive effort to recalculate our use of money, we just go with the face value. As transactions get larger, and as the rate of change of the goods and services value of money increases, then a threshold is crossed and we begin to adjust our use of money for expected shift in its goods-and-services value. Calling declining to bother to so recalculate “money illusion” is not a very helpful terminology. Treating it as a threshold generated by cognitive trade-offs is more reasonable.
As previously noted, norms represent embedded economising on cooperative effort. They obviate the need to recalculate cooperative bargains and generate consistency in behaviour across time. Convergent expectations make cooperation easier.
When people are engaged in experiments of the behavioural laboratory variety, they bring their normative selves to the experiment; i.e., their presumptive social action expectations. It is an easily available framing for social action and one which generates the most positive self-image, so represents an easily available, and readily salient, psychic gain in circumstances with minimal external context. People in behavioural laboratories tend to diverge from game theory predictions precisely because of the operation of norms. Indeed, cross-cultural comparisons of behavioural experiments are informative about cultural variations in the patterns of norms precisely because we bring our normative selves to the behavioural laboratory.
Revealingly, it has been found that chimpanzees, pan troglodytes, conform to the predictions of game theory better than humans do in behavioural laboratory game experiments and consequently can perform in strategy games as well as, or better, than humans. It is not that chimpanzees never display any trace of normative behaviour, it is just that what they do display is at a much lower level than humans. Taking their normative selves to the behavioural laboratory produces behaviour of self-interested strategising, with minimal normative “pollution”.
Psychologists call self-interested strategising with minimal normative constraint “Machiavellianism”. It is part of the dark triad, along with narcissism and psychopathy. Economists call self-interested strategising with minimal normative constraint Homo economicus. We can categorically deny that it is a non-existent abstraction. Homo economicus has definitely been found in social science: it is pan troglodytes in a behavioural laboratory.
The combination of cooperative breeding, tool using, hunting and fire generated far more returns to cooperation among humans than our nearest primate cousins. Our cognitive and (especially) our normative capacity is how we evolved to utilise the returns to cooperation. Indeed, as we became the apex predator, cooperative action to deal with other cooperative humans also sped up the evolution of our cognitive and normative capacity.
We exchange far more frequently, across a far wide range of circumstances, with a far wider range of conspecifics, than any other species because we are the normative ape. Bargained exchange is a normative activity: not merely in the sense of fulfilling the exchange but also in the sense of accepting the category of yours.
We display as much proactive aggression as chimpanzees, which is to say far more than any other primates. Indeed, we are very skilled at cooperative aggression. We display far less reactive aggression than either chimpanzees or bonobos (pan paniscus), our nearest relatives, because we have substituted cooperation, and normative patterns, for such aggression. Any concept of rationality that finds normative behaviour an embarrassment, or some add-on, is literally inhuman and has completely missed a key element in why we are the dominant species on the planet. Even more tellingly, it has missed a key element in why we engage in so much exchange. It is also why we do much more exchange when there is more normative support for it.
Sacred signifiers, whether ancestors, spirits, gods, civic icons (such as the US Constitution) or ideological icons, can operate as framings for norms. Invoking the sacred object ties an action or pattern of behaviour into a pre-existing pattern of normative deference, including any associated sanctions, with transgression becoming an offence against the sacred value. Such sacralisation can have powerfully stabilising effects for cooperation within a group. Conversely, incompatible notions of the sacred, of what is inviolable, can have deeply divisive and anti-cooperative effects.
Sanctioning can also perform a signalling function, broadcasting your commitment to the group and/or to approved patterns of behaviour. This implies that you are a likely partner for cooperative endeavours.
Damage to reputation is damage to connections, to relational wealth. Hence stigmatisation can be a powerful sanction. The more unavoidable and irredeemable stigmatisation is, the more it blocks or destroys relational wealth. Many societies have used acts of restitution and/or rituals of redemption or restoration to permit the repair of cooperation and avoid spiralling conflict.
Shakespeare’s characters often show great concern for their reputation. Shakespeare was writing in the age of duelling. The willingness to engage in duels provided a way for people to signal their character and their norm commitment, establishing themselves as trustworthy recipients of office in a patronage society. As cognitive skills became more dominant, Classicism became a means of signalling norm commitment. As bureaucracies and the human-and-cultural capital class have continued to expand, an ostentatious commitment to designated moral goals that both morally and cognitively differentiates from the wider society has become the increasingly dominant norm commitment signal. The claim to own morality is, however, rather different in its social and status implications than the claim to own honour or to have a superior education of cultural commitment. When associated with transnational networks and identities, it encourages cultural polarisation presented as moral polarisation.
Bureaucracies have to select and coordinate people. Both these processes are assisted by selecting for norm convergence (which includes convergence in beliefs, scripts and expectations). Moreover, generating moral projects that flow from such norm convergence can be an excellent status and resource strategy. One pursued quite successively by Christians in the intensively bureaucratised Roman Empire of Constantine (r.306–337) and his successors. The Roman imperial bureaucracy had previously hugely expanded, from maybe 300 officials in the early Empire (the Principate) to 30–35,000 in the late Empire (the Dominate). Most of the growth in the imperial bureaucracy was under Diocletian (r.284–305), mainly due to a shift to taxing in-kind. That Constantine, the first powerful Emperor after Diocletian, proceeded to adopt a highly moralising religion (Christianity) that promoted normative convergence while presiding over this vastly increased imperial bureaucracy is perhaps not a coincidence.
Norms do not, in themselves, solve the problems of cooperative behaviour, they merely enable more of it. The work of mathematical biologist Martin Nowak suggests that there is a cycle of cooperation within processes of social selection, whereby cooperation can arise, build up to a peak, and then collapse.
Pioneer historical sociologist ibn Khaldun analysed the history of the interaction between pastoralist and urbanised societies as a cycle whereby the hardships of pastoralism created intense social bonding, that could lead to conquest of the river valley and coastal cities by the pastoralists. The pressures of sedentary rulership would then weaken those social bonds until the dynasty decays and is replaced by a new wave of hardened warriors with strong social bonds. This is a cycle of cooperation building and collapsing.
The pastoralist society/urban society dynamic is not the only pattern to which ibn Khaldun insights can be applied. A pithy version of ibn Khaldun’s cycle was coined by G. Michael Hopf in his 2016 novel Those Who Remain and has since gained a certain memetic currency: “Hard times create strong men. Strong men create good times. Good times create weak men. And, weak men create hard times.”
The Soviet Union managed to go through the ibn Khaldun cycle within a single lifetime, with different Soviet leaders epitomising different stages of ibn Khaldun’s analysis:
(1) group bonded by strong asabiyya (group feeling) seizes control of an urbanised territory — Lenin,
(2) the ruler separates himself from the group and establishes his own dominance — Stalin,
(3) asabiyya fades as the pursuit of material gain and comfort dominates the ruling group — Khrushchev to Chernenko,
(4) asabiyya collapses among the ruling elite and the state fragments and is replaced — Gorbachev.
Demographer Peter Turchin, building on ibn Khaldun’s insights about the development, peaking and collapse of cooperation, has analysed demographic cycles, particularly elite demography, as showing a pattern of integrative (increasing cooperation) and disintegrative (collapsing cooperation) phases.
Organisations, institutions and cultures exist because people are, in some important sense, committed to their continuing existence. In each case, people are socialised into the organisation, institution or culture. That socialisation is crucial to the organisations, institutions and cultures being reproduced, to them continuing to operate.
Organisations, institutions and cultures evolve over time, they are subject to the processes of social selection. If the constraints people are dealing with do not shift significantly, then considerable stability in these patterns can be expected. Historically, environmental and technological constraints have been the most stable, while adverse environmental and technological shifts can have de-stabilising, even dramatically de-stabilising, effects on organisations, institutions and cultures. For instance, the development and legalisation of contraception that women could unilaterally control has dramatically reduced the risks of pregnancy from sex. This has had profound effects on norms and patterns of behaviour in societies of mass prosperity, where low physical risk jobs have proliferated, that are still resonating through developed societies, undermining presumptive sex roles to an extent unparalleled in human history.
Organisations tend to be considerably more ephemeral than institutions and cultures as they typically involve relatively small numbers of people, have much more specific and limited functions and generally recruit people as adults. The earlier people are socialised into patterns of behaviour and belief, the more resiliently imbued with them people tend to be. The more immersive patterns of behaviour and belief are — the more their interactions with others, in both scale and scope, reinforce the patterns of behaviour and belief — the more imbued with those patterns of behaviour and belief people tend to be.
Culture is pervasive, organisations are just part of one’s life, institutions are in between. Economist John Powellson’s definition of an institution as “an accepted mode of behaviour protected by the culture” captures their culturally embedded nature.
Cultures are not monolithic. Various sub-groups can experience a culture quite differently, or have divergent patterns.
To understand institutions, one has to understand the constraints and possibilities they are dealing with. Institutions in societies with artisanal production and limited measurement capacities, where individual goods can be separately identified and differentiating between the chances of nature or human action is difficult, face very different transaction cost problems than do societies of mass produced goods with accurate measurement. Hence the institutions of industrialised mass-measurement societies become profoundly different to what had worked previously, due to dealing with very different constraints and possibilities.
Institutions are not only embedded in cultures, they are embedded in a matrix of other institutions. Institutions do not operate independently of either other institutions or the culture around them. Attempts to simply copy an institution will not produce the expected effects, if they are transferred into a different culture and a different institutional matrix. One may copy the formal rules and intentions of an institution, but the surrounding schemata, scripts, expectations and norms will not be the same, so even if the formal rules and intentions are the same, they will generate different patterns of behaviour and so different outcomes.
Europe developed such unusually effective states in large part because there was enough cultural and institutional similarity among the competing polities within Christian Europe that they could seek to copy and adapt successful institutions from each other and have analogous outcomes. The intensity of the competition, operating within unusually high levels of institutional variety among states, selected for effective state institutions. The institutional variety meant that the processes of social selection, operating across time, had far more to work with. Though it was still true that, during the medieval period, Latin Church countries could copy each other more successfully than Greek Church countries could copy them and that, since the Reformation, Protestant countries have been able to copy each other with somewhat more facility than Catholic countries could copy Protestant ones or that Orthodox countries could copy either.
Migration
Patterns of migration will therefore affect organisations, institutions and culture as they introduce people socialised into different cultures and matrices of institutions into the same physical space. How much they are introduced into the same social space will depend on how immersive their social interactions are.
Thus, bringing relatively small numbers of people from a wide range of cultures will have different implications than will bringing large number of people from a small range of cultures. In the former case, the experience of the new society, its organisations, institutions and culture, will be far more immersive than in the latter. Hence, in the former case, the process of socialising people into the existing organisations, institutions and culture can be expected to be much smoother than in the latter.
Indeed, if people are brought in from different cultures in sufficiently large “lumps”, then an oppositional structure can be created whereby people express their cultural identity through a sense of distinction from the incumbent culture and its institutions. People are adept at drawing and enforcing symbolic boundaries around groups that they see themselves as belonging to. Symbolic boundaries can have pro-social effects within a group. The more convergent are beliefs, scripts, norms and expectations, the more cooperation within the group is facilitated.
Thus, academic disciplines are noted for drawing symbolic boundaries around themselves. They develop norms about what is, or is not, part of the discipline.
Symbolic boundaries are often delineated by use of in-group, out-group descriptors. Groups can develop dominance beliefs: beliefs that failure to conform to establishes various levels of out-group status. These are dominance beliefs both in the sense that adherence to them is dominant within the group but also in the sense that the ability to cast out on the basis of contravening them, perhaps to the extent of inducing shunning or other sanctions, can be an effective dominance strategy.
The more moralised dominance beliefs are, the more the out-group descriptors will imply not only intellectual, but moral failure. Witch, heretic, infidel, racist, etc are classic malice-labels signifying profound moral failure establishing excision from the group. The peak dominance belief strategy is to establish that any attempt to contest a dominance belief constitutes moral failure.
While all cultures draw symbolic boundaries to some extent, cultures can vary widely in how strongly they do so and in how they conceive of and enforce those boundaries. Food and touching taboos can be effective enforcers of social boundaries, though are hardly the only such means. The emphasis Islam puts on the umma, the Muslim community, is very much about drawing symbolic boundaries. Much of Sharia deals with relations with non-Muslims, usually to increase the intensity of the symbolic boundary. Mainstream Sunni Islam has a long history of drawing profound distinction between those who have accepted, i.e. submitted to, the primacy of the rules of Allah and those who have not. A distinction that includes a long history of sanctified aggression, going back to the preaching and actions of Muhammad, against those who have not so submitted (or are deemed to have not so submitted).
Given the greater persistence and strength of such symbolic boundaries within Islam compared to other religions in the contemporary world, it is not accidental that mainstream Sunni minorities stand out in the scale of their fraught interactions with non-Muslim majorities, nor that minorities in Muslim countries tend to have disproportionately fraught experiences with members of Muslim majorities. The history of Pakistan shows this dynamic quite clearly, with Sunni, Shia and Ahmadis combining against Hindus and Sikhs in the 1940s, Sunni and Shia combining against Ahmadis in the 1970s (when they were declared heretical and banned from teaching) and Sunni now combining against Shia (notably by changes in the blasphemy law that protects the Companions of the Prophet, thereby anathematising core Shia beliefs). How sharply to draw symbolic boundaries, around whom, and what follows from that, has been central to the Arab-Israeli disputes. Disputes that began with social stresses created (or, at the very least, aggravated) by migration. Though the recent increase in the salience of the Sunni/Shia distinction has seen some weakening of the symbolic boundary around Israel, as a non-Muslim, non-Arab state.
Attempts by economists to calculate how much economic activity (defined as production for exchange) would be increased if all countries had open borders presume that the social structures within which exchange takes place would not themselves be affected by the flow of people. We can see from the above that this is not remotely a reasonable assumption. Organisations, institutions and cultures are not independent of the people who participate in and interact with them. More to the point, they are not independent of patterns of belief, action, norms and expectations, patterns that vary highly non-randomly across human populations and are not automatically transferred due to change in residence.
People bring their cultures with them, and the larger the groups of people with a common culture, the less likely they are to shift away from them.
Calculating the effects of migration is not merely a matter of working out the new activity equilibrium because there is no reason to think that the structural equilibria that such activity equilibrium calculations presume will remain constant in the face of large-scale migration. Structural equilibria are not merely patterns of exchange, but rest on patterns of belief, action, norms, expectations and connection that are highly variant in content and not randomly distributed. Those structural equilibria are not going to be independent of who migrates and in what numbers.
Migration can also affect interactions among the existing residents of the countries they migrate to. Most people in developed countries are still born, live and die within a relatively small area. They live in a world of mostly local connections that affect their ability to manage their lives, adjust to difficulties and organise for common interests. Information and cooperation prospects are going to flow along connections: it is no accident that friends, relatives, and acquaintances is generally the most frequent labour market intermediary. Not only does information about job vacancies flow along such connections, being recommended by someone known provides extra information, even an implicit guarantee, about an applicant whose personal qualities are otherwise unknown.
If people of different cultural backgrounds move into a local area, they tend to disrupt those connections. This effect is greatly increased if newcomers belong to a specific culture, as that increases the likelihood that they will keep to their own patterns of connection, hence will replace rather than join the existing matrix of connection. Migration can act as a corrosive on the relational wealth of residents. The pattern and propinquity of migration can therefore affect its economic effects, particularly for suppliers of labour.
As people of different cultural backgrounds move into an area, folk of the original culture will increasingly tend to avoid it as a place of residence, as it will not be as friendly to their own connections. Given the normal process of urban churn as people move, this pattern of newcomers coming in and incumbents moving out, and not being replaced, can change the demographics of an area remarkably quickly.
While such flows can disrupt local connections, they do not tend to affect the networks of those higher up the socio-economic scale. Thus, one of the effects of migration on sufficient scale can be to disrupt local connections while not affecting elite networks. (Elites being anyone who can recurrently influence how people they do not know act.) During the age of empire, colonial authorities regularly imported people of very different culture than the locals to promote commercial activity. It also had the effect of dividing the resident populace into culturally distinct groups, making colonial domination somewhat easier: a divide-and-dominate strategy. It is a pattern that can operate just as effectively in a democracy as in a colonial possession.
One of the clearer findings of the economics of migration is that migration benefits the holders of capital much more than it does the providers of labour. If migration disrupts the local connections of working residents without affecting elite networks, the economic advantage is magnified by a political one. The combination of increasing elite advantage with increased separation into disconnected groups can undermine the political and social coherence of a society, intensifying internal conflict. Economic historian Robert Fogel identified the dramatically increased levels of migration to the US after the development railways and steamships in the 1820s as a major economic, social and political stressor that intensified the existing slave/non-slave, and urban-commercial versus rural estates, fracture lines in the American republic in the lead up to the American Civil War.
The use of shaming and shunning to impose norms on what may be expressed can be a very powerful tool to advantage the interests and concerns of those able to do so. As noted, it is one way of creating and enforcing symbolic boundaries. As local connections weaken, it becomes another advantage that elite networks can, and so do, use. Accusations of, for instance, racism and xenophobia can be very effective tools in blocking people reliant on local connections from speaking up in their own interests, or discounting them if they do.
Migration can also be used to justify critique of existing national culture, as part of both an owning-morality status strategy and an antagonistic identities divide-and-dominate strategy. In that case, attacks on the common heritage add a status-and-cultural cost to political organisation, economic inequality and relational wealth costs. Indeed, as the salience of cultural divisions increases, with ostentatious disrespect for the local heritage (and, of course, those who embrace the same) and ostentatious respect for other heritages is used as a cosmopolitan signalling strategy, this can shift political pressure from economic redistribution to issues of cultural identification and trade protection.
As it is hard to expropriate human capital (short of expropriating the holder of the human capital, and that has its own limitations), possessors of human capital have often been drawn to radical political activism. When the working class was excluded from politics, this created a natural political alliance. During the nineteenth and early twentieth century, an effective response to rising income inequality and radical (even revolutionary) political agitation was to extend the franchise, creating a reasonable expectation of future income and services redistribution. While possessors of human-and-cultural capital remained a relatively small group, and income/class identity remained highly salient in politics, the alliance kept going. As, however, the human-and-cultural capital class has expanded, divergent interests have tended to drive the two groups apart.
In societies with universal adult suffrage, where human capital can attract high incomes, redistribution is likely to be less attractive option and franchise extension (except to new migrants) is not available as a response to rising inequality and increasing cultural differentiation in our new “gilded age”. An alternative strategy is to use the power to grant and deny legitimacy, based on some appropriate structure of sacredness and sin, to block effective expression of working class discontent; a strategy more likely to be successful the more disrupted and atomised the working class is. The effect is magnified if suppliers of labour can be further divided into competing groups. High level of migration can be a very useful adjunct to such a strategy, especially under a diversity, rather than an assimilation, migration policy.
With the shrinking of private sector unions, and the takeover of the union apparatus by holders of human-and-cultural capital, the last area where working class people have status and authority within modern developed societies is the police. (A consequence of being a significantly working class institution can include the aggressive tribalism that is a recurrent feature of working class cultures.) Defunding the police is a natural culmination of a social strategy of blocking or eliminating working class social and political influence. Moreover, when presented in an explicitly racialised way, it has the further advantage of intensifying divide-and-dominate strategies.
A polity is democracy if, and only if, the working class is included in the political process. Any social strategy that seeks to systematically block working class political action is at war with democracy, whether the adherents of the strategy admit that to themselves or not.
As citizenship, built around a common heritage, has been a key institutional and legitimacy support for working class political involvement (all the way back to the demos of Ancient Athens), devaluing citizenship, and undermining any sense of common heritage, can also be a very useful adjunct to such a strategy. This would also tend to undermine at least some structural equilibria. Not least because of the push to replace impersonal rules (treating people the same regardless of social identity) with a structure of anonymous rules (treat people according to social identity). This would involve undermining the open access social order of impersonal rules that has evolved in recent centuries. Blocking the ability to create new political organisations, or attempting to quarantine such off from access to power, by denying them legitimacy and organisational capacity, is a potentially workable strategy to forge an entrenched dominant interest group coalition replacing the existing open access social order.
To put the matter more directly. In a situation where politics has become mainly a struggle between groups of holders of capital (human-and-cultural capital on the “left”, business capital on the “right”); there is rising inequality, both income inequality and cultural/status inequality, given that ownership of morality is increasingly used as an elite signifier; where there is no significant capacity to extend the franchise, except to a limited degree at age and residency margins; and there is strong resistance to increased redistribution, as many holders of human-and-cultural capital have relatively high incomes and/or are already burdened with significant liabilities, there will be pressure to evolve a social strategy to block redistributive and cultural discontent. As the open access order of impersonal exchange tends to generate new organisational responses to channel such discontent — hence the rise of populist movements, particularly national populist movements — the open access order of impersonal exchange becomes the problem. Hence the rise of rejection of the American, Western and Enlightenment projects and attempts to replace impersonal exchange with anonymous exchange based on social identities and open access discussion with increasingly restrictive norms regarding speech and thought.
The phenomena is particularly intense in the United States partly due to the cultural legacy of Greater New England Yankee Puritanism — like the Great Awakenings, the Great Awokening is very much a product of that cultural legacy — and partly due to the US’s vexed history of construction of racial identities. A strategy of frustrating working class discontent by dividing working people into antagonistic identities has both more to work with and an already well-established history, extending back to the Antebellum South.
Moreover, the combination of burgeoning student debt and highly restrictive housing regulation that shut increasing numbers of young people out of metro housing markets (especially if they already have significant student debt) creates a strata of possessors of human-and-cultural capital with a burden of liabilities and little prospect of significant asset accumulation. That is a classic revolutionary group, as they have organisational and rhetorical capacity along with minimal commitment to the existing order.
The downside of human-and-cultural capital being hard to expropriate is that it is hard to undermine or attack someone’s human capital without attacking them. To establish the dominance of some set of human-and-cultural capital requires either getting divergent possessors of human-and-cultural capital to submit or convert, to block their use (and replication) of their human-and-cultural capital, or to kill them. There is a reason that totalitarian politics arises out of human-and-cultural capital politics. Typically, it arises from the politics of social transformation that establishes some urgent, and trumping, moral project justifying the social dominance of a particular set of holders of specific human-and-cultural capital. As the Soviet Union under the New Economic Policy and contemporary China demonstrate, a cultural command economy can be an effective vehicle for totalitarian politics. It is, perhaps, the natural vehicle for totalitarian politics in a digital age. The current attempts to impose very restrictive norms on the forms and use of human-and-cultural capital fit this pattern and have construction of a cultural command economy as their natural end point.
If extending the franchise is not a useful option (except as a mechanism to further reduce the social leverage of the resident working class), and commitment to redistribution of status and resource opportunities is rejected, then rejection of the open access order of impersonal exchange, and so of the American, Western and Enlightenment projects, is what is left.
To put it another way, there is an elite revolt against broad-based political bargaining underway. With migration, and associated what-is-or-is-not-legitimate normative plays, being a major weapon against such bargaining.
One of the fundamental problems of mainstream economics is that it takes exchange — buying and selling and its analogues — to be the basic, and generalisable, mode of social interaction. This is not how actual societies work. Another problem of mainstream economics, following on from exchange-as-basic, is thatoutside the realm of institutional economics, it tends to analyse institutions as if they are, or can be treated as, patterns of exchange. A third problem, also following on from exchange-as-basic, is that mainstream economics tends to treat people as if they were interchangeable, apart from differences specific to the operation of exchange. A fourth is that the concentration on positive-sum exchange encourages blindness about the importance of zero-sum, or even negative-sum, status games in human interactions.
Using the exchange-as-basic model, migrants can be analysed as not differentiated, except in features relevant to exchange, and as if there is no difference between migrants and residents that affects the operation of institutions. Adding in the presumption that culture transfers neatly from existing residents to new ones, a proposition needed to presume no effect on institutions, completes the misreading of the social dynamics of migration.
But migration is not a problem of just activity equilibria, where the structures within which activity takes place can be assumed to be unaffected. It is also a matter of local connections and of structural equilibria, which very much depend on the patterns of beliefs, action, norms and expectations among people; patterns that in turn depend on their socialisation and patterns of interaction. Both of which are potentially greatly affected by migration flows. Crucial structural equilibria were not able to be maintained, under the stress of mass migration, in the American republic after steamships and railways led to the advent of mass migration. In that case, the migrants were mostly coming from the British Isles and Northern Europe, so the main stress factor was not any cultural distance from the migrants but in how their arrival shifted the balance of territorial and social interests within the Antebellum US. Similarly, the varying experience of migration between the coastal-metro and the interior regions of the US has become a major stressor, encouraging contemporary political and territorial polarisation. A similar intensification of metro/provincial splits can be seen in the United Kingdom and in France.
The “large lump” migration into the US since the 1965 Immigration and Nationality Act, and into post-imperial Europe, have clearly generated significant social and political stress in those societies. By contrast, Australia and Canada, with proportionately considerably higher rates of migration, but with much more of a “small lumps” pattern, and in highly urbanised societies (so with much less of a metro/provincial split), have experienced significantly less signs of social and political stress.
People reliant on local connections have very good reasons to be concerned if there is large-scale migration of culturally distinct people into or near their local area. Especially as the social and political effects will tend to magnify their relative economic disadvantage, compared to the holders of capital and their relative political disadvantage, compared to people in elite networks. They therefore take a double status and resource-access hit. They also have good reason to prefer migration of people more culturally similar over those more culturally different. Nor can the wider structure of organisations, institutions and culture be presumed to be unaffected by the scale and source of migration. These effects are magnified if an own-morality elite status strategy engages in a systematic critique of the common heritage, adding a cultural-and-status hit to the aforementioned consequences.
Resilience and efficiency
Efficiency is about maximising output for a given level of input (or minimising inputs for a given level of output). Efficiency tends to encourage specialisation. Stable environments tend to select for efficiency.
Resilience is about being able to continue to operate in changing circumstances. Resilience tends to encourage generalised adaptability. Unstable environments tend to select for resilience.
Being anti-fragile, being able to become stronger in adverse circumstances, is an even stronger response to environmental instability.
Selection for efficiency can undermine resilience, if it selects for a pattern of inputs or outputs that reduces the ability to cope with changes in the environment. Being enormously efficient at extracting nourishment from a particular source is not resilient if the source disappears.
Conversely, resilience can be inefficient, as it tends to require diversity of resources and capacities. Having many small strip fields is inefficient, it reduces average productivity. But it is resilient, because it is less subject to variance in output due to variations in rainfall or soil quality. In a high-risk environment, it may be more important to stop output dropping below a certain level than to maximise average output. That is, the resilient strategy of managing risk by diversifying across space is preferred over the efficient strategy of maximising output across time. If risk levels fall, as indicated, for example, by falling interest rates, then strip fields are likely to be amalgamated into larger, more efficient, fields.
Connection is a resilience strategy. In certain circumstances, it can be an anti-fragile strategy, if bonds between people are strengthened. Of course, elites may not wish to have workers, residents or citizens display such connected resilience. This is especially true if elites regard themselves as living in a stable global environment in a situation where, due to technology, outsourcing and migration, resident labour has become replaceable across a much wider margin than was previously the case. Characterising resistance to migration as racism or xenophobia seeks to use granting and denying legitimacy as a social dominance lever so as to strip resident workers of the public space to defend their interests.
But the question of resilience also applies to institutions and culture, to structural equilibria. It is one thing to see that newcomers conform to the patterns of resident institutions. It is quite another to claim they have fully internalised the necessary beliefs, expectations and norms. If those beliefs, expectations and norms are only weakly adopted, then the structural equilibria sustaining institutions may prove to be quite fragile.
Assimilation is much more clearly a resilience strategy than is diversity. The rejection of assimilation likely reflects both movement away from the experience of world war and loss of working class political influence, especially in centre-left political parties. If migration increases the stress in a society, that can be another path to undermine the resilience of institutions.
The notion that we can calculate the economic gain to be had from open borders, or even large-scale migration, holding institutions and culture constant, is not a claim worthy of anyone’s intellectual respect. Nor is the claim that such fantasy calculations of economic gain remotely represent a complete analysis of the effects of large-scale migration.
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This essay is part of the intellectual scaffolding for a book to be published by Connor Court looking at the social dynamics of marriage. (There might also be some suggestion that economists and anthropologists should talk more.) As this essay is something of a work in progress, it is subject to ongoing fiddling.
Cross-posted from Medium, which has the updated version.
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