Much is being made of the idea of fairness in our modern politics, and to many people, notably many Democratic contenders for the presidency and the Labour party in the UK ‘fairness’ equals redistribution of wealth.
But that simplistic idea – to impose very high taxes on the rich in order to hand it in some manner to those less fortunate – is not the answer for one simple reason: it offends our deeply rooted human desire for fair play.
Although game theory was first used to predict strategy during the Cold War and then to describe economic behavior, in 1972 British economist John Maynard Smith realized its usefulness in predicting which competing strategies help animal populations to propagate and survive.
Game theory is now used for modeling in all the social sciences and in evolutionary biology. Biologists turn to game theory to determine how animals – and human beings – react in certain complex social situations.
Games strip away the vast complexity of human behavior to its skeletal strategies.
Scientists have always maintained that the human drive for fairness is a moral issue, developed only in human society as a “counter dominance” strategy, to “encourage” — by which they mean “force” — cooperation.
Nevertheless, it appears that, within any society, a sense of fairness spontaneously evolves as a basic bond of society. In the tests of various games even within indigenous cultures, the more a society operates interdependently, the fairer the individuals act toward each other.
Turn-taking entirely rests on the assumption that this impulse also exists in the person who is the object of our generosity, and that he or she will automatically return the favor. However, we immediately respond to any instance where we are in some way betrayed.
Most of us possess an in-built scorecard that abhors a freeloader, with a corresponding need to punish those who take more than their fair share. In humans our abhorrence of unfairness is most evident in the fact that we are willing to punish transgressors of the social contract, even if it comes at our own expense.
This has been proved in game theory, with the “Public Goods,” a standard game in experimental economics. This game is designed to test how people behave when asked to contribute to something that could benefit the entire community, but at a price to themselves.
It’s a bit like asking people to voluntarily pay a sum of their own choosing in taxation toward maintaining the parks in California.
In this scenario, a number of participants are given tokens, which are redeemable at the end for money. They’re allowed to decide secretly how much of it to keep and how much to put into a common pot. The experimenters then award some percentage of the total in the pot — 40 per cent, say — to everyone playing.
If each player is playing with 20 tokens and all four put in all their tokens, the experiments will award 40 per cent of eighty, or 32 tokens to each. Although each player forfeits all his own tokens, each ultimately benefits financially in the long run by putting all his money in the common pot.
The irony of the game is that everyone makes the most money when forfeiting all his own tokens, since the experimenters reward the most from the highest amounts within the pot.
And this is exactly what happens. Among large number of Public Goods experiments carried out by social psychologists, most people add something to the pot and the average is for people to give up half their tokens to the public good.
This game can be run either as a “one shot” or a “repeat” over a series of up to 10 rounds, but a very different scenario emerges during repeat Public Goods games.
In that case, the urge to give is initially enormous — on average, people begin playing by giving up to 40 to 60 per cent of their tokens — but this generous impulse quickly abates so that, by the final rounds, nearly three-quarters of all people contribute nothing and the rest, close to nothing.
Although at first glance, it would appear that people are simply following their own self-interest, that isn’t the explanation offered by the players. When interviewed later, those participants who had initially been generous grew increasingly furious at freeloaders, who were either contributing nothing or less than the others.
The generous players had retaliated with the only weapon available to them: they’d stop contributing to the public fund.
In other versions of the game, when players are allowed to fine the freeloader, albeit at a cost to themselves, they are more than happy to do so, even though they would benefit more individually by continuing to contribute to the pot.
Social scientists call this impulse “altruistic punishment” – our desire to punish unfairness, even if it comes at a cost to ourselves. This suggests that, within our social bond with each other, we have a strongly honed sense of fair play — the urge to cooperate with others and to punish those who violate the social contract of cooperation.
So strong is this impulse in human beings that we are willing to cut off our own nose, so to speak, by refusing our own reward in order to punish transgressors who have taken more than they are entitled to. We would rather go home empty-handed than allow someone to get away with more than their fair share.
It’s a bit like a taxpayer, annoyed at loads of people on the welfare rolls, refusing to pay his taxes.
What these games show is simply this: the soul of any successful society is turn-taking, or reciprocity – a sense of fair play. The moment individuals begin to cluster in a group larger than the nuclear family, they appear to evolve a strong, in-built sense of fairness. Cooperation can be maintained only to the extent that individuals are fair with each other.
Our survival depends upon our ability to give each one of us a turn, and the extent to which any society begins to fray relates to a deterioration of a sense of fairness and basic reciprocity.
And this suggests that in order to reform capitalism and move beyond either naked claw capitalism or old-style socialism, the answer lies in this in-built sense of fairness and exactly what is deemed to be fair – for all sides.
And what that means is not to create sameness, but for every last one of us to contribute in some way – as much as we are able – to a real life Public Goods game.
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