Antara Haldar highlights a potential institutional advantage of developing countries, shows how the hesitation to appeal to voters’ emotions is putting progressives at a disadvantage, considers where the economics discipline is headed, and more

Project Syndicate: In February, you suggested that UK Prime Minister Boris Johnson’s attendance at parties at 10 Downing Street during pandemic lockdowns could seal his political fate. While Johnson survived a recent no-confidence vote, about 40% of Conservative lawmakers voted against him, with many citing the public’s loss of trust in his leadership. Is that loss of trust limited to Johnson, or does it have broader institutional repercussions? Is this scandal good or bad for the rule of law in the United Kingdom (the weaknesses of which you highlighted back in 2019)?

Antara Haldar: I’ve just been reading a book called Chums, by Financial Times journalist Simon Kuper, about the Bullingdon Club, an exclusive drinking society at Oxford that gave us Brexit and other national and international delights. Kuper does a great job of chronicling the sense of impunity – and the associated disdain for the “common” person – that is all too common among English elites.

But, while these elites might be able to get away with bending the rules in normal times, there are bound to be consequences when the majority is sacrificing as much as it did during COVID-19 lockdowns, and the disparity with the behavior of the elites is so stark. It has been gratifying to witness Johnson’s popularity wane, as people have woken up to the extent of this divergence.

Johnson is a problem in his own right, but his behavior – and the backlash against it – is symptomatic of a deeper issue: the system no longer serves the people. Rejecting Johnson alone is therefore not enough. Though any development that shakes people out of their apathy is good, lasting institutional change depends on whether people embrace civic participation – the true elixir of democracy. In other words, whether the “Partygate” scandal is a boon or a blight for the rule of law depends on what comes next.

PS: The United States has also seen major affronts to the rule of law in recent years. In discussing both the leaked Supreme Court draft majority opinion to overturn Roe v. Wade – which has now been become an official ruling – and Partygate, you highlighted the moral dimension of the rule of law, noting that “the purchase that rules have on behavior depends on people identifying with the rules’ moral content.” How should this relationship between rules and morals inform efforts to strengthen the rule of law and build effective institutions in the developing world?

AH: I believe that moral sentiment is the oil that lubricates the wheels of our institutional machinery. Two key observations follow from this. The first is that institutional transplantation cannot work, unless differences of perception (how individual actors respond to institutions at a cognitive level) and context are explicitly addressed. For example, formerly colonized countries or enslaved communities are going to view the law – which underwrote their subjugation – very differently from those who have historically been empowered by the law.

The second observation is that the types of “social capital” that are plentiful in the Global North are very different from those in the Global South. The former remains relatively rich in formal institutions (like legal systems), despite recent upheaval, whereas the latter has much more tightly knit communities and moral norms. If legal and other institutions get better at tapping into these cognitive and affective mechanisms, the institutional endowments of these regions could be greatly enhanced.

Consider the example of microfinance (which I have written about extensively). In the absence of formal laws and institutions, particularly in rural regions of the developing world, lenders took advantage of an alternative resource that was abundant in these areas: community ties.

PS: You argued in March that, beyond morals, institutions like the US Supreme Court should have “affective appeal.” Is this a case for group quotas? Beyond diversity of membership, what features of legal rules and institutions enhance their appeal to “fast” instinctive and intuitional thinking, and to what extent are these features visible in countries like the US and the UK?

AH: What psychologists call “affect” translates broadly into “emotion” in common parlance. And it is critically important for institutions. Affect is the mysterious “x” factor behind institutional functionality and health. But this does not necessarily mean that group quotas are the way forward. I don’t necessarily think the composition of institutional representatives needs to reflect the composition of a country precisely. What counts is an amorphous sense of institutions engaging peoples’ “moral machinery,” partly by ensuring that they “look like” those they represent.

This is not merely a matter of presentation for the sake of tapping homophily – that is, humans’ affinity for those who resemble us. It also about ensuring that legal rules resonate with people’s beliefs. I still remember the only time I ever saw a lecturer on the verge of tears as a student. My European law professor, who had helped to draft the Constitution for Europe, announced that it had been rejected. A key reason for that rejection was that the French government had simply left a 70,000-word document, written in legalese, at voters’ doorsteps, when it should have been trying to make a compelling case for the constitution.

In the US and the UK, the right has proved far more adept at appealing to affect than the left has. The heartbreaking reversal of Roe v Wade is a case in point: it is the product of a decades-long, emotionally charged campaign by the right. Meanwhile, progressives have qualms about appealing to affect – and this is putting them at a distinct disadvantage. Institutions – of which law is a paradigmatic instance – are too important to be so inscrutable.

By the Way…

PS: In an interview last year, you argued that “we’ve gotten the protagonist of capitalism wrong, but if we change that protagonist, we can get to a very different plot.” Who do we think the protagonist is, and who should it be? How would that alter our understanding of – and relationship to – capitalism?

AH: Despite an increase in sophistication in several domains in economics, the discipline’s current protagonist remains a variant of Homo Economicus: a relentlessly individualistic, materialistic, selfish, and thus “rational” (within the current logic of economics) actor. But research in a plethora of disciplines – including the cognitive and affective sciences, social psychology, evolutionary biology, anthropology, and sociology – has proved that the reality is far more complex. For example, primatologists like Frans de Waal have shown that morality may not be unique to humans. The economist Robert H. Frank, for his part, has demonstrated that emotions are not always irrational. And psychologists like Daniel Kahneman and Amos Tversky have made clear that human reasoning is far from infallible.

Perhaps the worst part of all this is that Homo Economicus has become a kind of aspirational ideal in a capitalist society – a self-fulfilling prophecy. But, by putting flesh on the bones of the stick figure at the heart of our economic analysis, and considering a wider roster of its cognitive features, we could develop a completely different version of capitalism – a kinder, gentler version. I’ve written about this at some length.

PS: Your assessment of capitalism is based not only on an examination of the history of developed economies, but also on observations of developing countries as they have built their own capitalist systems. Which assumptions about the history or development of capitalism did these observations challenge or invalidate?

AH: I applaud the breakthroughs enabled by the “history of capitalism” literature. But it is easier to examine “work in progress” capitalism in real time as it evolves in the developing world than it is to study the historical institutional evolution of the developed world. Capitalism in the Global South is, after all, a kind of “capitalism under construction.” We can look through the scaffolding and see each layer of the system as it is built, rather than seeing a “completed” product and guessing at what is underneath. From a scientific and analytical perspective, it works much like performing a dissection helps an aspiring surgeon to gain a better understanding of anatomy – it gives us a chance to lift the lid on capitalism and look at the insides.

I have learned an enormous amount from being “in the field” in the developing world. The empirical challenges that the experience of developing countries poses to seemingly settled theory are profound, unsettling, and intriguing, and have led me to question many assumptions about capitalism. For example, contrary to much of the prevailing economic theory, at least since the 1980s or 1990s, governments have been front and center. The markets that I observed so closely, from South Asia to Latin America, did not reflect some Hayekian spontaneous order. Instead, they were a Polanyian social construction, and many of the core relationships that define them are inherently “relational,” rather than anonymous.

What can be observed in real time in the developed world is the unraveling of institutions, many instances of which I’ve written about for PS. It is fascinating to watch, though on a personal level, it can be soul-destroying. In any case, it appears to establish that the mechanical workings of institutions are on a global continuum. I’ve written more on this subject as well.

PS: In 2018, you called economics “the discipline that refuses to change” – specifically, by incorporating the “wisdom of behavioral approaches.” Have you seen any progress on this front in recent years? What might convince economists finally to abandon Homo Economicus and learn from other disciplines, including other social sciences and the humanities?

AH: Economics currently faces an epistemic crisis. Its power over the last 50-70 years has stemmed from parsimony: the seductive simplicity and the tidy internal consistency of the so-called neoclassical consensus. But this assumed away most of the complex realties of the real world, thereby compromising the discipline’s theoretical richness and predictive capacities. On the flip side, if economics leans too much into the critical tradition, it would gain intellectual texture, but risks losing its center of gravity or the cohesiveness of its canon, thereby compromising its institutional success as an academic discipline and its perceived usefulness to policy.

So, economics is at a crossroads. Fortunately, methodological advances like network theory are beginning to equip us with the tools we need to deal with complexity more rigorously. I think that locating economics in the broader canvas of the social sciences and humanities is very helpful. The subject was traditionally taught as a part of the “Moral Sciences” – alongside psychology and philosophy – until Cambridge first established a separate faculty for it. It would be healthy to return to that model.

Read More

The Remains of the Day

By Kazuo Ishiguro

I am currently rereading this, having first read it while at university. Without giving too much away, it’s about a butler serving an English lord who earnestly believed in appeasement in the inter-war period. Apart from the fact that the setting reminds me of my college(s) in Cambridge, this is a beautiful and touching ode to the Old World and the sometimes-flawed values that defined it. The book’s genius stems from its inversion of foreground and background: cataclysmic global events are viewed through a lens of a butler whose role it is, even in the midst of tremendous global anxiety, to make sure that the silver is polished and the table is set for dinner. In this manner, Ishiguro reminds readers that the developments that are so astutely analyzed in the pages of PS – the war in Ukraine, the pandemic, an endless series of financial crises – are canvasses against which everyday human lives are playing out. The sublime and the ridiculous are always living cheek by jowl.

The WEIRDest People in the World: How the West Became Psychologically Particular and Particularly Prosperous

By Joseph Henrich

Joseph Henrich is a truly inspiring scholar whose research agenda is profoundly – and unpretentiously – transforming our understanding of our evolutionary story, with significant consequences for how we chart our future course. Henrich’s work marks a distinctive shift from treating cultural diversity as a subaltern agenda to recognizing it as an object of serious scientific study. His work on “WEIRD” (Western, Educated, Industrialized, Rich, and Democratic) societies captures this particularly well. These regions are, in many ways, the exception, rather than the norm, yet their experience is often canonized as universal. Henrich demonstrates that when the motivations are right and the questions astutely handled, many of the ideological, racial, and other divisive battles that can impede social-science scholarship can be avoided. Thanks to the work of scholars like Henrich, psychology is far ahead of disciplines like law and economics in acknowledging cultural difference as vital to understanding our world.

Thinking, Fast and Slow

By Daniel Kahneman

Having sold well over two million copies, this is obviously not an esoteric gem of which PS readers have never heard. But the fact is that I almost always have a copy around, and I learn more with every reading. Indeed, the book has fundamentally affected my thinking about institutions, and has been more effective than any single other intervention in paving the way for an epistemic revolution in economics. As Kahneman points out, he won the Nobel Prize in Economics without having taken a single economics course. Perhaps that kind of outsider perspective is precisely what is needed to catalyze real epistemic change in a discipline that is otherwise highly homogenous.

Antara Haldar is University Lecturer in Empirical Legal Studies at the University of Cambridge. Copyright: Project Syndicate, 2022, and published here with permission.