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(This essay is an elaboration of Collective Action (and Time Horizon) Problems).
Imagine that I offered each person in a group the following deal: You can agree to give me $30, and in return I’ll give $10 to each and every person in the group, including you. I’ll give the $10 to everyone, whether they paid $30 or not, for each person that does pay $30.
Each person is faced with an offer to pay $30 dollars in return for, to him or her individually, $10, a bad deal for that individual (a loss of $20). But since everyone else in the group also each gets $10, for any group with a membership of more than three people, it is a bigger return to the group than cost to the group. If there are 10 people in the group, and everyone makes the deal, they each pay $30 and each get $100 in return, for a net gain of $70. However, if one doesn’t pay, he or she gets $90 outright (9 people taking the deal times $10 to each person in the group) while each of the others only get a net gain of $60 ($90 minus the $30 paid in). The individual incentive is not to pay in, even though everyone is better off the more people who do, with everyone coming out ahead if 3 or more people pay in. Those who don’t pay in, however, always do better than those who do (the “free rider problem”).
This dynamic is a major underlying force in the generation of social institutions, which to a large degree exist to overcome this collective action problem. There are many scenarios woven throughout our collective existence in which people benefit from some form of cooperation (even those forms that establish the rules for competition, such as the enforcement of property rights in service to the functioning of markets), but are tempted by individual incentives to cheat or fail to act cooperatively. Our laws, our contracts, our governments, our social norms, our ideologies, all are laden with mechanisms that have evolved with the purpose of creating mutual commitment mechanisms, enforced either externally by social institutions or internally to one’s own psychological make-up. Combined, they form social institutional technologies which are robust sets of memes self-replicating and spreading throughout our shared cognitive landscape (see the essays linked to in the first box at Catalogue of Selected Posts).
It has always been a dynamic at the heart of intertribal and international relations, in which sovereign societies must strategically interact in a world with limited international legal enforcement mechanisms. With increasing political, economic and cultural globalization, and information, communication and transportation technologies make the world ever smaller and more tightly integrated, examining these dynamics is one critical component of understanding the shared geopolitical landscape in which we live.
“The War of the Woods”:
Imagine that long ago, two countries, Apestonia and Pulgalandia, had a forest on their border. Both countries desperately needed the wood in the forest, because it was both their primary building material and their fuel. Each country was faced with the choice of either dividing the forest evenly, or attacking the other and trying to get more of the forest for themself.
There are 1000 acres of forest between the two countries. If the two countries agree to draw their border right through the middle of it, they can each have 500 acres of forest, which they both desperately need.
But if one attacks quickly while the other one is planning on sharing the forest evenly (and so isn’t prepared for war), the one that attacks will capture 700 acres of the forest, 300 acres will be burnt or destroyed during the fighting, and the other will get zero acres. Since they are militarily evenly matched, if they both attack each other at the same time, 400 acres of forest will be destroyed in the fighting, and they’ll each end up with 300 acres of forest.
Here’s a table that summarizes these choices and outcomes:
Pulgalandia Apestonia Cooperate(don’t attack) Don’t Cooperate(attack) Cooperate(don’t attack) Apestonia: 500 Acres
Pulgalandia: 500 Acres Apestonia: 0 Acres
Pulgalandia: 700 Acres Don’t Cooperate
(attack) Apestonia: 700 Acres
Pulgalandia: 0 Acres Apestonia: 300 Acres
Pulgalandia: 300 Acres
Each country faces the following logic: “We don’t know what the other country will do. If they decide to cooperate (not attack first), we will get 500 acres if we also cooperate, but 700 acres if we don’t (if we attack unprovoked). Therefore, if they cooperate, we are better off not cooperating (attacking). If they decide not to cooperate (to attack), then we will get zero acres if we cooperate (don’t attack), but 300 acres if we don’t (if we attack). Therefore, no matter what the other country does, we are better off attacking.”
However, if both countries follow that logic, they each end up with 300 acres, though if they had cooperated and split the forest, they would have each ended up with 500 acres. So, while each country has an incentive to attack, if they can find a way to commit one another to cooperation, they both benefit.
So, even though they have a conflict over the forest, they have a shared interest in finding a way to commit one another to cooperating for mutual benefit. This is often the case, with war being costly in blood and treasure, and peaceful coexistence (and even mutually beneficial exchange) being far more conducive to general prosperity.
Historically, real tribes and countries have faced this challenge. Some have said, “Okay, let’s agree to cooperate, and to make sure no one cheats, we’ll exchange hostages.” And then each country would send an important member of their own society (often the ruler’s daughter to be raised by the other ruler as his or her own) to go live with the other society, so that if either cheats, that hostage can be killed in retaliation. Later, countries sent the children of royalty to marry the children of royalty in other countries, sort of as “permanent hostages,” but also to bind the countries together so that they can act more cooperatively.
In the modern world, we’ve developed a much more elaborate system of international diplomacy, with embassies in each other’s countries, and treaties, and international organizations (like the United Nations). The European Union, whose roots go back to post-WWII efforts to create economic ties that would diminish the chances of resumed warfare, is perhaps the most advanced example of emerging international political economic consolidation
Not just internationally, but within nations, overcoming this collective action problem is a big part of why we’ve created many of the social institutions we’ve created. Our Constitution, our laws, even our religions, have developed in many ways to help make it easier for people to commit one another to mutually beneficial actions even when they have individual incentives to cheat or act in non-cooperative ways.
With modern technologies, modern weapons (such as nuclear weapons), modern transportation and communication technologies, an increasingly global economy, increasingly global environmental and natural resource issues, all nations in the world face many collective action problems. Our increasing political globalization is a complex tapestry of conflict and cooperation woven within this underlying logic.
So far, we’ve assumed that the countries were equally matched, and looked at the cost-benefit analysis of each when considering whether to attack the other or to live in peace. But what if they weren’t evenly matched? What if one was militarily stronger than the other? How would that change things?
If Apestonia were more powerful than Pulgalandia, then Apestonia would capture more forest than Pulgalandia would if the two went to war. If Apestonia were to attack first, perhaps it would capture the whole forest against the weaker Pulgalandia, losing only a small portion (let’s say a tenth) in battle. This outcome can be seen in the lower-left square of the two-by-two table, in which Apestonia attacks first and captures 900 acres, while Pulgalandia ends up with zero.
Conversely, if Pulgalandia attacks first, it will gain the advantage of surprise, but will still be facing a superior force, and might manage to capture and control 300 acres against Apestonia’s 500, 200 being lost to the destruction of war. This outcome is summarized in the upper-right square.
Pulgalandia Apestonia Cooperate(don’t attack) Don’t Cooperate (attack) Cooperate(don’t attack) Apestonia: 800 Acres
Pulgalandia: 200 Acres Apestonia: 500 Acres
Pulgalandia: 300 Acres Don’t Cooperate
(attack) Apestonia: 900 Acres
Pulgalandia: 0 Acres Apestonia: 600 Acres
Pulgalandia: 100 Acres
If they both attack each other at the same time, more forest will be lost to the destruction of battle, and neither will have the benefit of surprise, but Apestonia will still come out ahead. This is reflected in the lower-right square.
Because of the difference in power, when they negotiate a peace in which neither attacks, Apestonia can demand more of the forest than Pulgalandia. This is reflected in the upper-left square.
The logic that the two countries face is still similar to the logic that they faced when equally powerful. Neither knows what the other will do. Apestonia says to itself, “If Pulgalandia cooperates (doesn’t attack), we can get 800 acres for also cooperating (not attacking), or 900 acres for attacking. If Pulgalandia doesn’t attack, we are better off attacking. If Pulgalandia does attack, we can get 500 acres for not attacking first (only reacting to their attack), and 600 for attacking first, so, again, we are better off attacking. No matter what Pulgalandia does, we’re better off attacking.
Similarly, Pulgalandia is better off attacking no matter what Apestonia do. They say to themselves, “If Apestonia doesn’t attack first, we get 200 acres for also not attacking, but 300 for attacking, and if Apestonia does attack first, we get zero acres for not having attacked at the same time but 100 acres for having attacked at the same time. Either way, we’re better off attacking.”
But they both know this, and both know that they’d be better off not attacking one another. So, just as before, they need to invest in some way of committing one another to cooperation.
But the pay-offs can look different as well. It may be that, while the weaker Pulgalandia has incentives to attack no matter what the stronger Apestonia does, Apestonia gets a stronger benefit from cooperation. In the chart below, Pulgalandia still is better off attacking no matter what Apestonia does, and Apestonia, knowing that, knows it has to attack to get 550 rather than 500 acres. This is reflected in the table below:
Pulgalandia Apestonia Cooperate(don’t attack) Don’t Cooperate (attack) Cooperate(don’t attack) Apestonia: 800 Acres
Pulgalandia: 200 Acres Apestonia: 500 Acres
Pulgalandia: 250 Acres Don’t Cooperate
(attack) Apestonia: 650 Acres
Pulgalandia: 100 Acres Apestonia: 550 Acres
Pulgalandia: 200 Acres
But the most Pulgalandia can possibly get is 250 acres, if they attack before Apestonia does. Apestonia can just say, “look, we’ll give you 300 acres, 50 more than you can possibly get by attacking us. We’ll keep 700, which is more than we can get in any other way. If you attack, even while we are planning on cooperating with you, you lose 50 acres. You have no reason to attack, and we’re both better off than we can otherwise be.”
This is reflected in the table below, in which neither country has any incentive to do anything other than cooperate:
Pulgalandia Apestonia Cooperate(don’t attack) Don’t Cooperate (attack) Cooperate(don’t attack) Apestonia: 700 Acres
Pulgalandia: 300 Acres Apestonia: 500 Acres
Pulgalandia: 250 Acres Don’t Cooperate
(attack) Apestonia: 650 Acres
Pulgalandia: 100 Acres Apestonia: 550 Acres
Pulgalandia: 200 Acres
This is an illustration of how power is exercised among nations (or factions within a nation), even without having to exert any military force at all to do it. Nations know their relative power to one another, and when they negotiate treaties and deals they negotiate agreements that favor the more powerful. When the United States was formed, the more powerful (populous) states made sure that their power was reflected in the new government (by having representatives in Congress proportional to their population). When the United Nations charter was drafted, the most powerful nations insisted on forming a “security council,” that had far more power over the organization than other nations did.
Weak nations sometimes have the power of threatening to create problems for stronger nations, and thus get concessions to keep them calm. But nations also sometimes have leaders or governments that cease to act rationally, like the current government of North Korea seems to not be acting rationally.
Of course, if, in the end, the United States, worried about an irrational nuclear armed North Korea, gives them large amounts of aid to keep them from causing problems, then it will have turned out that North Korea’s “craziness” was pretty smart after all…. Strategies that “trump” rational considerations can be very rational strategies, including various ways of binding oneself to a limited range of options in order to increase one’s own bargaining power, or behaving in ways which make an opponent question one’s rationality in order to make them more accommodating for fear of erratic responses.
The scenarios presented above are highly simplified, leaving out many factors, such as uncertainty (real actors in such situations don’t know what the exact outcomes of various combinations of choices will be), more complexity in available options (not just binary choices), more interacting actors (not just two), more conflated issues being bargained over (not just a single resource), more costs and benefits to be considered (not just the amount of that single resource gained or lost), factional conflict across levels (different interest groups and political parties vying for different outcomes due to differing material interests and political ideological orientations), less centralized decision-making (not a single ruler making unlimited autocratic decisions, but rather in various ways collective decision-making processes impinging on the negotiations between actors constituted in that way), and various intrusions of emotional and irrational considerations, that even rational actors have to take into account.
But the complexity of the real world does not mean that abstraction from it is not a helpful tool in understanding underlying dynamics. Rather, it is a way of isolating individual dimensions of those underlying dynamics, gradually adding in enough of the complexity to begin to capture a deeper and subtler understanding of how our social institutional landscape really functions.
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President Obama addressed The United Nations earlier today (Wednesday) to announce a continued, if more vigilant, U.S. commitment to provide foreign aid to developing countries ( http://www.denverpost.com/ci_16141218). Way back in the last millennium, I was a student of Development (political, economic, cultural), and the various competing theories (Modernization, Dependency, World Systems). Modernization theorists tended to see nations as autonomous units, undergoing their own history, developing or not developing according to their own endogenous variables. Dependency and World Systems theories saw the world as more tightly intertwined, the relations among them affecting the fate of each.
The descriptive value of Dependency and World Systems theories is hard to deny: Due to client state and economic dependency relations to powerful nations, the small ruling classes in less developed nations are, more often than not, in either explicit or implicit league with the larger wealthy classes in some more developed nations, benefiting together as islands of wealth and comfort in a sea of suffering. To be sure, that’s not the whole story: Nationalism and other allegiances exist as well, with the ruling classes in those less developed nations generally identifying more with their own people of their own class at home than with those of their own class abroad, and sometimes even with the poor of their own country more than the rich of others. There are cross-cutting solidarities involved.
And it is overly simplistic to argue that the poverty of much of the world is a direct artifact of the wealth of some enclaves. Much of that poverty is, in reality, due to a lack of indigenous development, and would have existed with or without the rise of other wealthy and powerful nations. It’s also important to recognize that, in some ways, “a rising tide” really does “raise all ships”, and the wealth and institutional and technological innovations of the developed world have contributed positively as well as negatively to the development of less developed countries.
It’s hard to measure exactly to what extent that’s the case, and to what extent the rise of the European world empire did indeed suppress development elsewhere. Certainly, the history of colonization, of imposing inequitable trade relations, of dismantling sometimes diverse and vibrant indigenous economies in order to turn whole countries into plantations growing low value-added tropical crops and primary natural resources for the benefit of the lords across the seas or to the north, has to at least some extent exerted a suppressive developmental force on the late-comers. There is some mixture of both truths in play.
But let’s look at the world through the Dependency lens for a moment. We can as easily see the world as one divided by separate international classes as one divided by national boundaries. And a comparison of modern history to Medieval and ancient history bears out such a view. Ruling classes within nations or continental cultures developed historically from the descendants of warriors becoming landed nobility on the estates that their ancestors stole in conquest, with the former inhabitants reduced to serfdom. And global ruling classes began developing in the early modern era when European conquistadors found new lands to conquer, new native inhabitants to reduce to serfdom or other forms of marginalization, and new expropriated wealth to enjoy as a result. Our smug (and historically conveniently amnesiatic) belief that our relative wealth has no connection to the relative poverty of others in our own and other lands is simply not borne out by an honest survey of world history.
And that’s why foreign aid, and much else about the modern world, reminds me a bit of a scene from Charles Dickens’ A Tale of Two Cities. Madame Defarge, eager to spill the blood of any members of the hated aristocracy, was testifying at the trial of innocent aristocrat Charles Darnay during The French Revolution, recounting how Charles’ father had once carelessly run over and killed a peasant child with his carriage, and stopped to toss the distraught parent a coin. Needless to say, Charles was sentenced to be guillotined, a fate only averted by his look-alike barrister, the down-and-out Sydney Carton, who redeemed his own squandered life by taking Charles’ place, and thus doing “a far, far better thing than (he) had ever done before.”
As Charles Dickens said of that era in his opening lines of the novel:
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
Some things never change.
The only thing uglier than tossing the peasant parent a coin after running over her child is having your hand held back by a member of your household in the moment of doing so, admonished not to waste “our” hard earned cash on such lazy riff-raff.
I don’t know the answers to the vexing problems of our age. Development happens when and where it happens for reasons other than foreign aid, and independently of most of our theories. Some have successfully instituted export-driven growth, finding niche markets, and developing on the capital thus generated. Others have successfully leveraged the wealth derived from natural resource endowments. Occasionally, targeted protectionism for nascent industries has helped those industries acquire the breathing room necessary to become competitive in the long run. Infusions of capital from the developed world can certainly help (as it did in The Marshall Plan), and can also hurt (as it did in the Latin American debt crises of the 198o’s). But one thing’s for sure: In the long run, there is no “Us” v. “Them”; there is only an “Us”.
We may find the Madame Defarges both past and present to be hateful individuals. But those who are their enemy have always helped to create them. You run over enough peasant children in your carriage, and people start to want to send your adult children to the guillotine, or fly airplanes into your skyscrapers. You draw enough lines in the sand with opportunistic military conquests, lines above which to prosper and below which to languish, and the desperate mass of humanity you locked out will eventually come flooding through.
We live in a world increasingly acutely locked into an anachronistic global political landscape. Sovereign nations, which were on the slow path to gradually compromising their sovereignty to some form of weak global federalism throughout much of the twentieth century (during the breaks from their extraordinarily destructive demonstrations of why it was absolutely imperative that they do so), have now, under the decreasingly enlightened leadership of The United States, begun backpedaling once again into global balkanization and mutual antagonism (except in the cradle of modern civilization, Europe, which has coalesced into the most vibrant of all supranational entities, and has tried to march proactively into the future despite, once again, the absence of an American willingness to see past its own nose and do the same).
But as the United States discovered early in its history, a degree of shared fate, of shared challenges, of shared opportunities, requires a commensurate degree of effective shared governance. And as I’ve said elsewhere, it is inevitable, and pragmatically necessary, that whatever form that takes, it does not simply wish away or disregard the real distribution of political and material power in the moment preceding its creation. That distribution of power has to be leveraged, to create something better from the soil of what preceded it. America has to be a major player in the creation of a functioning world order, whether Americans or non-Americans find that an attractive prospect or not.
As President Obama rightly noted in his speech, foreign aid is an act of self-interest. But that interest is best served when those aided are perceived to be less foreign, and instead are recognized as fellow human beings in a world too small for some to hide from others behind walls and across oceans. We can’t close our eyes and plug our ears and expect to live unmolested in our enclave of relative wealth and comfort, while horrors are the norm in so much of the world. That won’t protect us from the tsunamis that will continue to hit, with increasing force, all of our shores and borders. We are a part of this world, whether we like it or not. And it’s time to take our noblesse oblige seriously.
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