Lots of talk about free markets in today's NY Times. What is the relationship between ethnicity and free-market democracy? What is the relationship between religion and capitalism? And what can the Prisoner's Dilemma teach us about all of this?
On the Dark Side of Democracy profiles Professor Amy Chua's belief that so-called "free" markets and democracy are not the cure-all Western conservatives promote them to be.
All too often, she says, bringing free markets and elections to developing nations leads not to stability or prosperity but to hate-mongering, discrimination and even genocidal violence.
The idea that political and economic liberty could trigger such atrocities is heretical to many Western liberals. That, Ms. Chua says, is because people here are blind to ethnicity.
....As she states the case in her recent book, "World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability"(Doubleday, 2003): "Markets concentrate wealth, often spectacular wealth, in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority. In these circumstances the pursuit of free market democracy becomes an engine of potentially catastrophic ethnonationalism." And this, she adds, is precisely what is happening today in Indonesia, Sierra Leone, Zimbabwe, Venezuela, Russia and the Middle East."
On the stupid side of academia, you have two Harvard sociologists who contend that religion affects the economic prosperity of certain countries because "What really stimulates economic growth is whether you believe in an afterlife — especially hell." Religion is a significant factor in the running of a capitalist economy, no doubt, but not because of the contents of its belief system, as these sociologists believe:
"Our central perspective is that religion affects economic outcomes mainly by fostering religious beliefs that influence individual traits such as honesty, work ethic, thrift and openness to strangers," the researchers, Robert J. Barro and Rachel M. McCleary, wrote in a recent issue of American Sociological Review. (They also happen to be married.) "For example, beliefs in heaven and hell might affect those traits by creating perceived rewards and punishments that relate to `good' and `bad' lifetime behavior."
....As the couple began their study, Ms. McCleary said, it was clear that the widely discussed secularization thesis — the idea that a country becomes more secular as it becomes richer and more industrialized — did not apply to the United States, one of the most religious nations in the world.
And over the last 30 years, many East Asian countries, including Malaysia, Singapore and South Korea, have experienced both rapid economic growth and the spread of Christianity, Mr. Barro said.
It's only late in the article that the more salient feature of this research is noted:
But one of the major challenges to such research is that countries that vary in their religious beliefs and practices also vary in ways that have nothing to do with religion, said Paola Sapienza, a professor of finance at Northwestern University. "Are you really picking up religion or something that correlates with it, like certain laws or social and economic institutions?" she asked.
The truth about the spread of religious attitudes is in Sapienza's study:
Last year, in the Journal of Monetary Economics, Ms. Sapienza and her colleague Luigi Zingales, at the University of Chicago, and Luigi Guiso, at the University of Sassari in Rome, published a paper that did not compare countries but looked at the relationship between religious beliefs and the attitudes shown to foster economic growth. "On average," they wrote, "religious beliefs are associated with good economic attitudes, where good is defined as conducive to higher per capita income."
But that study found that more religious people were also less tolerant of other races and nationalities and had more negative attitudes toward women. The study based its findings on World Values Surveys data collected at the University of Michigan.
The Harvard sociologists were trying to spin their data to suggest that religion produces "positive" attitudes related to economic growth, but this presumes that there is some correlation between a person's "honesty" and "thrift" and a person's religious beliefs, and it presumes the definition of "good" is a consequence of "higher per capita income." They trumpet belief in "heaven" and "hell" as good things because these beliefs may modify a person's behaviour, convince a person to work hard and tell the truth.
The General thinks religious belief is conducive to capitalist growth because both enterprises require the mass of adherents to believe in the righteousness of suffering. Victory through suffering, is the Christian mantra. Christianity convinces the poor to work at Denny's 40 hours per week and to accept the malicious governance of their corporate overlords because, well, God wanted it this way. Dignity in suffering. Just keep going to church and everything will be alright. Your victory is in the next life, so don't worry about the shitty conditions of this one. Instead of revolting, forming unions, doing something, most people sit back and take the abuse, and I think this is because religion convinces them that there are more important things than, say, better working conditions or higher wages. Important things like heaven and hell and other such nonsense.
Notice how the Sapienza research shows that religious people are less tolerant of other races, nationalities, and have negative attitudes towards women. That kind of dogmatic intolerance is what makes for a good capitalist, someone who can reduce the world (though it resists such reduction) to a simple formula of supply and demand, or good and evil, and then justify every unethical outcome (sweatshops, pollution, degradation of the environment, war over oil) as just a necessary evil of man's dominion over the earth, or just a necessary evil in the fight against... evil. Capitalism is not based on "justice for all" but on an inherent inequality, a disparity that generates profit. It's the most fundamental concept in capitalism: Somebody (actually, many people) has to work for less than their work is worth. The intolerance of religious people seems well suited to the capitalist spawning of inequality.
Look to the "prisoner's dilemma," a classic dilemma in game theory, for the central reason that religion works so well for capitalism. The prisoner's dilemma illustrates the conflict between individualistic and collective behaviour. Two men are arrested for the same crime, and interrogated separately. What should they do? Rat each other out? If prisoner A blames prisoner B for the crime, and prisoner B blames prisoner A, then there is no net gain. If prisoner A says nothing and prisoner B says nothing, then there is a slight advantage to both that they will not be convicted of the crime. However, by not saying anything, one risks being blamed by the other (and saying nothing in one's defense): This is the worst outcome and the best outcome.
In other words, is the individual best advantaged by selfish or unselfish behaviour? The best outcome for either prisoner would see one guy act selfishly (blame the other) and the other guy act unselfishly (say nothing). The first guy gets away because the second guy didn't say anything, he acted altruistically, and the first guy did, he acted selfishly. The lesson here is: Act selfishly and convince the other(s) to act unselfishly. This is the best outcome for you. Naturally, both prisoners know this, and so they can sabotage each other by both acting selfishly.
What does this have to do with religion? Well, while the agnostic rich people who run the country act in their own self-interest, they also convince the majority of poor people to act unselfishly, primarily by getting poor people to embrace religion and nationalism. Go to Iraq and risk your life to protect the American way of life. What they really mean is, Go to Iraq to protect my precious oil and power. The lesson of the Prisoner's Dilemma is: Convince everyone else to act unselfishly. But be as selfish as you can be. That's good capitalism.
2:43:52 PM 
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