Evolution of Exchange

I am reading Ludwig von Mises’ Human Action (1949; rev ed. 1963 pages 194-5) at present and from my notes I have a reference to something that struck me at the time of reading it as rather not quite right, the memory of which was sparked by yesterday’s debate about Fehr’s Ultimatum Game.

I have already mentioned in an earlier Blog that I am not entirely sold on the idea that from logical deduction we can derive complete and accurate conclusions about all human behaviour, especially when we are treating with human social evolution, and that it is ‘safe’ to ignore induction as a method of analysis (I may have taken this wrongly from what I have read and am ready to stand corrected). Economists should know that we occasionally should ‘look outside study windows’ to check we are not fantasising about the real world, or that we have not made an inference from false or incomplete premises. I am always mindful of Galileo’s empirical test at Pisa of the deduction that objects falling under the influence of gravity did so in relation to their mass.

Here are the relevant passages from Mises:

“The exchange relation is the fundamental social relation. Inter-personal exchange of goods and services weaves the bond which unites men in society. The societal formula is: do ut des. Where there is no intentional mutuality, where an action is performed without any design of being benefited by a concomitant action of other men, there is no interpersonal exchange, but autistic exchange. It does not matter whether the autistic action is beneficial or detrimental to other people or whether it does not concern them at all. …

… Hostile aggression was a practice common to man’s nonhuman forebears. Conscious or purposeful cooperation is the outcome of a long evolutionary process. Ethnology and history have provided us with interesting information concerning the beginning and the primitive patterns of interpersonal exchange. Some [Mises refers to Gustav Cassel, The Theory of Social Economy, 1932] consider the custom of mutual giving and returning of presents and stipulating a certain return present in advance as a precursory pattern of interpersonal exchange. Others consider dumb barter as the primitive mode of trade. However, to make presents in the expectation of being rewarded by the receiver’s return present or in order to acquire favour of a man whose animosity could be disastrous, is already tantamount to interpersonal exchange. The same applies to dumb barter which is distinguished from other modes of bartering and trading only through the absence of oral discussion.

It is the essential characteristic of the categories of human action that they are apodotic and absolute and do not admit of any gradation. There is action or nonaction, there is exchange or no exchange; everything which applies to action and exchange as such is given or not given in every individual instance according to whether there is or there is not action and exchange. In the same way the boundaries between autistic exchange and interpersonal exchange are sharply distinct. Making one-sided presents without the aim of being rewarded by any conduct on the part of the receiver or of third persons is autistic exchange. The donor acquires the satisfaction which the better condition of the receiver gives to him. The receiver gets the present as a God-sent gift. But if presents are given in order to influence some people’s conduct, they are no longer one-sided, but a variety of interpersonal exchange between the donor and the man whose conduct they are designed to influence. Although the emergence of interpersonal exchange was the result of a long evolution, no gradual transition is conceivable between autistic and interpersonal exchange. There are no intermediary modes of exchange between them. The step which leads from autistic and to interpersonal exchange essentially was no less a jump into something new and essentially different than was the step from automatic reaction of the cells and nerves to conscious and purposeful behaviour, to action.”

It is most unlikely that there was a ‘jump’ from non-exchange to exchange in the social evolution of human society, as stated firmly above. There were gradations brought about changing circumstances in hominid groups after the speciation from the common ancestor. These were gradual and not sudden. The initial speciation did not change all characteristics of the first hominids from the common ancestor of the hominid and the chimpanzee species. Given that natural selection operates on the individual and not the species a sudden jump seems most improbable. A change in one aspect of an individual’s ‘DNA’ took time to spread through its children and their children, and was reinforced over generations and built upon until a separate species was formed. The original biological change did not need to have an immediate and direct affect on the social change in behaviour.

Looking at exchange behaviour, I mentioned the discretionary grooming conducted by chimps on those who groom them in return and that the instances of sequential reciprocal grooming may be separated by many days, and not necessarily conducted by immediate return in the same session. I believe something similar occurs with certain bats. Taking the full cycle of the reciprocal exchanges, the groomers expect a return of grooming from those they groom, otherwise they do not groom again; it appears there is ‘no such thing as free groom’.

Biological evolution in the hominids led to certain bodily ‘gateways’, one of which was the growing brain size of the hominid species (I believe about 18-20 separate hominid species have been identified so far from fossil evidence). Hominid brains grew from a chimp size of c.340cc towards the human brain size of 12-1,400cc in several million years (I am speaking from memory here; my original ms is in another place). This had profound social effects, the main ones arising from the need to increase food intake to feed the ‘ravenous’ energy needs of the growing brains and a longer period of baby growth outside the womb while the brain and the skull grew. This altered hominid social relations, undermined the monopolistic sexual dominance regimes of alpha males over the band’s females (and males). It also changed female menstrual cycles, and had other sex related consequences, of which upright walking in place of a crouching gait also contributed.

For males the ‘party was over’. Up to then, females fed themselves and the children; males fed themselves. This arrangement changed and where it did pairs in the bands, and from this the bands themselves, continued to multiply; where it did not the band suffered local extinctions. That most hominid species did not adapt explains their extinctions, even after a million years plus of their successful terms as viable species (humans have clocked up only around 200,000 years so far).

The first shift in the non-exchange relationships was to the implicit exchange of food for the band’s population for general male, as opposed to minority alpha male, access to females during this evolutionary phase which lasted several million years. The exchange (crudely of subsistence for sex) was implicit because access was immediate but reciprocation in food supplies was longer term. This raised problems of ‘defections’, which could vary in degree and scale from individually poor, intermittent and non-existent, productivity on behalf of the females and children, and other males, in the band to below average ‘efforts’ compared with the efforts of others to comply implicit deal. Add in the usual inducements to grievances from jealousies, perceived slights and other sub-norm behaviours, we need not assume ‘harmony’ or ‘golden ages’. The ‘defection’ problem would be exacerbated in periods of scarcity (over the period, there was more than one ice age and its consequences to contend with) and where there was no enforcement of the ‘deal’.

As the burden of gathering-scavenging- hunting (itself a multi-million year process of change) grew so did enforcement of the exchange, by the other males in the band on those males that enjoyed access but were not active enough in supplying food. As the scale of scavenging, and later the hunting of bigger game intensified, it increased the degree of co-operation required to secure the meat protein in the band’s diet, causing the exchange to become less implicit and more explicit.

This evolved towards the conditional proposition: ‘If you have access, then you must supply food’, or, in modern terms: ‘If you supply food then you may access.’ Alongside these exchange relationships, ‘gifts’ between bands, and, eventually, trade as we would recognise it, appeared. Of course, in the picture there was also violent plunder, vendetta, and the usual interpersonal violence we find in all human groups.

We should not forget that a person, of unknowable motivation to others, who donates a favour (chimps grooming; hominids hunting small game), to a second person may affect the thinking of the receiver, who for whatever reason, accident or positive motivation, reciprocates and discovers that the reciprocated favour is returned, again without any conscious intention, may start of a cycle of reciprocation. The ‘autistic’ action generates realisation that the scope for mutually beneficial action can be opened. With growing brain size (an imperfect surrogate for intelligence) it helps to process this realisation. If chimps could do this, so could the more intelligent hominids.

Yesterday’s account of implicit reciprocation in the exchange of favours dealt with the division between giving without expected favours returning and giving with unenforceable expected favours returning. The motives of such actions, of their nature are discernible before the return or non-return, only afterwards. Judge people on what they do, not on why they say they do it.

What Mises calls ‘autistic’ exchange becomes ‘interpersonal exchange’ in the disappointment (anger) at the expectations of the implicit exchange being frustrated. That it became ‘socially necessary’ for the survival of individuals that their increased appetites were met by implicit exchanges becoming enforced was a change in behaviour of immense significance. Interpersonal exchange evolved gradually; where it faltered, or never started, it caused the elimination of those individuals and groups that failed to adjust, assisted by thousands of years of repeated ice-ages that added selection pressures on food subsistence and sexual access, which had unforeseen (at the time) influences on reproductive success.

Bands of individuals, who lived long enough to breed and to bring sufficient of the children to adulthood, survived extremes of climatic change; the others didn’t.

The rest, as they say, is (our) history.