Are economists selfish? Does studying economics make you selfish

Tim Harford in The FT

Against my better judgment, I was recently prevailed upon to play a game of Monopoly with the family. It soon developed in a fashion that has become familiar: everyone tried to rip everyone else’s face off, except me. I proposed a mutually beneficial deal to each player, offering extra concessions myself to make sure those deals got done. This dealmaking tactic didn’t go down well. Every time I reached an agreement with one player, the other players fumed. 

Before long, I was being roundly denounced as a ruthless exploiter of innocents. This made me sad. It was partly the disheartening realisation that I am clearly a punchable opponent at the board-game table. But there was something more. My plight in being cast as a pantomime villain seemed to stand in for the fate of economists as a whole. 

I should explain. In looking for advantageous trades, I was doing what comes naturally to economists. The basic building block of economic activity — so basic that we take it for granted — is two people making each other better off by finding gains from trade. You can easily spot the economists at the Monopoly table, they’re the ones trying to find the deals that make both sides happy. 

But are we lauded for our fascination with voluntary agreements for mutual benefit? We are not. Instead, economists are often accused both of celebrating selfishness and of being selfish. As Yoram Bauman, an economist and comedian, once joked: “The only reason we don’t sell our children is that we think they’ll be worth more later.” 

What have we done to earn this reputation for ruthlessness? Perhaps it’s that altruism and charity are not front and centre in economic analysis. It may be the character of Gordon Gekko in Wall Street (1987), assuring us that “greed, for lack of a better word, is good”, somehow being associated with economists. 

But our reputation for being calculating and unfeeling may also be thanks to the experimental evidence. Over the years, a series of studies have emerged which seem to show that studying economics causes students to behave more selfishly. 

The basic idea sounds plausible. If you sit in enough classes being told that people are fundamentally self-interested, you yourself might become more self-interested. A 1993 paper by Robert Frank, Tom Gilovich and Dennis Regan summarised some of this evidence. It found economics students tended to behave less cooperatively in experimental games. They also expected less honesty from others. For example, if asked whether they would expect a stranger who found some lost cash to try to return it. More recent research by Bauman and his colleague Elaina Rose found that economics students were less likely to contribute to two named charities in a classroom exercise. 

Yet there is a pair of big question marks hanging over this collection of studies. The first is whether economics teaches people to be selfish, or whether instead selfish people gravitate towards economics. Bauman and Rose note that economics majors are equally mean whether they are near the beginning or the end of their studies — in other words, perhaps economics has no effect on people’s generosity, but big-hearted people avoid economics classes. 

Perhaps more important, do these questions really measure honesty, selfishness or any other moral virtue? That’s not clear. In the Bauman and Rose study, for example, the two charities in question were both left-leaning activist groups. So did economics students refuse to contribute because they hate giving to charity? Or did they feel that these particular charities were not very worthy causes? 

As for classroom exercises, there is a sense in which the selfish move is the “correct” answer in certain experimental settings, such as the prisoner’s dilemma game. If a student is taught that, and then plays the selfish move, have they become more selfish in everyday life? It seems just as plausible to suggest that they have been taught how to reproduce the textbook answer in an academic setting and want to pass the economics test. 

There are certain tendencies in mainstream economics that might nudge people towards a cynical view of human nature, but there is also a long tradition in economics arguing that free markets promote co-operation, honesty, respect for others, freedom and reciprocal benefit. 

So does studying economics make you selfish? A new study with that title, by Girardi, Mamunuru, Halliday and Bowles, finds “no discernible effect” of studying economics either on self-interest or on the belief that other people are self-interested. 

I suggest that before besmirching the good character of economics students we should look for more convincing real-world evidence. So far I have found nothing. But my search did turn up the fascinating discovery — courtesy of the philosopher Eric Schwitzgebel — that books about moral philosophy were more likely to be missing from libraries than other philosophy books. A deep academic interest in ethics appears to be correlated with larcenous behaviour. It makes you think. 

Ironically, the game that inspired Monopoly, The Landlord’s Game, was designed by the activist and writer Elizabeth Magie to teach lessons about a fairer taxation system, and then refined by a socialist professor of economics, Scott Nearing, and his students. Yes, the economics nerds were proposing a co-operative, pedagogical version of Monopoly. Alas their vision was eclipsed by the ruthless battle of attrition we all know today. 

Our own session of Monopoly might have been more fun if only my fellow players had embraced the constructive, co-operative spirit of economics. Alas, they did not, so our game finished in the traditional fashion. It petered out with no clear winner and several sore losers.  

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Shane Watson: 'In teams that focus on results instead of processes, players start playing for themselves'

Shane Watson in Cricinfo

There are environments where the leaders talk about how big this game is, how important this game is, and say, "If we lose this game we are out." I have been in plenty of these team environments. There are also environments where leaders talk about how performance in this game will dictate selection, and that underperformance might lead to players getting dropped. I have heard from leaders of a number of teams that I have played in say things like, "Spots are up for grabs in the game" or "If you don't perform, you will get dropped."

So guess what people are thinking in those environments? "Don't lose. I really need to perform today. I need to score runs. We need to win. Don't get out. Don't bowl badly. Don't stuff up, otherwise I might be gone." All of these focus on results and fear of failure.

These environments can work for a shorter period of time, where fear of failure can drive individuals to be ready to lock in for one very important game. But these environments are not sustainable at all as stress and anxiety builds up to a point where the whole team implodes and I have been a part of these environments on a few occasions too. The telltale signs are that everyone starts to only play for themselves, for their individual spots, and as long as they do enough to get picked for the next game, they are happy. This always leads to an incredibly toxic team environment where the enjoyment factor of playing the game that you love evaporates and it turns into every person for themselves. We should be doing all that we can to do the opposite of this, as the best and most successful team environments always have a fun and enjoyment aspect to them as a very important undercurrent to all that they do.

Other environments I have been a part of are ones where there is a clear focus on the process and leaders ask the players to just bring the best version of themselves every time and to do it over and over again. They reiterate that if we all do this, we give ourselves the best chance of coming out on top. This is exactly what a championship mindset looks like!

This is what made Ricky Ponting such a good captain. He always said to the team in the lead-up to big games that the team whose individuals do the basics better and for longer will be the team that will come out on top. It focused our minds on the process, on doing the basics, controlling the A factors.

Paddy Upton for Rajasthan Royals built a process-driven environment that took all of the anxiety and stress out of a very pressurised tournament where performance and results were so important. The other team environment where this was done incredibly well was at Chennai Super Kings in the IPL under captain MS Dhoni and coach Stephen Fleming. I never heard either of them say, "We need to win this game today", or "If you don't score runs today or take wickets, you will be getting dropped."

My second year with CSK really stuck with me. There was no chopping and changing in selection. In other teams I had been with, players were turned over constantly. If a player didn't perform for a couple of games, selectors would think he wasn't good enough and would replace him immediately. This meant that everyone started looking over their shoulders and thinking, "Gosh, if I don't perform in a couple of games, then I could be gone too."

No matter who we are, we are always going to have times in our lives where we are in a "results-focused" environment. By understanding the mental-skills framework in this book, we know that this is the opposite of where we want to be mentally for us to be at our best both individually and collectively. We need to listen to what is being said by the leaders in this environment and we need to redirect their words ourselves to say, "I am not going to let their results focus influence the correct mindset I need for me to be at my best." This can be much easier said than done when players are being chopped and changed from one game to the next without any rhyme or reason, apart from someone not performing in one game. But understanding this will be a powerful tool for you to use throughout your life to ensure a negative environment doesn't infiltrate your thinking and pull you out of your high-performance mindset.

I've been a victim of a negative team environment. After the retirement of Ricky Ponting and Mike Hussey, the Australian team drifted significantly. Pressure to perform began to affect confidence and consistency. Players, myself included, began to look over our shoulders. I didn't have knowledge of the mental skills I needed to redirect my thoughts to the right things at the right times to consistently bring the best version of myself into every performance, instead of being overcome with fear and overwhelmed by a need for results, which saw my performances go downhill throughout that time. And this was all at a time where I was in my prime, performing really well in the IPL in an incredibly enjoyable, process-driven team environment. But as soon as I went back into this other environment, my kryptonite, my performances started to tank again and the enjoyment factor of playing the game that I loved evaporated very quickly.



When Watson was able to let go of the negative mindset that gripped the team, he was able to play with freedom and the results automatically followed•Craig Golding/AFP/Getty Images


My last three months with the Australia T20 team from early January 2016 through to the T20 World Cup in India was another example of one of those environments. We played India in a three-match T20 International series, where the selectors picked a really big squad and chopped and changed the team significantly from game to game, and then this flowed on to a T20 series in South Africa before we headed to India for the T20 World Cup. The conversations and actions around the group from the leaders - that being the coach, captain, selectors - were consistent messaging like, "All spots are up for grabs if you want to play in the T20 World Cup" and "You need to perform in this game as you might only have one opportunity to press your claim."

As soon as I heard and saw this, I immediately acknowledged in my own mind what this ridiculous situation was creating. This time I opted out. I knew the importance of preparation and focus. The result was that I bowled as well as I had in T20 cricket for Australia, played one of the games of my life at the SCG as captain, and retired at the end of the T20 World Cup as the No. 1 T20I allrounder in the world.

Surprise surprise, we lost to India in the quarter final knockout game. We left a few runs on the table and didn't execute that well with the ball against an Indian team that had barely changed their XI from the first game that we played against them during the series in Australia, three months before.

But the attitudes I saw in that T20 World Cup are everywhere. I saw it recently in a game of junior cricket. The result of the match was important as a place in the grand final was riding on it. A number of the parents had really built this game up as being a knockout game and had stressed to the kids how important it was to win to make the final. Then one of the calmest kids in the team went out to bat with two overs to go and one of the parents said, "Don't get out, otherwise we will lose" as he walked out to bat. And guess what happened. This poor young kid ended up getting out, and because of all of the build-up of importance for this game by the parents and kids around him, the calmest child on the field lost the plot, throwing their gear everywhere in disappointment of letting the team down. It was so sad to see and something that should never happen if the parents around the team simply understood the fundamentals of how to create the optimal environment. Reinforcement of the correct mindset would then filter down to all of the young kids.

It is so easy to allow the "live or die by results" environment to infiltrate your mindset and start to corrupt it. It is easy to start to move your thinking to fear of failure and how important it is to perform and get the results. But by understanding all of the mental skills in this book, you will be armed with all that you need to be mentally tough enough to create a super-strong cocoon around yourself, to just direct your thoughts to continually creating your optimal mental environment to bring the best version of you, no matter what team environment that you are in.

We need to do all that we can in our power to help with creating the best team environment possible, so that individuals don't have to feel like they are rebelling against the team leadership just to stay process-driven, to bring their best A game possible, game in game out. I'm convinced that more and more teams should be open to allowing players to manage their own mental and physical preparation. Everyone is different; everyone comes to know what best suits them; just as a lot of cricket is individual, so should a lot of the preparation be too. Understanding this will create so many more high-performing team environments, higher-performing individuals and most importantly, much more enjoyable team environments too, so that we never lose the fun and joy that we get playing the game that we love.

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On Ben Stokes - Do sportsmen have a responsibility to the sport?

Suresh Menon in The Hindu



One of the more amusing sights in cricket recently has been that of England trying desperately to work out a formula to simultaneously discipline Ben Stokes and retain him for the Ashes series. To be fair, such contortion is not unique. India once toured the West Indies with Navjot Singh Sidhu just after the player had been involved in a road rage case that led to a death.

Both times, the argument was one we hear politicians make all the time: Let the law takes its course. It is an abdication of responsibility by cricket boards fully aware of the obligation to uphold the image of the sport.

Cricketers, especially those who are talented, and therefore have been indulged, tend to enjoy what George Orwell has called the “benefit of the clergy”. Their star value is often a buffer against the kind of response others might have received. Given that the team leaves for Australia at the end of this month, it is unlikely that Stokes will tour anyway, yet the ECB’s reaction has been strange.

Neither Stokes nor Alex Hales, his partner at the brawl in Bristol which saw Stokes deliver what the police call ABH (Actual Bodily Harm), was dropped immediately from the squad. This is a pointer to the way cricket boards think.

An enquiry by the England and Wales Cricket Board (ECB) would not have taken more than a few hours. Given the cctv footage, the players’ own versions, and the testimony of the victims, it is unlikely that there could be any ambiguity about what happened. Yet the ECB has chosen to bring in its independent Cricket Discipline Commission only after the police have completed their inquiries.

Top sportsmen tend to be national heroes, unlike, say, top chartered accountants or geography teachers, and they have a responsibility to ensure they do not bring the sport into disrepute. It is a tough call, and not everybody agrees that your best all rounder should also be your most ideally-behaved human being. But that is the way it is. After all, sport is an artificial construct; rules around it might seem to be unrealistic too.

Stokes brought “the game into disrepute” — the reason Ian Botham and Andrew Flintoff were banned in the past — and he should not be in the team. The ECB’s response cannot be anything other than a ban. Yet, it is pussy-footing around the problem in the hope that there is a miracle. Perhaps the victims will not press charges. Perhaps the police might decide that the cctv images are inconclusive.

Clearly player behaviour is not the issue here. There are two other considerations. One was articulated by former Aussie captain Ian Chappell: Without Stokes, England stood no chance in the Ashes. The other, of equal if not greater concern to the ECB, is the impact of Stokes’s absence on sponsorship and advertising. Already the brewers Greene King has said it is withdrawing an advertisement featuring England players.

Scratch the surface on most moral issues, and you will hit the financial reasons that underlie them.

Stokes, it has been calculated, could lose up to two million pounds in endorsements, for “bringing the product into disrepute”, as written into the contracts. It will be interesting to see how the IPL deals with this — Stokes is the highest-paid foreign player in the tournament.

And yet — here is another sporting irony — there is the question of aggression itself. Stokes (like Botham and Flintoff and a host of others) accomplishes what he does on the field partly because of his fierce competitive nature and raw aggression.

Just as some players are intensely selfish, their selfishness being a reason for their success and therefore their team’s success, some players bring to the table sheer aggression.

Mike Atherton has suggested that Stokes should learn from Ricky Ponting who was constantly getting into trouble in bars early in his career. Ponting learnt to channelise that aggression and finished his career as one of the Aussie greats. A more recent example is David Warner, who paid for punching Joe Root in a bar some years ago, but seems to have settled down as both batsman and person.

Stokes will be missed at the Ashes. He has reduced England’s chances, even if Moeen Ali for one thinks that might not be the case.

Still, Stokes is only 26 and has many years to go. It is not too late to work on diverting all that aggression creatively. Doubtless he has been told this every time he has got into trouble. He is a rare talent, yet it would be a travesty if it all ended with a rap on the knuckles. England must live — however temporarily —without him.

Economists have started to take morality seriously

Ben Chu in The Independent

“We don’t do God,” Tony Blair’s press secretary, Alistair Campbell, once famously remarked. Similarly, economists don’t “do” morality.

They are a breed concerned with economic efficiency not spiritual uplift; human choices and incentives, not human values. They believe questions of morality can be left to philosophers and theologians.

There’s an element of truth in that stereotype. Economists have indeed tended to leave aside issues of morality. In some cases that’s because they think, on ideological grounds, that it has no place in the discipline.

But even more thoughtful and less dogmatic economists have tended to shy away from the question on the grounds that moral values are tricky to pin down, much less quantify.

That’s not to say that their research agendas have not supported “moral” agendas. They often expose market failures which harm the less well-off. And they defend the right of governments to intervene in markets in ways that might reduce short-term economic efficiency, such as by fining polluters.

They argue for the responsibility of governments to provide public goods like education. And there are also plenty of mainstream economists who justify progressive taxation on the grounds that high inequality is socially undesirable.

Yet their theoretical models themselves have generally had no place for morality.

But things might be changing. Two economic Nobel laureates at a meeting on the German island of Lindau last week outlined a bold attempt to put morality into theoretical economical modelling.

Oliver Hart, a 2016 Nobel winner, presented a paper, co-authored with Luigi Zingales, in which he looked at how the personal morality of shareholders might affect the behaviour of the companies in which they invest, in particular whether those firms will behave in a way that will maximise profits or whether they sacrifice some profit for the sake of behaving in a socially responsible manner.

To give an example, it’s perfectly legal for the American supermarket giant Wal-Mart to sell automatic weapons. But its executives could, in theory, choose not to do so. So what determines the corporate decision?

The Hart model raises the possibility that the incentives in the system of stock-market listed companies – the psychology of shareholders and the pressures on managements – might be behind an “amoral drift” in corporate behaviour.

In a similar vein, Jean Tirole, who won the Nobel in 2014, outlined at Lindau a theoretical framework in which he, along with Armin Falk, tries to model behaviour taking into account how certain popular “narratives” can inhibit people from doing what they would normally consider the right thing. A good example of such a narrative in the British context might be popular opposition to the admittance of Syrian child refugees on the false belief, pushed hard by the right-wing media, that they are all really adults pretending to be children.

“Economics is fundamentally a moral and philosophical science, embedded in the larger social sciences,” Mr Tirole said, urging other economists in the audience to join in the project of trying radical new approaches.

It remains to be seen whether this particular research agenda gets anywhere. There are plenty of holes that one can pick in the very simple models presented by Hart and Tirole and the broad-brush assumptions they make about people’s decision-making processes – something they both readily acknowledged.

It may turn out that the particular value that economics adds does indeed lie more in analysing the behaviour of broadly self-interested individuals in markets (whether competitive or not) rather than trying to build models that factor in more complex human motivations.

Yet those who criticise the “dismal science” for assuming that we are all self-interested robots should at least acknowledge these efforts by some of the luminaries of the field.

And this work is also a useful rebuke to the charge that by analysing human behaviour as narrowly self-interested the economics profession is implicitly encouraging people to behave in that selfish way, that the axioms of classical economics have a “normative” impact on society. 

And in a sense this is a return to older ways of thinking. Seventeen years before he wrote The Wealth of Nations in 1776 Adam Smith produced The Theory of Moral Sentiments.

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it,” wrote the revered father of economics.

Some of Adam Smith’s successors, at least, are taking those insights seriously.

Jeremy Hunt doesn’t understand junior doctors. He co-wrote a book on how to dismantle the NHS

Frankie Boyle in The Guardian


The health secretary’s name is so redolent of upper-class brutality he belongs in a Martin Amis book where working-class people are called Dave Rubbish

 

Jeremy Hunt: overtly ridiculous. Photograph: Mark Thomas/Rex Shutterstock




One of the worst things for doctors must be that, after seven years of study and then another decade of continuing professional exams, patients come in telling them they’re wrong after spending 20 minutes on Google. So imagine how doctors must feel about Jeremy Hunt, who hasn’t even had the decency to go on the internet.

Consider how desperate these doctors are: so desperate that they want to talk to Jeremy Hunt. Surely even Hunt’s wife would rather spend a sleepless 72 hours gazing into a cracked open ribcage than talk to him. Hunt won’t speak to the doctors, even though doctors are the people who know how hospitals work. Hunt’s only other job was founding Hotcourses magazine: his areas of expertise are how to bulletpoint a list and make dog grooming look like a viable career change.

Of course, the strikers are saying this is about safety, not pay, as expecting to be paid a decent wage for a difficult and highly skilled job is now considered selfish. Surely expecting someone to work for free while people all around them are dying of cancer is only appropriate for the early stages of The X Factor. Sadly, Tories don’t understand why someone would stay in a job for decency and love when their mother was never around long enough to find out what language the nanny spoke.

The fact that Hunt co-wrote a book about how to dismantle the NHS makes him feel like a broad stroke in a heavy-handed satire. Even the name Jeremy Hunt is so redolent of upper-class brutality that it feels like he belongs in one of those Martin Amis books where working-class people are called things like Dave Rubbish and Billy Darts (No shade, Martin – I’m just a joke writer: I envy real writers, their metaphors and similes taking off into the imagination sky like big birds or something). Indeed, Jeremy Hunt is so overtly ridiculous that he might be best thought of as a sort of rodeo clown, put there simply there to distract the enraged public.

I sympathise a little with Hunt – he was born into military aristocracy, a cousin of the Queen, went to Charterhouse, then Oxford, then into PR: trying to get him to understand the life of an overworked student nurse is like trying to get an Amazonian tree frog to understand the plot of Blade Runner. Hunt doesn’t understand the need to pay doctors – he’s part of a ruling class that doesn’t understand that the desire to cut someone open and rearrange their internal organs can come from a desire to help others, and not just because of insanity caused by hereditary syphilis.

The government believes that death rates are going up because doctors are lazy, rather than because we’ve started making disabled people work on building sites. Indeed, death rates in the NHS are going up, albeit largely among doctors. From the steel mines where child slaves gather surgical steel, all the way up to senior doctors working 36 hours on no sleep, the most healthy people in the NHS are actually the patients. This is before we get to plans for bursaries to be withdrawn from student nurses, so that we’re now essentially asking them to pay to work. Student nurses are essential; not only are they a vital part of staffing hospitals, they’re usually the only people there able to smile at a dying patient without screaming: “TAKE ME WITH YOU!”

The real reason more people die at weekends is that British people have to be really sick to stay in hospital at the weekend, as hospitals tend not to have a bar. We have a fairly low proportion of people who are doctors, don’t plan to invest in training any more, and are too racist to import them. So we’re shuffling around the doctors we do have to the weekend, when not a lot of people are admitted, from the week, when it’s busy. This is part of a conscious strategy to run the service down to a point where privatisation can be sold to the public as a way of improving things.

Naturally, things won’t actually be improved; they’ll be sold to something like Virgin Health. Virgin can’t get the toilets to work on a train from Glasgow to London, so it’s time we encouraged it to branch out into something less challenging like transplant surgery. With the rate the NHS is being privatised, it won’t be long before consultations will be done via Skype with a doctor in Bangalore. Thank God we’re raising a generation who are so comfortable getting naked online. “I’m afraid it looks like you’ve had a stroke. No, my mistake – you’re just buffering.”

When I was little, I was in hospital for a few days. The boy in the next bed was an officious little guy who took me on a tour of the ward. He’d sort of appointed himself as an auxiliary nurse and would help out around the place, tidying up the toys in the playroom, and giving all the nurses a very formal “Good Morning”, which always made me laugh. I got jelly and ice-cream one evening (I’d had my tonsils out) and they brought him some, too. Afterwards, he threw his spoon triumphantly into his plate and laughed till there were tears in his eyes. Then he tidied up and took our plates back to the trolley. What he meant by all this (we’d sit up at night talking and waiting for trains to go by in the distance) is that this was the first place he’d known any real kindness and he wished to return it. For most of us it will be the last place we know kindness. How sad that we have allowed it to fall into the hands of dreadful people who know no compassion at all, not even for themselves.

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.

Don’t let the Nobel prize fool you. Economics is not a science

The award glorifies economists as tellers of timeless truths, fostering hubris and leading to disaster

Joris Luyendijk in The Guardian


 

‘A Nobel prize in economics implies that the human world operates much like the physical world.’ Photograph: Jasper Rietman


Business as usual. That will be the implicit message when the Sveriges Riksbank announces this year’s winner of the “Prize in Economic Sciences in Memory of Alfred Nobel”, to give it its full title. Seven years ago this autumn, practically the entire mainstream economics profession was caught off guard by the global financial crash and the “worst panic since the 1930s” that followed. And yet on Monday the glorification of economics as a scientific field on a par with physics, chemistry and medicine will continue.

The problem is not so much that there is a Nobel prize in economics, but that there are no equivalent prizes in psychology, sociology, anthropology. Economics, this seems to say, is not a social science but an exact one, like physics or chemistry – a distinction that not only encourages hubris among economists but also changes the way we think about the economy.

A Nobel prize in economics implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modelling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths.

Economist Sir Richard Blundell among Nobel prize frontrunners


To illustrate just how dangerous that kind of belief can be, one only need to consider the fate of Long-Term Capital Management, a hedge fund set up by, among others, the economists Myron Scholes and Robert Merton in 1994. With their work on derivatives, Scholes and Merton seemed to have hit on a formula that yielded a safe but lucrative trading strategy. In 1997 they were awarded the Nobel prize. A year later, Long-Term Capital Management lost $4.6bn (£3bn)in less than four months; a bailout was required to avert the threat to the global financial system. Markets, it seemed, didn’t always behave like scientific models.

In the decade that followed, the same over-confidence in the power and wisdom of financial models bred a disastrous culture of complacency, ending in the 2008 crash. Why should bankers ask themselves if a lucrative new complex financial product is safe when the models tell them it is? Why give regulators real power when models can do their work for them?

Many economists seem to have come to think of their field in scientific terms: a body of incrementally growing objective knowledge. Over the past decades mainstream economics in universities has become increasingly mathematical, focusing on complex statistical analyses and modelling to the detriment of the observation of reality.

Consider this throwaway line from the former top regulator and London School of Economics director Howard Davies in his 2010 book The Financial Crisis: Who Is to Blame?: “There is a lack of real-life research on trading floors themselves.” To which one might say: well, yes, so how about doing something about that? After all, Davies was at the time heading what is probably the most prestigious institution for economics research in Europe, located a stone’s throw away from the banks that blew up.

 Howard Davies, pictured in 2006. Photograph: Eamonn McCabe for the Guardian

All those banks have “structured products approval committees”, where a team of banking staff sits down to decide whether their bank should adopt a particular new complex financial product. If economics were a social science like sociology or anthropology, practitioners would set about interviewing those committee members, scrutinising the meetings’ minutes and trying to observe as many meetings as possible. That is how the kind of fieldwork-based, “qualitative” social sciences, which economists like to discard as “soft” and unscientific, operate. It is true that this approach, too, comes with serious methodological caveats, such as verifiability, selection bias or observer bias. The difference is that other social sciences are open about these limitations, arguing that, while human knowledge about humans is fundamentally different from human knowledge about the natural world, those imperfect observations are extremely important to make.

Compare that humility to that of former central banker Alan Greenspan, one of the architects of the deregulation of finance, and a great believer in models. After the crash hit, Greenspan appeared before a congressional committee in the US to explain himself. “I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms,” said the man whom fellow economists used to celebrate as “the maestro”.

Nobel Prizes in science: strictly a man’s game?



In other words, Greenspan had been unable to imagine that bankers would run their own bank into the ground. Had the maestro read the tiny pile of books by financial anthropologists he may have found it easier to imagine such behaviour. Then he would have known that over past decades banks had adopted a “zero job security” hire-and-fire culture, breeding a “zero-loyalty” mentality that can be summarised as: “If you can be out of the door in five minutes, your horizon becomes five minutes.”

While this was apparently new to Greenspan it was not to anthropologist Karen Ho, who did years of fieldwork at a Wall Street bank. Her book Liquidated emphasises the pivotal role of zero job security at Wall Street (the same system governs the City of London). The financial sociologist Vincent Lépinay’s Codes of Finance, a book about the division in a French bank for complex financial products, describes in convincing detail how institutional memory suffers when people switch jobs frequently and at short notice.

Perhaps the most pernicious effect of the status of economics in public life has been the hegemony of technocratic thinking. Political questions about how to run society have come to be framed as technical issues, fatally diminishing politics as the arena where society debates means and ends. Take a crucial concept such as gross domestic product. As Ha-Joon Chang makes clear in 23 Things They Don’t Tell You About Capitalism, the choices about what not to include in GDP (household work, to name one) are highly ideological. The same applies to inflation, since there is nothing neutral about the decision not to give greater weight to the explosion in housing and stock market prices when calculating inflation.

  Ha-Joon Chang, pictured at the Hay-on-Wye festival, Wales. Photograph: David Levenson/Getty Images

GDP, inflation and even growth figures are not objective temperature measurements of the economy, no matter how many economists, commentators and politicians like to pretend they are. Much of economics is politics disguised as technocracy – acknowledging this might help open up the space for political debate and change that has been so lacking in the past seven years.

Would it not be extremely useful to take economics down one peg by overhauling the prize to include all social sciences? The Nobel prize for economics is not even a “real” Nobel prize anyway, having only been set up by the Swedish central bank in 1969. In recent years, it may have been awarded to more non-conventional practitioners such as the psychologist Daniel Kahneman. However, Kahneman was still rewarded for his contribution to the science of economics, still putting that field centre stage.

Think of how frequently the Nobel prize for literature elevates little-known writers or poets to the global stage, or how the peace prize stirs up a vital global conversation: Naguib Mahfouz’s Nobel introduced Arab literature to a mass audience, while last year’s prize for Kailash Satyarthi and Malala Yousafzai put the right of all children to an education on the agenda. Nobel prizes in economics, meanwhile, go to “contributions to methods of analysing economic time series with time-varying volatility” (2003) or the “analysis of trade patterns and location of economic activity” (2008).

A revamped social science Nobel prize could play a similar role, feeding the global conversation with new discoveries and insights from across the social sciences, while always emphasising the need for humility in treating knowledge by humans about humans. One good candidate would be the sociologist Zygmunt Bauman, whose writing on the “liquid modernity” of post-utopian capitalism deserves the largest audience possible. Richard Sennett and his work on the “corrosion of character” among workers in today’s economies would be another. Will economists volunteer to share their prestigious prize out of their own acccord? Their own mainstream economic assumptions about human selfishness suggest they will not.

Selfish traits not favoured by evolution, study shows

By Melissa HogenboomScience reporter, BBC News

Evolution does not favour selfish people, according to new research.

This challenges a previous theory which suggested it was preferable to put yourself first.

Instead, it pays to be co-operative, shown in a model of "the prisoner's dilemma", a scenario of game theory - the study of strategic decision-making.

Published in Nature Communications, the team says their work shows that exhibiting only selfish traits would have made us go extinct.

Game theory involves devising "games" to simulate situations of conflict or co-operation. It allows researchers to unravel complex decision-making strategies and to establish why certain types of behaviour among individuals emerge.

Freedom or prison

A team from Michigan State University used a model of the prisoner's dilemma game, where two suspects who are interrogated in separate prison cells must decide whether or not to inform on each other.

In the model, each person is offered a deal for freedom if they inform on the other, putting their opponent in jail for six months. However, this scenario will only be played out if the opponent chooses not to inform.

If both "prisoners" choose to inform (defection) they will both get three months in prison, but if they both stay silent (co-operation) they will both only get a jail term of one month.

The eminent mathematician John Nash showed that the optimum strategy was not to co-operate in the prisoner's dilemma game.

"For many years, people have asked that if he [Nash] is right, then why do we see co-operation in the animal kingdom, in the microbial world and in humans," said lead author Christoph Adami of Michigan State University.

Mean extinction

The answer, he explained, was that communication was not previously taken into account.

"The two prisoners that are interrogated are not allowed to talk to each other. If they did they would make a pact and be free within a month. But if they were not talking to each other, the temptation would be to rat the other out.

"Being mean can give you an advantage on a short timescale but certainly not in the long run - you would go extinct."

These latest findings contradict a 2012 study where it was found that selfish people could get ahead of more co-operative partners, which would create a world full of selfish beings.

This was dubbed a "mean and selfish" strategy and depended on a participant knowing their opponent's previous decision and adapting their strategy accordingly.

Crucially, in an evolutionary environment, knowing your opponent's decision would not be advantageous for long because your opponent would evolve the same recognition mechanism to also know you, Dr Adami explained.

This is exactly what his team found, that any advantage from defecting was short-lived. They used a powerful computer model to run hundreds of thousands of games, simulating a simple exchange of actions that took previous communication into account.

"What we modelled in the computer were very general things, namely decisions between two different behaviours. We call them co-operation and defection. But in the animal world there are all kinds of behaviours that are binary, for example to flee or to fight," Dr Adami told BBC News.

"It's almost like what we had in the cold war, an arms race - but these arms races occur all the time in evolutionary biology."

Social insects

Prof Andrew Coleman of Leicester University, UK, said this new work "put a break on over-zealous interpretations" of the previous strategy, which proposed that manipulative, selfish strategies would evolve.

"Darwin himself was puzzled about the co-operation you observe in nature. He was particularly struck by social insects," he explained.

"You might think that natural selection should favour individuals that are exploitative and selfish, but in fact we now know after decades of research that this is an oversimplified view of things, particularly if you take into account the selfish gene feature of evolution.

"It's not individuals that have to survive, its genes, and genes just use individual organisms - animals or humans - as vehicles to propagate themselves."

"Selfish genes" therefore benefit from having co-operative organisms.

Are beautiful people 'selfish by nature'?

People with symmetrical faces are more self-sufficient and less likely to co-operate, new research suggests

• Jamie Doward and Bradley Wilkinson
• The Observer, Sunday 14 August 2011
• larger | smaller

A study suggests that people with symmetrical faces, such as Natalie Portman, are naturally more self-sufficient. Photograph: Steve Granitz/WireImage
Kate Moss, George Clooney, Natalie Portman or Cristiano Ronaldo may be many people's ideas of dream dates, but pioneering research that combines economics with biology suggests they may not be perfect life partners. According to a study to be discussed this month at a gathering of Nobel prizewinners, people blessed with more symmetrical facial features, which are considered more attractive, are less likely to co-operate and more likely to selfishly focus on their own interests. Santiago Sanchez-Pages, who works at the universities of Barcelona and Edinburgh, and Enrique Turiegano, of the Universidad Autónoma de Madrid, base their claims on the "prisoner's dilemma" model of behaviour, played out under laboratory conditions. Two players were each given the option of being a "dove" and co-operating for the greater good; or a "hawk", taking the selfish option, with a chance of gaining more if the other player chose "dove" and co-operated. The subjects' faces were then analysed. The study found that people with more symmetrical faces were less likely to co-operate and less likely to expect others to co-operate. The findings will be presented at the annual Nobel Laureate Meetings in Lindau, Germany, from 23 to 27 August. The explanation may be found in evolution. The two academics speculate that, on a subconscious level, people tend to view symmetrical physical attributes as a sign of good health and find people with them more attractive as a result. Earlier studies have suggested that individuals with symmetrical faces tend to suffer fewer congenital diseases and therefore make better potential mating partners. As a result, the studies suggest, they are more self-sufficient and have less need for seeking the help of others. The pair write: "As people with symmetrical faces tend to be healthier and more attractive, they are also more self-sufficient and have less of an incentive to co-operate and seek help from others. Through natural selection over thousands of years, these characteristics continue to the present day." The authors also examine the relationship between co-operation levels and exposure to testosterone during development. Testosterone is usually associated with aggressive behaviour, suggesting "alpha males" do not make great team players. But the authors suggest this is only a partial truth and that testosterone can promote co-operative behaviour. They write: "Subjects exposed to higher levels of testosterone during foetal development did not co-operate less than the rest and even co-operated more than subjects with average levels. It seems that leading co-operation and not necessarily obtaining a higher individual profit are seen by some as a source of status." The pair warn against jumping to the "simplistic conclusion" that facial asymmetry or testosterone can be used to predict a person's behaviour, but they suggest their research could help to design public policies and act as a corrective to purely economic-based decision making. They note: "If certain behaviours such as smoking, drinking or high-speed driving are perceived by those who engage in them as part of their quest for status, it is very unlikely that providing economic disincentives like higher taxes, prices or fines will have a strong deterrent effect."

• © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved.

'Dreams Are Made Out Of Impossibles'

'...As soon as one impossible becomes possible, it shakes up the structure and creates a domino effect, preparing the ground for making many other impossibles possible.'
Muhammad Yunus





The 2nd Professor Hiren Mukerjee Memorial Annual Parliamentary Lecture delivered by Professor Muhammad Yunus: "Social Business: A Step toward creating a new economic and social order" on Wednesday, 9th December, 2009 at Central Hall, Parliament House, New Delhi. The inaugural lecture was given by another Nobel laureate, Amartya Sen

Hon. Vice-President of India; Hon. Prime Minister of India, Hon. Speaker of Lok Sabha; Hon. Members of Lok Sabha and Rajya Sabha; Distinguished Ministers; and Ladies and Gentlemen:

When I first got the invitation, I got really scared. I did not believe that I will have an invitation like this to address the Members of Lok Sabha and Rajya Sabha. Then, I felt that I have so many friends here, and so, instead of thinking of them in terms of Members of Lok Sabha and Rajya Sabha, I felt like thinking of them as my friends who have been supporting me all along in my career, all along the way I have worked. The Government of India and the people of India have given me so many prizes and so many decorations; I have occupied so many positions in your Committees. So, I felt totally comfortable coming back here, to share with you the thoughts that I had accumulated over the years, to share the things that I have done or acquired or try to do; and that is the subject matter of my presentation today.

It is a great honour and a privilege for me to deliver the 2nd Professor Hiren Mukerjee Memorial Annual Parliamentary Lecture in honour of the formidable academician and parliamentarian, Professor Hiren Mukerjee. I am very proud to pay my respects to an individual whose commitment to social justice spanned over 60 years, until his death in 2004.

Hiren Babu‘s commitment to the plight of the oppressed and exploited during his entire life has inspired many. His gift of oratory has captivated and enlightened individuals across the political spectrum. Indeed, Hiren Babu‘s faith in the ability of all people, including the poor, to change their own lives for the better.
Professor Hirendra Nath Mukerjee has been one of the 20th century's best examples of the intellectual prowess in South Asia. If our human resources are nurtured and simply given a chance to grow, I am certain we can all change our economic and social situations dramatically. I pay tribute to the memory of this great son of this region who dedicated himself to improving the life of the poor people at the very bottom. Professor Mukerjee tried to address the poverty issue politically. I first got involved with poverty as an academician, and then I got involved personally, almost by accident.

I got involved with poverty because it was all around me. If you recall the famine of 1974 in Bangladesh, that famine pushed me out of the university campus. In disaster situations, most of us take up our social roles unhesitatingly. But in my case what began in a time of crisis became a life-long calling. I gave up my academic position and founded a bank in the process — a bank for the poor people. In 1974, I found it extremely difficult to teach elegant theories of economics in the classroom while a terrible famine was raging outside. Suddenly I felt the emptiness of economic theories in the face of crushing hunger and poverty. I realized that I had to leave the campus and somehow make myself useful to the distressed people of Jobra, the village next door to the university campus. In trying to discover what I could do to help, I learned many things about Jobra, about the people, and about their helplessness. I came face to face with the struggle of poor people to find the tiniest amounts of money needed to support their efforts to eke out a living. I was shocked to meet a woman who had borrowed just five taka from a money-lender. The condition of the loan was, she would have to sell all her products to him at a price he would decide. A five-taka loan transformed her into a virtual slave. To understand the scope of this money-lending practice in that village, I made a list of the people who had borrowed from the money-lenders. When my list was complete, I had 42 names in the list. These people had borrowed a total of taka 856 from the money-lenders. To free these 42 people from the clutches of the money lenders, I gave them the money from my pocket to repay the loans. The excitement that was created in the village by this small action touched me very deeply. I thought, "If this little action makes so many people so happy, why shouldn't I do more of this?" That's what I have been trying to do ever since. The first thing I did was to try to persuade the bank located in the university campus to lend money to the poor in the next door village. But the bank manager refused to do that. He said, "The poor do not qualify to take loans from the bank — they are not creditworthy". I argued with him about this for several months and also his senior officials in the banking hierarchy tried to persuade him but no result.

So I offered to become a guarantor for loans to the poor people. The bank agreed to accept this proposal. By the middle of 1976, I started giving out loans to the village poor, taking personal responsibility for their repayment. I came up with some ideas for making it easier for people to repay the money they had borrowed. These ideas worked. People paid back the loans on time, every time. It seems to me that lending money to the poor was not as difficult as it was imagined. But I kept confronting difficulties in trying to expand the programme through the existing banks. Finally, I decided to create a separate bank for the poor people. I succeeded in creating that bank in 1983. We called it Grameen Bank. Today, Grameen Bank is a nationwide bank serving the poor in every single village of Bangladesh. It has 8 million borrowers, 97 per cent of whom are women. The bank is owned by the borrowers. The members of the Board are elected by the borrowers as shareholders. Grameen Bank lends out over $100 million a month in collateral-free loans averaging about $200. It encourages children of Grameen families to go to school. The women and the borrowers are totally illiterate. But we wanted to make sure that children go to school and we succeeded in having all their children to go to school. Then we offered education loans when these children came to college level and university level so that they are not turned down because they come from poor families. So, the Grameen Bank keeps on giving loans to support all the cost of education for all the children who come to the college level. Right now, there are more than 42,000 students who are currently pursuing their education in medical schools, engineering schools, and universities, entirely financed by education loans from Grameen Bank. Some of them have completed their Ph.D. and we feel good that the new generation is emerging among the illiterate poor women. We encourage these young people to take a pledge that they will never enter job market as job seekers and we encourage them to believe that they are job-givers and not job seekers. We explain to them that their mothers own a big bank - Grameen Bank. It has plenty of money to finance any enterprise that they wish to float. So, why should they waste time looking for a job working for somebody else? Instead, they should be an employer, rather than an employee.

Grameen Bank is financially self-reliant. All of its funds come from the deposits that it mobilizes. Everywhere they open their branches. More than half of the deposits come from the borrowers themselves, who are required to open a bank account as soon as they join Grameen Bank to save a little bit of money every week. They have a collective savings balance of over half a billion US dollars right now. The repayment rate on loan is very high, about 98 per cent, despite the fact that Grameen Bank focuses on the poorest people – those that other banks called non-creditworthy. I raised the question whether banks should tell whether people are creditworthy or not or people should tell whether the banks are people-worthy.

Grameen Bank even gives loans to beggars. They use the loans to start the business of selling goods from door to door, rather than begging door to door. Beggars liked the idea. We introduced this programme four years back and now we have over 100,000 beggars in this programme. During the four years since this programme was launched, over 18,000 beggars have quit begging completely. They became self-reliant sales persons. When people ask what happened to others, I tell them that they are part-time beggars now because they are mixing begging and selling at the same time and gradually trying to build their way out of begging completely.

The idea of small, collateral-free loans for poor women, known as "microcredit", or "microfinance", has spread all around the world. There are now Grameen-type programmes in almost every single country in the world. We even run a programme named "Grameen America" in New York City. It is now branching out to Omaha, Nebraska, and San Francisco, California. Even in the richest country in the world with the most sophisticated banking system, there is a huge need for a bank dedicated to serving the poor because there are millions of people who cannot receive any financial service from their banks even in United States and also countries in Europe.

When I meet Grameen Bank borrowers, I often meet mother-daughter and mother-son pairs when I visit their homes in which the mother is totally illiterate, while the daughter or son is a medical doctor or an engineer. A thought always flashes through my mind: the mother could have been a doctor or an engineer too. She has the same capability as her daughter or son. The only reason she could not unleash her potential is that the society never gave her the chance. She could not even go to school to learn the alphabet.

The more time you spend among poor people, the more you become totally convinced that poverty is not created by poor people. It is created by the system that we have built, the institutions that we have designed, the concepts we have formulated. Poverty is an artificial, external imposition on a human being, it is not innate in a human being. And since it is external, it can be removed. It is all a question of doing it.

Poverty is created by deficiencies in the institutions that we have built. For example, financial institutions. Financial Institutions refuse to provide financial services to nearly two-thirds of the world‘s population. For generations, they claimed that it could not be done, and everybody accepted that explanation. This allowed loan sharks to thrive all over the world. Grameen Bank questioned this assumption and demonstrated that lending money to the poorest in a sustainable way is possible. Now it is demonstrated that it works better than those banks because in the financial crisis we have seen how other banks are crumbling and how microfinance is thriving. We have no problems whatsoever.

During the current financial crisis, the falsity of the old assumption became even more visible. While big conventional banks with all their big collateral were collapsing, micro-credit programmes which do not depend on collateral, continued to be as strong as ever. Will this demonstration make the mainstream financial institutions change their minds? Will they finally open their doors to the poor people? I leave this question to you.

I am quite serious about this question because when a crisis is at its deepest, it can offer a huge opportunity. When things fall apart, that creates the opportunity to redesign, recast and rebuild. We should not miss this opportunity to redesign our financial institutions. When we are in a financial crisis, let us convert them into inclusive institutions. Nobody should be refused access to financial services. Because these services are so vital for self-realization of human beings, I strongly feel that credit should be given the status of a human right.

Every human being is born into this world fully equipped not only to take care of himself or herself, but also to contribute to the well being of the world as a whole. Some get the chance to explore their potential, but many others never get the chance to unwrap the wonderful gifts they are carrying with them. They die with those gifts unexplored, unwrapped and the world remains deprived of their contribution.

Grameen has given me an unshakeable faith in the creativity of human beings and the firm belief that human beings are not born to suffer the misery of hunger and poverty.

We can create a poverty-free world if we collectively believe in it – a world in which the only place you would be able to see poverty is in poverty museums. Some day, school children will be taken to visit these poverty museums. They will be horrified to see the misery and indignity that some human beings had to go through. They will blame their ancestors for tolerating this inhuman condition for so long.

To me, poor people are like bonsai trees. When you plant the best seed from the tallest tree in a tiny flower-pot, you get a replica of the tallest tree, only inches tall. There is nothing wrong with the seed you planted, only the soil-base that you gave it is totally inadequate. Poor people are bonsai people. There is nothing wrong with their seeds, but society never gave them the proper base to grow on. All it takes to get poor people out of poverty is for us to create an enabling environment for them. Once the poor can unleash their energy and creativity, poverty will disappear very quickly.

Let me return to the current financial crisis. Unfortunately, the media coverage gives the impression that, once we fix this financial crisis, all our troubles will be over. We forget that the financial crisis is only one of several crises that are threatening humankind. We are also suffering a global food crisis, an energy crisis, an environmental crisis, a health care crisis, and the continuing social and economic crisis of poverty. These crises are as important as the financial crisis, although they have not received as much attention as the financial crisis.

Furthermore, the media coverage may give the impression that these are disconnected crises that are taking place simultaneously, just by accident. That‘s not true at all. In fact, these crises grow from the same root and I think it is a fundamental flaw in our theoretical construct of capitalism.

The biggest flaw in our existing theory of capitalism lies in its misrepresentation of human beings. In the present interpretation of capitalism, human beings engaged in business are portrayed as one-dimensional beings whose only mission is to maximize profit. This is a much distorted picture of a real human being. Human beings are not money-making robots. The essential fact about human beings is that they are multi-dimensional beings. Their happiness comes from many different sources, not just from making money.

Yet economic theory has built the whole theory of business on the assumption that human beings do nothing in their economic lives other than pursue their self interests of making money. The theory concludes that the optimal result for society will occur when each individual‘s search for selfish benefit is given free rein. This interpretation of human beings denies the role to other aspects of life –political, social, emotional, spiritual, environmental, etc.

No doubt human beings are selfish beings but we must not forget that human beings are selfless beings too. Yet this selfless dimension of human beings has no role in economics. This distorted view of human nature is the fatal flaw that makes our economic thinking incomplete and inaccurate. Over time, it has helped to create the multiple crises we face today.

Once we recognise this flaw in our theoretical structure, the solution is obvious. We can easily replace the one-dimensional person in economic theory with a multi-dimensional person – a person who has both selfish and selfless interests at the same time.

Immediately our picture of the business world changes completely. We now see the need for two kinds of businesses, one for personal gain, that is, profit maximization, another dedicated to helping others. In one kind of business, the objective is to maximise economic gains for the owners, even if this leaves nothing for others, while in the second kind of business, everything is for the benefit of others and nothing is for the owners – except the pleasure of serving humanity.

Let us call this second type of business, which is built on the selfless part of human nature, as "social business". This is what our economic theory has been lacking.

A social business is a business where an investor aims to help others without taking any financial gain whatsoever. At the same time, the social business generates enough income to cover its own costs. Any surplus is invested in expansion of the business or for increased benefits to society. The social business is a non-loss, non-dividend company dedicated entirely to achieving a social goal.

Will anybody in the real world be interested in creating businesses with selfless objectives? Where would the money for social business come from? I am always asked this question.

Judging by the real human beings I know, many people will be delighted to create businesses for selfless purposes. Some have already created such businesses. I will give briefs on some of them a little later.

Regarding the source of fund, one source can easily be the philanthropy money going for creating social businesses. This makes enormous sense. One problem with charity programmes is that they remain perpetually dependent on donations. They cannot stand on their own two feet. Charity money goes out to do good things, but that money never comes back. It is a one-way route. But if a charity programme can be converted into a social business that supports itself, it becomes a powerful undertaking. Now, the money invested is recycled endlessly. A charity taka has one life, but a social business taka has endless life. That is the power of social business.

Besides philanthropists, many other people will invest in social businesses just to share the joy of making a difference in other people‘s lives. People will give not only money for social business but also they will bring their own creativity, networking skills, technological prowess, life experience, and other resources to create social businesses that can change the world.

Once our economic theory adjusts to the multi-dimensional reality of human nature, students will learn in their schools and colleges that there are two kinds of businesses in the world – traditional money-making businesses and social businesses. As they grow up, they will think about what kind of company they will invest in and what kind of company they will work for. And many young people who dream of a better world will think about what kind of social business they would like to create. Young people, when they are still in schools, may start designing social businesses, and even launch social businesses individually or collectively to express their creative talents in changing the world.

Like any good idea, the concept of social business needs practical demonstration. So, I have started creating social businesses in Bangladesh.

Some of them are created in partnership with large multi-national companies. The first such joint venture with a multi-national company was created in 2005, in partnership with the French dairy company, called Danone. The Grameen-Danone social business is aimed at reducing malnutrition among the children of Bangladesh. Just about fifty per cent of Bangladesh‘s children suffer from malnutrition. The Grameen-Danone Company produces a delicious yogurt for children and sells it at a price affordable to the poor. This yogurt is fortified with all the micro-nutrients which are missing in the children‘s ordinary diet. We put vitamins, iron, zinc, iodine, etc. into the yogurt. If a child eats two cups of yogurt a week over a period of eight to nine months, the child gets back all the micro-nutrients he or she needs and becomes a healthy, playful child.

As a social business, Grameen-Danone follows the basic principle that it must be self-sustaining, and the owners must remain committed never to take any dividend beyond the return of the original amount they invested. The success of the company will be judged each year not by the amount of profit generated by the company, but by the number of children getting out of malnutrition every year.

Many other big companies are now approaching us to create social businesses jointly with us. They want to create joint ventures with Grameen because they want to make sure that social business they do, it is done in the right way. Once they become experienced in social businesses, they will take the concept wherever the need exists.

We have a joint-venture social business with Veolia, a large French water company. Bangladesh has a serious arsenic problem in our world. Almost half of the people of Bangladesh drink arsenic-contaminated water, meaning literally drinking poison everyday. The Grameen-Veolia Water Company was created to bring safe drinking water in the villages of Bangladesh where arsenic contamination of water is a huge problem. Villagers are buying water from the company at an affordable price instead of drinking contaminated water.

BASF is a chemical company of Germany that has signed a joint-venture agreement to produce chemically treated mosquito-nets in Bangladesh as a social business. The BASF-Grameen joint-venture company will produce and sell these mosquito-nets as cheaply as possible to make it affordable to the poorest people. The company will have to be self-sustaining, but there is no intention of BASF taking any profit or Grameen taking any profit out of the company beyond the amount invested.

Our joint-venture social business with Intel Corporation of the USA, Grameen-Intel, aims at using information and communication technology to help solve the problems of the rural poor- for example, by providing health care in the villages by using IT.

Our joint-venture with Adidas, a big shoe and sports company in Germany, aims at producing shoes for the lowest income people at an affordable price. The goal of the Grameen-Adidas company is to make sure that no one, child or adult, in Bangladesh goes without shoes. This is a health intervention to make sure that people in the rural areas, particularly children, do not have to suffer from the parasitic diseases that can be transmitted by walking barefoot.

Grameen-Otto is about to set up a garment factory as a social business in collaboration with Otto, a large chain store and mail-order company in Germany. Profit of the company will be used for the improvement of the quality of lives of the employees, their children and their family members and the poor of the neighbourhood.

As these examples show, social business is not just a pleasant idea. It is a reality, one that is already beginning to make positive changes in people‘s lives.
Many more social businesses are on the way. One attractive area of social businesses will be in creating jobs in special locations or for particularly disadvantaged people. Since a social business company operates free from the pressure of earning profit for the owners, the scope of investment opportunities is much greater than with profit-maximizing companies. Profit-maximizing companies need to be assured of a certain minimum level of return on their investment before they will invest and create jobs. A social business does not need to fulfil such a condition. It can easily invest below that level and go down even to near-zero profit level, and, in the process open up some opportunities for creating jobs for many people which is an exciting area of social business for job creation.
Another area of social business is in afforestation. Forests are being denuded all around the world by individuals, greedy businesses and, in some cases, by Government officials who are paid by the tax-payers to protect the forests. They become the instrument in denuding the forests. This is having a documented negative impact on climate change. Planting trees across huge tracts of land could be an excellent area for social business. This opportunity, we cannot afford to ignore for saving our planet.

Healthcare is another highly potential area for social business. Public delivery of healthcare in most cases is inefficient and often fails to reach the people who need the healthcare the most. Private healthcare caters to the needs of the high-income people. The big empty space between the two can be filled by social businesses.
In Bangladesh, Grameen Healthcare Company is trying to create social businesses to fill this gap in the healthcare system. We are trying to develop a prototype of health management centres in the villages to keep healthy people healthy by concentrating on prevention and offering diagnostic and health check-up services and offering health insurance programmes, etc. We are making efforts to take advantage of the universal availability of mobile phones. We are in the process of working with the leading manufacturers to design diagnostic equipment that can transmit images and data in real time to city-based health experts through the mobile phones.
Grameen Healthcare is in the process of setting up of a series of Nursing Colleges as social business to train girls from Grameen Bank families as nurses.

Bangladesh has an enormous shortage of nursing professionals. The global shortage of nurses is also quite enormous. There is no reason why a vast number of young girls should be sitting around in the villages, getting married and have children while these attractive job opportunities are going unfilled.
Grameen Healthcare is also planning to set up secondary and tertiary health services, all designed as social businesses. To train a new generation of doctors to staff our social business healthcare facilities, Grameen Healthcare wants to set up a University of Health Sciences and Technology.

Many other segments of healthcare are appropriate for building successful social businesses—nutrition, water — which I mentioned — health insurance, health education and training, eye-care, mother-care and child-care, diagnostic services, etc. It will take time to develop the prototypes. But once creative minds come up with the design for a social business and a prototype is developed successfully, it can be replicated endlessly.

Designing each small social business is like developing a seed. Once the seed is developed, anybody can plant it wherever it is needed. Since each unit is self-sustaining, funding does not become a big obstacle.

The world today is in possession of amazingly powerful technology. That technology is growing very fast, becoming more powerful every day. Almost all of this technology is owned and controlled by profit-making businesses. All they use this technology for is to make more money for themselves, because that is the mandate given to them by their shareholders. Imagine what we can achieve if we use the same technology to solve the problems of the people!
Technology is a kind of a vehicle. One can drive this to any destination one wants. Since the present owners of technology want to travel to the peaks of profit-making, technology takes them there. If somebody else decides to use the existing technology to end poverty, it will take the owner in that direction. If another owner wants to use it to end diseases, technology will go there. The choice is ours. Present theoretical framework does not give this choice. Inclusion of social business creates this choice.

One more point. There will be no need to make an either/or choice. Using technology for one purpose does not make it less effective for serving a different purpose. Actually, it is the other way round. The more diverse use we make of technology, the more powerful the technology becomes. Using technology for solving social problems will not reduce its effectiveness for money-making use, but rather enhance it.

The owners of social businesses can direct the power of technology to solve our growing list of social and economic problems, and get quick results.

Once the concept of social business becomes widely known, creative people will come forward with attractive designs for social businesses. Young people will develop business plans to address the most difficult social problems they see around them. The good ideas will need to be funded. I am happy to say there are already initiatives in Europe and Japan to create Social Business Funds to provide equity and loan support to social businesses.

In time, more sources of funding will be needed. Each level of government – international, national, state and city – can create Social Business Funds to encourage citizens and companies to create social businesses designed to address specific social problems such as unemployment, health, sanitation, pollution, old age, drug, crime, disadvantaged groups – the disabled, etc. Bilateral and multilateral donors can create Social Business Funds. Foundations can earmark a percentage of their funds to support social businesses. Businesses can use their social responsibility budgets to fund social businesses.

We will soon need to create a separate stock market for social businesses to make it easy for small investors to invest in social businesses. Only social businesses will be listed in this Social Stock Market. Investors will know right from the beginning that they will never receive any dividends when they invest in
Social Stock Market. Their motivation will be to enjoy the pride and pleasure of helping to solve difficult social problems around them.
Social business gives everybody the opportunity to participate in creating the kind of world that we all want to see. Thanks to the concept of social business, citizens do not have to leave all problems on the shoulders of the government and then spend their life time criticizing the government for failing to solve them. Now citizens have a completely new space in which to mobilize their creativity and talent for solving the problems themselves. Seeing the effectiveness of social business, governments may decide to create their own social businesses or partner with citizen-run social businesses and/or incorporate the lessons from the social businesses to improve the effectiveness of their own programmes.

Governments will have an important role to play in the promotion of social business. They will need to pass legislation to give legal recognition to social business and create regulatory bodies to ensure transparency, integrity and honesty. They can also provide tax incentives for investing in social businesses as well as for social businesses themselves.

The wonderful promise of social business makes it all the more important that we redefine and broaden our present economic framework. We need a new way of thinking about economics that is not prone to creating series of crises; instead, it should be capable of ending the crises once for all. Now is the time for bold and creative thinking and we need to move fast, because the world is changing very fast. The first piece of this new framework must be to accommodate social business as an integral part of the economic structure.

In this context, let me raise another question.

What will be world be like twenty years or fifty years from now? More specifically, what will South Asia be like? It is fascinating to speculate about this. But I think an even more important question is: What do we want the world and specifically South Asia to be like twenty years or fifty years from today?

The difference from the two questions has great significance. In the first formulation, we see ourselves as passive viewers of unfolding events. In the second, we see ourselves as active creators of a desired outcome. I think it is time to take charge of our own future rather than accept our future passively. We spend too much time and talent in predicting the future and not enough on imagining the future that we would love to see. And even so, we do not do a very good job in predicting the future. With all our wisdom, all our expertise and all our experience, we repeatedly fail to imagine the amazing changes that history continues to throw our way.

We never foresee even.

Think back to the 1940s. Nobody then predicted that, within fifty years, Europe would become a borderless political entity with a single currency. Nobody predicted that the Berlin Wall will fall even a week before it happened. Nobody predicted that the Soviet Union will disintegrate and so many independent countries will emerge out of it so fast.

On the technology front, we see the same thing. In the sixties, no one predicted that a global network of computers called the internet would soon be taking the whole world by storm. No one predicted that lap-tops, palm-tops, Blackberries, iPods, iPhones, and Kindles would be in the hands of millions of people very soon. Even twenty years ago, no one was predicting that mobile phones would become such an integral part of life in every single village everywhere.
Let us admit it; we could not predict the world of 2010 even from 1990 – a span of only 20 years. Does this give us any credibility in predicting the world of 2030 from today, given the fact that each day the speed of change of the world is getting faster and faster?

If we have to make predictions, there are probably two ways to go about it. One would be to invite the best scientific, technical and economic analysis in the world to make their smartest 20 year projections. Another would be to ask our most brilliant science fiction writers around the world to imagine the world of
2030. If you ask me who has the best chance of coming closer to the reality of 2030, without pausing for a second I would say that the science-fiction writers will be far closer to the reality of 2030 than the expert analysts.

The reason is very simple. Experts are trained to make forecasts on the basis of the past and present, but events in the real world are driven by the dreams of people, not the past and the present.

We can describe the world of 2030 by preparing a wish-list, our dream wish-list. This wish-list will describe the kind of world we would like to create in 2030. That is what we should prepare for.

Dreams are made out of impossibles. We cannot reach the impossibles by using the analytical minds which are trained to deal with hard information which is currently available. These minds are fitted with flashing red lights to warn us about obstacles that we may face. We will have to put our minds in a different mode when we think about our future. We will have to dare to make bold leaps in our minds to make the impossibles possible. As soon as one impossible becomes possible, it shakes up the structure and creates a domino effect, preparing the ground for making many other impossibles possible.

We will have to believe in our wish-list if we hope to make it come true. We will have to create appropriate concepts, institutions, technologies and policies to achieve our goals. We cannot achieve our wish-list by following the old concepts and old institutions. The more impossible the goals look, the more exciting the task becomes.

Fortunately for us, we have entered into an age when dreams have the best chance to come true. We must organise the present to allow an easy entry into the future of our dreams. We must not let our past stand on our way. Past should not be a trap, past should be a foundation to jump into the future.

Let us dream that by 2030, we will create a well-functioning South Asian Union. There will be no visas required, no customs limiting travels among the South Asian countries. There will be a common flag along side our national flags, a common currency, and a large area of common domestic and international policies.
Let us dream that by 2030, we will make South Asia the first poverty-free region in the world. Let us prepare to challenge the world to find one single poor person anywhere in South Asia.

Let us dream that by 2030, South Asia will set up a reliable state-of-the-art healthcare system that will provide affordable healthcare for every single person.
Let us dream that by 2030, we will create a robust financial system to provide easy access to financial services to every single person in South Asia.
Let us dream that by 2030, the first career choice for every child growing up in South Asia will not be to work for some company but to launch his or her own company.

Let us dream that by 2030, we will have a range of creative and effective social businesses working throughout South Asia to solve all our remaining social problems.

Do all these dreams sound impossible? If they do, that means they are likely to come true if we believe in them and work for them. That is what the history of the last fifty years has taught us.

So, let us agree to believe in these dreams of our future, and dedicate ourselves to making these impossible possible.

Thank you very much.