#19 An embedded economy

Hi all,

We almost have a new cabinet here in the Netherlands. "Almost" because they still need to find the individuals who will take on the roles, including a prime minister, and they must delve into the details. This is a prelude to the European elections and reflects trends in other countries: a shift towards extremes, backlash against sustainability, populism, nostalgia for a past that never existed, and a conservative agenda.

If we examine the policy programme titled " Advocates for global isolationism – a surprising stance for a country that built its fortune on trade! It includes an extreme anti-migration agenda, significant support for the agricultural lobby (particularly powerful in the Netherlands), and reduced climate change ambitions. Additionally, the budget is based on weak foundations, such as plans to cut more than 20% of civil servant positions and reduce contributions to the EU, alongside legally dubious claims, whether under European law or Dutch law. In short, it consists of 26 pages of illusions.

But I think it does not matter for the biggest populist party, PVV. If they cannot execute the policies on migration or agriculture, they will point the finger at Brussels: ‘They are not willing”! A populist doom loop is in the making.

These policies mistakenly put two things at the core: self-interest and a false idea that we can return to the past. If everything were better, then these two things would be so against what we need to do: look at the future and how we can improve our future in times of polycrisis. We need to work together and understand our collective interests and influence, with all we have and what all we are, to achieve a positive future.

Self-interest drives people to do things as well as possible, to create products that people want to buy, leading to prosperity and progress. A society is the sum of all individuals. Thus, according to economists, collective prosperity is also essential. This individualistic view of humanity is seen everywhere: this is our neoliberal meritocracy, the idea that we succeed on our own and can keep everything or face misfortune and must deal with it ourselves. And this is what we see in the overdrive into neoliberal populism.

It has also become crystal clear that pursuing self-interest alone cannibalizes the collective. This article by Dennis Snower and David Sloan Wilson gives an excellent description of the difference between the individual ‘pursuit of happiness’ and collective well-being.

Self-interest is stronger than the collective within a group. Success for the individual insect, mammal, or reptile is a matter of success. However, at the level of society, altruism is needed between groups. Otherwise, self-interest cannibalizes cooperation, collective interests, and nature. This leads to inequality, the collapse of ecosystems, and polarization.

Something happened during the evolution of our species that resulted in a quantum jump of cooperativity. That “something” was in large part social control, meaning the capacity of members to reward the prosocial behaviors and punish the antisocial behaviors of other members. Our distant ancestors found ways of suppressing bullying and other forms of disruptive self-serving behaviors within small groups (Boehm, 1993, 1999, 2011). Increasingly, this is being studied as a form of self-domestication, similar to the domestication of our animal companions

We seem to have forgotten this. Humanity's success depends on our ability to cooperate and offer each other something. That's what distinguishes us from other species. Our individual pursuits are embedded in society: sometimes, group norms restrict our aspirations for the group's success. A prosperous society is also embedded in nature: respecting planetary boundaries and regenerating nature—an embedded, restorative economy.

We don’t see that back in policy. While the urgency increases, the effects of Ecosystem Tipping Points might be disastrous—or, at least, huge (more on this paper below).

By now, almost everyone is aware of these collective problems. However, our reflex is to achieve this by seeking an ambitious job or adapting our lifestyle. The individual who ‘must make a difference’, individual morality. Conversely, those who want to make the world more sustainable are held accountable for unsustainable behaviour.

A fundamental misunderstanding. Our society is not made up of just individual 'I's; it consists of us in networks, communities, clubs, and like-minded groups. We are merely the smallest unit of the economic structure, embedded in social networks and based on nature. As fathers or mothers, we are children, citizens, neighbours, employees, entrepreneurs, consumers, employees, and voters. And in all these roles, we can influence others through our choices. But not only from our contributions. It is the shaping of social influence through groups in the different roles we have.

Understanding the difference between the individual and the collective is crucial to understanding what everyone can contribute. We can vote for a party that helps us realize our ideals. We can help others. We can take care of ourselves and our loved ones. We can try to realize dreams with others. And sometimes, we can also make a difference through our work if we have the luxury of choosing a job and not just trying to make ends meet.

That is also how we can solve climate change, for example, by doing things differently in all those roles until a critical mass becomes the new norm: a social tipping point.

We know that this is not going by itself. But the idea is that by ‘social norming’, society changes: you don't have to convince everyone to let, from then on, societal norms (peer effects) do the rest. There is also a tendency to overuse and overstate the idea. Recognizing and avoiding these patterns of “seeing the world through tipping point glasses” is essential.

There is evidence that climate action can lead to tipping points (see here a post where I summarise two articles), but it is insufficient to trigger widespread adoption. Other factors, such as technology, infrastructure, and supportive policies, play pivotal roles. Once the tipping point is crossed, peer influences amplify the adoption rates, driving a self-sustaining loop of acceptance and further adoption.

Another question is what part of the population is needed. Of course, there is not one answer. Some people say it is 25% (referring to this research). Still, it depends on what part of the transition, the environment, the effectiveness of peer pressure, sustainable behaviour versus the use of technologies, etc.

It's not about what we do right or wrong as individuals. It's about doing things well together. And that can only happen if we occasionally subordinate our self-interest. And that starts with those who now have the luxury of more than enough.

But the crux is that everyone, in every role, can contribute. By what you buy. How much did you buy? What you vote for. For what you feel responsible in society. Which bank do you use, or how do you go on vacation? And it's certainly not just about individual action. It's about you as part of the system. By changing your consumer behaviour, you inspire others and expand the market for more sustainable products. However, by your voting behaviour or starting a care cooperative with others, you also help change the system, bringing tipping points closer. So it's always an interplay between changing the system, what the government does, the rules, norms, habits, and your behaviour. Only some people must or can lead the way. But everyone can contribute.

I don't think everyone can contribute equally to a better world, and I don't think everyone always makes the right choices. It's a misunderstanding to think everything starts with the individual. I often end up in discussions.

“Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary."

For the rest of the article, see my substack