Money’s Mutation of the Modern Moral Mind
Apr04
Political Economy
Luca Giordano - Christ Cleansing The Temple

Money’s Mutation of the Modern Moral Mind

The Simmel Hypothesis and the Cultural Evolution of WEIRDness

This paper is also available as a PDF on SSRN.

Modernity as a psychological syndrome is a well-trod topic, with a variety of opinions as to, first of all, what it consists in, and second, what led to its peculiar dominance in the West as it modernized. Weber (1956), for example, perhaps most famously, points to bureaucracy as an organizational form that reflects and reinforces a rational and impersonal administrative style. Johnson and Koyama (2019) point to liberalism as a spandrel created by increased state capacity, and Henrich (2020) locates its origin in altered kin structures in Northern Europe. This last book, in particular, identifies a constellation of psychological features Henrich calls WEIRD, an acronym for Western, Educated, Industrialized, Rich, and Democratic, which has been used to refer specifically to the psychological tendencies and moral sensibilities that originated in, but have spread out rapidly from, the modern West.

One comparatively neglected account of WEIRD psychology, not necessarily at odds with any of the former, comes from Georg Simmel’s (1907) The Philosophy of Money, which argues that the rise of the mass money economy took over the coordinating role of a number of previously economically essential institutions and “freed” them from material feedback, allowing them to evolve according to their own internal logic. In numerous domains, money has driven an increased “differentiation”, not only in the basic sense of encouraging the division of labor as has been recognized since Adam Smith, but also in the sense that the various domains of human social life are much more clearly differentiated than in premodern social life. This is true both of differentiation within domains – for example, the proliferation of subcultures, or the conception of aesthetic choices as an expression of authentic individuality – as well as between domains – for example, the modern conception of religion as something ideally independent of politics. What I will call the Simmel Hypothesis, locates the essence of modernity as a psychological syndrome in this differentiation, driven by money’s quality as a pure means (as opposed to an end in itself).

This paper interprets the Simmel Hypothesis as a story of changing cultural-evolutionary constraints on the signals and institutions necessary to coordinate the division of labor. The essential problem is that the division of labor – the gains from which constitute the human evolutionary niche – requires trust, as well as collective action to generate that trust through enforcement mechanisms, which is coordinated with signals such as, ethnic, religious, or sartorial markers. Money, itself a costly signal and a coordinating mechanism (Harwick 2021a), largely obviates these, but only when property claims can be reliably enforced by an overarching institution such as a state. Because the validity of pre-monetary signals was predicated on their noninstrumental use, however – they were only credible if they were regarded as ends in themselves, rather than means – their replacement with a marker of pure instrumentality – money – does not necessarily diminish the use of the original signals. Rather, their disconnection from the feedback provided by the mundane tasks of coordinating exchange have led straightforwardly to the distinctive features of the modern Western mind, both its crowning achievements and its peculiar pathologies, including rationalism, individualism, and fundamentalism.

We will take pains to organize the logical problem of coordinating the division of labor after the actual historical evolution of the ways human societies have done so. While in principle “rational reconstructions” of any particular social institution are not constrained to follow actual historical evolution,1 the closer we can align them, showing why the historical development proceeded this way and not some other way, the surer we can be that we have focused on the key features, mechanisms, and constraints rather than something extraneous. We build, therefore, starting with the problem of the division of labor in personalistic groups, moving to the division of labor in a clientelist society, and finally introducing money and showing how it creates the conditions for the modern mind.

I. Division of Labor in Human Prehistory

The fundamental premise of this paper is that a mechanism is necessary for coordinating the division of labor. The division of labor is a more general concept than exchange, and the division of labor in the early human environment looked more like collective action than exchange. We will speak, therefore, of gains from the division of labor rather than the more specific ‘gains from trade’.

There are good theoretical reasons to prioritize collective action over exchange, rather than starting with a model of the latter (Harwick 2018). Most importantly, exchange – whether between individuals or communities – presupposes relatively secure property claims; otherwise there will be parties for whom predation provides higher payoffs than exchange. Indeed, non-stereotyped exchange is vanishingly rare among nonhuman animals for exactly this reason: however great the benefits from exchange may be, cooperation in an exchange makes one vulnerable to exploitation without sufficient security from predation to make it worthwhile to reveal one’s endowments.2

This security may arise from a natural asymmetry that favors the defender in conflicts over property, or from artifactual institutions that favor the defender and punish aggressors. It is doubtful that such an asymmetry naturally exists between people, and we cannot assume well-functioning third party definition and enforcement of property claims at this point, without begging the question. If dyadic exchange requires a collectively organized defense against predation, whether external or internal, we must solve the collective action problem before we postulate dyadic exchange. We cannot, in other words, build up from a thought experiment with Crusoe and Friday,3 and the division of labor – in whatever form it takes – will require trust.

Nor is it necessary at this point, once the necessary collective action is accounted for, to continue to dyadic exchange: achieving collective action in defense against internal and external predation suffices to account for early human social structure and the gains from the division of labor that it was able to exploit. The locus of collective action, and the division of labor, was for much of human history a small and relatively egalitarian band within which reciprocity and participation in collective action – both directly for material provision and external defense, and indirectly by punishing noncontributors in the material provision game (Yamagishi 1986) – are enforced by personal ties. Exchange within such groups is largely time-separated, with spot exchange reserved for inter-group trade.

Even this limited division of labor poses a puzzle, however. Both theory and experiment confirm that, without perfect information and beyond a group size of about 5, collective action will never be in the narrow interests of the individuals who are a part of it (Fehr & Gächter 2000; Bowles & Gintis 2011: 63-67).

Collective action can be evolutionarily stable even if it is not a Nash equilibrium, however, if there is selection between groups for those with more cooperative individuals, strong enough to outweigh the selection against cooperative individuals operating within groups (Sober & Wilson 1998). From the perspective of individuals in such groups, if their preferences are being shaped by  selection at a level other than the individual level where preferences are held, group-oriented preferences must be noninstrumental ends in themselves, rather than being held for the conscious purpose of exploiting gains from the division of labor (Harwick 2020). As Rappaport (1971) argues,

Through sanctification the purposes of higher-order systems may be injected into lower-order systems. As such, sanctification operates as a counterthrust to attempts by individuals or social groups to promote their own purposes to positions of dominance in higher-level systems.

Indeed, the fact that cooperation is not a Nash equilibrium under these circumstances shows that group-oriented preferences cannot be held instrumentally, for the explicit purpose of individual material benefit (see also De Geest & Miller 2021). Whether in the material provision game or in the supervening punishment game that stabilizes cooperation in the material game, it will never be in individuals’ narrow interests to cooperate unless their subjective preferences include ends besides their own individual material payoffs.

In order for individuals to be selected for who are impressible with group-oriented ends, it is necessary not only that such groups cohere internally for the purposes of collective action, but also that they compete with one another as relatively cohesive groups. The equilibrium is not universalistic altruism, but parochial altruism (Choi & Bowles 2007; Bowles & Gintis 2011, ch. 8), where group members have a noninstrumental preference for cooperation with an ingroup, but maintain hostilities (whether latent or overt) toward outgroups. Without such hostilities, there would not be sufficient competition between groups for those with members more strongly and noninstrumentally committed to their group to counterbalance the within-group selection against such individuals with noninstrumental ends. Evidence does point to intense inter-group competition in the early human environment, and as Choi & Bowles (2007) show, the theoretical alternative to parochial altruism is not universalism, but – like most animals, most of the time – simple noncooperation.

In practice, therefore, these noninstrumental preferences will be tightly linked to participation in ritual, as a costly signal of being committed to collective action within that particular group. The signal is informative because an individual with a noninstrumental preference for cooperation and loyalty to the group will participate in a ritual; someone without either will find it overly burdensome. Thus the strategy: contribute to the collective good provided the benefits can be limited to ritual participants.4 A community member who participates in (say) a harvest ritual, signals his commitment to remaining enmeshed in a network of repeated dealings, where atomized or independent agents would not be able to trust one another in a collective action context. In practice, because the primary axes of the division of labor in small-scale societies are by age and sex (Hooper et al. 2015), coming-of-age rituals, where a young individual is initiated into manhood or womanhood, are important signals of trustworthiness in a personalistic community (Gilmore 1991).

Thus, the division of labor within a community at tribal scale is coordinated by personal obligation, and vouchsafed by a credible signal of buy-in to that ongoing mutual obligation. And where dyadic exchange between individuals was not feasible because the defender of a property claim had no particular advantage over the aggressor, groups – especially settled groups, for geographic or other reasons – do frequently have a defensive advantage (Bó et al., 2020). Property claims of groups can therefore be more reliably enforced, and accordingly, regularized bilateral spot exchange between groups appears in the historical record long before bilateral spot exchange between individuals (Marwick 2003). And similarly to the division of labor within communities, the division of labor between communities is also laden with ritual forms, credible signals of benign intention in a situation that would otherwise expose both sides to the risk of exploitation. Malinowski (1926: ch. 3), for example, describes the extensive rituals accompanying the exchange of fish for vegetables between inland and coastal Melanesian villages.

II. Division of Labor in Impersonal Communities

Personal ties are only a viable mechanism to coordinate the division of labor at a severely limited scale. As a community grows, there are three possible paths forward:

  1. The community may fission (Bandy 2004), resulting in two (or more) distinct and nonoverlapping normative communities, organized internally much as before. This case presents no new problems.
  2. The community may be prevented from fissioning, and retain its status as a singular normative community, by organizing its division of labor on authoritarian lines. This too, however, becomes increasingly difficult as the scale of the society grows, due both to informational and principal-agent problems. The exercise of authority, being itself a collective action problem, can hardly be an ultimate solution to a community’s collective action problems.
  3. The community may split into separate but coexisting normative factions, perhaps all united by a loose set of noninstrumental values, but organized internally by more substantive values.

This latter case poses new problems, and it can be similarly arrived at through separate communities coming to overlap rather than through internal divisions. These factions may split along a number of different faultlines, depending on the potential for trust and collective action. For example, cosmopolitan empires have often settled upon a division of labor by ethnicity. Ethnic diasporas and religious minorities prior to 1700 have frequently specialized into particular occupations. In guild systems, occupations as such organize themselves as permanent interest groups. Stratified societies frequently reserve certain occupations for certain social classes. But whatever the axes along which the factions split, and whatever values they share with other factions in the broader society, they will necessarily be organized – to a greater or lesser extent – around some kind of noninstrumental value.

Such a society coheres because the division of labor is coordinated by a hierarchy of overlapping and competing normative groups at a variety of different scales. Bear in mind that there is as yet no third-party enforcement of property claims between groups, and rights within groups flow directly from the collective action around the noninstrumental goal that constitutes them. As North, Wallis, and Weingast (2009) emphasize, the various interest groups in such a society are kept together by the generation of rents – gains from the division of labor – which flow to groups as such and are distributed internally only after being apportioned to the group as a whole. They even call this situation the ‘natural state’ of political organization in societies too large to be organized entirely by personal ties. We will call it clientelism: a joint economic and political structure (for the two are hardly separate at this point) where the division of labor is organized by negotiations between groups, with individual rights defined and collective action occurring only within those groups, administered via overlapping personalistic hierarchies.

The fact that the distribution of rents among groups is settled and renegotiated with a background threat of intergroup conflict points to the importance of a collectively organized defensive advantage in conflict in making agreement on rights and privileges – and thus exchange – possible. Indeed, even when there has been a nominal central government, for example in most empires, on-the-ground governance is mostly left to these local groups, who interface with the central government as groups (Johnson & Koyama 2019), and hold the threat of collectively organized violence as a bargaining chip in negotiating the division of labor and (thus) the distribution of rents vis-a-vis other groups.

Furthermore,  if the coexistence of various groups is ensured by the generation of rents, these rents can be most easily generated through a division of labor; by the monopolization by one group or another of certain productive opportunities. In other words, the surplus generated from the division of labor made possible by ceasing hostilities, can be enough to ensure peace among intermingling groups, even as those groups maintain their identities and the loyalties of their constituent individuals. Johnson & Koyama (2019, ch. 12), for example, document a number of religious minorities across both time and space specializing in particularly lucrative trades: European Jews in moneylending, English quakers in overseas trade, and displaced German Huguenots in skilled craft. Ethnic minorities, similarly, frequently specialize into narrow occupations: celebrated examples in economic history include the Maghribi traders in medieval Italy (Greif 1993) and Jewish diamond merchants in New York City (Richman 2006). Religious or ethnic majorities can specialize along additional axes, for example, sex, class, kin, or even occupation as such. These various axes along which interest groups may form, and which may organize collective action oriented around some noninstrumental value, we will call domains of life.

Such groups must of course have internal enforcement mechanisms to ensure the buy-in and contribution from each member. But in a clientelist environment, they must also have enforcement mechanisms for external trade, and these will coevolve with and reinforce the place taken by the group in the division of labor. The Maghribi traders, for example, had specific enforcement mechanisms to prevent members from cheating outsiders with whom they frequently did business. The Jewish diamond merchants, similarly, have mechanisms to guard external trust from internal cheaters. This external trust is necessary in order for the group to benefit at all from monopolizing a certain market, and because different trades have different informational asymmetries and opportunities for exploitation, these external enforcement mechanisms will tend to be specialized to the group’s trade.

Thus, visible group markers – for example, religious garb, physical ethnic features, or signs of social class – take on a crucial significance: allowing any member in a society to know who can be trusted in what sort of trade. These markers themselves become costly signals for individuals, in that they preclude possible occupations monopolized by other groups. And being costly signals, they can serve as a partial surrogate for the more intense collective rituals of personalistic communities, and take on some degree of noninstrumental significance themselves. Many religious traditions require distinctive dress, for example, and sartorial and sumptuary laws limiting the acceptable dress and conspicuous consumption of various social classes, were common in medieval Europe and around the world. Such differences were also commonly imposed from without in cosmopolitan empires: the Fourth Lateran Council in 1215 declared (§68) that Jews and Muslims “of either sex, in every Christian province and at all times, are to be distinguished in public from other people by the character of their dress,” and similar regulations applied to Christians and Jews in the Ottoman empire.5

In addition to the organizational problem of the division of labor, the necessary noninstrumentality of the value around which each group or faction is organized shines light on the psychology of the individual under such a social structure. As Johnson and Koyama (2019) point out, “tolerance” in its modern liberal sense of a division between public and private commitments will be alien to him, though coexistence will of course be possible. So long as the burden of generating trust is placed on the collective action structures within these groups, trust which is necessary to generate the gains from the division of labor that constitute the human evolutionary niche, there can be no distinction between public and private commitments. Each individual in a society has an interest in knowing the normative commitments of each other member, in order to know exactly what each can be trusted for. And similarly, in equilibrium, each individual will have an interest in honestly displaying his own normative commitments.

Furthermore, these visible markers are bearing the burden of economic coordination. Each domain of life is functionally geared to economic necessity, even though from an “inside” perspective individuals regard the group’s values noninstrumentally. Thus, economic necessity constrains the cultural evolution of a group’s norms and values in a way that deliberate choice cannot, given the noninstrumentality of each group’s conscious goals. It has been noted, for example, that the radicalness of the early Christian Church – in particular, its principled iconoclasm – was largely lost during its institutionalization in the late Roman empire. Radically iconoclastic sects continued to arise and fizzle out over the next millennium, until the Reformation. This analysis provides an explanation deeper than simple corruption and persecution. Rather, any institutionalized religion – that is, one bearing the burden of holding together a widespread normative community – will be unable to take its own principles too literally, and will depend on pragmatic and inarticulable “blind spots” (Harwick & Kelly 2021).6 A sect that relies too heavily on logical entailments from specific articulated values to justify its strategies will necessarily be vulnerable to exploitative strategies in its collective actions, and – like the mostly failed hippie communes of more recent memory – will be unable to provide the internal and external enforcement mechanisms necessary to specialize into a rent-generating trade, and thus to survive as a distinctive group.7

Finally, though an individual may be committed to multiple overlapping groups in various domains (for example, kin, religious, occupational, etc), because each is oriented toward the provision of trust and enforcement mechanisms, it will be impossible to cleanly separate the various domains of life. Ethnic, national, and religious cleavages, for example, will tend to coincide, and will mutually reinforce one another in a structure of legitimacy. This is true not because the values held by groups in each domain are necessarily logically compatible or complementary – if this is not true of the values within groups, how much less for the values between groups! – but because they are being operated upon by the same selective forces. In terms of the explicit statements of its prophets and its sacred texts, for example, Christianity, like the Judaic prophetic tradition from which it descended, had strong anti-political commitments. But although the Church was (unlike for Islam) always distinct from secular power in Europe,8 the Church did serve an unambiguously political role, and religion was intimately connected to the legitimacy of political authority. There was no clear distinction between religious and political domains – even if the distinction between religious and political organizations was maintained – because the same cultural-evolutionary forces of economic necessity were operating on both. To say that premodern thinking was “holistic” as opposed to analytical, is simply to point to this lack of differentiation. Though different domains are all functionally oriented toward and constrained by economic necessity, they are done so through noninstrumental values, which means that a problem in any given domain cannot be considered in isolation from other domains without upsetting an equilibrium of rent distribution and division of labor between groups; nor can the question be approached directly in terms of means-ends rationality without vitiating the potential for collective action within any given group.

While North, Wallis, and Weingast show in detail why clientelism is a viable way to organize a premodern society, the signaling story we have told shows why post-Neolithic division of labor has invariably been organized along interest group lines, rather than some other way, and also explains important features of such societies. It is not that occupational lines provide a convenient common interest for the organization of an interest group; rather, it is that interest groups organized around some other value provide a vehicle for organizing the division of labor, ensuring its incentive-compatibility and generating sufficient rents from it. If collective action is necessary in order to provide a sufficient defensive advantage in conflict to make property claims meaningful, then bilateral exchange within groups will be largely unnecessary, and bilateral exchange between individuals of different groups will be done with the background of respective group loyalties in mind.

III. The Division of Labor in Monetized Societies

Georg Simmel (1907) argued that monetization was a watershed moment in the creation of the modern mind; that money’s status as a “pure means” accustomed modern peoples to rational calculation and allowed various institutions and domains of life to differentiate “according to their own internal logic”. Though Simmel was more sociologist than economist or historian, Simmel’s identification of the core of the modern psyche as rational calculation, as well as his story of differentiation through monetization, can be reconstructed more rigorously in light of the foregoing history of the coordination of the division of labor.

In a clientelist society, visible signals of group membership have a dual purpose: first, a signal to insiders that the individual will cooperate in the group’s collective action endeavors and participate in its internal governance, and second, a signal to outsiders that the individual is embedded in a group with enforcement mechanisms to ensure trustworthiness in particular occupations. Money, where it is used, is primarily exchanged with outsiders, and the property claims exchanged for money arise as as an equilibrium détente between these groups.

The situation changes when one unified group exists with both the power and the inclination to regularize and enforce property claims between other groups. It is important to realize that this situation did not exist even within premodern “states” and empires, which were held together less by the authority of a central government and more by negotiation among factions. To use the terminology of Mann (1984), despite having a great deal of despotic power – the ability to impose their will within their ambit of power – premodern states had very little infrastructural power – that is, a rather small ambit of influence. Where a central government existed – and it did not in many places for much of history – its operation was bound up with other domains of life such as religion, ethnicity, kin, sex, occupation, and so on, and dependent on legitimation from them.

When property claims are regularized between groups by a single overarching group, it becomes possible to use money for self-enforcing spot exchange. By contrast with visible signals of group membership, money is a costly signal to the provider of a good or service that the provision will be reciprocated with something of commensurate market value later by an indeterminate third party (Harwick 2021a). Money is a substitute for the kinds of group-internal enforcement mechanisms that made inter-group exchange possible, what Kocherlakota (1998) called “memory”. Provided property claims are widely acknowledged and enforced,9 money makes spot exchange incentive compatible.

The availability of money does not, of course, solve the ultimate incentive-compatibility problem: it merely transfers the burden to a higher level. The enforcement of property rights still requires collective action by a group specialized in enforcement and organized around a noninstrumental value. But, in this configuration, the collective action of such an enforcing group – a state – “transform[s] would-be N-person social dilemmas into soluble dyadic interactions” from the perspective of individuals in subsidiary groups (Harwick 2020).

Money, then, coordinates the division of labor, something noted by Adam Smith at the dawn of the modern era as a number of mutually reinforcing developments were occurring for the first time: (1) The British state was consolidating its administrative control over subsidiary groups and factions, and, more specifically, Parliament as a faction within the state consolidated its administrative control over the state itself. (2) Money was coming to be used as a general medium of exchange as local markets became integrated across the country and autarkic manor economies fell defunct. And (3) the division of labor was becoming increasingly intricate, driven by the increase in the size of the market.

What the availability of money under a regime of secure property rights does, is to relieve the subsidiary groups of the necessity of coordinating the division of labor. On the one hand, without a need for group-internal enforcement mechanisms, at least not to the same degree,10 the division of labor need no longer be organized along group lines, and can therefore be made much more intricate. A great deal of latent economic potential was unlocked by making it possible for individuals, rather than groups, to specialize according to a comparative advantage.

But relieving these subsidiary groups of the necessity of coordinating the division of labor, also changes the character of these groups themselves. Simmel’s characterization of money as a “pure means” points to the difference between monetary exchange under a secure property regime, and impersonal exchange without such an overarching regime. In the latter case, to repeat, because collective action and enforcement in large groups is not incentive-compatible, the costly signals used to coordinate that collective action must be regarded as ends in themselves, though ends with large practical blind spots. On the other hand, because money stands in as a costly signal and makes cooperation in exchange incentive-compatible, it is possible to employ money instrumentally in a way that it is not possible to employ intra-group ritual.

Thus, the deliberate means-ends rationality that Weber (1956) and Simmel both identify as the peculiar feature of the modern mind, can be understood as having been made possible by the replacement of an incentive-incompatible collective action game, where a divergence between subjective payoffs and objective payoffs is maintained by selection at the group level for individually irrational preferences, with an incentive-compatible spot exchange game, where subjective payoffs may align with the objective payoffs. This alignment between payoffs and preferences, indeed, is the hallmark of economic rationality (Harwick 2020).

The ascendancy of monetary exchange as the primary organizational tool for the division of labor entails a reduction of the “moral burden” on most people;11 that is, the extent to which they must make choices contrary to their objective material interests in order to continue reaping the gains from the division of labor. Thus, rationalism – both economic and scientific – become possible: the former because spot exchange is now incentive-compatible within its ambit, and the latter because the economic benefits of a scientific means-ends approach to factual questions now outweigh the dangers of discoordination in an incentive-incompatible exchange game. Rationalism, therefore, in any domain, should be understood as the spread of instrumental logic into domains previously coordinated by groups organized around noninstrumental ends. Instrumental logic has a natural advantage in any domain characterized by an incentive-compatible game: there is no need to bear a moral burden when the Pareto optimal outcome is a Nash equilibrium; no need to suppress a direct instrumental interest in the objective material payoffs.

IV. The Modern Moral Mind

It would be a mistake, however, to characterize modern morality as purely means-ends oriented. Indeed, in many important ways, modern humans are less means-ends oriented than their premodern forebearers. In addition to the rationalization pointed to by Weber, Simmel characterizes the modern moral mind by differentiation among domains of life. In particular, the domain of economic necessity that previously ran through and anchored each separate domain, now constitutes an independent “economic” domain where explicit means-ends logic is permissible and even encouraged. This new domain, however, is jealously walled off from other domains, in a way that would have struck premoderns as peculiar. And this differentiation, along with the rationalization that money made possible, is the key to the difference between modern and premodern moral sensibilities.

Because the values around which these groups cohered are held for their own sake, the reduction of the moral burden on them does not eliminate the reason for the groups’ existing from the perspective of the members’ subjective values, even though there is no longer any objective economic necessity for them. Accordingly, the groups do not vanish, at least not uniformly. Rather, Simmel’s argument that previously interlinked domains of life begin to differentiate and “evolve according to their own internal logic” means that the cultural-evolutionary constraints on noninstrumental group values are now different. No longer constrained by the necessity to generate economic rents, iconoclastic and aritualistic groups become viable in a way that they were not in a sparsely monetized society. It was not just the printing press that made the Reformation viable where previous iconoclastic sects had failed or been coopted; it was the increasing monetization of the European economy, and the increasing capacity of central and northwestern European states that made a relatively iconoclastic doctrine possible (and even so, the even more stringently iconoclastic Anabaptist sects continued to be persecuted).

Thus, in a variety of domains the loosening of the economic constraint on group values leads to their intensification, not their decay. Where economic necessity previously made it necessary to permit large practical blind spots as to the entailments of particular explicitly held values, we are now free to take these values much more seriously and literally on their own terms and purge the blind spots. Art, for example, no longer tasked with buttressing political legitimacy, has evolved into much more abstract forms with no clear relation to aesthetic sensibility. In religion, fundamentalism becomes increasingly viable, with deliberate means-ends logic put in service of a noninstrumental value (Weber calls this value rationality). And indeed, fundamentalist revivals occurred in all of the major world religions over the course of the 20th century. In politics, liberal states are held together by a noninstrumental value of procedural legitimacy, a value that makes us far more averse to what would today be called corruption – even (to some extent) by those who might benefit from it – but in the past was simply the normal functioning of clientelist negotiation.

This latitude to take a group’s noninstrumental organizing value more seriously, also entails differentiation, both within and between domains. In religion, for example, witness the fracturing of denominations made possible after the Reformation. Because such groups can be largely self-justifying now, there is little size constraint, either from above or below. Simmel, similarly, points to the existence of fashion as a particularly modern phenomenon. With the division of labor no longer necessarily tied to social class, and therefore outward class distinctions now being unnecessary to enforce, coordination happens spontaneously, and as a signal of something other than cooperativeness. In particular, means-ends rationality now frequently grounds aesthetic choices in an ethic of authenticity. I dress the way I do, not because this is simply how we dress, but in order to express some facet of individuality (and indeed, authenticity is closely related to the iconoclasm and aritualism that we have argued money also make possible: see e.g. Keane [2002]). Individual choice in the expression of visual signals, along with much more fluid group affiliation, become possible precisely because these signals are no longer bearing the burden of coordinating the division of labor. Religion, too, becomes (or at least, can become) a matter of private conviction and belief rather than public participation in ritual. Thus an ethic of tolerance in its modern sense – a division between private and public commitments – becomes possible only in a fully monetized society.

This luxury to take our noninstrumental values more seriously, to fully explore their logical entailments using explicit means-ends logic, manifests as a particular sort of purity. Indeed, despite the fact that money takes over much of the economic coordination in the modern era, we feel much more strongly than did premoderns that money should not touch sacred values; that to involve money in any of these noninstrumental values would be to profane them.

In justice, for example, we feel that monetary fines for murder are inappropriate, as it raises the specter of a wealthy individual deciding that he can afford a murder. For the ancients, however, a monetary fine for murder was quite normal, in societies all the way from Hammurabi’s code to the ancient German practice of Wergeld, both of which lay out a schedule of monetary fines for various crimes including murder. In a clientelist society, money simply does not carry the connotation of rational calculation as it does for us today. In Melanesian societies, a variety of primitive monies carry ritual significance (e.g. Armstrong 1924), whereas we feel that to exchange religious experience for money would be to cheapen the former; to reduce it to a means rather than an end in itself. Jesus’ anger at the moneychangers in the temple (Matthew 21:12-17) appears quite natural to us in the modern era, but the role of money in sacrificial ritual would have been commonplace and unobjectionable at the time. And in love, we feel today that romantic love should be self-justifying and noninstrumental. We heroize stories of marriage across ethnic or class lines. Whereas in a clientelist society, when kin ties are cemented and familial alliances made through marriage, and the division of labor is organized along kin lines, dowries and bride prices are common: not that love plays no role, but it is not so differentiated from domains of  economic necessity as it is for the moderns.

This process continues today, and presents the possibility of sacralization in order to remove something from the realm of economic calculation and means-ends rationality. The rhetoric surrounding healthcare, education, or housing policy, for example – that they are rights – frequently aims at just such a sacralization, in order to preserve and legitimize an otherwise inefficient flow of rents.

V. Conclusion

Scientific rationalism is commonly accepted as a hallmark of WEIRD psychology, but its exact contours, and its ultimate origin, have been the subject of a wide variety of speculations. We have interpreted Georg Simmel’s sociological account as a cultural-evolutionary story of the changing constraints on institutions, with moral sensibilities and psychological predilections responding to a reduced moral burden on the institutions that previously coordinated the division of labor.

To say that the moderns are more analytical, for example, points to the fact that the domains of human social life are more functionally differentiated now. To call them individualistic points to a reduced moral burden, which allows them to regard outward signals instrumentally, as expressions of individual preference, rather than as signals coordinating cooperation. The locus of economic provision is much more individualized and dyadic than in the past. This differentiation, the “freeing” of various domains from economic necessity, has made possible a number of the crowning achievements of the modern world. The application of means-ends rationality to the natural world, the luxury of taking a commitment to literal truth seriously, has made possible an unprecedented scientific and technological revolution. And the reorganization of the division of labor around dyadic exchange rather than group-internal collective action mechanisms has unleashed a staggering explosion of economic growth over the past several hundred years.

At the same time, the disasters of modernity can be traced straightforwardly to the same predilections. Unconstrained by economic necessity, fundamentalism – whether religious, nationalistic, or ideological – can become locked into a piety contest dynamic, where the primary cultural-evolutionary force becomes runaway selection on the most extreme interpretation of a sacred value. Many of the wars, mass murders, and genocides of the 20th Century – at scales far beyond anything possible in the premodern era – were a direct result of such a dynamic.

On the other hand, if ritual participation is necessary for the healthy development of the human mind, the ability to provide for one’s self economically without such participation – again, a possibility unknown to the premoderns – will increase the incidence of anomie, undersocialization, and other afflictions of modern, and especially urban, life. Finally, if modernity as a psychological syndrome is partially heritable, it may select against itself by separating the domain of childrearing from the domain of economic necessity, making it subjectively superfluous (Harwick 2021c). Indeed, the demographic transition is closely linked to psychological modernity, and birthrates continue to plummet both in the developed and the developing worlds.             Only a few hundred years into the modern era, we are still in uncharted territory, especially entering what has been called a “crisis of modernity”. The achievements of the modern mind – scientific rationalism, individual liberty, and economic growth – are worth celebrating, and preserving. This account of their origins highlights the dangers it must confront; destructive outgrowths of the very same tendencies that made the modern world possible. In particular, the noninstrumental values buttressing the liberal state – the values of procedural legitimacy, of formal equality, and a tolerance of substantive inequality – must be reinforced for their own sake and not instrumentally as a means to economic growth. If they are treated as mere means – as many policy-oriented economists are wont to make them – defection against them is still the Nash equilibrium for any given faction, which can secure a larger share of benefits and status to itself, even at the expense of the broader social body. Such a society, one to which the rise of identity politics is rapidly hurtling us, must eventually collapse back into a clientelist mode of organization unable to sustain either modern economic growth or individual liberty. That, ultimately,is the crisis of modernity to which its partisans must rise.

Footnotes

  1. Examples of rational reconstructions of social phenomena that self-consciously do not follow historical development include Menger (1898), Buchanan & Tullock (1962), and Rawls (1971).
  2. Thus far, the argument holds both for spot and time-separated exchange. Spot exchange (whether monetary or otherwise) has the advantage of lowering counterparty risk in any given transaction, but is only possible to regularize when parties can specialize, which is only possible against a backdrop of secure property claims, as well as a market size large enough to make specialization worthwhile. Neither of these conditions can be taken for granted at this stage.
  3. For more on why parables of goods-exchange emerging out of anarchy do not work, see Harwick (2021b).
  4. The importance of metering benefits in the heuristics used to build up social exchange strategies is emphasized by Cosmides et al. (2010), both in dyadic and n-person exchange.
  5. Interestingly, a reorganization of sartorial laws was a key piece of Sultan Mahmud II’s attempted rebalancing of Ottoman interest groups in 1829, particularly the establishment of distinctive dress for the administrative class (Quataert 1997).
  6. Mendenhall (1955), similarly, interprets the Old Testament as the record of a recurring clash between the principled iconoclasm of the Jewish prophets – a direct ideological ancestor of Reformation iconoclasm millennia later – and the inevitable pragmatic and corrupting exigencies of governance faced by the Jewish state.
  7. Why the Reformation succeeded where previous iconoclastic movements had fizzled out, will be suggested in the following sections.
  8. It has been argued, for example (Scheidel?), that one factor in Europe’s dynamism was the Church as an independent and transnational power center.
  9. This cannot, of course, be taken for granted, as the previous section shows. Nevertheless the origin of this kind of enforcement is outside the scope of this paper. We are more interested in its effects than its causes.
  10. Particularly severe information asymmetries may still make a division of labor along group lines efficient as before, especially where state enforcement is too unwieldy (e.g. Richman 2006). It should be noted however that one vital function of money is to eliminate information asymmetries on at least one side of the transaction (Alchian 1977).
  11. Though not on everyone, particularly in the enforcing group, which must still organize collective action for enforcement of property claims upon subsidiary groups.

Tags

CooperationCultureMoneyDoug NorthGeorg SimmelJoseph HenrichMark KoyamaMax Weber

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