The Rational Optimist: How Prosperity Evolves. Matt Ridley

      There is a scene in the film The Maltese Falcon in which Humphrey Bogart is about to be given $1,000 by Sydney Greenstreet and will have to share some of it with Mary Astor. Greenstreet whispers to Bogart that he’d like to give him a word of advice: that he assumes that Bogart is going to give her some of the money, but that if he does not give her as much as she thinks she ought to have, he should be careful. The scene prefigures a game, invented by Werner Guth in the late 1970s and much loved by economists, called the Ultimatum Game, which opens a little window into the human spirit. The first player is given some money and told to divide it with the second player. The second player is told he can accept or refuse the offer, but not change it. If he accepts, he receives the money; if he refuses, neither he nor the first player gets a penny. The question is, how much money should the first player offer the second player? Rationally, he should tender almost nothing, and the second player should accept it, because however small the sum, refusal will only make the second player worse off than acceptance. But in practice, people usually offer close to half the money. Generosity seems to come naturally, or rather, ungenerous behaviour is irrationally foolish, because the second player will – and does – consider a derisory offer worth rejecting, if only to punish the selfishness of the first player.

      The lesson of the ultimatum game and hundreds like it is that again and again people emerge from such experiments as nicer than you think. But the even more surprising lesson is that the more people are immersed in the collective brain of the modern commercial world, the more generous they are. As the economist Herb Gintis puts it, ‘societies that use markets extensively develop a culture of co-operation, fairness and respect for the individual’. His evidence comes from a fascinating study in which people in fifteen mostly small-scale tribal societies were enticed to play the Ultimatum Game. Those societies with the least experience of dealing with outsiders were the most hard-hearted, ungenerous and narrowly ‘rational’. Machiguenga slash-and-burn farmers from the Amazon most often offered just 15 per cent of the sum to their co-subjects, and in all but one cases, the second player accepted. Likewise, a Hadza hunter-gatherer from Tanzania usually makes a very small offer and experiences few rejections. On the other hand, players from those societies that are most integrated into modern markets, such as the Orma nomads of Kenya or the Achuar subsistence gardeners of Ecuador, will usually offer half the money just as a Western undergraduate would. The whale-hunting Lamalera of the island of Lembata in Indonesia, who need to coordinate large teams of strangers on hunts, offer on average 58 per cent – as if investing the windfall in acquiring new obligations. Much the same happens in two New Guinea tribes, the Au and Gnau, whose members often make ‘hyper-fair’ offers and yet see them rejected: in such cultures, gifts can be a burden to the receiver because they carry an obligation to reciprocate.

      The lesson of this study is that, on the whole, having to deal with strangers teaches you to be polite to them, and that in order for such generosity to emerge, costly punishment of selfishness may be necessary. Rejecting the offer is costly for the second player, but he reckons it is worth it to teach the first player a lesson. The argument is not that exchange teaches people to be kind; it is that exchange teaches people to recognise their enlightened self-interest lies in seeking cooperation. Here, then, lies a clue to the unique human attribute of being able to deal with strangers, to extend the division of labour to include even your enemies.

      Cooperation, exchange and specialisation within a family group are routine throughout the animal kingdom: among chimpanzees and dolphins, among wolves and lions, among individuals of almost any social species. A meerkat or a scrub jay trusts its relative on sentry duty to sound the alarm if an eagle appears and shares the duty. A worker ant divides labour with its queen, with soldiers and with its sisters in other castes of worker. All these societies are just large families. Collaboration between unrelated strangers seems to be a uniquely human achievement. In no other species can two individuals that have never before met exchange goods or services to the benefit of each other, as happens routinely each time you visit a shop or a restaurant or a website. Indeed, in other group-living species, such as ants or chimpanzees, the interactions between members of different groups are almost always violent. Yet human beings can treat strangers as honorary friends.

      Taking the first step to proffer the hand of cooperation to a homicidal enemy must have been momentous and almost impossibly difficult, which is perhaps why it is such a rare trick in the animal kingdom. It took primatologists such as Sarah Hrdy and Frans de Waal to notice just how peculiar this is: how inconceivable it would be for an orderly queue of stranger chimpanzees to board an aeroplane, or sit down in a restaurant, without turning violently on each other. And generally speaking the more cooperative a species is within groups, the more hostility there is between groups. As a highly ‘groupish’ species ourselves, still given to mutual aid within groups and mutual violence between groups, it is an extraordinary thing that people can overcome their instincts enough to have social commerce with strangers.

      I think the first overtures may have been ventured first by human females. After all, homicidal raids against neighbouring groups are – in human beings and in most other primates – conducted always by males. So encounters between strange females are not necessarily going to turn violent. Moreover, in all apes females are the sex that leaves the group into which they were born when they mate; in monkeys, curiously, it is males that leave. Assuming human beings follow the ape pattern – as they do to this day in most human societies – then women would have had close relations in other groups in the shape of their mothers, fathers and brothers with whom to build relationships. There is even a curious, much later echo of such a female-centred pattern in the trading patterns of south-east Asia before the arrival of Westerners. The traders of Malaysia, Indonesia and the Philippines were often women, who were taught to calculate and to account from an early age.

      Again and again throughout history, trust has to start with relatives before it can be extended to strangers; sending relatives abroad as agents has a long history. The trading ports of Asia each had their own communities of Gujaratis, Fujianese, Persians, Armenians, Jews and Arabs, just as the ports of Europe had their separate communities of Genoese, Florentine, Dutch, English and Hanseatic merchants, keeping the trust within the family as their diasporas spread. The financing of Wellington’s armies in Spain in 1809–12 was made possible because the British government trusted a Jewish lender named Nathan Rothschild to trust his brothers on the continent to buy bullion with British