Banks gone bad: Our evolved morality has failed us
25 March 2013 by Christopher Boehm
We seem to be unable to punish bankers for their scandalous behaviour. That's because our moral instincts can’t cope, says a professor of biological sciences and anthropology
Why is it so hard to punish bankers for their scandalous behaviour? Have our evolved moral instincts failed us?
ROB a bank and you risk a long stretch in jail. Run a bank whose dubious behaviour leads to global economic collapse and you risk nothing of the sort, more likely a handsome pay-off.
Illegal and dangerous mistakes associated with the financial industry have caused serious harm to US and world economies. That is beyond doubt. And the scandals keep coming – rate rigging, money laundering, mis-selling and sanctions busting. The wider backlash against the industry shows no sign of easing.
So given the scale of damage and public anger, fuelled by the industry's bonus culture, it is curious that those responsible have largely avoided punishment in the traditional judicial sense, despite the clamour for it.
That we so want those involved to get their just deserts has its roots in ancient human forms of social control, which led to our modern sense of morality.
In their rudimentary, hunter-gatherer forms, crime and punishment surely go back for tens of millennia. The case has been made that by 45,000 years ago, or possibly earlier, people were practising moralistic social control much as we do.
Without exception, foraging groups that still exist today and best reflect this ancient way of life exert aggressive surveillance over their peers for the good of the group. Economic miscreants are mainly bullies who use threats or force to benefit themselves, along with thieves and cheats.
All are free-riders who take without giving, and all are punished by the group. This can range from mere criticism or ostracism to active shaming, ejection or even capital punishment. This moral behaviour was reinforced over the millennia that such egalitarian bands dominated human life.
Then around 12,000 years ago, larger, still-egalitarian sedentary tribes arrived with greater needs for centralised control. Eventually clusters of tribes formed authoritative chiefdoms. Next came early civilisations, with centrally prescribed and powerfully enforced moral orders. One thing tied these and modern, state-based moral systems to what came before and that was the human capacity for moral indignation. It remains strong today.
So there is an inevitable outcry when bankers seem to "get away with it", offending this instinctive moral corrective sense.
And ultimately, such public opinion should strongly influence how we police fiscal deviants – but there are complicating factors that suggest this instinct is being undermined when it comes to taming the most harmful behaviour in the banking world.
Firstly, if popular morality has from ancient times been about protecting individual interests from damage through social predation, we must ask some questions. What happens when lawbreaking becomes embedded in large, hard-to-understand economic systems, and when the immediate damaging consequences seem to be diffuse and institutional, rather than direct and personal?
There is an obvious disconnect between what takes place in a small band, in which moral outrage leads to hurtful punishments that fit with hurtful crimes, and a very large system of international finance in which the negative consequences are so much less direct and the power to deter gets lost in the process.
To this we must add the fact that the US democratic system of popular representation, and to a degree that of other nations, is compromised by lobbying that too often amounts to institutionalised bribery. Reform is unlikely because the heavily lobbied politicians we elect are in charge of both our electoral system and, to an extent, our system of justice.
The result is that lobbies often trump what we fondly refer to as the people's will, as long as really serious, electorally significant moral indignation in the populace can be avoided. Banking institutions loom large on the lobbying stage. A 2009 report from the International Monetary Fund concluded that lenders who lobbied most were those engaged in riskier practices.
Add in our long-standing tradition of coddling white-collar offenders whose acts seem to impact only on corporations, and the sheer complexity of judging the economic consequences of errant behaviour, and maybe we can better understand why moral outrage doesn't translate into action.
Ultimately we are still left with what to do about this, how to regulate a free-market economy to deter behaviour that causes major fiscal problems. Morality aside, economists learned from the Soviet Union that excessive regulation leads to gross economic inefficiency, and most people in capitalist economies believe in having sensibly but minimally regulated economies that largely organise themselves.
Modern democracies are quite similar to egalitarian hunting bands in that moralistic public opinion helps to protect populaces against social predation, and dictates much of social policy. In a sense, the Founding Fathers were brilliant in creating a larger-scale system, one that basically guarantees personal autonomy yet permits enough centralised control to run a much bigger ship.
However, the sheer scale of society, combined with the internationalisation of business, has produced cognitive challenges that must, in an age of increasing manipulation by lobbyists, be met by ordinary voters. Fortunately, voters don't always follow the political advertising money.
Simplistic solutions, such as criminalising any financial rule-breaking that leads to serious social harm, would provoke much debate. What is beyond debate is that in the case of major corporate crimes an ancient approach to making justice serve the greater good is creaking and groaning, and that new answers must be sought.
Christopher Boehm is author of Moral Origins (Basic Books) and professor of biological sciences and anthropology at the University of Southern California
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