Neoliberalism and Loneliness

 

The trouble with charitable billionaires

More and more wealthy CEOs are pledging to give away parts of their fortunes – often to help fix problems their companies caused. Some call this ‘philanthrocapitalism’, but is it just corporate hypocrisy? By Carl Rhodes and Peter Bloom in The Guardian


In February 2017, Facebook’s founder and CEO Mark Zuckerberg was in the headlines for his charitable activities. The Chan Zuckerberg Initiative, founded by the tech billionaire and his wife, Priscilla Chan, handed out over $3m in grants to aid the housing crisis in the Silicon Valley area. David Plouffe, the Initiative’s president of policy and advocacy, stated that the grants were intended to “support those working to help families in immediate crisis while supporting research into new ideas to find a long-term solution – a two-step strategy that will guide much of our policy and advocacy work moving forward”.

This is but one small part of Zuckerberg’s charity empire. The Initiative has committed billions of dollars to philanthropic projects designed to address social problems, with a special focus on solutions driven by science, medical research and education. This all took off in December 2015, when Zuckerberg and Chan wrote and published a letter to their new baby Max. The letter made a commitment that over the course of their lives they would donate 99% of their shares in Facebook (at the time valued at $45bn) to the “mission” of “advancing human potential and promoting equality”.

The housing intervention is of course much closer to home, dealing with issues literally at the door of Facebook’s Menlo Park head office. This is an area where median house prices almost doubled to around $2m in the five years between 2012 and 2017.

More generally, San Francisco is a city with massive income inequality, and the reputation of having the most expensive housing in the US. Chan Zuckerberg’s intervention was clearly designed to offset social and economic problems caused by rents and house prices having skyrocketed to such a level that even tech workers on six-figure salaries find it hard to get by. For those on more modest incomes, supporting themselves, let alone a family, is nigh-on impossible.

Ironically, the boom in the tech industry in this region – a boom Facebook has been at the forefront of – has been a major contributor to the crisis. As Peter Cohen from the Council of Community Housing Organizations explained it: “When you’re dealing with this total concentration of wealth and this absurd slosh of real-estate money, you’re not dealing with housing that’s serving a growing population. You’re dealing with housing as a real-estate commodity for speculation.”

Zuckerberg’s apparent generosity, it would seem, is a small contribution to a large problem that was created by the success of the industry he is involved in. In one sense, the housing grants (equivalent to the price of just one-and-a-half average Menlo Park homes) are trying to put a sticking plaster on a problem that Facebook and other Bay Area corporations aided and abetted. It would appear that Zuckerberg was redirecting a fraction of the spoils of neoliberal tech capitalism, in the name of generosity, to try to address the problems of wealth inequality created by a social and economic system that allowed those spoils to accrue in the first place.

It is easy to think of Zuckerberg as some kind of CEO hero – a once regular kid whose genius made him one of the richest men in the world, and who decided to use that wealth for the benefit of others. The image he projects is of altruism untainted by self-interest. A quick scratch of the surface reveals that the structure of Zuckerberg’s charity enterprise is informed by much more than good-hearted altruism. Even while many have applauded Zuckerberg for his generosity, the nature of this apparent charity was openly questioned from the outset.

The wording of Zuckerberg’s 2015 letter could easily have been interpreted as meaning that he was intending to donate $45bn to charity. As investigative reporter Jesse Eisinger reported at the time, the Chan Zuckerberg Initiative through which this giving was to be funnelled is not a not-for-profit charitable foundation, but a limited liability company. This legal status has significant practical implications, especially when it comes to tax. As a company, the Initiative can do much more than charitable activity: its legal status gives it rights to invest in other companies, and to make political donations. Effectively the company does not restrict Zuckerberg’s decision-making as to what he wants to do with his money; he is very much the boss. Moreover, as Eisinger described it, Zuckerberg’s bold move yielded a huge return on investment in terms of public relations for Facebook, even though it appeared that he simply “moved money from one pocket to the other” while being “likely never to pay any taxes on it”.

The creation of the Chan Zuckerberg Initiative – decidedly not a charity organisation – means that Zuckerberg can control the company’s investments as he sees fit, while accruing significant commercial, tax and political benefits. All of this is not to say that Zuckerberg’s motives do not include some expression of his own generosity or some genuine desire for humanity’s wellbeing and equality.

What it does suggest, however, is that when it comes to giving, the CEO approach is one in which there is no apparent incompatibility between being generous, seeking to retain control over what is given, and the expectation of reaping benefits in return. This reformulation of generosity – in which it is no longer considered incompatible with control and self-interest – is a hallmark of the “CEO society”: a society where the values associated with corporate leadership are applied to all dimensions of human endeavour.

Mark Zuckerberg was by no means the first contemporary CEO to promise and initiate large-scale donations of wealth to self-nominated good causes. In the CEO society it is positively a badge of honour for the world’s most wealthy businesspeople to create vehicles to give away their wealth. This has been institutionalised in what is known as The Giving Pledge, a philanthropy campaign initiated by Warren Buffett and Bill Gates in 2010. The campaign targets billionaires around the world, encouraging them to give away the majority of their wealth. There is nothing in the pledge that specifies what exactly the donations will be used for, or even whether they are to be made now or willed after death; it is just a general commitment to using private wealth for ostensibly public good. It is not legally binding either, but a moral commitment.

There is a long list of people and families who have made the pledge. Mark Zuckerberg and Priscilla Chan are there, and so are some 174 others, including household names such as Richard and Joan Branson, Michael Bloomberg, Barron Hilton and David Rockefeller. It would seem that many of the world’s richest people simply want to give their money away to good causes. This all amounts to what human geographers Iain Hay and Samantha Muller sceptically refer to as a “golden age of philanthropy”, in which, since the late 1990s, bequests to charity from the super-rich have escalated to the hundreds of billions of dollars. These new philanthropists bring to charity an “entrepreneurial disposition”, Hay and Muller wrote in a 2014 paper, yet one that they suggest has been “diverting attention and resources away from the failings of contemporary manifestations of capitalism”, and may also be serving as a substitute for public spending withdrawn by the state.

 

Warren Buffett announces a $30bn donation to the Bill and Melinda Gates Foundation, 2006. Photograph: Justin Lane/EPA

Essentially, what we are witnessing is the transfer of responsibility for public goods and services from democratic institutions to the wealthy, to be administered by an executive class. In the CEO society, the exercise of social responsibilities is no longer debated in terms of whether corporations should or shouldn’t be responsible for more than their own business interests. Instead, it is about how philanthropy can be used to reinforce a politico-economic system that enables such a small number of people to accumulate obscene amounts of wealth. Zuckerberg’s investment in solutions to the Bay Area housing crisis is an example of this broader trend.

The reliance on billionaire businesspeople’s charity to support public projects is a part of what has been called “philanthrocapitalism”. This resolves the apparent antinomy between charity (traditionally focused on giving) and capitalism (based on the pursuit of economic self-interest). As historian Mikkel Thorup explains, philanthrocapitalism rests on the claim that “capitalist mechanisms are superior to all others (especially the state) when it comes to not only creating economic but also human progress, and that the market and market actors are or should be made the prime creators of the good society”.

The golden age of philanthropy is not just about benefits that accrue to individual givers. More broadly, philanthropy serves to legitimise capitalism, as well as to extend it further and further into all domains of social, cultural and political activity.

Philanthrocapitalism is about much more than the simple act of generosity it pretends to be, instead involving the inculcation of neoliberal values personified by the billionaire CEOs who have led its charge. Philanthropy is recast in the same terms in which a CEO would consider a business venture. Charitable giving is translated into a business model that employs market-based solutions characterised by efficiency and quantified costs and benefits.

Philanthrocapitalism takes the application of management discourses and practices from business corporations and adapts them to charitable work. The focus is on entrepreneurship, market-based approaches and performance metrics. The process is funded by super-rich businesspeople and managed by those experienced in business. The result, at a practical level, is that philanthropy is undertaken by CEOs in a manner similar to how they would run businesses.

As part of this, charitable foundations have changed in recent years. As explained in a paper by Garry Jenkins, a professor of law at the University of Minnesota, this involves becoming “increasingly directive, controlling, metric-focused and business-oriented with respect to their interactions with grantee public charities, in an attempt to demonstrate that the work of the foundation is ‘strategic’ and ‘accountable’”.

This is far from the benign shift to a different and better way of doing things that it claims to be – a CEO style to “save the world through business thinking and market methods”, as Jenkins puts it. Instead, the risk of philanthrocapitalism is a takeover of charity by business interests, such that generosity to others is appropriated into the overarching dominance of the CEO model of society and its corporate institutions.

The modern CEO is very much at the forefront of the political and media stage. While this often leads to CEOs becoming vaunted celebrities, it also leaves them open to being identified as scapegoats for economic injustice. The increasingly public role taken by CEOs is related to a renewed corporate focus on their wider social responsibility. Firms must now balance, at least rhetorically, a dual commitment to profit and social outcomes. This has been reflected in the promotion of the “triple bottom line”, which combines social, financial and environmental priorities in corporate reporting.

This turn toward social responsibility represents a distinct problem for CEOs. While firms may be willing to sacrifice some short-term profit for the sake of preserving their public reputation, this same bargain is rarely on offer to CEOs themselves, who are judged on their quarterly reports and how well they are serving the fiscal interests of their shareholders. Thus, whereas social responsibility strategies may win public kudos, in the confines of the boardroom it is often a different story, especially when the budget is being scrutinised.

There is a further economic incentive for CEOs to avoid making fundamental changes to their operations in the name of social justice, in that a large portion of CEO remuneration often consists of company stock and options. Accepting fair trade policies and closing sweatshops may be good for the world, but is potentially disastrous for a firm’s immediate financial success. What is ethically valuable to the voting and buying public is not necessarily of concrete value to corporations, nor personally beneficial to their top executives.

Many firms have sought to resolve this contradiction through high-profile philanthropy. Exploitative labour practices or corporate malpractice are swept under the carpet as companies publicise tax-efficient contributions to good causes. Such contributions may be a relatively small price to pay compared with changing fundamental operational practices. Likewise, giving to charity is a prime opportunity for CEOs to be seen to be doing good without having to sacrifice their commitment to making profit at any social cost. Charitable activity permits CEOs to be philanthropic rather than economically progressive or politically democratic.

There is an even more straightforward financial consideration at play in some cases. Charity can be an absolute boon to capital accumulation: corporate philanthropy has been shown to have a positive effect on perceptions by stock market analysts. At the personal level, CEOs can take advantage of promoting their individual charity to distract from other, less savoury activities; as an executive, they can cash in on the capital gains that can be made from introducing high-profile charity strategies.

The very notion of corporate social responsibility, or CSR, has been criticised for providing companies with a moral cover to act in quite exploitative and socially damaging ways. But in the current era, social responsibility, when portrayed as an individual character trait of chief executives, has allowed corporations to be run as irresponsibly as ever. CEOs’ very public engagement in philanthrocapitalism can be understood as a key component of this reputation management. It is part of the marketing of the firm itself, as the good deeds of its leaders come to signify the overall goodness of the corporation.

Ironically, philanthrocapitalism also grants corporations the moral right, at least within the public consciousness, to be socially irresponsible. The trumpeting of the CEOs’ personal generosity can grant an implicit right for their corporations to act ruthlessly and with little consideration for the broader social effects of their activities. This reflects a productive tension at the heart of modern CSR: the more moral a CEO, the more immoral their company can in theory seek to be.

The hypocrisy revealed by CEOs claiming to be dedicated to social responsibility and charity also exposes a deeper authoritarian morality that prevails in the CEO society. Philanthrocapitalism is commonly presented as the social justice component of an otherwise amoral global free market. At best, corporate charity is a type of voluntary tax paid by the 1% for their role in creating such an economically deprived and unequal world. Yet this “giving” culture also helps support and spread a distinctly authoritarian form of economic development that mirrors the autocratic leadership style of the executives who predominantly fund it.

The marketisation of global charity and empowerment has dangerous implications that transcend economics. It also has a troubling emerging political legacy, one in which democracy is sacrificed on that altar of executive-style empowerment. Politically, the free market is posited as a fundamental requirement for liberal democracy. However, recent analysis reveals the deeper connection between processes of marketisation and authoritarianism. In particular, a strong government is required to implement these often unpopular market changes. The image of the powerful autocrat is, to this effect, transformed into a potentially positive figure, a forward-thinking political leader who can guide their country on the correct market path in the face of “irrational” opposition. Charity becomes a conduit for CEOs to fund these “good” authoritarians.

A protester outside the Nasdaq headquarters in New York marks Facebook’s IPO, 2012. Photograph: Alamy Stock Photo

The recent development of philanthrocapitalism also marks the increasing encroachment of business into the provision of public goods and services. This encroachment is not limited to the activities of individual billionaires; it is also becoming a part of the activities of large corporations under the rubric of CSR. This is especially the case for large multinational corporations whose global reach, wealth and power give them significant political clout. This relationship has been referred to as “political CSR”. Business ethics professors Andreas Scherer and Guido Palazzo note that, for large corporations, “CSR is increasingly displayed in corporate involvement in the political process of solving societal problems, often on a global scale”. Such political CSR initiatives see organisations cooperating and collaborating with governments, civic bodies and international institutions, so that historical separations between the purposes of the state and the corporations are increasingly eroded.

Global corporations have long been involved in quasi-governmental activities such as the setting of standards and codes, and today are increasingly engaging in other activities that have traditionally been the domain of government, such as public health provision, education, the protection of human rights, addressing social problems such as Aids and malnutrition, protection of the natural environment and the promotion of peace and social stability.

Today, large organisations can amass significant economic and political power, on a global scale. This means that their actions – and the way those actions are regulated – have far-reaching social consequences. The balanced tipped in 2000, when the Institute for Policy Studies in the US reported, after comparing corporate revenues with gross domestic product (GDP), that 51 of the largest economies in the world were corporations, and 49 were national economies. The biggest corporations were General Motors, Walmart and Ford, each of which was larger economically than Poland, Norway and South Africa. As the heads of these corporations, CEOs are now quasi-politicians. One only has to think of the increasing power of the World Economic Forum, whose annual meeting in Davos in Switzerland sees corporate CEOs and senior politicians getting together with the ostensible goal of “improving the world”, a now time-honoured ritual that symbolises the global power and agency of CEOs.

The development of CSR is not the result of self-directed corporate initiatives for doing good deeds, but a response to widespread CSR activism from NGOs, pressure groups and trade unions. Often this has been in response to the failure of governments to regulate large corporations. High-profile industrial accidents and scandals have also put pressure on organisations for heightened self-regulation.

An explosion at a Union Carbide chemical plant in Bhopal, India in 1984 led to the deaths of an estimated 25,000 people. James Post, a professor of management at Boston University, explains that, after the disaster, “the global chemical industry recognised that it was nearly impossible to secure a licence to operate without public confidence in industry safety standards. The Chemical Manufacturers Association (CMA) adopted a code of conduct, including new standards of product stewardship, disclosure and community engagement.”

The impetus for this was corporate self-interest, rather than generosity, as industries and corporations globally “began to recognise the increasing importance of reputation and image”. Similar moves were enacted after other major industrial accidents, such as the Exxon Valdez oil tanker spilling hundreds of thousands of barrels of oil in Alaska in 1989, and BP’s Deepwater Horizon oil rig exploding in the Gulf of Mexico in 2010.

 

The Deepwater Horizon oil rig ablaze in the Gulf of Mexico, April 2010.
Photograph: Handout/Getty Images

Another important case was the involvement of the clothing companies Gap and Nike in a child labour scandal after the broadcast of a BBC Panorama documentary in October 2000. Factories in Cambodia making Gap and Nike clothing were shown to operate with terrible working conditions, involving children as young as 12 working seven days a week, being forced to do overtime, and enduring physical and emotional abuse from management. The public outcry that ensued demanded that Gap and Nike, and other organisations like them, take more responsibility for the negative human social impacts of their business practices.

CSR was introduced in order to reduce the ill effects of corporate self-interest. But over time it has turned into a means for further enhancing that self-interest while ostensibly claiming to be addressing the interests of others. When facing the threat of corporate scandal, CSR is seen as the vehicle through which corporate reputation can be boosted, and the threat of government regulation can be mitigated. Again, here we see how corporations engage in seemingly responsible practices in order to increase their own political power, and to diminish the power of nation states over their own operations.

The idea that organisations adopt CSR for the purposes of developing or defending a corporate reputation has put the ethics of CSR under scrutiny. The contention has arisen that, rather than using CSR as a means of “being good”, corporations adopt it merely as a means of “looking good”, while not in any way questioning their basic ethical or political stance. Even Enron, before its legendary fraud scandal and eventual demise in 2001, was well known for its advocacy of social responsibility.

CEO generosity is epic in proportions – or at least that is how it is portrayed. Indeed, on an individual level it is hard to find fault with those rich people who have given away vast swaths of their wealth to charitable causes, or those corporations that champion socially responsible programmes. But what CSR and philanthrocapitalism achieve more broadly is the social justification of extreme wealth inequality, rather than any kind of antidote to it. We need to note here that, despite the apparent proliferation of giving promised by philanthrocapitalism, the so-called golden age of philanthropy is also an age of expanding inequality.

This is clearly spelled out a 2017 report by Oxfam called An Economy for the 99%. It highlights the injustice and unsustainability of a world suffering from widening levels of inequality: since the early 1990s, the top 1% of the world’s wealthy people have gained more income than the entire bottom 50%. Why so? Oxfam’s report places the blame firmly with corporations and the global market economies in which they operate. The statistics are alarming, with the world’s 10 biggest corporations having revenues that exceed the total combined revenues of the 180 least wealthy nations. Corporate social responsibility is not making any real difference. The report states: “When corporations increasingly work for the rich, the benefits of economic growth are denied to those who need them most. In pursuit of delivering high returns to those at the top, corporations are driven to squeeze their workers and producers ever harder – and to avoid paying taxes which would benefit everyone, and the poorest people in particular.”

Neither the philanthropy of the super-rich nor socially directed corporate programmes have any real effect on combating this trend, in the same way that Zuckerberg’s handout of $3m will have a negligible effect on the San Francisco housing crisis. Instead, vast fortunes in the hands of the few, whether earned through inheritance, commerce or crime, continue to grow at the expense of the poor.

In the end, it is capitalism that is at the heart of philanthrocapitalism, and the corporation that is at the heart of corporate social responsibility, with even well-meaning endeavours serving to justify a system that is rigged in favour of the rich.

What is particular about this new approach is not that rich people are supporting charitable endeavours, but that it involves, as sociologist Linsey McGoey explains, “an openness that deliberately collapses the distinction between public and private interests, in order to justify increasingly concentrated levels of private gain”. 

In the CEO society, corporate logic such as this rules supreme, and ensures that any activities thought of as generous and socially responsible ultimately have a payoff in terms of self-interest. If there was ever a debate between the ethics of genuine hospitality, reciprocity and self-interest, it is not to be found here. It is in accordance with this CEO logic that the mechanisms for redressing the inequality created through wealth generation are placed in the hands of the wealthy, and in a way that ultimately benefits them. The worst excesses of neoliberal capitalism are morally justified by the actions of the very people who benefit from those excesses. Wealth redistribution is placed in the hands of the wealthy, and social responsibility in the hands of those who have exploited society for personal gain.

Meanwhile, inequality is growing, and both corporations and the wealthy find ways to avoid the taxes that the rest of us pay. In the name of generosity, we find a new form of corporate rule, refashioning another dimension of human endeavour in its own interests. Such is a society where CEOs are no longer content to do business; they must control public goods as well. In the end, while the Giving Pledge’s website may feature more and more smiling faces of smug-looking CEOs, the real story is of a world characterised by gross inequality that is getting worse year by year.

We’re not as selfish as we think we are. Here’s the proof

George Monbiot in The Guardian


Do you find yourself thrashing against the tide of human indifference and selfishness? Are you oppressed by the sense that while you care, others don’t? That, because of humankind’s callousness, civilisation and the rest of life on Earth are basically stuffed? If so, you are not alone. But neither are you right.

A study by the Common Cause Foundation, due to be published next month, reveals two transformative findings. The first is that a large majority of the 1,000 people they surveyed – 74% – identifies more strongly with unselfish values than with selfish values. This means that they are more interested in helpfulness, honesty, forgiveness and justice than in money, fame, status and power. The second is that a similar majority – 78% – believes others to be more selfish than they really are. In other words, we have made a terrible mistake about other people’s minds.

The revelation that humanity’s dominant characteristic is, er, humanity will come as no surprise to those who have followed recent developments in behavioural and social sciences. People, these findings suggest, are basically and inherently nice.

A review article in the journal Frontiers in Psychology points out that our behaviour towards unrelated members of our species is “spectacularly unusual when compared to other animals”. While chimpanzees might share food with members of their own group, though usually only after being plagued by aggressive begging, they tend to react violently towards strangers. Chimpanzees, the authors note, behave more like the homo economicus of neoliberal mythology than people do.

Humans, by contrast, are ultrasocial: possessed of an enhanced capacity for empathy, an unparalleled sensitivity to the needs of others, a unique level of concern about their welfare, and an ability to create moral norms that generalise and enforce these tendencies.

Such traits emerge so early in our lives that they appear to be innate. In other words, it seems that we have evolved to be this way. By the age of 14 months,children begin to help each other, for example by handing over objects another child can’t reach. By the time they are two, they start sharing things they value. By the age of three, they start to protest against other people’s violation of moral norms.

A fascinating paper in the journal Infancy reveals that reward has nothing to do with it. Three- to five-year-olds are less likely to help someone a second time if they have been rewarded for doing it the first time. In other words, extrinsic rewards appear to undermine the intrinsic desire to help. (Parents, economists and government ministers, please note.) The study also discovered that children of this age are more inclined to help people if they perceive them to be suffering, and that they want to see someone helped whether or not they do it themselves. This suggests that they are motivated by a genuine concern for other people’s welfare, rather than by a desire to look good.

Why? How would the hard logic of evolution produce such outcomes? This is the subject of heated debate. One school of thought contends that altruism is a logical response to living in small groups of closely related people, and evolution has failed to catch up with the fact that we now live in large groups, mostly composed of strangers.

Another argues that large groups containing high numbers of altruists will outcompete large groups which contain high numbers of selfish people. A third hypothesis insists that a tendency towards collaboration enhances your own survival, regardless of the group in which you might find yourself. Whatever the mechanism might be, the outcome should be a cause of celebration.

‘Philosophers produced persuasive, influential and catastrophically mistaken accounts of the state of nature.’ Photograph: Time Life Pictures/Getty Images

So why do we retain such a dim view of human nature? Partly, perhaps, for historical reasons. Philosophers from Hobbes to Rousseau, Malthus toSchopenhauer, whose understanding of human evolution was limited to the Book of Genesis, produced persuasive, influential and catastrophically mistaken accounts of “the state of nature” (our innate, ancestral characteristics). Their speculations on this subject should long ago have been parked on a high shelf marked “historical curiosities”. But somehow they still seem to exert a grip on our minds.

Another problem is that – almost by definition – many of those who dominate public life have a peculiar fixation on fame, money and power. Their extreme self-centredness places them in a small minority, but, because we see them everywhere, we assume that they are representative of humanity.

The media worships wealth and power, and sometimes launches furious attacks on people who behave altruistically. In the Daily Mail last month, Richard Littlejohn described Yvette Cooper’s decision to open her home to refugees as proof that “noisy emoting has replaced quiet intelligence” (quiet intelligence being one of his defining qualities). “It’s all about political opportunism and humanitarian posturing,” he theorised, before boasting that he doesn’t “give a damn” about the suffering of people fleeing Syria. I note with interest the platform given to people who speak and write as if they are psychopaths.

The effects of an undue pessimism about human nature are momentous. As the foundation’s survey and interviews reveal, those who have the bleakest view of humanity are the least likely to vote. What’s the point, they reason, if everyone else votes only in their own selfish interests? Interestingly, and alarmingly for people of my political persuasion, it also discovered that liberals tend to possess a dimmer view of other people than conservatives do. Do you want to grow the electorate? Do you want progressive politics to flourish? Then spread the word that other people are broadly well-intentioned.

Misanthropy grants a free pass to the grasping, power-mad minority who tend to dominate our political systems. If only we knew how unusual they are, we might be more inclined to shun them and seek better leaders. It contributes to the real danger we confront: not a general selfishness, but a general passivity. Billions of decent people tut and shake their heads as the world burns, immobilised by the conviction that no one else cares.

You are not alone. The world is with you, even if it has not found its voice.

How friendship became a tool of the powerful

William Davies in The Guardian

Imagine walking into a coffee shop, ordering a cappuccino, and then, to your surprise, being informed that it has already been paid for. Where did this unexpected gift come from? It transpires that it was left by the previous customer. The only snag, if indeed it is a snag, is that you now have to do the same for the next customer who walks in.

This is known as a “pay-it-forward” pricing scheme. It is something that has been practised by a number of small businesses in California, such as the Karma Kitchen in Berkeley and, in some cases, customers have introduced it spontaneously. On the face of it, it would seem to defy the logic of free-market economics. Markets, surely, are places where we are allowed, even expected, to behave selfishly. With its hippy idealism, pay-it-forward would appear to go against the core tenets of economic calculation.

But there is more to it than this. Researchers from the decision science research group at the University of California, Berkeley have looked closely at pay-it-forward pricing and discovered something with profound implications for how markets and businesses work. It transpires that people will generally pay more under the pay-it-forward model than under a conventional pricing system. As the study’s lead author, Minah Jung, puts it: “People don’t want to look cheap. They want to be fair, but they also want to fit in with the social norms.” Contrary to what economists have long assumed, altruism can often exert a far stronger influence over our decision-making than calculation.

Such findings are typical of the field of behavioural economics, which emerged in the late 1970s. Like regular economists, behavioural economists assume that individuals are usually motivated to maximise their own benefit – but not always. In certain circumstances, they are social and moral animals, even when this appears to undermine their economic interests. They follow the herd and act according to certain rules of thumb. They have some principles that they will not sacrifice for money at all.

It seems that this undermines the cynical, individualist theory of human psychology, which lies at the heart of orthodox economics. Could it be that we are decent, social creatures after all? A great deal of neuroscientific research into the roots of sympathy and reciprocity supports this. Optimists might view this as the basis for a new political hope, of a society in which sharing and gift-giving offer a serious challenge to the power of monetary accumulation and privatisation.

But there is also a more disturbing possibility: that the critique of individualism and monetary calculation is now being incorporated into the armoury of utilitarian policy and management. One of the key insights of behavioural economics is that, if one wants to control other human beings, it is often far more effective to appeal to their sense of morality and social identity than to their self-interest.

This is symptomatic of a more general shift in policy and business practices today. Across various fields of expertise, from healthcare to marketing, from military training to finance, there is rising hope that strategic goals can be achieved through harnessing the power of the “social”. But what exactly does this mean? As the era of social democracy recedes further into the past, the meaning of the term is undergoing a profound transformation. Where once the term implied something concerning society or the common good, increasingly it refers to a technique of psychological intervention on the individual. Informal social connections and friendships are being rendered more visible and measurable. In the process, they are being turned into possible instruments of power.

Using the social to make money

Over recent years, generosity has become big business. In 2009, Chris Anderson, former editor of Wired magazine, published Free: The Future of a Radical Price. Anderson argued that there was now a strong business case for giving products and services away for free, in order to forge better relationships with customers. Giving things away for free becomes a means of holding an audience captive or building a reputation, which can then be exploited with future sales or advertising. Michael O’Leary, boss of Ryanair, has even suggested that airline tickets might one day be priced at zero, with all costs recovered through additional charges for luggage, using the bathroom, skipping queues, and so on.

What Anderson was highlighting was the potential of non-monetary relationships to increase profits. And just as corporate giving can be used as a way of boosting revenue, so can the magic words that are used in return. Marketing specialists now analyse the optimal way of saying the words “thank you” to a customer, so as to deepen the social relationship with them.

The language of gratitude has infiltrated a number of high-profile advertising campaigns. Around Christmas 2013, Lloyds TSB, one of the British banks to bemost embarrassed by the 2008 financial crisis, launched a campaign consisting entirely of cutesy images of childhood friends enjoying happy moments together, concluding with the words “thank you”, written in party balloons. There was no mention of money. More bizarrely, Tesco, whose brand has suffered in recent years, released a series of YouTube videos in 2013 with men in Christmas jumpers singing “thank you” to everyone from the person who cooks Christmas dinner, to those driving safely, to other companies such as Instagram and so on. Tesco, it was implied, sprays gratitude in all directions, regardless of its own private interests.

There is inevitably a limit to how much of a social bond an individual can have with a multinational company. Businesses today are obsessed with being social, but what they typically mean by this is that they are able to permeate peer-to-peer social networks as effectively as possible. Brands hope to play a role in cementing friendships, as a guarantee that they will not be abandoned for more narrowly calculated reasons. So, for example, Coca-Cola has tried a number of somewhat twee marketing campaigns, such as putting individual names (“Sue”, “Tom”, etc) on their bottles as a way to encourage gift-giving. Managers hope that their employees will also act as “brand ambassadors” in their everyday social lives. Meanwhile, neuromarketers have begun studying how successfully images and advertisements trigger common neural responses in groups, rather than in isolated individuals. This, it seems, is a far better indication of how larger populations will respond to advertising.

All this – along with the rise of the “sharing economy”, exemplified by Airbnb and Uber, offers a simple lesson to big business. People will take more pleasure in buying things if the experience can be blended with something that feels like friendship and gift-exchange. The role of money must be airbrushed out of the picture wherever possible. As marketers see it, payment is one of the unfortunate “pain points” in any relationship with a customer, which requires anaesthetising with some form of more social experience. The market must be represented as something else entirely.

Digitising the social

Yet the greatest catalyst for the new business interest in being social is, unsurprisingly, the rise of social media. At the same time that behavioural economics has been highlighting the various ways in which we are altruistic creatures, social media offers businesses an opportunity to analyse and target that social behaviour. It allows advertising to be tailored to specific individuals, on the basis of who they know, and what those other people like and purchase. These practices, which are collectively referred to as “social analytics”, mean that tastes and behaviours can be traced in unprecedented detail. The end goal is no different from what it was at the dawn of marketing and management in the late 19th century: making money. What has changed is that each one of us is now viewed as an instrument through which to alter the attitudes and behaviours of our friends and contacts. Behaviours and ideas can be released like “contagions”, in the hope of infecting much larger networks.

FacebookTwitterPinterest Illustration by Pete Gamlen

The most valuable trick, from a marketing perspective, is how to induce individuals to share positive brand messages and adverts with each other, almost as if there were no public advertising campaign at all. The business practice known as “friendvertising” involves creating images and video clips that social media users are likely to share with others, for no conscious commercial purpose of their own. The science of viral marketing, or the creation of buzz, has led marketers to seek lessons from social psychology, social anthropology and social network analysis.

Businesses have long worried about their public reputations and the commitment of their employees. It also goes without saying that informal social networks themselves are as old as humanity. Despite the countercultural rhetoric of the “sharing economy”, what has changed is not the role of the social in capitalism, but the capacity to subject it to a detailed, quantitative, economic analysis, thanks primarily to the digitisation of social relationships.

In the longer term, the most profound cultural and ethical implications of this may be how we come to view ourselves and those around us. As data about social ties becomes easier to collect and access, and as concepts of duty and altruism become increasingly understood by economists (as the pay-it-forward study exemplifies), the temptation to ask self-interested, strategic questions about one’s own social circle will arise. Applying the mentality of cost-benefit analysis beyond the realms of the market is often controversial to start with, but can quickly become normal. Government economists today have no problem calculating the price of human life or the natural environment, if it is useful for purposes of policy appraisal.

Could we come to view our own personal acts of generosity and friendship in a similarly utilitarian sense? The evidence to support such an egocentric logic is growing rapidly. The area where there could be most to gain from such calculations is in the domain of health: social contact is good for us, in both body and mind. Just be sure that it is contact with the right people.

Using the social to improve health

In February 2010, I found myself sitting in a large hall, with a huge golden throne on my left, and the future leader of the Labour party, Ed Miliband, to my right. We were watching images on a screen that reminded me of the fractal videos that used to be sold by “herbal remedy” salesmen on Camden market in London in the early 1990s. Also present were a number of government policy advisers, all straining to appear as relaxed as possible – a status game that goes on in the corridors of power, played to indicate that one is at home there. (The game was won under the coalition government by David Cameron’s former adviser, Steve Hilton, who was notorious for wandering into meetings barefoot.)

There were about 10 of us in the room, one of the more baroque offices in the Cabinet Office, and we were all staring at the screen, transfixed by the movement of individual lines and dots that were being displayed. Standing next to the screen, clearly enjoying the impact that his video was having on this influential audience, was the American medical sociologist Nicholas Christakis. Christakis was on a speaking tour, promoting his book Connected, and had been invited to present some of his findings to British policymakers during the dying days of Gordon Brown’s government. As a sociologist with an interest in policy, I had been invited along.

Christakis is an unusual sociologist. Not only is he far more mathematically adept than most, but he has also published a number of articles in respected medical journals. The images we were watching on the screen that day represented social networks in a Baltimore neighbourhood, within which particular “behaviours” and medical symptoms were moving around. Christakis’s message to the assembled policymakers was a powerful one. Problems such as obesity, poverty and depression, which so often coincide, locking people into chronic conditions of inactivity, are contagious. They move around like viruses in social networks, creating risks to individuals purely by virtue of the people they happen to hang out with.

FacebookTwitterPinterest Illustration by Pete Gamlen

Christakis is part of a growing movement within the policy world. While marketers desperately seek to penetrate our social networks in order to alter our tastes and desires, policymakers have come to view social networks as means of improving our health and wellbeing. The “social neuroscience” pioneered by John Cacioppo of the University of Chicago suggests that the human brain has evolved in such a way as to depend on social relationships. Cacioppo’s research suggests that loneliness is an even greater health risk than smoking. Practices such as “social prescribing”, in which doctors recommend that individuals join a choir or voluntary organisation, are aimed at combating isolation and its tendency to lead to depression and chronic illness.

Driven particularly by neuroscience, the expert understanding of social life and morality is rapidly merging into the study of the body. One social neuroscientist, Matt Lieberman, has shown how pains that we have traditionally treated as emotional (such as separating from a lover) involve the same neurochemical processes as those we typically view as physical (such as breaking an arm). Social science and physiology are converging into a new discipline, in which human bodies are studied for the ways they respond to one another physically.

At the Cabinet Office presentation, there was something mesmeric and seductive about Christakis’s images. Could entrenched social problems really be represented by graphics of this sort? Christakis’s technical prowess was certainly alluring. In the grand tradition of American GIs bringing chewing gum and nylon stockings to the British during the second world war, his hi-tech social network analysis seemed novel and irresistible.

But what I found slightly surreal that day, aside from the gold throne, was the freakish view of this particular inner-city US community that we were privy to. Like the social analytics companies, which try to spot consumer behaviour as it emerges and spreads, there we were in London observing how the dietary habits and health problems of a few thousand relatively deprived Baltimore residents were moving around, like a disease. It felt as if we were viewing an ant colony from above. The fact that these flickering images represented human beings, with relationships, histories and agendas, was almost incidental.

It would seem a little perverse to suggest that policymakers ignore this evidence of the impact of social networks and altruism on health. If medical practitioners can change the behaviour of just a few influential people in a network for the better, they can potentially spread a more positive “contagion”. Yet there is a danger lurking in this worldview, which is the same problem that afflicts all forms of social network analysis. In reducing the social world to a set of mechanisms and resources, the question repeatedly arises as to whether social networks might be redesigned in ways to suit the already privileged. Networks have a tendency towards what are called power laws, whereby those with influence are able to harness that power to win even greater influence.

One example of this is known as “emotional contagion”. Psychologists working with social analytics can now track the spread of positive and negative emotions, as they travel through social networks. This was the topic of Facebook’s controversial experiment using newsfeed manipulation, the results of which were published last summer. Different moods, including anger and depression, are now recognised to be more socially contagious than others. But what will we do with this knowledge? The anxiety, as social life becomes swept up by quantitative analysis, is that happy, healthy individuals might tailor their social relationships in ways that protect them against the “risk” of unhappiness. Guy Winch, an American psychologist who has studied this phenomenon, advises happy people to be on their guard. “If you find yourself living with or around people with negative outlooks,” he wrote on the website Psychology Today, “consider balancing out your friend roster.” The impact of this rebalancing on those unfortunate friends with the “negative outlooks” is all too easy to imagine.

The fabric of social life is now a problem that is addressed within the rubric of health policy, and there is something a little sad about that. Loneliness now appears as an objective problem, but only because it shows up in the physical brain and body, with calculable costs for governments and health insurers. Generosity and gratitude are urged upon people by positive psychologists, but mainly to alleviate their own mental health problems and private misery. And friendship ties within poor inner-city neighbourhoods have become a topic of government concern, but only to the extent that they mediate epidemics of bad nutrition and costly inactivity.

The irony is that, for all the talk of giving and sharing, this is potentially an even more egocentric worldview than that associated with the market. The cornerstone of orthodox economics, dating back to Adam Smith, is that self-interest in the marketplace is ultimately beneficial for society. The era of social optimisation looks set to stand this claim upside down: being social in your everyday life is worth it, because it will ultimately deliver benefits back to you. The trouble is that our appetites for this new commodity can spiral out of control.

Addicted to contact

Over the past decade, the ubiquity of digital media – and social media in particular – has become a lightning rod for media hysteria. The internet or Facebook can be blamed for the fact that young people are increasingly narcissistic, unable to make commitments to one another or concentrate on anything that is not interactive, and so on. There is indeed some evidence to suggest that individuals who use social media compulsively are more egocentric, prone to exhibitionism and grandiose behaviour. But rather than treat the technology as some virus that has corrupted people psychologically and neurologically, it is worth standing back and reflecting on the broader cultural logic at work here.

What makes social media so compulsive, even addictive? It is the experience of social life, stripped of all its frustrations and obligations. People who cannot put down their smartphones are not engaging with images or gadgetry for the sake of it: they are desperately seeking some form of human interaction, but of a kind that does nothing to limit their personal, private autonomy.

 FacebookTwitterPinterest Illustration by Pete Gamlen

What we witness, in the case of a social media addict, is only the more pathological element of a society that cannot conceive of relationships except in terms of the psychological pleasures that they produce. The person whose fingers twitch to check their Facebook page when they are supposed to be listening to their friend over a meal is a victim of a philosophy in which other people are only there to please, satisfy and affirm an individual ego from one moment to the next. This inevitably leads to vicious circles: once a social bond is stripped down to this impoverished psychological level, it becomes harder and harder to find the satisfaction that one wants. Viewing other people as instruments for one’s own pleasure represents a denial of the core ethical and emotional truths of friendship, love and generosity.

One grave shortcoming of this egocentric idea of the social is that none (or at least, vanishingly few) of us can ever constantly be the centre of attention, receiving praise. And so it also proves with Facebook. As an endless stream of exaggerated displays of positivity or success, Facebook often serves to make people feel worse about themselves and their own lives. The mathematics of networks means that most people will have fewer friends than average, while a small number of people will have far more than average. The tonic to this sense of inferiority is to make one’s own exaggerated displays of positivity or success, to seek the gaze of the other, thereby reinforcing a collective vicious circle. As positive psychologists are keen to stress, this inability to listen or empathise is a significant contributor to depression.

If wellbeing resides in discovering relationships that are less ego-oriented, less purely hedonistic, than those an individualistic society offers, then Facebook and similar forms of social media are rarely a recipe for happiness. It is true that there are specific uses of social media that lend themselves towards stronger, more fulfilling social relations. One group of positive psychologists has drawn on its own evidence of what types of social relations lead to greater happiness, to create a new social media platform, Happier, designed around expressions of gratitude and generosity, which are recognised to be critical ingredients of mental wellbeing.

What remains unquestioned by such efforts to redesign social networks for greater wellbeing is the underlying logic, which implies that relationships are there to be created, invested in and – potentially – abandoned, in pursuit of individual optimisation. The darker implication of strategically pursuing positive emotion via relationships is that the relationship is only as good as the psychic value that it delivers. “Friend rosters” may need to be “balanced”, if it turns out that one’s friends are not spreading enough pleasure or happiness.

Neoliberal socialism

Our society is excessively individualistic. Markets reduce everything to a question of individual calculation and selfishness. Unless we can recover the values associated with friendship and altruism, we will descend into a state of ennui.

These types of claims have animated various critiques of capitalism and markets for centuries. They have often provided the basis of arguments for reform, whether moderate attempts to restrain the reach of markets, or more wholesale demands to overhaul the capitalist system. Today, the same types of lament can be heard, but from some very different sources. Now, the gurus of marketing, behavioural economics, social media and management are first in line to attack the individualistic and materialist assumptions of the marketplace. But what they are offering instead is a marginally different theory of individual psychology and behaviour, in which the social is primarily an instrument for one’s own medical, emotional or monetary gain.

What we encounter in the current business, media and policy euphoria for being social is what might be called “neoliberal socialism”. Sharing is preferable to selling, so long as it does not interfere with the financial interests of dominant corporations. Appealing to people’s moral and altruistic sense becomes the best way of nudging them into line with agendas that they had no say over. Brands and behaviours can be unleashed as social contagions, without money ever changing hands. Empathy and relationships are celebrated, but only as particular habits that happy individuals have learned to practise. Everything that was once external to economic logic, such as friendship, is quietly brought within it.

How would one break out of this trap? The example of “social prescribing” by doctors is an enticing one. While it starts from a utilitarian premise, that individuals can improve their wellbeing through joining associations and working collaboratively, it also points towards the institutions to make this happen, and not simply more cognitive or behavioural tips. If people have become locked in themselves, gazing enviously at others, this poses questions that need institutional, political, collective answers. It cannot be alleviated simply with psychological appeals to the social, which can exacerbate the very problems they aim to alleviate, once combined with digital media and the egocentric model of connectivity those media facilitate. There is a crucial question of how businesses, markets, policies, laws and political participation might be designed differently to sustain meaningful social relationships, but it is virtually never confronted by the doyens of social capitalism.

It is not very long since the internet offered hope for different forms of organisation altogether. As the cultural and political theorist Jeremy Gilbert has argued, we should remember that it was only a few years ago that Rupert Murdoch’s media empire was completely defeated in its efforts to turn Myspace into a profitable entity. The tension between the logic of the open network and the logic of private investment could not be resolved, and Murdoch lost half a billion dollars. Facebook has had to go to great lengths to ensure that the same mistakes are not made – particularly by anchoring online identities in “real” offline identities, and tailoring its design around the interests of marketers and market researchers. Perhaps it is too early to say that it has succeeded.

The reduction of social life to psychology, or to physiology as achieved by social neuroscience, is not necessarily irreversible. Karl Marx believed that by bringing workers together in the factory and forcing them to work together, capitalism was creating the very class formation that would eventually overwhelm it. This was despite the “bourgeois ideology” that stressed the primacy of individuals transacting in a marketplace. Similarly, individuals today may be brought together for their own mental and physical health, or for their own private hedonistic kicks; but social congregations can develop their own logic, which is not reducible to that of individual wellbeing or pleasure. This is the hope that currently lies dormant in this new, neoliberal socialism.

NIMBY - the death of altruism

With little but economic gloom on the horizon, David Cameron likes to appeal to Britain's better instincts, insisting: "We're all in this together." Whether the average citizen is listening to the Prime Minister's entreaties is open to doubt: Britons appear to be more selfish and less interested in the common good than ever before.

The latest British Social Attitudes report suggests that levels of altruism are falling in these straitened times. People are hostile to housebuilding in their neighbourhoods, less likely to make personal sacrifices to protect the environment and increasingly resistant to paying more for hospitals and schools.

They are also sceptical about the Government's ability to change things for the better, with a growing belief that is down to individuals to sort out their problems for themselves. Support for tax rises to boost spending on services such as health and education has fallen to 31 per cent – half of the 63 per cent of people in favour just nine years ago.

The number willing to pay higher prices to safeguard the environment, such as by buying Fair Trade goods, has fallen from 43 per cent in 2001 to 26 per cent today, while the proportion prepared to pay more tax for the same reason is down from 31 per cent to 22 per cent.

Researchers also uncovered evidence of an entrenched "not in my backyard" mentality over housebuilding, with 45 per cent of people opposing any new development near them, compared with 30 per cent in favour. Opposition is strongest in areas where property is in shortest supply – 58 per cent in outer London and 50 per cent in the South-east of England.

The survey, now in its 29th year, acknowledged that three-quarters of the public believe the income gap between rich and poor is too large. Yet only 35 per cent believe the Coalition should redistribute more to lessen the disparity.

Paradoxically, 54 per cent of the public believe jobless benefits are too high and discourage the unemployed from finding work, up from 35 per cent in 1983, the first year of the survey. And although people were concerned about child poverty levels, 63 per cent pinned some of the blame for the problem on parents who "don't want to work".

The survey, by the independent social research institute NatCen, found Britons increasingly relaxed about private healthcare. In 1999, 38 per cent said it was wrong; today the figure has fallen to 24 per cent.
45 Percentage of Britons who oppose any new development near their homes. In outer London the figure is 58 per cent.

26 Percentage of people willing to pay more for ethical goods to save the environment – down from 43 per cent 10 years ago.

' Nice Guys Finish Last'

I didn't get where I am today by being nice...

Richard Hall

Monday, 05 December 2011

It is a phrase that millions of good-natured people around the world will consider so obvious that it hardly deserves to be questioned. Nonetheless, a team of business experts claims to have proved the pessimistic notion that "nice guys finish last" – at least where money is concerned.

A study has found that a person's "agreeableness" has a negative effect on their earnings. "Niceness", according to the research published in the Journal of Personality and Social Psychology, does not appear to pay.
"This issue isn't really about whether people are nasty or nice," said Richard Newton, business author and consultant. "A better way of putting it might be a willingness to fight your corner."

While agreeable traits such as compliance, modesty and altruism may seem conducive to a good working atmosphere, the study found that managers are more likely to fast-track for promotion and pay rises "disagreeable" people – those more likely to "aggressively advocate for their position".

The study, by Beth A Livingston of Cornell University, Timothy A Judge of the University of Notre Dame and Charlice Hurst of the University of Western Ontario, interviewed 9,000 people who entered the labour force in the past decade about their career, and gave personality tests which were then measured against income data.

The findings are bad news for nice guys, but worse still for women of all temperaments. They show that, regardless of their levels of agreeableness, women earned nearly 14 per cent less than men. Agreeable men earned an average of $7,000 (£4,490) less than their disagreeable peers.

"Nice guys do not necessarily finish last, but they do finish a distant second in terms of earnings," the study noted. "Our research provides strong evidence that men earn a substantial premium for being disagreeable while the same behaviour has little effect on women's income." Reasons offered for the difference include a better success rate for disagreeable types when negotiating pay rises, suggesting stubbornness is a key for success.