Capitalism: It's Nice!

These findings have been rolling in over the last half-decade or so: democratic market cultures produce a tendency to cooperation.  Here's more:

Researchers use economic games to investigate how people cooperate in real-life. Now a team led by Benedikt Herrmann, at the University of Nottingham, have identified striking differences in the way university students from different countries play one such game known as The Public Goods Game. Compared with students from developed Western nations, students from less democratic countries like Saudi Arabia, Oman and Belarus tended to punish not only free-loaders, but also cooperative players, with the result that cooperation in their groups plummeted.
[…]
In a commentary on the findings, published in the same journal, Herbert Gintis of the Sante Fe Institute, said the results challenge the way people have tended to view capitalist democracies. “The success of democratic market societies may depend critically upon moral virtues as well as material interests, so the depiction of civil society as the sphere of 'naked self-interest' is radically incorrect,” he wrote.

All this should not be surprising. People in places that got rich by doing more than finding useful stuff in the ground got that way by getting good at cooperating.

14 Replies to “Capitalism: It's Nice!”

  1. Or as I wrote, the typical Congress person has a strong incentive to do things that he or she thinks will be good for his or her district and absolutely no incentive to think about (much less do things) for the world beyond. When you put 435 (or 255) of these similarly incentivized individuals together in a room, you don’t magically wind up with a macroeconomist who has an incentive to care about “fiscal stimulus.”
    http://ipeatunc.blogspot.com/2009/02/channel-fog-thickens-continent-cut-off.html

  2. Straight away – this is perfect. Came here via the Corner, and am grateful for it.
    The juvenile level of discourse about economic cause and effect has been jarring, though predictable. It seems that every time I hear something utterly nonsensical, irrelevant and/or buffoonish about the recession from my lefty friends, they are repeating something they read from Krugman.
    Paul, dude, go back to Enron. Oh … right …

  3. Krugman leaves his textbook theory untouched and simply tries to win the shoutfest
    Or, his political passion displaces his economic thinking. He’s a brilliant economist, but the purest of political hacks. When he’s writing about something that doesn’t fire up his political hindbrain, he’s fabulous; otherwise he’s unhinged.

  4. I admit it’s fun to call Paul Krugman names but it doesn’t prove anything — one way or the other.
    To answer your question: “But is there any reason based in up-to-date economic theory to believe that this trillion dollar deficit-spending bill is not, as Barro says, garbage?” Yes, there is. Take another look at the interview you link to where Barro is asked “What would you say is the best empirical evidence there?” He explains that tax cuts worked in the past and then he says “I’m the middle of a study where I am trying to estimate this overall, going back to 1913 — sort of constructing some measure of the overall effect of the tax rate at the margin, at the moment. I’m just looking at that now, actually…” Then when Baro is asked what kind of multiplier value on a dollar [of stimulus] he would expect, Barro doesn’t give any numbers but says: “Well both things, but here I’m talking about the tax rate stuff. Get some measure of the effect of marginal tax rate that comes from the government — federal, state, local. And then you can see what it looks like going down or going up and how the economy responds. And then, in addition to that, the government might be spending more or less money […]”
    Maybe the interviewer didn’t grill Barro hard enough but it just dosen’t look like Barro has the numbers to claim that “incentive” tax cuts are x% better than “silly” tax cuts or increased government spending. Perhaps he will when he finishes his study but that’s not much use right now.
    Also, what’s so terrible about just “improving our odds”?

  5. Deleted by NYT blog moderator:
    your comment is awaiting moderation.
    Paul –
    The problem with posts like this — as opposed to your (increasingly pertinent) wonkish posts and the occasional more or less neutral factual posts — is that it erodes your audience. Pointlessly. And at moments like this, the only relevant audience is the Congress on both sides of the aisle.
    Your role in all this is to provide the best possible economic analysis. To clarify confusions. To interpose inconvenient facts. Etc. (If you want a different role, you should ask Obama for a job.)
    Every time you post on this blog, you ought to ask yourself: If Keynes found himself in my position today (or Samuelson or Solow, etc.), what would they feel compelled to say. And what would he (or they) resist saying.
    To put it some entirely different way: Posts like this cheapen the brand. Why play club basketball with Galbraith when you can play in some other better league?
    Affectionately,
    Old friend

  6. What’s funny is this, from a recent Krugman post quoting the Center for American Progress: “The Senate compromise recovery and reinvestment legislation provides for 12 to 15 percent fewer jobs created or saved than the House-passed Recovery and Reinvestment Act despite costing slightly more. The House-passed legislation creates or saves between 430,000 and 538,000 more jobs than the Senate compromise.”
    How on earth can anyone claim to know those figures so precisely? I want the people producing those figures to show proof that as of 1999, their models predicted the financial devastation that we’re seeing now. No such proof that you knew it back in 1999? Then quit pretending that you have a crystal ball.

  7. Krugman’s reputation in the area of macroeconomics is a sham. He spent the 2001-2004 period warning about deflation, a period during which the Fed flooded the economy with liquidity, commodities and real estate skyrocketed and the stage was set for what we are experiencing right know. Krugman’s deflation hysteria contributed to create the climate in which Greenspan’s and Bernanke’s (helicopter Ben, “savings glut” Ben) dovishness took hold. It was only in 2005, after the 2004 election, and when the writing was already on the wall, when he came out with a column saying that the Fed had solved the popping of one bubble (the dot com) by creating another (real estate). That column is his claim to having been right all along, although it is inconsistent with his stated Keynsian beliefs (being consistent with what the Austrians had been saying since the mid 90’s instead), and completely at odds with his position during the 2001-2004 period.
    Krugman’s claim to authority must be challenged!!! Forcefully!!!

  8. Krugman understands that policy is largely determined by the outcome of the public opinion shoutfest. Yet this recognition seems to have no effect on Krugman’s ideas. Rather than bring inside his models disagreement over economic theory and the lack of political incentive to faithfully apply them, which would lead him to radically revise his prescriptions, Krugman leaves his textbook theory untouched and simply tries to win the shoutfest.
    And this wrong, why? If you are convinced that your policy ideas are sound, and the only way to get them adopted is to win the shoutfest, why shouldn’t you try to win the shoutfest?

  9. Boilerplate anti-Krugman. Starts by saying ‘he is shrill,” repeat several times, and end with a significant elaboration such as he is ‘freaking” shrill. Laughs and pats on the back all around.

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