Thursday, February 28, 2008

Shermer on the evolutionary psychology of corporate behavior

As I have mentioned before, Michael Shermer has recently become enamored with evolutionary psychology and it’s really showing in his Scientific American columns. He may, however, have become a tad too enthusiastic for his own good. In a recent piece, “Do all companies have to be evil?”, Shermer applies evolutionary psychology to the corporate world. His conclusion, gratifyingly, is that the “greed is good” mindset (Objectivism, for example) not only does not breed success but actually leads to failure. Argues Shermer,
When we apply these evolutionary findings to economic life, we learn that Enron and the Gordon Gekko “Greed Is Good” ethic are the exception and that Google’s “Don’t Be Evil” motto is the rule. Two conditions must be present to accentuate the latter: first, internal trust reinforced by personal relationships, and, second, external rules supported by social institutions.
Shermer then goes on to compare the corporate cultures of Enron and Google in some detail, thereby illustrating his contention about trust and social institutions. This is all very interesting (and certainly worth a read) but I have a few misgivings. What follows are a couple of unconnected observations.

Firstly, Shermer seems to fail to appreciate that to evaluate a hypothesis rigorously it needs to be tested against data not used to come up with it in the first place. That is, if we hypothesize x based on observations y, to test x we need to compare its predictions to a different set of observations z - we can’t use y again because that would be circular. So it makes me worry when Shermer says
By studying how modern companies work, we can gain insights into the evolutionary underpinnings of our morality, including concepts such as reciprocity, altruism and fairness. When we apply these evolutionary findings to economic life…
Is he using human behavior in corporate settings as data for evolutionary psychology or is he using evolutionary psychology to explain human corporate behavior? Perhaps I am being a bit unfair, Shermer has limited space and the above is somewhat tangential, but it remains an important methodological point.

Secondly, it is important to note that in most of the article, Shermer is speculating, not doing science or reporting on established science. For example, he explains Google’s success at creating a productive corporate culture by invoking egalitarianism:
A horizontal corporate structure [like Google’s] generates an atmosphere of equalitarianism and nonelitism that taps into the environment of our Paleolithic ancestors, who evolved in what are believed to have been largely egalitarian bands and tribes.
This seems plausible enough and, sure, we infer from the egalitarian cultures of current hunter-gatherers that our Pleistocene ancestors had similarly egalitarian ways, but we don’t really know what the significance of this is. Numerous successful organizations – the American military comes to mind – have decidedly vertical structures. And soldiers too have ancestors who we infer lived in egalitarian cultures. So what does this “tap into” business really amount to? Some actual science would have been nice – plausibility is not a sufficiently high bar, support from serious academic studies is what Shermer’s hypotheses need. (When n=2 [Google + Enron] we can’t be really sure of anything). More importantly, Shermer should have explicitly warned his readers he was speculating. To be clear: I have nothing against speculation; it’s a valuable and important exercise. But it is vital to distinguish carefully between speculation and fact, between speculative extensions of theory and well-established theory.

A small matter also annoyed me a bit in the article: Shermer uses the term “evolution” in several distinct senses without clear distinction. There is vague metaphysical evolution, cultural evolution, biological evolution, and many others. Shermer invites misunderstanding by not being clear about which sense he’s referring to.

Lastly, Shermer’s contention that Google is a paragon of goodness (and thus an illustration of his evolutionary speculations) is vulnerable to the observation that the company doesn’t always behave as advertised. Google, let’s not forget, conveniently disregarded its principles for access to the Chinese market (among many other lapses, as Shermer himself documents). But his response to this problem is as lame as it comes, “Controversies of this nature are inevitable for any company that grows as rapidly as Google has, and no matter how lofty a company philosophy may be, perfection will always be an unattainable goal.” Human aren’t perfect. Great. But we knew that already. What happened to Shermer’s hypothesis that there is an evolutionary reason that “don’t be evil” breeds business success? Scientists don’t get to rationalize away inconvenient facts. (To be fair, this problem doesn’t implicate the contention that aspects of the “don’t be evil” philosophy cultivate an internal corporate structure conducive to business success. Shermer, however, unwisely defends a broader hypothesis at the end of the article).

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