Why are humans such a cooperative species, and what does the answer to this question mean for our understanding of the organization of modern firms and societies? As a species, we are surprisingly good at sustaining cooperation, even on a large-scale and among relative strangers. This poses an interesting puzzle both for evolutionary and economic theory, where the baseline models assume that behaviors must be understood in terms of how they further agents’ self-interest. These baseline models are difficult to square with cooperative behaviors in general, and with the empirical evidence about the specific nature of human cooperation in particular. This has led to a rapidly growing ‘naturalistic’ literature at the intersection of the biological, behavioral, and social sciences that aims to solve the theoretical puzzle posed by our cooperative behaviors.
What this literature suggests is that humans are social animals that evolved cooperative dispositions over a long history of living in egalitarian small scale societies in which culturally transmitted norms and institutions favored cooperation. As a result of this evolution, our behaviors are affected by a number of things that fly in the face of standard economic assumptions about human behavior, including other-regarding preferences, the important role of social norms, and our sensibility to relative, as opposed to absolute, pay-offs. In fact, the empirical evidence suggests that the majority among us does not at all resemble the Homo economicus relentlessly pursuing his self-interest featuring in standard economic models – although, interestingly, it also suggests that a non-negligible minority does. The task of human organization is to sustain cooperation in the face of this motivational heterogeneity.
The fact that most of us are much more concerned with the social, as opposed to merely economic nature of our relations with others makes cooperation much easier to sustain than one would expect on the basis of the standard assumptions of economic theory. Nevertheless, the advantages of cooperation are easily undermined by competition within a cooperative group. The fundamental problem that human organizations need to solve is that cooperative behaviors are seldom in the self-interest of individual group members. Our long evolutionary history of gene-culture co-evolution endowed us with a social psychology that made our ancestors relatively successful at solving this problem in small scale egalitarian societies with little coercion and much autonomy. But how does their success translate to sustaining cooperation on the much large scale of modern forms of organization with their deep hierarchies?
Our central argument is that the emerging understanding of our cooperative dispositions suggests a general theory of human economic organization that also has implications for our understanding of modern forms of organization. More specifically, we derive ten principles for a naturalistic theory of human economic organization. For instance, organizations compete with each other on their ability to channel intra-organizational competition in ways that increase their success in inter-organizational competition. Because genetic evolution proceeds at a much slower pace than cultural evolution, the success of modern organizations depends on their ability to use cultural ‘work-arounds’ that make productive use of tribal instincts that originally evolved to sustain cooperation on a much smaller scale. However, given the nature of these tribal instincts, cooperative arrangements on a large scale do not necessarily lead to ethically desirable outcomes. In particular, our evolutionary heritage leads to the prediction that the two major ethical problems of human organization are intra-group exploitation of group members by their leaders and inter-group hostility.