Very slightly confused here:
Market economic theory and simple models of evolution suggest individuals (or their genes) act to maximise their own benefit. But altruism is common, as apparently witnessed by festive gift-giving. The standard evolutionary explanation is "reciprocal altruism" (give me a gift and I\’ll give you one just as nice). One of the most widely used experimental setups to investigate the origins of altruism is the "ultimatum game". Two subjects are asked to share a cash sum of say £100. One of them (the proposer) decides the cut – who gets what. The other (the responder) can either accept the share offered or toss the money back in the proposer\’s face, in which case, neither of them takes any of it away.
They play the game only once, so there\’s no opportunity to develop reciprocal altruism. If the responder behaves entirely and rationally selfishly, he or she should accept whatever the proposer is prepared to give. But if the proposer offers less than £25, the other player tends to refuse the share and both leave empty handed. Most people are prepared to forsake personal benefit to punish selfishness. In the language of evolutionary psychologists, we are spiteful.
Now that\’s a reasonable description of the ultimatum game and yes it is true that humans seem to play it a different way from other animals. We are indeed spiteful when we don\’t get a fair deal. But there\’s an error there in the idea that market economic theory is based on the maximisation of our own benefit.
In one sense, it\’s true. In another not. It\’s commonly believed that each individual acts to maximise their own immediate self-interest: that is, that the economy depends upon a series of one time ultimatum games. Thus that one or oher party gets screwed in every transaction.
But actually, market economic theory is based, at least in part, upon Adam Smith\’s "enlightened" self interest. I take that "enlightened" to be a synonym for a recognition that it\’s actually a series of the ultimatum game: not a one off in each transaction, but a series of them with the same (or nearly the same) players over time. Thus the existence of behaviour such as spite, the idea of a "fair deal" which we will accept and an unfair one which we won\’t. No, Smith didn\’t couch it in the same language, of game theory and so on, but I do take the two explanations to be the same.
I thus end up with this piece of evopsych telling me not that there\’s something wrong with market economics, rather, that it\’s confirming one of the things that make such work. Precisely because we do have spite, precisely because we do look to enlightened self interest, not purely to short term self interest, that\’s why the whole structure works.