Diversity is Good: Anthropology, Economics and Human Freedom

Over the years anthropologists have had a good deal to say about notions of power and inequality. For example, the late CUNY anthropologist Eric R. Wolf took his early experiences working with peasants in Puerto Rico to explore these larger questions in the global system. In the opening to his book Envisioning Power he wrote:

We stand at the end of a century marked by colonial expansion, world wars, revolutions, and conflicts over religion that have occasioned great social suffering and cost millions of lives. These upheavals have entailed massive plays and displays of power, but ideas have had a central role in all of them.

Conservatives don't often like talking about power and inequality. I've touched on some of the reasons why in my post The Nature of Partisan Politics. However, here I'd like to address the outrage that many conservatives feel when these issues move center stage as they are with the release of Michael Moore's new film Capitalism: A Love Story.

In his documentary Moore makes the case that our current economic system is not functioning as it's advertised and proposes alternatives in the form of more democratic systems. Moore doesn't view this to be a very revolutionary idea but as a continuing evolution of social life. As he stated in his interview with journalist and author Naomi Klein:

We've changed relationships and institutions around quite considerably because we've decided democracy is a better way to do it....But we spend eight to ten to twelve hours of our daily lives at work, where we have no say. I think when anthropologists dig us up 400 years from now--if we make it that far--they're going to say, "Look at these people back then. They thought they were free. They called themselves a democracy, but they spent ten hours of every day in a totalitarian situation and they allowed the richest 1 percent to have more financial wealth than the bottom 95 percent combined."

Anthropologists make it their life's work to take this kind of "big picture" view. By looking at hundreds of different societies (or in the case of evolutionary anthropologists like myself, expanding that to include hundreds of primate species as well) it's difficult to justify any single system as the "right" way to organize social life.

But there are many wrong ways. If your ultimate goal is human freedom it has been demonstrated quite well that totalitarian systems, whether they be religiously based such as in Iran or secular such as in the Soviet Union, always result in the opposite of freedom. These are closed societies where freedom of speech, of movement, of livelihood are all constrained by the State. In contrast to these closed societies the more open societies of Europe, the US and Canada are held as the only correct way to run an economy. This is usually called the free market system.

However, the problem with this usual argument is that the "free market" isn't all that free. Take the current banking system (please!). There are now only four major banks--Citigroup, JPMorgan Chase, Bank of America and Wells Fargo--who control 40% of all deposits of FDIC-insured institutions. The public bailout of the banking system (first by Bush and then by Obama) made it possible for these megacorporations to buy out smaller banks, allowing them to control more than 75% of all deposits in some markets.

As Moody's Chief Economist Mark Zandi told the Washington Post:

There's been a significant consolidation among the big banks, and it's kind of hollowing out the banking system. You'll be left with very large institutions and small ones that fill in the cracks. But it'll be difficult for the mid-tier institutions to thrive.

The oligopoly has tightened.

Now compare this reality with the Soviet system. According to a report on the U.S.S.R. Bank for Foreign Economic Affairs that was carried in the ABA Banking Journal on the eve of the Soviet collapse:

The state-owned institution is one of five specialized Soviet banks that focus entirely on a specific market. "We practically have a monopoly on international banking," says Uljanov. "If any [Soviet] enterprise wants to be involved in a joint venture with a foreign company or borrow funds abroad, it needs to apply for a license from our bank."

Whether you have five state-run banks or four privately run banks, the reality on the ground is the same. Your choices are limited. You can't even say that the "Big Four" US institutions are independent of one another considering that their stock holders and board of directors are often involved in multiple institutions at the same time. This is not a free market. It is, as Zandi pointed out, an oligopoly which represents the opposite of an open society.

Furthermore, there is a fundamental danger to this kind of concentration, whether it's in the Soviet state or what we face with our corporate system. Large institutions are slow to adapt. A useful metaphor to think about this kind of concentration is monoculture. In the natural world there is vibrant biodiversity in most ecosystems. However, if a farmer was to grow a single species of corn, for example, there is a very real fear that his entire crop could be wiped out. All it would take for his livelihood, and that of his family, to be ruined is for a disease or pest to penetrate the corn's defenses and destroy all his hard work. In contrast, indigenous farmers would often look to nature for how to grow crops and would plant a diverse number of species so that, if any one crop failed, there would be many others to rely upon. The bottom line is: diversity is good.

This applies to an open society the same way it applies to natural systems. The greater the concentration of resources, the greater the risk that a single economic blunder (such as rebundling bad loans as AAA rated securities) could bring the system screeching to a halt. What is needed is more diversity, smaller institutions and less inequality.

Well funded conservative organizations may like to scream about the dangers of socialism, but they're not fond of looking at the dangers we face with our current system. What's the line about how it's impossible to convince someone of something if their income depends on them believing the opposite? However, the problems we face right now are too important for a monoculture of ideas. To use an economics metaphor, it's time to diversify our portfolio.