People behaving badly (and well)

The decline of morality has been blamed on governments being too brutal or too liberal. But a well-behaved society must grow naturally, and it can if left alone, argues Hamish McRae

Why do people behave badly? And how can one persuade people to behave better? There is an almost universal assumption that standards of personal - and public - morality have declined in Britain over the last 30 or so years, and that this is somehow the responsibility of the state. This quest for morality has become the latest battleground of British politics, with both main parties seeking not just to assert their own "moral correctness", but also to pin the blame for the decline on the other side.

For the left, it is all the result of the Tory brutalisation of society over the last 17 years: an excess of individualism and greed, which their market-based philosophy encouraged. For the right, it has been the result of a generation of stripping away of individual responsibility by liberal attitudes of the 1960s and 1970s and by the encroachment of the state: both, they would argue, were fostered by Labour.

The "it's all the fault of the other side" may seem a bit depressing, but it is unsurprising given the nature of late-20th-century political debate. Governments are seen to be responsible for human behaviour, or at any rate for curbing, channelling and shaping it. But what is surely much more depressing is the conclusion that flows from this: that the bastion against bad behaviour - and let's leave aside for the moment the definitions of that - is the government. People, it would seem, have a disagreeable choice. They must accept a more authoritarian state, as in Singapore, and they will get low crime, low unemployment, and a relatively stable family structure. But if they want the liberty and exuberance of the United States, they will have to put up with high crime and much less stable families.

Of course there must always be a conflict between order and variety, between bossiness and freedom, but to our Victorian ancestors the odd aspect of the present debate would surely be the assumption that the state is the appropriate body to "remoralise" our society, if that is indeed what we want to do. Do people really behave differently because they are told to do so by the government of the day? A century ago that would have seemed an absurd notion.

Anyone who instinctively believes that people are moral, honest and co- operative not because they are told to, but because they have found that this behaviour is in their long-term self-interest, will be vastly encouraged by a new and important book published today, The Origins of Virtue by Matt Ridley.

The author, a former science editor of The Economist, is a zoologist by training, and draws on biology as much as economics to explain why human nature is what it is. Dolphins, bees, ants, apes, even vampire bats are pressed into service, alongside Hobbs, Rousseau, Smith, Ricardo and Darwin. The result is a book refreshingly and determinedly non-political - though readers might like to know that Matt happens to be a nephew of the late Nicholas Ridley, the former Tory cabinet minister.

His thesis starts with the revolution in biology that has taken place since the 1960s, a revolution encapsulated in Richard Dawkins' phrase "the selfish gene". People do not consistently act in their own self-interest, or that of their family or their group. They do things for the benefit of their genes. This explains some aspects of human economic behaviour. For example, economists have always found it difficult to explain why people want to pass on wealth to their children. It is a very strong desire, but it does not fit in with theories that see the main motive of humanity as being to maximise consumption, for it brings no benefit to the individual. Think of inheritance as money following genes and it all makes sense. (It also explains why inheritance taxation is so unpopular.)

Ridley then moves on to Adam Smith's identification of the division of labour as the great driver of the world's vastly increased prosperity over the past 300 years, and the pursuit of self-interest as the motive leading to greater specialisation. He explains a wonderful parallel between the market economic system and the human immune system.

Our immune systems are immensely specialised, with more than one billion different types of defending cells. But there are not very many of each; they only multiply if there is a need to fight an infection. So when the defenders rush in and kill the invaders, they are not doing so because they are good guys; they are doing so because that is the only way they can fulfil their innate ambition to reproduce. Their "selfish ambitions are bent to the greater good of the body just as selfish individuals are bent by the market to the greater good of society".

But how did we, as a species, learn to co-operate? How did we learn that honest exchange of goods and services generates wealth faster than theft? I have just been reading John Julius Norwich's trilogy on the history of the Byzantine empire. One of the most striking differences between that age and ours (aside from the matricide, fratricide, patricide, blinding, castration, slavery and other disagreeable practices of the period) is the different perception of how wealth is generated.

We know you get rich by trade; then people thought you got rich by pillage. Byzantine rulers may have been dimly aware that wealth was generated by a trading economy, although they weakened theirs by over-regulation, but they weren't averse to destroying their markets by sacking their enemies' cities.

Ridley takes us through the various twists of "game theory" - what strategies are most likely to gain participants their goals when neither side knows if the other will cheat. There is Tosca's dilemma in Puccini's opera - should she sleep with the police chief to save the life of her lover, Cavaradossi? Both she and Scarpia cheat and all three die.

Ridley next looks at "tit-for-tat", where each player responds in like form to the opposite player (played with murderous consequences in sectarian Northern Ireland) and compares it with other strategies such as "always defect" and "always co-operate". In computer simulations, it seems that a generous version of tit-for-tat (ie you occasionally forgive misbehaviour by the opponent, but not often enough to encourage it) usually won for everyone, until this was modified into a strategy called "firm-but-fair", which did even better. That motto encapsulates the way vampire bats trade blood with each other, and of course the way we are supposed to train our dogs and bring up our children. The central point here is that reciprocity is a fundamental glue of society.

But how do you use reciprocity to reinforce good behaviour? Ridley looks at the research on baboons, where males co-operate to steal females from other males - not a particularly virtuous intent - and at chimpanzees. Dolphins co-operate in even more complex ways, but with even more questionable moral intent: they kidnap a female in season and gang-rape her.

But, at least, dolphins do not live in warring tribes. They do not have football riots. Ridley's aim is to explain to people that they need not be tribal: "Our politics need not be the way it is". If we behaved like dolphins there would still be aggression and violence, but there would not be nationalism, borders and warfare. Can we become less tribal? Yes, says Ridley, female humans already are much less tribal than men.

The key is to encourage trade. If people trade, exploiting their comparative advantage, everyone benefits. Prosperity reinforces their desire to co- operate. To function properly the market system demands order and creates laws - but laws created from below by market needs, not imposed from above by some potentate. The market system will, Ridley argues, protect the environment more effectively than government edicts, provided that property rights to the environment are established, so that people protect the environment through self-interest - "ecological virtue must be created from the bottom up, not the top down".

Above all, successful trade requires and reinforces trust. Trust, like morality, seems suddenly to have been rediscovered by Western society. The growth of litigation, particularly in the US, arguably reflects a decline in trust. The need for greater trust in economic relationships is the core argument in the new best-seller, Trust, by the American author Francis Fukuyama. It is not just that if contracts have to be tied down in detailed documentation, then the whole process of trade is slowed. Part of Fukuyama's argument is that economic growth now will depend more and more on the sharing of intellectual capital and that this can most efficiently be done through informal trust relationships.

At a dinner I had with him in London last week, Fukuyama told me why Silicon Valley in California has been so successful. People there, he explained, share knowledge not just with companies with which they are collaborating, but often with competitors too. Their community consists in large part of people who had been hippies together in the Sixties. They have established a loose reciprocity, a knowledge that if you helped a friend who worked for a competitor to solve a problem, at some stage you could go back and get some help yourself. Result: Silicon Valley has dominated software development in the US, and not the computer community around Boston's Route 128, which operated on a less co-operative ethos.

Trust has to be built from the bottom up; it cannot be imposed from above. Ridley's conclusion does have political implications. It is that "where authority replaces reciprocity, the sense of community fades". He shares the widespread belief, articulated strongly by people such as Tony Blair, of the need to rebuild a sense of community, but he believes that government cannot do that. Indeed, he believes the state is the problem, not the solution. We have replaced thousands of small community institutions with a handful of giant centralised ones. "Heavy government makes people more selfish, not less".

If Ridley is right, then there is a middle way between Singapore and, say, Manhattan. We do not need to have an authoritarian government telling us what to do to enjoy a stable society. We do not need to experience the disparities of wealth and human values evident in parts of North America in order to have a competitive economy. We build trust through free exchange between individuals. We take bureaucracy out of people's lives, and push down power to local communities. Gradually virtue will return.

`The Origins of Virtue', by Matt Ridley, Viking, pounds 20.