On endogenous preferences

The other day, I quoted Steven Lukes to the effect that one manifestation of capitalists' power is that voters do not challenge that power. This claim needs substantiating.

Let's start from the reasonable premise that voters do seem content with inequalities of power and income. Why might this be? One possibility is that it reflects a rational, autonomous preference. Maybe inequality is a price worth paying for economic freedom and prosperity, and that if we had a more socialist society people would rebel and choose managerialist capitalism. The other possibility is that contentment with inequality is endogenous - that capitalism generates preferences which help sustain inequality, against the interest of many people.

What's the evidence for this latter theory? A lot  is indirect and suggestive:

 - We know from the work (pdf) of people such as Christopher Hsee and (pdf) Dan Haybron that people's preferences don't necessarily promote their interests; this is the basis of "Nudge". But if our choices of consumer goods and savings can be irrational, isn't it more likely that our voting behaviour will be, given that inattention and ignorance towards politics can be rational?

 - Cognitive biases are ubiquitous, and many of these might bias people towards a greater acceptance of the existing order than is rational.

- We know that peer pressure can influence people's behaviour - even, for example, about which shares they buy. But if our preferences are malleable by our social networks, mightn't they be malleable by other social forces too?

- The function of social norms is to get us to behave in ways that are good for society, but not in our direct material interest. They explain why we don't steal even if we won't get caught, or why we tip in restaurants we'll not revisit. But if norms can restrain the pursuit of our interests in this way, mightn't other norms restrain hostility to capitalism and managerialism?

- We know that capitalism can generate irrationality in one respect; hunter-gatherers are less prone to the endowment effect than modern men. So, could it generate other types of irrationality, such as support for even damaging forms of inequality?

On top of this indirect evidence, we have some laboratory evidence. Jeffrey Butler got people to play an urn-guessing game, and found that people who were paid well for correct guesses thought they were better at guessing than people who were paid badly. This suggests that arbitrary inequality can boost the confidence of the well-off and depress that of the worst off, which in turn can entrench that inequality by giving the rich a sense of entitlement and the poor a sense that they shouldn't upset the apple-cart.

Another experiment was done at the University of Rennes. Researchers split subjects into two groups - advantaged and disadvantaged - and gave the disadvantaged group the chance to destroy some of the advantaged's wealth at a cost to themselves. They found that the subjects did so when inequality was modest, but not when inequality was greater. "The level of conflicts significantly declines with the extent of inequality", they concluded - probably because the disadvantaged become resigned to their fate.

All this is consistent with the Marxian hypothesis that capitalism generates an ideology which helps sustain inequality. And you don't need conspiracy theories or a belief in the power of mass media to believe this.

Granted, it's not proof. And there are other things that explain the weakness of leftist parties - not least of which is the stupidity of so many on the left. All I'm saying is that we should take seriously the possibility that preferences for the existing order are endogenous and not fully rational.

Comments

[Luis Enrique]

Many of these things may be helpful to capitalists, and protect them, but I think you are stretching things to call them manifestations of their power

[Adam Bell]

If we accept that preferences can be irrational, this does not mean they do not carry moral weight. A power structure that generates self-sustaining irrational preferences is not morally suspect unless it can be demonstrated that it also precludes the possibility of rational preferences. One can always rationally prefer irrationality. This is why alcohol exists.

[Boursin]

Missing from the list is potentially the most important of all the reasons for the left's lack of success: wild overestimates as to how far to the left the status quo in one's own society is already right now. Here's one very interesting piece of survey research done in the United States in 2005 (PDF):

http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf

Respondents were asked to choose either the actual wealth distribution of the US or a perfectly equal wealth distribution, i.e. a Gini coefficient of zero. Just 23 % said they'd prefer to have the former in their own society, while 77 % opted for the latter. So when the question is put this way, more than three fourths of Americans are to the left of even Marx! ("From each according to his ability, to each according to his need" - and even this more moderate principle Marx did not endorse, but instead banished it in the Critique of the Gotha Programme to a vague, as yet unseen future.)

When the competing choices were the actual wealth distributions of the US and of the more mildly egalitarian (but stereotypically social-democratic) Sweden, the already small minority of 23 % preferring the former shrank even further, to just 8 %.

BUT if the same respondents had instead been asked whether they believe the US to be a better country to live in than Sweden, without giving them the quantitative data on their actual respective income distributions, many would start spouting bromides about the US being the greatest country in the world and about Sweden being a godless socialist hell-hole.

In other words, many of those who vote for the right do so only because they mistakenly believe the particular right they vote for to be far, far more to the left than it is; while there are no corresponding right-wing voters (or only an insignificantly tiny number) who mistakenly vote for the left because they overestimate how far to the right it is.

It would be interesting to see similar research from the UK.

[JStC]

"preferences for the existing order "...is their another "order" to turn to?....seems the preferences have set preferences for the ones that have no other set up preference to turn to...

[andrew]

I think you may be anthropomorphising the effect.

Rain is not an expression of the earth's power, it is an effect of the operation of the system.

Not many (if any) capitalists takes an action with the intention of preserving inequality - I may be wrong, but I think they would say they are just following the dictates of the market.

To be fair, you do tread around the concept - using the word endogenous, but personalising it and then labeling the group behavior as 'endogenous and not fully rational' only takes you so far.

I can think of 3 reasons

1 - Under non-capitalist systems, inequality is actually greater

2 - Under non-capitalist systems, the individual may have a lower standard of living.

3 - You do not trust those who say they wish to make this change for you.

Not saying these are true or not, just that if you believed them - and there is no evidence to the contrary presented to you - your preference is rational.

[Matthew]

Voting behavior is basically always irrational, even when all voters are individually perfectly rational. This is the Arrow Impossibility Theorem. One implication of the theorem is that a polity's revealed preferences can be manipulated by altering the voting system--pooled elections generate different preferences than run-off elections. Multi-party systems generate different preferences than two-party systems. Single-member districts generate different preferences than proportional representation. That is, whoever designs the election system also decides the outcome of the election (within reason--optimal voting strategies will rule out extreme candidates).

This also applies within the legislature. Consider for example efforts to amend Obamacare in the US so that it no longer included the insurance mandate. Voting rules in congress let committee chairs hold votes on the bill as a whole without voting separately on each line of the bill. Had the mandate portion of the bill been held to a vote separately, it would clearly have failed to pass, and without that provision, the Obamacare bill as a whole would have failed to pass as well. But since the voting system was designed to exclude the possibility of voting on the mandate separately from the bill, it passed.

So the simple answer is that polities support capitalism because capitalists designed the voting rules.