A core concept in our culture is that we are individuals in competition with other individuals. Like chimpanzees roaming the veldt, we need to outsmart and out maneuver other chimps who might otherwise get the food we need or the mates we desire.
But that idea only goes so far to explain our behavior. In a new book, The Righteous Mind, Jonathan Haidt suggests that our chimpanzee-like competitiveness has been over-laid by an evolutionary trend to cohere and cooperate, to work together. He argues: “We are like bees in being ultrasocial creatures whose minds were shaped by the relentless competition of groups with other groups. We are descended from earlier humans whose groupish minds helped them cohere, cooperate, and outcompete other groups.”
Haidt argues that we have, in effect, a kind of switch that allows us to turn off individual competition in favor of group cooperation and intergroup competition. “The hive switch is a group-related adaptation that . . . cannot be explained by selection at the individual level . . . [It] is an adaptation for making groups more cohesive.”
Darwin had a similar idea, arguing that groups or tribes that learned to work together had an advantage in the evolutionary struggle for survival. This is not conscious, but something that works because it is instinctive, automatic.
There are many other ways to account for unconscious cooperation or coordination in groups: people may cohere because they seek approval from others, or need to belong and fear being isolated. Our bodies intuitively accommodate information from other bodies, our brains mirror the activity of other brains. And no doubt there are other possible explanations. The important point is that group cohesion happens. Our culture stresses competition and rewards winners, so that is what we pay attention to. But that is just half the story.
What are the lessons here for investors and others who seek to predict events? What does this imply for markets? There may be wisdom in crowds, as James Surowiecki contends, but there is also great irrationality and danger: bubbles and crashes, groupthink and panic, irrational exuberance, irrational pessimism, and powerful convictions based on little or no information.
These forces are particularly influential in the absence of hard data. If we are unable to look to reality to correct such beliefs, we look to each other to confirm them, and often angrily reject contrary opinions.
How to cope with these distortions? There is a kind of gradient of conformity. At one end are the mass delusions that animate authoritarian regimes. (We get a taste of that at football games and political rallies.) At the other end, there are innocuous shopping impulses and fads that help us to “keep up with the Joneses.”
What are the warning signs that our groupishness is driving us? One indicator is the righteousness we feel in contemning others and their “misguided” beliefs. On a lesser scale is the smug comfort we enjoy in gossiping with others. But the best way to tell is to examine our motives. What kind of evidence do we have for what I am thinking? Do I want to believe this too much? What would be the emotional price of changing my opinion?
Our individualism is not something that comes naturally, as we tend to think. We have to work at it.