Growth hunger

(From "Horizons" no. 114 September 2017)​​​

​"Da"Technological innovation and economic growth began when our ape-like ancestors produced simple stone blades, using one stone to knock flakes off another". This quotation was taken from the financial magazine World Finance and is a reflection of the current view of the mechanism that has led to humanity's accumulation of wealth. It is a trait of our species. It results from an innate and universal drive that has developed throughout our evolutionary history, and which is still present in contemporary society. Any attempt to control the growth of production to reduce the overall environmental impact is destined to fail; it will clash with a fundamental aspect of our mind-set.

However, empirical studies have produced a much more complex image of the psychological side to our economic behaviour. For example, behind our desire always to have more lies our aversion to loss, and coming hand in hand with our propensity to maximise personal interest is a spontaneous and continual desire for equality. The result is that the different impulses of our brain converge into a complex interaction of biology and culture. Both in economics and elsewhere, human nature seems to show plasticity.

Overly rational steps

Both Adam Smith and the schools of classical and neoclassical economics that followed saw 'the progress of opulence' in societies as based on two deeply rooted individual drives: the desire to improve one's lot and the need to be acknowledged by others. Each drive aims to increase the wealth of the individual continually, through perfectly rational means. Smith argued that this stretched back to the dawn of time and that human beings were naturally equipped with a propensity to maximise their personal interest.

As of the 1970s, behavioural economics started attacking the foundations of this vision. On the one hand, classical economics saw rationality as perfect, but it now seems that it is not. When faced with a choice, we use neither all of the information available to us, nor all of the resources of rational logic; we most often make intuitive judgement calls, produced automatically by the fast-reacting circuits of our brains and not our analytical faculties. These "fast and frugal" heuristics, as they are called by Gerd Gigerenzer and Daniel Goldstein, often allow us to get things just right, but they also lead to what psychologists call 'cognitive bias'. This bias opens us up to influence and leaves us vulnerable to manipulation by economic actors, who can push us to make decisions that go against our own interests, according to Klaus Mathis, a law professor at the University of Lucerne, in 2015.

In the 1990s the MacArthur Economics Network drew together approaches from experimental economics, psychology and anthropology. This network of researchers, including the pioneering neuro-economist Ernst Fehr of the University of Zurich, observed that the vision of human nature at the heart of economic theory was blind to a number of elements. "People care both about other people, and about how social transactions occur—not just the outcomes", they wrote in an article in 2004. Laboratory and field experiments led by these teams, both in the West and further afield, showed no sign of the Homo oeconomicus that they had expected. What they found was Homo reciprocans. In this individual, "the logic of 'reciprocal fairness' takes precedence over selfish self-maximizing behaviors". Intercultural comparisons show that the psychological impulses behind our economic behaviour vary greatly among groups of humans. There may be a universal human nature, but it is expressed in a number of different ways when it comes to the mutual construction of culture.

Familiarisation and envy

There is a contemporary vision of economic anthropology and psychology that aligns itself closely with that of Adam Smith, as put forward by Bruno S. Frey of the University of Basel, a specialist in the economics of wellbeing. "Our research on wellbeing shows that having an advantage in terms of material resources is very important to those who have very little. What we see is that, if someone has a low income and their income later increases, there is a spectacular growth in their life satisfaction. This is because they are leaving behind poverty which is a very unhappy situation".

Those who are already better off will still try to increase their incomes, but they do it for very different reasons. "If you are a senior manager, you will compare yourself with your colleagues in similar positions. But, even if you earn more in Switzerland than you would in France, Germany or Italy, you will still tend to compare yourself with peers in the US financial sector, who are paid even more". This is a universal law, says Frey. "There seems to be an innate tendency to compare oneself with those who are in a better situation. This envious tendency is not necessarily a likeable feature of human nature, but the systematic comparison with people who are more successful is what pushes humanity forward".

A third impulse makes up the system, maintaining it in perpetual movement even for a person at the top of the prosperity ladder. This is the familiarisation effect. This impulse leads us to perceive an objectively constant state as increasingly less satisfying, the longer it lasts. In other words, our minds perceive what is an unchanging quantity of resources to be a decreasing quantity. This is because our expectations fail to stop adjusting upwards. "This familiarisation factor plays a more important role, when it comes to income, than in other areas of life. It neutralises a large part of the increased effect on individual material well-being", says Frey.

According to Jörg Rieskamp, a psychologist and specialist in economic heuristics and decision-making, also at the University of Basel, there is one other factor that explains our desire. "Evolution has clearly given our species hedonic preferences. We tend to seek pleasure and to avoid unpleasant situations. But that does not mean that we are driven to grow in such a way as to make us want more than we have. From a biological, evolutionary point of view we just cannot identify such a drive. What we can see is, on the one hand, an element pushing us to achieve the necessary resources for survival, and on the other, a drive to avoid loss, in other words, a strong tendency to avoid losing resources".

So, what then is the relationship between loss aversion and growth impulse? "In principle, once we have sufficient resources, we are happy with preserving the status quo. But in reality, it is difficult to keep things safe. There are always fluctuations, uncertainty and risk. Our tendency to avoid all potential negative change drives us to seek security by always aiming to have a little more resources in the immediate future. We are therefore trying to accumulate more material goods, because we see that as the safest strategy for avoiding having less, even if deep down we would be happy with the status quo".

Anthropological plasticity

It is conceivable that these psychological faculties make up only one of a range of possible states of mind. This is the argument put forward by Christian Arnsperger, the director of the University of Lausanne's Institute of Geography and Sustainability. He sees the psyche of H. oeconomicus as corresponding less to the immutable human nature inherited from the hunter-gatherers of the Pleistocene and more to a "cultural and political project". In Adam Smith's time, this was a humanist approach, "enabling the emergence of a society free of the shadow of hunger and early death".

Is H. oeconomicus therefore an exclusive product of the European 18th century? "I'm not really in favour of purely historical explanations: I think that there is a human foundation that stretches throughout history", says Arnsperger. "But within this human foundation, there is an ongoing internal debate. The human in favour of growth is only one of the possible variants of the human being". We are very far from being truly determined by a rigid neurobiological programme, and we do indeed show some anthropological plasticity, in other words, an "innate capacity to overcome our innate faculties", leading to a large range of different ways of being a human being. Interestingly, the biological sciences are also showing a similar image, where even the genome and the very architecture of the brain can lead the way to a variety of different behavioural and physical results.

How has this quest for increased wealth led to a behavioural second nature? On the one hand, it is a consequence of economic mechanisms themselves. "The creation of money, for example, came hand-in-hand with the creation of debt, and henceforth individuals and societies have the obligation of growth", says Arnsperger. On the other hand, "growth is being increasingly presented as a collective project. No individual acts spontaneously with the goal of macroeconomic growth in mind. However, what we see in the political discourse is an increasing frequency of the suggestion that contributing to growth must be a personal motivation. It is of course true that there is a minority holding capital who do have a direct interest in economies growing incessantly as a whole".

So, as Arnsperger argues, we are faced with an unprecedented task. "Faced with the progressive destruction of all of the key elements of our biosphere, creating a culture of sustainability for human life on Earth does not just mean stopping all growth, but electing a selective and temporary growth model, made up of conscious decisions with regard to where growth is desirable and for how long". He also calls for a real "anthropological transition", which will be made possible thanks to the very plasticity of nature. "Of course, today we need to lead this project in a different way than through the top-down employment of constructivism used by totalitarian movements".

Nic Ulmi is a journalist in Geneva.