Category Archives: Politics

Gendering the Financial Crisis

When you think of the financial crisis, do you think of The Other Guys, theatre, and gender?  Maybe not the first two, but what I bet you are thinking of is gendered, whether you realise it or not: Men (probably white) in suits, playing guesswork in front of a graph at a big desk in a big office in the City or on Wall Street.  How much does gender have to do with the crash?  A number of bankers and financial experts blamed testosterone for the crisis, including the head of the IMF, Christine Lagarde, who postulated: “If Lehman Brothers had been Lehman sisters, today’s economic crisis clearly would look quite different.”  Birkbeck’s Kate Maclean disagrees.  This quip is based on quickly-accessed gender stereotypes that coloured mainstream descriptions of the crisis, and not a thorough analysis of the gender dynamics.  The truth is more complicated.

In the lecture theatre tucked away on Birkbeck’s 4th floor on 28 November – the night’s lecture was Gendering Representations of the Financial Crisis, a BiGS (Birkbeck Gender & Sexuality) event. It was meant to be the first seminar in a BiGS series on gender and austerity. If the first event is indicative of the rest of the series, I will certainly be in attendance.

The main stage showed Birkbeck lecturers Louise Owen and Kate Maclean presenting their work on the topic. Owen came from a theatre perspective, looking at two popular theatre productions on the financial crisis, Enron and The Power of Yes, and Maclean took a broader sociological perspective, focusing in on two films, Margin Call and The Other Guys. Lecturer in psychosocial studies, prolific writer, and force-to-contend-with Lynne Segal chaired the evening.

You can listen to a podcast of the evening here.

Maybe I’m just not much of a theatre person, but I was really taken by Maclean’s presentation. (If theatre interests you, do check out the podcast link, which also has the slides from both presentations.) Maclean was engaging, funny, and interesting. And, her presentation made me really want to re-watch The Other Guys.  The Other Guys is a hilarious parody of masculinity.  Maclean deemed it “postfeminist” for the way it puts masculinity under the microscope, poking fun at extreme representations of masculinity.

Credit to Kate Maclean
Credit to Kate Maclean

Before the crisis, risk-taking was valued and considered masculine.  The two feedback upon each other: risk-taking was valued because it was masculine, and it was

masculine because it was valued.

Credit to Kate Maclean
Credit to Kate Maclean

Masculinity often defines itself by negation, by being what is not feminine, so, the contrapositive is that risk management was deemed feminine.  In The Other Guys, Will Ferrell’s character embodies this.

He is the uber-orderly, rule-following “paper bitch.”  It’s not subtle.

In the film, like after the crisis, the “other guys,” the risk-managers, come to be valued.  They’re seen as the way forward, to fix the crash or at least prevent another one from happening.  Will Ferrell and Mark Wahlberg’s characters become “The Guys”:  they prove their masculinity.

So what if women had been running the financial world?

Slide courtesy of Kate Maclean
Credit to Kate Maclean

Some women (e.g. see above) had power and influence, but were fired near the crash because they were thought to be “too soft,” not risky enough. Let’s step back for a second. What does it mean to be risky, anyways? What is risky is defined by what is masculine. Giving birth is very risky practice yet women are not seen as aggressive risk-takers when they choose to give birth. Society easily overlooks risky practices when they are done mostly by women; they’re re-coded as ‘natural,’ ‘biological,’ or ‘motherly.’  Are office workers, like many of the men who were cogs in the financial crisis, really that risky? Or even that masculine? Why then, Maclean asked, was the crisis attributed to masculine risk-taking?  The crash needed an explanation, and the explanation readily got caught up in gendered tropes.

It is a limited view of femininity that assumes women at the top would have prevented the financial crisis. The idea that perpetuated this postulation is that women would play the role of mother at work, keeping the naughty, risky boys in check.  Many depictions of women’s roles in the crisis were constrained to the age-old stereotypes of virgin, mother, and whore.  For example, in the play Enron, a sexy woman character named Claudia Roe is a co-higher up to Enron‘s President. Her main plot points include seducing the president (whore) and quitting to go home to her children (mother).  She was based of a combination of high-up women in Enron. One was Sherron Watkins, the key whistleblower, who went on to a similar job post instead of home to her “beautiful children” like Claudia Roe.

Despite a faith that women could have prevented the crisis, women were the main victims of austerity as a result of the financial crisis. Segal pointed out that older women in particular were heavily effected, with a combined effect of ageism and sexism. She said, women over 50 have been forty times as likely to lose their jobs since the crisis. Despite masculinity being blamed for the crisis, it’s women who lost more jobs because of it. Men and masculinity made it through the crisis with a slight redefinition of masculinity – risk management is ‘cool’ now. Femininity continued to be posed within out-dated tropes, and women, did not make it through.

Maclean just had an article published on this topic, “Gender, risk and the Wall Street Alpha Male,” which you can see here.

You can sign up to the BiGS mailing list to receive updates on their upcoming events, or have a look here.

Hope @Royal Court Theatre

After a successful run of the hit Let the Right One In, expectations were high when Jack Thorne (writer) and John Tiffany (director) teamed up once again for the production of Hope. The BAFTA-winning writer Thorne delivered a story of austerity with surprising levity and wry humour.

Hope tells the story of a Labour council in an unnamed working-class town. The play centres on the various schemes local council leaders make after being told they must make £64 million savings over a three-year period through budget cuts.

One council leader, Hilary, (played by Stella Gonet) with her strict and pragmatic approach, proposes important cuts to urban facilities such as libraries, museums, and street lighting. The second council leader, Mark (Paul Higgins), tries to defend Hilary’s decisions. Still short of making their goal the cuts eventually hit a centre for adults with learning difficulties. This decision becomes national news and the small working-class council is left humiliated.

Hope's cast.
Hope’s cast.

Through Mark’s character (Paul Higgins), a man who is struggling with the consequences of his divorce and suffering from alcoholism, Thorne manages to juxtapose complex decisions of political life with obstacles and anxieties in private life. This juxtaposition exposes how there is little difference, in some ways, in how politicians make decisions publicly and privately. In both spheres, we fear we will fail to achieve our goals or live up to expectations, on the one hand, and on the other, we find the strength to fight for our goals.

Paul Higgins (as Mark)
Paul Higgins (as Mark)

 

The conversation between Mark and the ex-leader George (Tom Georgeson) is where Throne wants us to reflect on the Labour party’s role in the recent past and how today there is a lost sense of solidarity. Throne demonstrated a dynamic ability by portraying both negative and positive aspects of the party. He concluded this scene with a pinch of optimism and strong sense of purpose, driving the message that one should make good decisions not for the Party, not for the country, not for the working class, but for the town.

Tommy Knight and Tom Georgeson
Tommy Knight and Tom Georgeson

The play ends with an informal chat between an elderly George and the young Jake (Tommy Knight). This is an encounter between different worlds and different experiences, yet ends on a point of agreement in their understanding of Dickens’ book Great Expectations. Hilarious and intense, this conversation’s common ground also summarises the play: it’s sort of pointless not trying. I admire Thorne’s sense of lightness and humour and Tiffany’s ability to convey this fully whilst leaving us with a sense of hope, especially in life itself.

Hope runs until 10 January. Tickets: (£12- £32; Mondays all seats £10)

Venue: Royal Court Theatre (Jerwood Theatre Downstairs), London

 

 

Reclaim the Night – #YesAllSurvivors #RTN14

Saturday, 22 November — women marched through the streets of London, from Whitehall to Camden, in a demonstration calling for women’s right to feel safe walking the streets at night.

emancipation-155792Before I came to the UK, I helped organise my college’s Take Back the Night in Carlisle, Pennsylvania, USA. In the United States, everyone is welcome to take part throughout the event. In fact, during my final year, we made sure some fraternities and men’s sports teams attended the event (yes, we carried out targeted advertising). We marched across our campus, mostly women and some non-binary individuals, but we had a few steadfast male allies chanting beside us too, and more men budding in their role as allies. It felt supportive, united, and allied.

Reclaim the Night in London only allows women-identified people to participate in the march itself. Reasons cited for this are women’s, especially survivors of domestic violence, comfort and safety. The march is a fight against male-dominated violence against women and, as is often the case, survivors of men’s violence want to create a space for themselves without fear. This is an important consideration, but I find it incomplete and antithetical to the mission of the march.

Excluding men from the march feels a bit like excluding them from the movement. The march is about fighting for women’s right to be safe at night, to be free from undue blame for sexist acts of violence, but it is also about coming together to support each other in our fight and to invigorate the movement. Men need to be part of the movement. Everyone needs to be part of the movement. The fight to end violence affects everyone and needs to be on everyone’s agenda. There is, at least, a men’s vigil held to cheer the march on, giving men the opportunity to come together and get excited about being our allies in this fight. Further, everyone was allowed at the rally and celebrations that took place after the march. However, I would like to see men hosting important discussions about their role in ending violence – like discussions held on the night that are women-only. After all, they’re half the problem. They can be half the solution.

More importantly, allowing only woman-identified people to march reinforces the image of man as abuser, woman as victim. While most cases of domestic violence (DV), especially sexual violence, are perpetrated by men against women, DV can and does happen to anyone. Excluding survivors who are not women erases the myriad other dynamics of domestic violence from general awareness.

Is the march a safe space for women who experienced violence at the hands of other women, in a same-sex relationship, or from a woman relative? Assuming an all-woman space is a safe space is heterosexist. LGB folks face stigmatization that extends to DV services. Their experiences must be acknowledged if we want to ever eradicate the stigma. As for victims who are men, we can forget about them, just like we forget about gender non-conforming, genderqueer, and non-binary individuals. Gender non-conforming individuals are the targets of violence as often as women and never recognised in DV statistics or services. Trans* individuals face obstacles in accessing DV services because they are often based on the strict binary of women/men and may not help them if their ID doesn’t ‘match’ their presentation. As feminists, we should be fighting to end all violence, not just violence by men against women.

Untitled design
Image Credit: Howl Arts Collective – flickr

At least the march includes trans women in its definition of women – because hello, trans women are women and also face the highest levels of violence. While to me trans women are an obvious inclusion in any feminist act of sisterhood and empowerment, it is not obvious to all feminists. Rather, “feminists.”

I had planned to write only about the exclusion of men from the march, but the events of the night brought up a more pressing issue. There was a group of self-titled ‘radical feminists’ who were handing out transphobic leaflets at the march, calling for trans women to be excluded from the march because they are “males” who make it an unsafe space, and this is against ethos of the night. No, no, no. First of all, judging someone’s sex is not that straightforward and this group of unfortunate feminists were making assumptions. We all know what happens when you assume. Secondly, a person’s sex does not determine their gender presentation or identity. Trans women do not benefit from male privilege and so do not have the same power as men in the patriarchy.  Quite the contrary.  I am frankly in awe. I am awestruck at how ignorant some ‘educated feminists’ can be. I identify whole-heartedly as a feminist, but never wish to be confused with the likes of these.

Transmisogyny’ describes the denigration of the feminine based on the assumption that femininity is inferior to masculinity and is targeted towards trans women and gender non-conforming people who present feminine characteristics.  It’s like misogyny +1.  Trans women are targets of violence because they are women and because they are trans, and thus they should have a space in the women’s movement.  This is important to the feminist struggle to end violence against women, or to end gender-based violence because it is based on the patriarchal power structures the disadvantage not just all women, but all femininity.  This brings me back to my point that we should include more than just women in the march, because it’s about more than just women.

We march to end violence perpetuated by the patriarchy.

End violence.png
Image Crdit:  openDemocracy – flickr

 

Anatomy of a Demo – The People’s Assembly Against Austerity – 19 November 2014

It was getting dark. I was knackered. My back ached from jumping over barriers and chasing police officers. My feet ached from walking and running. My shoulder throbbed from being struck by the camera of  an overzealous TV cameraman. My laptop was refusing to connect to the nearest WiFi network. I took a selfie with my phone and grimaced at the bright orange paint in my hair and on my cheek. It was spattered over my jacket, shoes and borrowed camera. I had Parliament Square mud all over the knees of my jeans. I scrolled through the 619 images I had snapped during the day. Satisfied, I bit into my homemade chicken wrap, and absent mindedly began scraping at a globule of orange paint on my left shoe.

Nine hours earlier, at about 9am, I was firmly ensconced in Malet Street. I had my packed lunch and a borrowed camera. A hastily created ‘Press’ vest too. Just in case. This was my first demonstration as an observer/aspiring journo, and I couldn’t have picked one which is more emotive for students. In this age of austerity, students are suffering. Not just now, but in the future too, with most expected to be saddled with in excess of 40 grands worth of debt after graduating. Thus, The People’s Assembly Against Austerity – under the ‘student’ nomenclature – organised the demo for 19th November.

Malet Street at 10am was cold and forlorn. A few organisations had pitched stands, and placards (in their hundreds it seemed) were being prepared. As the minutes passed, crowds began to gather. I had initially thought there might be a poor turnout, perhaps influenced by the lack of NUS support. This was not to be, and, by departure time, the atmosphere was festive (not as in Christmas) and good natured chanting was accompanied by the ferocious waving of some humorous and creative placards and flags. Police presence was minimal to say the least.

I stationed myself at the front of the march. Keen for a ‘story’, I was conscious of a small group of masked youths, and surmised that they may behave in an interesting way. I latched myself to them for most of the march. It was impressive how well the march had been organised and marchers deployed with great efficiency. I thought it great that students had the opportunity to vent their anger, despair and annoyance at student debt and education fees.

As the march wended its way through Bloomsbury and down Holborn onto the Strand, the first small pockets of conflict occurred. It was at the front of the march and perpetrated by the masked-up wannabe anarchists, outside MacDonald’s and Top Shop — no surprises there. These pit-stops passed without major incident, and it was only when we arrived at Parliament Square the inevitable violence erupted. This, I thought, was a shame. We were only a few yards away from the rally point, where the intention was for speakers to address the assembled marchers. Surely one of the major, if not the most important, part of the demo?

Instead, our be-masked chums decided to clamber over the police barriers (fine, I thought), jump up and down shouting anti-capitalist slogans (no problem) and then proceeded to tear down the metal mesh fencing to get onto the grassed area of Parliament Square. Not only do I not have a problem with people demonstrating, I think it slightly abhorrent that demonstrations on Parliament Square are prohibited. So, whilst I perhaps understood the reasoning behind wanting to demonstrate on Parliament Square (although I’m not sure some of the demonstrators did) I didn’t really understand the violence which went with it, and the sad sight of a 60 year-old City of Westminster heritage warden cowering at the sight of dozens of black clad guys surrounding him to kick, push and smash their way on to the square.

I joined them on the Square, perversely proud as I was one of the first dozen journos who breached the lines. After declaring a victorious occupation, the smattering of demonstrators who joined the masked marauders evidently got bored quickly.

There was some flare-ignition, giving the Square an eerie war-zone atmosphere, exacerbated by some slightly unhinged individuals attempting to create a barricade — what they intended to barricade, I have no clue — on the square out of concrete blocks, fencing and railings.

They were, however, foiled by lack of interest. Soon most people began to drift over to the rallying point, to get involved and listen to the speakers. I actually ached to do this, but my desire for front-line journo action made me stick with the anarchist crew.

Disorganised and with very little apparent knowledge of the issues of the march, this small group led a larger group on a mini-tour of government and political bases. Oh, and a Starbucks!

At each point, damage and skirmishes with the police (no helmets, no shields, and not too many batons) ensued with vigour. Anti-cuts chants changed into anti-police chants. At Tory party HQ, I snapped away as several of the masked dudes planned to smash a wheelie bin into police lines. Which they did. Our next stop was the Department for Business, Innovation and Skills, which was declared by one of the pseudo-anarchists to be the ‘Department for Education’. Despite the massive signage declaring otherwise, the massed crowd seemed to concur. Scuffles ensued, paint was thrown and placards chucked. Several tried to get into the building (and do what exactly?) whilst chanting ‘scum’ at the four security guards desperately trying to hold the doors shut. These are the ‘working men’ to whom these people were claiming allegiance earlier.

Again with a lack of direction and apparent boredom – helped by the arrival of riot cops I assume – the next stop was a small Starbucks. Yes, it’s incredible and unacceptable they’ve avoided their tax. Yes, it’s fairly annoying to see them on every street corner. But their tax affairs and ubiquity surely could not justify paint chucking, window smashing and throwing a Barclays bike through the doors?

All along Victoria Street, more scuffles followed, until eventually a sort of semi-kettle took place. The balaclava and mask wearing contingent legged it successfully, and after half an hour, most people drifted away.

I was personally enthused by the day – it’s exactly the sort of stuff I’d like to do. I think I need to learn how to write impartially to become a journalist, but I couldn’t understand a lot of the behaviour. Frightened Starbucks staff, the cleaners who have to tidy up afterwards, the street sweepers and the glaziers. They are the working class. They should be on our side. It’s easy to see why they perhaps are not – the media (myself included) will only ever go where there is something newsworthy, but when such excellently attended and organised student demos are used as an excuse for bizarre acts of violence which prove nothing, it is only ever these incidences which will get into the news.

As I scraped paint off my shoe, I felt somewhat deflated, although proud of my battle scars.  It had started as a great day. Full of fun, and friendliness. For most people, I’m sure it continued that way. I hope it did. It was just a huge shame that the issues of the day were, and will have been, ignored to some extent – students had a great opportunity to show some reserve and strength, and put forward their very cogent and necessary arguments. Unfortunately, to coin a Daily Mail-esque phrase, ‘a few idiots spoiled it for everyone else’.

Women in parliament: Is Politics a Women’s Problem?

 

I attended a Women’s Conference organized by the British Organization of People of Indian Sub-Continental Origin (BOPIO) in the Houses of Parliament last week. This conference was a joint effort with Birkbeck College and the Department of Journalism run by Dr Tim Markham.

In the audience were academics, students from Birkbeck, activists, community leaders and journalists. The Women in politics conference was a bold move particularly ahead of the General Election in 2015.

Anniversary professor of Politics at Birkbeck College Prof Joni Lovenduski set the tone for the  discussion. Following a warm welcome, Labour MP for Southall, Mr Virendar Sharma sparked a debate after expressing his sincere wish for more women joining Parliament.

He addressed the concerns of juggling a happy family life with a position of responsibility. These factors were amongst those mentioned which negatively influence the number of women in Parliament. However, he said a better work-life balance can be achieved by updating the working practices of the House of Commons and local government.

UK statistics show that only 23%  of MPs are female. They also suggest the big political parties have already selected a large number of their candidates for next year’s general elections, few of whom are female. Further information on this topic can be found here and here.

Panellist Ekua Agha, a current PhD student at Birkbeck, encouraged women to be strong and have a tunnel vision if their goal is entering the political arena. Ms Agha pointed out: ” Right now most women find their interest in politics accidentally after flipping a coin while campaigning for causes they are passionate about. Sadly, this leaves less time to make it to the top which leads the gender gap to flourish.”

Political Secretary for BOPIO Namrata Dhingra argued that political representation of women is crucial for their empowerment in NGOs and the population at large. Both NGOs and state political institutions need to renegotiate spaces for formal and informal networks. Political participation for women should not be limited to exercising the right to vote, but also power sharing and co-decision making at all levels of governance. Ms Dhingra view is: “political participation is a process that actually involves both men and women taking part in political activities.”

The majority of the conference attendees were women, even though men were also invited. Does that mean the gender imbalance in politics is a women’s problem?

This conference highlighted some of  the problems all women face when entering into politics, but with special focus on women from the Indian Sub-Continent. The conference was great for helping to raise awareness that more women should feel they can put themselves forward into the political arena.

An attendee, Emma Watson said: “it is time that we all perceive gender on a spectrum instead of two seats of opposing ideal.”

She urged men to take “this mantle, so that their daughters, sisters and mothers can be free from prejudice.” Suggesting if we work as a team, rather than as separate entities, we can achieve much more.

BOPIO president and former Mayor of Lewisham, Mr Sinna Mani, from Dulwich was ecstatic. He said: “It is great to have conferences like this, but women need to stand up for themselves and not to be afraid to be themselves while networking with their male counterparts. This would open a dialogue and more opportunities for women to increase their influence.

“It is imperative that we all take on a responsibility not to only raise awareness of these issues, but to also look for solutions and implement them so our future generations can enjoy a more balanced overall society.”

Details of how to join the British Organisation of People of Indian Sub-Continental Origin are available on the website www.bopio,org.uk. The organisation, is looking for young blood and training is available. For more information email: namratadhingra@rocketmail.com.

Adventures in Economics

Introduction

Human beings are by nature economic animals who, according to Adam Smith, have an inherent propensity to “truck, barter and trade”. In order to facilitate exchange and improve their well-being, people create money, markets and institutions. Interaction of entirely selfish individuals may produce a mutually beneficial and a Pareto optimal outcome. Coordination among the activities of individuals participating in a market is spontaneous and is guided by
the “invisible hand” of self-interest. This “invisible hand” was rigorously encapsulated in the First and Second Theorems of Welfare Economics.

But despite claims of universality of economic laws, economists have extreme difficulty identifying such laws and agreement on the validity of such laws may be impossible to achieve.

For this reason John Stuart Mill referred to economics as an inexact science and characterised its laws as tendency laws. Such expressions of tendency are, in simple terms, generalisations
regarding what will happen if no disturbing event should intervene.

Economics is, and rightly so, concerned with insight appreciably more than it is concerned with prediction of events. In Keynes’s words,

“the theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, a technique of thinking, which helps its
possessor to draw correct analytic conclusions.”

These scant references to the history of economic thought figure as aids to a non-anachronistic understanding of the past, not as gratuitous arrows pointing to the relevance of earlier ideas.

The limitations of Mill’s and Carlyle’s philosophically expressed understanding of economics are obvious not only when compared to modern theories, but also when set within the course of economic history. At the same time, all can enjoy and benefit from applications of the “dismal science” that are relevant, insightful and anything but dismal.

Modern industrial market societies show enormously complex functional integration. Although economists’ models of the market exhibit why we need only enforce certain abstract rules – such as prevention of fraud and property rights – in order to achieve an efficient social order, they do not explain how the set of rules itself can be created, adapted to new situations, or sustained. The provision of the moral and legal framework for a market economy is itself a public good, and subject to the free rider problem.

And yet, today economics is the most rigorous and systematic of the social sciences and a starting point for understanding not only the economy but other aspects of society. An economic model is an intellectual mechanism, used to explain a particular variable or event. Although a model can take a literary form, the economics profession has preferred that models be expressed in formal mathematical terms.

Mathematics is vitally important in terms of the expression and communication of ideas in economics. This in itself is a matter of interest, particularly with respect to the public understanding
of economics. However, the use of mathematics in economics has drawn criticism from a variety of source, mainly from outside the profession.

In essence, a formal model contains a set of endogenous variables whose values (prices, quantities etc.) are determined logically within the model. Economic theory is used to develop mathematical statements about a set of observable endogenous variables which are related to another set of observable explanatory variables. Economic theory may also relate the endogenous
variables to a set of unobservable variables. Thus, economics is essentially a collection of formal models applied to analysis of specific problems and to an explanation of specific
phenomena.

The economics of information

There have always been organisations and institutions capable of creating and disseminating knowledge: from the medieval guilds through to the modern market research agency. One
hardly needs reminding that information is a valuable resource: knowledge is power.

And yet, realistic economic study of information and information producing industries is a relatively recent development in the evolution of economic thought. Developments in economics
that have taken place since the 1990s have led to improved understanding of the extent to which markets, agents and institutions process and convey information.

The subject of the economics of knowledge poses fascinating and challenging questions – theoretical, empirical, conceptual and normative. Although knowledge has been at the heart of economic growth and the gradual rise in social well-being since antediluvian times, social scientists spent the last century realising that value itself was not some intrinsic property of the world, but more a construction of our interaction with the world. Arguably,  economic analysis alone is not sufficient, since knowledge is context-dependent. However, focusing on scarcity and cost helps us to understand that psychology.

For a long time, formal modelling in economics was based on assumptions about perfect information (including efficiency, full employment of resources and uniform prices). While
the fact that information imperfections are pervasive in the economy was recognised by all economists, it was hoped, in the spirit of Alfred Marshall’s dictum”Natura non facit saltum,”
that it was defensible as an assumption: a heuristic by which to approximate behaviour.

Of course, one can make the Wittgensteinian argument that no general analysis of knowledge can exist since no general analysis could capture the nuance and variety of contexts in which
human beings recognise instances of human knowledge. However, the exploration of this philosophical thread yields surprisingly little about economic behaviour.

The marginal productivity of information depends on how the quantity of information is measured. Some economists, such a Stigler (Nobel Prize 1982), argued that information is just
a transaction cost – that is to say, once the real costs of information were taken into account, the standard results of economics still hold. However, it was famously shown by Stiglitz (Nobel
Prize 2001) that this was not true, and the conclusions derived from it do not hold. One of the main implications from this research was that even a small amount of information imperfection could have a profound effect on the nature of the equilibrium.

The economics of altruism

With regards to the discipline of economics, a common misconception is that economists think that people are self-interested or rational, or should be self-interested. Although this is
not strictly true, the assumption of rational self-interested behaviour has been a highly fruitful one in modern economic theory.

In The Theory of Moral Sentiments, Adam Smith points out that people often care for the well-being of others and that this may have significant economic consequences. Similar observations are made by Gary Becker, Kenneth Arrow and Paul Samuelson. In fact, there is extant literature on economic behaviour and policy analysis when agents are altruistic or exhibit other-regarding preferences.

So, what insights can we gain into altruism? First, we must make distinctions between economic, biological, anthropological and psychological theories of altruistic motivation. In fact, altruism can be defined in numerous incompatible ways. In the interests of brevity, here we are only concerned with what economics says about altruism.

However, things are far from easy. Altruistic behaviour does not necessarily lead to a more socially efficient outcome. It is also known that competitive equilibria with transfers need not be efficient when agents are altruistic. In this context, if altruistic transfers are permitted then both First and Second Welfare Theorems of Classical Welfare Economics do not generally hold.

A theoretical framework for distinguishing between economically altruistic and non-altruistic acts must specify a number of different goods which enter into each individual’s utility function and distinguish those which are directly beneficial to the individual’s economic well-being. Some economists use a concept of “felicity” which corresponds with happiness or experienced utility.

It is also worth pointing out that there are different types of behaviour contained in the spectrum of altruism. Such behavioural types range from true selfishness to true altruism, where
there is no ambiguity about the social desirability or divergence between appearance and motivation of an altruistic phenomenon. Apparently non-altruistic behaviour which is not altruistically
motivated and is socially detrimental will have different implications to apparently altruistic behaviour which is altruistically motivated and is socially beneficial.

Into the former category would fit standard cases of market failure where rational self-interested individuals are, for whatever reason, not led to behave socially efficiently by the economic environment in which they make their decisions. On the other hand, the latter scenario fits closely with the classic case of an altruistic act, which benefits others at a cost to the altruistic individual, and where the total benefit conferred is greater than the cost. Here, an individual
with truly altruistic preferences would carry out such an action because it would increase their utility. This includes the felicity of other individuals.

An understanding of the (repeated) prisoners’ dilemma leads to the conclusion that cooperation can emerge and be sustained in small groups. On the other hand, co-operation is much more difficult with a large number of players. This is due to problems of monitoring and
the threat of Nash reversion or other strategies to punish the individual defector. This is the reason why some externalities cannot be negotiated away via Coasian bargaining. Yet, this is
also the reason why competition works.

Charles Shaw
Birkbeck EFS
Birkbeck EFS is a society. Their interests lie in bringing together fellow students and furthering their interest in Economics and Finance by inviting speakers, organising events, and engaging in discussion on contemporary issues.