Is this really the face of capitalism?

Economists and other social scientists are familiar with a concept called “framing”. Ask a question one way, and you might get a particular answer. But ask the same question differently, or in a slightly different context, and your answer may change completely.

There are tons of experiments that show the power of framing in influencing our decisions. A recent example I read about in this Atlantic article, however, tells us something important not only about ourselves but about the debate over capitalism.

As the article summarizes, an experiment a few years ago had college students play a classic “prisoner’s dilemma” game — that is, a game between two people where the individual has no incentive to cooperate — and separated the participants into two categories. The behavior of the students in these two groups was strikingly different:

[The researchers] told half the students it was called “Community Game” and the other half that it was called “Wall Street Game.” And that was all it took to turn these undergrads from team players into Gordon Gekkos. Fully 67 percent of the students cooperated when they were told they were playing “Community Game,” but only 33 percent cooperated when they were told they were playing “Wall Street Game.”

Essentially, what the experiment proves is that a very simple framing of a game — “community game” vs “Wall Street game” — can dramatically influence how cooperative or how selfish people choose to behave. That is, just hinting about the intended nature of the game dictated to a large extent how people acted.

This simple illustration tells us a lot about capitalism and what’s wrong with the world. Following the 2008 financial crisis in particular, I heard lots of people — including my own friends and family — assert that the crisis proved that capitalism as a system had failed. Some seemed to suggest that free markets in and of themselves promote the greedy behavior that caused the crisis.

Since then I’ve been trying to make the case, as calmly as possible, that it’s the economic actors (i.e. people) that participate in the system that are desperate for a change, not the system itself. It should be noted that Adam Smith and the other economic philosophers who laid out the principles of capitalism more than two centuries ago never advocated for selfishness, nor complete deregulation. And if we’re getting specific, they certainly never advocated for bad mortgages to be shadily cut up and packaged as AAA-rated investments, or to market such toxic assets as safe to unwitting investors, one of the major components of the 2008 crisis. This point has been made by lots of people of late, but the message has mostly fallen in deaf ears, it seems*.

The economic experiment mentioned above showed that even just changing a single phrase could completely change our economic choices and behavior. Just by calling something “community” instead of “Wall Street” essentially doubled the rate of cooperation in the experiment. “Wall Street”, in most people’s minds, connotes selfishness and aggression. “Community” connotes cooperation and regard for others.

Now, imagine the “community” game, but a scaled version that encompasses the globe. That is, imagine a global system of free enterprise where the prevailing assumption about human nature is that we all can and should play by the rules and respect the rights of others. Congratulations: You now understand the version of capitalism conceived by Adam Smith and his contemporaries.

So, what if we keep the general system that we have now but change ourselves, and reverse the cynical and selfish assumptions we hold about human nature? Surely, the nuts and bolts of our economic system need tweaking**. Most economists agree that free markets require some smart regulations at the very least, and that the collective welfare of society is maximized when we have a strong social safety net and some ways to redistribute resources. The Baha’i teachings would agree: In the words of Shoghi Effendi, “There is nothing in the teachings against some kind of capitalism; its present form, though, would require adjustments to be made.”

But no system — political, economic, or otherwise — can work if the individuals that make up that system lack integrity. That’s a point that I’ve made frequently here, and one that echoes throughout the Baha’i Writings. Abdu’l-Baha writes:

[A]ny agency whatever, though it be the instrument of mankind’s greatest good, is capable of misuse. Its proper use or abuse depends on the varying degrees of enlightenment, capacity, faith, honesty, devotion and highmindedness of the leaders of public opinion. (Secret of Divine Civilization, p. 16)

Though ‘Abdu’l-Baha wrote the passage above with a focus on political leaders, I see no reason it can’t be expanded to include the rest of us regular folks, particularly in a democratic society in which we ourselves choose those leaders. It is we who set the underlying assumptions of our economic environment — whether “community” or “Wall Street” — and this has a huge bearing on whether or not our capitalist system is ultimately characterized by decency and respect, as envisaged by Smith, or by the cynical selfishness that we all regularly accept and accede to today.

So, please: Let’s get a bit more nuanced in how we talk about what’s wrong with our economic system. It’s easy to decry something as amorphous and unspecific as the “excesses of capitalism”, but it’s much harder to look in the mirror and admit the truth: Maybe we are the problem.

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* I’ll recommend once again reading Farhad Rassekh’s essay, The Baha’i Faith and the Market Economy, for a discussion on what Smith and other Scottish Enlightenment envisioned in terms of capitalism, and how that vision relates to the Baha’i teachings.

** Let me be as clear as possible and forestall any misdirected outrage: There are lots of ways that the rules on the ground, so to speak, need to be adjusted. It’s clear to me, at least, that we need much more effort to (for instance) reduce income inequality, prevent another banking crisis, and provide assistance to the poor. These efforts are huge in terms of their real impact on people’s lives. But these types of things have a moral and spiritual component too, which I’ve written about on this blog. Capitalism allows plenty of room for us to take care of the needy or properly regulate the banking sector, the question is how much of a basic sense of justice and urgency we have as a society to actually do these things, even as the basic structure of a free market system is in place.