Human Nature

How Do the Economic Elites Get the Idea That They ‘Deserve’ More?

The natural tendency toward discrimination and inequality

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By Yanis Varoufakis

The ‘haves’ of the world are always convinced that they deserve their wealth. That their gargantuan income reflects their ingenuity, ‘human capital’, the risks they (or their parents) took, their work ethic, their acumen, their application, their good luck even. The economists (especially members of the so-called Chicago School. e.g. Gary Becker) aid and abet the self-serving beliefs of the powerful by arguing that arbitrary discrimination in the distribution of wealth and social roles cannot survive for long the pressures of competition (i.e. that, sooner or later, people will be rewarded in proportion to their contribution to society). Most of the rest of us suspect that this is plainly false. That the distribution of power and wealth can be, and usually is, highly arbitrary and independent of ‘marginal productivity’, ‘risk taking’ or, indeed, any personal characteristic of those who rise to the top.

In this post I present a body of experimental work that argues the latter point: Arbitrary distributions of roles and wealth are not only sustainable in competitive environments but, indeed, they are unavoidable until and unless there are political interventions to keep them in check.

The laboratory experiment central to this post took place some time ago and involved 640 volunteers. It revealed that rigid hierarchies might emerge even among people who are, to all intents and purposes, identical. Of course, discrimination cannot emerge unless there is at least some distinguishing feature (e.g. some are ‘left-hookers’ or have green eyes, some are men while others are women). So, to test the hypothesis that systematic discrimination can emerge when subjects seem identical to each other, the experimental design made it impossible for one participant to discern anything other than a wholly arbitrary feature of the ‘other’; a feature that is commonly known to be uncorrelated to the character, application, intelligence, motivation or ability of the person involved. What feature? We simply assigned, at random, the colour Blue to half our subjects and the colour Red to the other half. Could such an arbitrary colour assignment seed stable conventions that discriminated terribly between the Reds and the Blues; i.e. people that were, otherwise, indistinguishable (and who knew that the colour assignments were random and, therefore, meaningless)? The answer is, contrary to anything economic theory can explain, a resounding ‘yes’. (Click here for the academic paper, published in The Economic Journal, reporting on this experiment and here for a longer chapter on the same topic, published recently in this book.)

What does this all mean? What lesson can we learn, from these laboratory experiments, about our societies? Are there insights here that can be of help to political activists and civil rights organisations struggling against systematic discrimination? Below, I (YV) offer a brief summary of the empirical findings and answer questions posed by Nick Hadjigeorge (NH) concerning the political significance of these issues for civil rights activists.

INSIGHTS FROM THE LAB – in six points

  1. Experimental evidence shows that large-scale arbitrary discrimination can be sustainable on the basis of some distinguishing feature that everyone knows is independent of personal character, skill, aggression, IQ, temperament etc. If we can reproduce rigid patterns of discrimination within an hour, in a laboratory, then feminists, anti-racists  and critics of the vast inequalities between social classes have powerful evidence that it is perfectly possible for societies to distribute the good social roles (and the wealth emanating from these) independently of the personal virtues powerful white men invoke to justify their riches and power.
  2. Given their evolutionary stability, the patterns of discrimination become institutionalized in human societies because people begin to believe that they deserve what they are getting or not getting (as part of the distribution that results from the evolved discriminatory conventions). The ideology of entitlements, in others words, follows on the coattails of arbitrary distributions of social roles and income.
  3. Members of  advantaged and disadvantaged groups behave differently based on this dynamic, expect the ‘other’ group to behave differently and, importantly, allow their ‘expectations’ to become more than predictions: to become ethical expectations (e.g. the advantaged tend to believe that it is right that they should be getting more than the disadvantaged and vice versa).
  4. Advantaged people engage more in hostile behaviour toward one another, and they feel entitled to their winnings.
  5. Disadvantaged members learned to expect less and to develop a greater capacity to act collectively and cooperatively against the logic of free-riding. As a result, even though this is not necessarily what motivates them, they manage to recoup some of the losses from being disadvantaged (in their dealings with the advantaged group) by managing to cooperate with one another.
  6. The explanation of how real power evolves, and what makes it sustainable, is to be found in the mind, and the beliefs, of the majority of the disadvantaged who succumb to the  ideological belief that they are entitled to less than the advantaged.

NH: Your analysis began with empirical observations of discrimination amongst populations of birds, before you proceeded to human behaviour in the laboratory. Do you have more to say about the institutionalization process that we observe in human societies?

YV: Humans have a capacity that animals lack: the capacity to rationalise ex post and to develop moral (or normative) beliefs. Whereas in bird populations discrimination is based just on a Darwinian replicator mechanism (which ensures that conflict is minimized through the division of birds between those which are programmed to act as hawks and to those that behave dovishly), human societies are at least one order to magnitude more complex. As in the ‘Animal republic’ so too in human societies the socio-economic games we play (also known as… patriarchal, racially-charged capitalism) are quite primitive and conflictual, giving rise to social divisions between advantaged and disadvantaged groups. The difference is that humans question the conventions around them. They need reasons for accepting them. So, they devise them surreptitiously, covertly, subconsciously. They convert the observation “this is what I am getting” to the belief “this is what I am entitled to”. When predictive beliefs acquire a veneer of ethicality, they become solidified and the social order is stabilised. But, at the same time, an opposite force is at work; a subversive one that is akin to mutations in biology. These mutations are acts of rebellion (e.g. a Spartacus or a Malcolm X) that destabilize the social order and the dominant ideology. It is through this tussle between the adaptive, conservative, replicator dynamic and the subversive rebelliousness of political mutations that human history evolves. The institutions of slavery, patriarchy, racism, capitalism etc. all came about in this manner. And were all subverted in that manner too.

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NH: Is it your impression that your experimental subjects behaved according to socialization, or is it the result of innate brain-wiring, as in the bird example?

YV: The only innate, hard-wired, aspect of this ‘socialization’ process has to do with our need, as humans, to rationalize; to have reasons for accepting the conventions regulating our behavior. What David Hume describes in his Treatise of Human Nature as the surreptitious conversion of an ‘is’ to an ‘ought’. It is this ‘thirst for reasons’ that is the source of the ideology that solidifies behavioural patterns of discrimination and cooperation but also of the ideology of rebellion, subversion and resistance.

NH: Advantaged members feel entitled to their winnings. What sense do the disadvantaged members feel? Is it injustice, etc?

YV: Yes and no. The disadvantaged experience a mix of emotions. Partly a sense of injustice, partly a sense of pride for not being exploiters, partly an indignation against the advantaged but also partly moral condemnation of other disadvantaged people who are ‘uppity’, who think they deserve better and who seek to subvert the advantage of the advantaged. After all, the greatest opponents of feminists have been women (who proclaimed that women should stay in the home) and the police forces that attacked anti-Apartheid protesters in the South Africa were mostly black…

NH: What is your opinion on the Civil Rights Movement? Did its members successfully utilise their power as members of the disadvantaged group?

YV: Yes. Broadly speaking, the second great difference between human societies and stratified bird populations (besides our capacity to rationalise and to develop normative beliefs) is the fact that humans, possibly courtesy of Logos (speech, language and reason), tend to correlate our mutations. If you think of mutations as individual acts of resistance against established discriminatory conventions, politics is what happens when these individuals attempt to correlate their mutations, thus giving them a great deal more power to overturn the current conventions. In the 1960s the Civil Rights Movement accomplished this with great success, especially so in view of having recruited into the coalition of subversives members of the advantaged group (e.g. whites who rode on the buses with blacks). If the Movement failed in something it was in that it had no answer to the massive loss of blue collar jobs after 1973, a loss that undermined the vast majority of disadvantaged Americans. But this is another story…

NH: Looking ahead, how do you feel about current movements of disadvantaged members exercising their collective power?

YV: It is the historic duty of victims of arbitrary discrimination to contest it tooth and nail. It is also inevitable that they will keep trying, despite the Sirens that strive to keep them on their sofas, glued to the idiot box, or to immerse them in a cloud of mindless, cheap, plastic consumerism against the background of economic insecurity. The bad news is that, since the 1970s, the economic bedrock on which the civil rights’ movement stood has become increasingly brittle. The Crisis of 2008 gave out some hope that the dispossessed would take heart and, through the Occupy Movement, reclaim part of the moral high ground in this never ending struggle. The jury is still out on this. But there is good news: As long as mindless, irrational and multiple patterns of discrimination survive, the human spirit will always produce serious challenges to it and, in so doing, will keep the flame alive.

NH: Does your game theory model/research provide any insight into how these groups should behave?

YV: No. It simply empowers them:

  • with the demonstration that the discrimination they are up against can be as idiotic as it is sustainable
  • with proof that the fact that discrimination, inequality and exploitation is rampant and everywhere is no sign that there is some worthy rationale behind discrimination, inequality and exploitation
  • with evidence that, however sustainable discriminatory norms and practices may seem, they can crumble and disappear once we expose their reliance on false beliefs that resemble a type superstition functional to the interests of a tiny minority.

How resistance and Civil Rights groups will organize against discriminatory patterns, and how they will subvert the latter’s  ideological ‘cover’, is for them to work out and for us to support.

Illustration credit: Elliot Gerard. To see more artwork from Elliot, follow him on Instagram and Twitter @elliotgerard

Originally published here.

2016 January 21

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  • BryanKavanagh

    In my experience people are split, too, on the very rent-seeking in unearned incomes that make the 0.01% super wealthy. Where many see stolen public wealth as an obscenity, a greater number seems to see nothing wrong with it. Maybe it’s aspirational: they have forlorn hopes of playing the game, too – to become billionaires at the public’s expense? Or maybe they are just misguided, admiring all the ‘hard work’ that got these rent-seekers to where they are?

  • Henry Leveson-Gower

    I also think that members of the elite can be uncomfortable with their relative privilege and they accept myths of their moral superiority as a way of dealing with this discomfort. So they use the myth of superiority as a comfort blanket to avoid guilt. More the generally the elite seek to avoid reality of their position. A classic response to anyone who points out such reality is ‘don’t be so boring’ the ultimate put down – see Terence rattigan plays and also I recall my mother saying such in similar circumstances.

  • X-7

    K, YV, all good.
    Adding mutant memetic speciation re code in a physics / evolution context, including monetary code.

  • Haris Iasonas Haralabides

    I don’t know if most readers have done the connection but in his rhetoric YV manages to depict himself more than any “elites” of this world. At least the later are succesful in crucial aspects of life (like creating wealth, often from nothing e.x. FB inventor). I consider this another session of his beloved practices in theoretic masturbation.

    • constantine

      I don’t know if you’ve noticed but your comment (that there is a correlation between success, wealth and personal merit) exemplifies the “entitlement” part of his point.
      And AFAIAK, YV is pretty successful himself, financially speaking, so don’t go there huh?

      • Haris Iasonas Haralabides

        If you mean that acquiring a phd, becoming a professor (not even tenured) of average universities and marketing yourself to become a finance minister of a country that fails miserably after you took over, equals success in life, yes I would aggree. Yet, phds are only the theoretical part whereas the practical is light years away. Morwover, FYI, Mr. Varoufakis’s financial success is mostly based on his marriage and his wife’s affluence. Otherwise he is a below mediocre academic with less publications than the average college professor. As a finance minister he was awarded the first position for the worst negotiation of the year 2015 by Harvard experts. Yes, he is succesful in exemplifying what to avoid as a minister of finance. (your ball).

  • A. Ezhutachan

    Varoufakis misses an obvious trick- viz. mentioning the ‘bourgeois strategy’ in Hawk Dove. What is important in a conflict is which side has the ‘bourgeois’ sense of entitlement which means they are willing to send a ‘costly signal’ – and this includes Hirschman Exit- as opposed to indulging in ‘cheap talk’.

    The problem here is that in the real world, unlike in Game Theory, Knightian uncertainty obtains. The future fitness landscape is unknown. Hedges against this Uncertainty can themselves carry risk. A person known to own fungible hedges may be at greater risk of kidnapping or murder.

    Similarly, a ‘proletarian’ strategy of militancy may succeed in vesting entitlements- e.g. property rights in jobs, tenancy protection etc. However, rather than hedging against uncertainty, these entitlements may put the proletariat at greater risk- for example, if the employer goes bankrupt, or the Apartment building turns into a shooting-joint.

    More generally, worsening ‘Wealth’ distribution (ex ante Wealth, that is) may reflect not the cunning of the bourgeois but their previous rout by the proletariat who poverty trapped themselves by clamoring for a share of what was only quasi-rent- i.e. something doomed to disappear in the medium term and turn mischievous longer term.

    Ordinary people may not have the vocabulary to express these ideas in precisely this way, but, at least in Greece and other ‘PIGS’- or even Argentina for that matter!- it appears that this is indeed the ‘situational rationality’ to which the ‘wisdom of the crowd’ has reverted to. Thanks, in part, must surely go to Varoufakis’s own disastrous career as a Eurogroup Finance Minister.

  • planckbrandt

    Next step is just where do the winnings come from. Discrimination is not just based on arbitrary colors painted on people and our beliefs about those colors. The private ownership of the money supply itself created as bank debt by private institutions replicates the moneylending of ancient times. It transmits from the many to the few ooodles of lifetime earnings of ordinary people as made up imaginary compound interest due on made up imaginary money. OK. When gold and silver were the underlying money, maybe the money loaned wasn’t so imaginary and made up. But, the compounding interest due was. And, the belief that gold and silver are needed as a circulating medium was made up, too.

    Beliefs that allow this kind of money system create real distinctions between people, those who can create money out of nothing and collect lifetimes of wages as interest on top of it and those who can’t. This is real-life, not simply errant discriminatory beliefs. And, the power it gives the few to shape culture and institutions then leads right to the made up color discrimination stories. Elites need discrimination stories to keep the majority divided. They are not accidents.

    David Graeber suggests the discriminatory beliefs came second only after the moneylending relationships established the social hierarchy. Warriors, merchants, and priests on top, everybody else in debt to them for lifetimes. Discriminatory beliefs as ethics were needed to justify the situation, and are not the cause of it. The money relationship was.

    Of course, the Georgists believe that private profit from not humanly created land and nature is another important factor behind this stratification. This is another inconvenient set of beliefs. The creation of money out of thin air grants a lot of power to a tiny few to get hands on land and nature, and then in turn decide everything else for the rest of us.

  • Helmut_Schmidt69

    Unfortunately, this post delves too far into crazy regressive leftist land. Hierarchies develop because human intelligence is distributed in a bell curve. While increasing complexity and civilization made this more rigid, in the primitive tribal communities in which we evolved, and which we have observed elsewhere in the world, the leaders did in fact tend to be the most intelligent.

    People aren’t equal. This is simply a fact, and only someone steeped in Marxist Tabula Rasa mythology will claim otherwise. Today, with the extraordinary advancements in genetics and major powers like China rolling out CRISPR machines for genome editing of human eggs to maximize intelligence, even the exercise here is counter-productive.

    The problem we have here is that technology has rendered pretty much everyone with an IQ of less than 100 obsolete. They serve no meaningful economic function besides the most basic servile positions. Problem is? that’s most people in the case of whites, blacks, central and south Asians, and hispanics, and about 40% of east Asians. Something can be done for these people, but blaming their plight on purported moral failings of others is not the way.

    This propaganda has been adopted by the powers of international finance capital because it divides the people against each other, rather than against those who truly hold the power in society.

    The premise of this article is not simply scientifically false, it is entirely counterproductive to the very purpose of this site. This will appeal to the garden variety ideological leftist who has believed every fake hate crime, every fake campus rape horror, and spends their days cowering from words they find offensive. But, it will not appeal to the broad non-wealthy white population of America that will no longer tolerate the “racist’ slur, which this post indirectly implies.

    And thus we get the very conflict that prevents sufficient unity to promote a truly progressive society that distributes wealth in a fair manner.

    Yours is a nearly dead ideology. And it will die with the election of Donald Trump. It is time to move on. And remember, on the Donald’s victory day, it is people like you who made him possible.

    • expeedee

      Very well written and completely on target.

  • Димитър Димитров

    I’m not totally agree, but there is something true. In fact, the problem is much more simple and easy to solve. It is enough to put a ceiling in the succession of economic power and the rules of the competition to ensure approximately equal opportunities for equal abilities. The division of labor and roles in society is inevitable.

  • Lorenzo Kobayashi

    Tajfel’s minimal group paradigm?

  • Lots of speculation and conclusions being drawn based on a lab experiment with questionable methodology!

  • John Rabies

    Money itself gives you the right to make mistakes. Money also gives you access to confidental informations otherwise inacessible to ordinary people. Give me a milion and I’ll probably be broke after two years. But give me a billion, I will have have few bilions after two years. The only personal competences needed are IQ above 100 and not to be a compulsive gambler.
    Moreover, we all like constructing legends around our-beautiful-selves and belive in those legends. The rich are not an exception.

  • shiboleth

    It’s hard not to agree with all this. Of course, you can call this ‘reluctant marxist’ a simplifier of the true theory and philosophy but he has the point. The society can’t but permanently reconsider its insurmountable social conflicts which constantly and unavoidably beg for the change – historically, politico-economically and philosophically …