The Wisdom of Pop-Management Books

‘Pop management’ books – that is, non-scientific business books written by high-profile academics or (former) practitioners for managers or those who want to become one – are a very interesting literary genre. With catchy titles (‘Competing for the Future’, ‘Winning in Emerging Markets’, ‘Build to Last’, ‘In Search of Excellence’, ‘Good to Great’, ‘Guerilla Marketing’) and promising sub-titles (‘Successful Habits of Visionary Companies’, ‘Lessons from America’s Best-Run Companies’, ‘A Manifesto for Business Revolution’, and ‘Easy and Inexpensive Ways for Making Big Profits from Your Small Business’), they target travelling managers in airport shops and try to lure them into believing that there are some magical tricks to be learned that will make a business more successful…And it would seem that this marketing strategy works: many of these books are best sellers (‘The One Minute Manager’, for instance has sold over 7 million copies since it was first published in 1982!), Harvard Business Press – which specialises in this genre – is a thriving business, and more and more pop-management books come on the market every year.

However, such business books have also been criticised for a lack of scientific rigour and for promising things they cannot hold. An excellent critique of this literature is Phil Rosenzweig’s book ‘The Halo Effect…and eight other business delusions that deceive managers’, which – rather ironically – is very much written in the pop-management style. Rosenzweig shows for instance that many very successful business books commit one of the most basic cardinal sins in scientific research, i.e. sampling on the dependent variable. Books like ‘Build to Last’, or ‘In Search of Excellence’, essentially pick a number of successful companies and try to explain their success by looking at the characteristics of these companies and their top managers…Ignoring all the while the thousands of other companies out there which have similarly characteristics, but are not successful.

One fairly recent pop-management book is by Michael O’Malley and is called ‘The Wisdom of Bees. What the hive can teach business about leadership, efficiency and growth’ (or TWOB for short). Having been a hobby beekeeper at one stage myself, I was intrigued by the claim that business had something to learn from a bee colony. But unfortunately, like most pop management books, TWOB lacks rigour and is full of half-baked intuitions and flawed analogies….Indeed the main attraction of the book, but also its main flaw, is the use of a biological analogy, comparing a beehive to a human business organisation.

To be sure, biological analogies are not a bad thing as such. Indeed, there was some debate a while ago about what the elimination – or rather the deliberate omission – of biological analogies from Alfred Marshall’s work signified for the development of economics as a discipline. Some economists see in the omission of biology – notably Darwin’s evolutionary theory – from economics the beginning of neoclassical economics (Niman 1991, Foas 1994).

However, at the same time, the use of biological analogies in the social sciences are a tricky thing that often leads to the temptation to ‘naturalise’ the socially constructed and to cast an air of innateness and inevitability over acquired human behaviours. This temptation is clearly apparent in TWOB.

The book starts off with the observation that honeybee colonies are remarkably well organised and function smoothly, despite the complexity of the tasks at hand (finding a location for the hive, creating honeycombs out of wax, foraging for pollen and nectar, producing the honey, feeding larvae etc.). Bees have been around for millions of years, inhabit every continent except Antarctica, and are hence among the most successful animals on the planet. The author concludes that ‘[t]he honeybee has mastered a great society and it would be phylogenic hubris to think we have nothing to learn from them.’ (pp.7/8).

The reasons for the success of bees are quickly identified: motivated and committed workers, a self-sacrificing dedication to the hive, clear leadership from the Queen, yet decentralised decision making, meritocracy, and careful planning, among others (25 in total).

The problem with this ‘analysis’ is that the author searches for answers to inherently human problems in an insect society.  As much as I love anything that has six legs and wings (as opposed to eight legs and no wings, I should add!), insects are nothing like humans – or indeed any other mammal. Insects are fascinating and awe-inspiring animals when you look at them from up close and take the time to observe their behaviours. Nevertheless, in neurological terms, they are relatively simple creatures without a very complex nervous system. In fact, many entomologists consider that insects’ nervous system is too simple for them to actual experience anything akin to what we call 'pain' in humans and other mammals (see here). Similarly, complex social behaviours of social insects do not necessarily imply that these behaviours are the result of ‘consciousness’, ‘intention’, or even ‘thinking’ and ‘planning’ as the book suggests. Complex behaviours may very well be hardwired into their DNA. Nor do insects have a complex psychology anywhere comparable to humans. Therefore, concepts such as motivation and discipline; and behaviours such as opportunism, intrigue, and deception – referred to throughout the book – simply make very little sense in this context.
So, when the author writes ‘cooperation does not occur automatically in human and bee societies’ (p.31). I think he is mistaken. Cooperation among honeybees does not have to be achieved through disciplinary mechanisms, such as incentives, rewards, and punishments to avoid the possibility of opportunism. Cooperation is hardwired into the bees DNA. This undermines the whole purpose of the analogy, because motivation and reigning in opportunism are two key functions of human work organisations. Surely, there is not much we can learn from an ‘organisation’ that does not have to deal with these issues.

More broadly, the whole book is based on the fundamental mistake of ‘humanising’ bees. The author is certainly right that they are amazing creatures. But they are simply not human. Clearly the author seems to forget that at times. Thus, he writes: ‘Bees exhibit a worldview that we correspondingly would describe as fair, open-minded, and objective’ (p.114). Do bees really have a worldview? Do they use concepts like fairness and open-mindedness?

More strikingly still, referring to the bees’ role in pollinating plants, O’Malley writes: ‘Honey bees were practicing social responsibility long before it became fashionable’ (p.156). This is stretching the analogy beyond the threshold of pain. It clearly does not make any sense whatsoever to attribute to bees concerns such as ‘social responsibility’. Surely none of the positive effects bees have on their environment are intended or even conscious!

Bees are not human, do not behave like humans, and do not have the same needs as humans! They work weekends, take no holidays, have no hobbies, they don’t ask to be paid; they cannot feel any pain, and essentially work until they drop dead! They have no house to go home to and their ‘work’ – foraging for pollen, producing honey and wax etc. –, is not actually work, but simply their life. Indeed, bees do not produce honey to sell it, but to feed on it. Therefore, for a bee, the beehive is not a business.

Now, one might say that my criticism is a bit unfair. Isn’t it legitimate to pick certain practices of a bee colony and derive lessons for companies without buying into all aspects of the analogy? Well, the problem with this ‘pick and choose’ approach is that the successful functioning of the beehive can only be understood holistically. Different behaviours of honeybees taken individually cannot account for the success of beehives; only the complex interplay of the different behaviours can. The reason why the beehive works so well is that the different behaviours complement each other so well. So, drawing lessons by looking at one practice only while ignoring complementary ones may not work.

Consider for instance the claim that part of the beehive’s success is to show little tolerance to underperforming individuals and replace less productive old bees with younger more vigorous ones (lesson 3 ‘Let merit be your guide’, p.26). This is certainly the case. Yet, one reason why this works is that the colony does not have to pay for the old bees ‘retirement plans’ (e.g. food and shelter), as they simply die or are killed. That’s why getting rid of them reduces the hives ‘costs’ tremendously.
Similarly, the author praises the bees’ pragmatism when it comes to rid the hive of male bees (drones) who are not needed anymore and are now simply a burden on the hive. O’Malley sees in this behaviour, called the ‘massacre of the drones’, a laudable example of ‘swift action’ and meritocracy (who doesn’t contribute to the hive has to go) (pp.26/7). Sure, this behaviour contributes to the beehive’s success. But only because of its radicalism, which consists in the fact that the drones are killed and do hence not drain the hive’s resources any further (as a laid-off worker might do when obtaining a social package). Needless to say that applying such a radical solution consistently to a human organisation raises all sorts of ethical and social questions. Conversely, if the lesson to be drawn is not consistent with the actual practice, the question arises what is the point with the analogy?

In the absence of a systematic and holistic use of the analogy of the beehive, the lessons seem arbitrary at best and random at worst! Sometimes they are plainly contradictory: Thus, lesson 12 ‘preserve a positive attitude’ suggests that managers should supress any ‘[…] contagious negativity and cynicism’ (p.88) among the workforce. This implies essentially to impose one positive ‘corporate culture’ or one ‘discourse’ that is accepted by everyone. Lesson 13 ‘keep your balance’, on the other hand, suggests that managers should embrace diversity within the workforce, not impose conformity, and workers should be allowed to ‘use their brains independently’ (unless, I suppose, if they chose to use it for ‘negativity’ and ‘cynicism’).

Other lessons seem terribly far-fetched: Lesson 2 (‘keep energy levels up’) mentions very reasonable measures to reduce the risk of ‘burn out’ among the workforce; one of which is sabbaticals….How exactly the toiling life of a bee leads to the conclusion that their success has something to do with sabbaticals remains a mystery.

Finally, some lessons are open to all sorts of interpretations: O’Malley writes that the choice of a new site for the hive is ‘[…] a momentous life-or-death decision process that is entirely made by worker bees in the field, operating outside the control of a central authority’. This passage could very well be interpreted as suggesting that companies should be run by workers. I’m sure that is not what the author had in mind. But it illustrates the ‘whateverism’ inherent in the analysis. Every single type of behaviour of bees can be interpreted in various ways, especially because the analogy is not used systematically and holistically.

Indeed, based on the description of the functioning of the beehive in this book, I can think of at least two additional lessons that could be drawn for human society:

26. Only one female in the society should be allowed to reproduce, but all others are in charge of raising her offspring (That actually sounds remarkably like Plato’s republic).

27. Workers should have the power to get rid of a CEO if they consider his/her performance to be unsatisfactory and they should be allowed to reject an incoming CEO if they don’t like him/her (Bees oftentimes kill new queens that they don’t like).

To be sure, these additional lessons are absurd. However, the behaviours they refer to are as much part of the explanation why beehives work well as any other lesson that can be found in the book. My point is that there is no obvious criteria that tells us why certain aspects of the analogy should be applied to human organisations while others should not.

Readers may find this is a pedantic rant about a book that doesn’t take itself as seriously as I do. I think, however, the question of analogies and metaphors in the social sciences is an important issue, because they have more pernicious effects then people commonly realise. The problem with metaphors and analogies is this: The originators are often quite nuanced and acknowledge the imperfect fit with reality. Most of their readers, however, will take them much too literally.  Often, the metaphor is all that remains of the argument. The context in which it was used and the nuance and complexity of the underlying argument is lost. Rather than a tool to make complex phenomena easier to understand by relating them to the readers’ every day experience – which is the purpose of metaphors and analogies –, they become gross over-simplifications of complex social phenomena and therefore and obstacles to a proper understanding of the phenomena at hand.

Two important examples spring to mind: The first one is Adam Smith’s metaphor of the ‘invisible hand’ to illustrate how markets work. The second one is the analogy of a government’s finances to a private household (see on the latter example). Both images have become so common and widely-used that they are literally taken for granted by most people, in spite of the fact that both capture – at best – only part of the phenomenon that they are supposed to describe. These images are powerful rhetorical devices, but have also contributed to widespread fundamental misunderstandings about the functioning of markets or public finances with important consequences for economic policies. Therefore, careless metaphors and analogies should not be taken lightly and the idea that human society functions like an insect society needs to be nipped in the bud!

Neo-liberalism Is Dead!....and It’s NOT Good News.

There has recently been a great deal of debate around the question whether the Global Financial Crisis of 2008 was caused by neo-liberal policies and – if yes – whether neo-liberalism would survive the crisis (two books who deal with this topic are by Colin Crouch  and Vivien Schmidt and Mark Thatcher) .

A book by Serge Audier entitled ‘Néoliberalisme(s). Une archéologie intellectuelle’ [Neoliberalism(s). An intellectual archeology] (unfortunately not translated into English yet), suggests a surprising answer to this debate: namely, neo-liberalism has been dead for a very long time….and I would add: that’s not a good thing!

Audier’s book sets out to challenge four critical perspectives on neo-liberalism, which are widely adopted, but rarely questioned by critical academics:

1.     The first critical perspective sees neo-liberalism as a bellicose and militant ultra-liberalism that the bourgeoisie used to fight the rise of socialism and the labour movement, which threatened their dominance. This very popular neo-Marxist perspective is notably associated with David Harvey and Naomi Klein. For these authors, the quintessence of neo-liberalism is not so much the ‘shrinking of the state’, but rather the fusion of ‘big government’ with ‘big business’ and the use of the state apparatus to promote large corporations’ interests.

2.     The second perspective is the Foucauldian perspective. Michel Foucault and his disciples start from the analysis of Gary Becker’s theory of Human Capital and investigate the ‘anthropology’ underlying neo-liberalism. Foucault’s main argument is that neo-liberalism is distinct from classical liberalism by substituting a view of the homo oeconomicus as the ‘entrepreneurial man’ for the classical view of homo oeconomicus as the ‘man of exchange’. Therefore, neo-liberalism is based on the foundational regulatory principle of competition, not economic exchange or consumption.
Neo-Foucauldians such as Wendy Brown and Thomas Lemke draw –according to Audier uncritically – on this ‘entrepreneurial paradigm’ to criticise modern capitalism for its tendency to make the ‘competition’ the governing principle for all areas of life.

3.     The neo-Bourdieusian perspective is different from the Foucauldian one, because it focuses – on the one hand – more on the economic consequences of neo-liberalism (i.e. inequalities, precariousness of employment relations etc.) and - on the other hand – on the role that economics as an academic discipline plays in the transformation of capitalism. Pierre Bourdieu’s work – and the work of his disciples such as Frédéric Lebaron – sees neo-liberal (or neo-classical) economics as a key instrument allowing certain ‘class interests’ to become dominant. On this account, economists become the bearers and apostles of a certain ideology, which has been devised to maintain in place certain power structures in the capitalist society. This leads Bourdieusian sociologists to purport a hyper-rationalistic view of human history, where every event is part of a ‘plan’ (or indeed a conspiracy) orchestrated by a small, powerful elite to reproduce itself and maintain its grip on power. Neoliberalism is just one element of that plan.

4.     The fourth perspective criticises an alleged coalition between the radical left-wing movements of Mai 1968 and economically liberals. On this account, it is this coalition of left-wing anti-authority, individualist libertarians and right-wing economic liberals that is responsible for the unleashing of an amoral and immoral brand of capitalism since the 1970s. This perspective is linked to a conservative – some might say reactionary – interpretation of neo-liberalism and has notably been adopted by Nicholas Sarkozy in his election campaign in 2007. But even left-wing intellectuals, such as Eric Hobsbawm voiced similar criticisms of the individualist, anti-authority movement of 1968. On this account, the common factor uniting left-wing students with right-wing ‘speculators’ is hence the rejection of any authority (including the state), the extreme individualism and hedonism of these movements.

Based on a meticulous analysis of public speeches, minutes of meetings, personal correspondence, and the main writings of leading neo-liberals, Audier convincingly shows that all four critical perspectives are of very limited use to understand what neo-liberalism is and what role it played in the transformation of modern capitalism. All four interpretations tend towards post hoc rationalisation of a complex historical process and some of them frankly border on intellectual dishonesty, in that they apply a very selective reading to the history of neo-liberal thought. The evidence presented in the book, strongly suggests that neo-liberalism cannot be seen as a coherent anti-Keynesian conspiracy supported by big business. Rather, from its inception, neo-liberalism was a loose collection of ideas and theories, which were often instrumentalised for economic and political purposes, but which never formed a homogeneous set of ideas that was undisputed among its main proponents, as the more conspiratorial interpretations would make us believe.

More interestingly, however, for me, two key points emerge from Audier’s account: Firstly, neo-liberalism was a great idea; Secondly, it was dead by the early 1960s.

Why was it a great idea? What Audier’s analysis shows, is that the intention of most participants in the meeting that first established the neo-liberal project – the Colloque Lippmann held in Paris in 1938 – was not only – in fact, not even primarily – a staunch reaction against anything socialist, collectivist, or even Keynesian. Rather, neo-liberalism was born out of an acknowledgement that classical laissez faire liberalism and Manchester capitalism of the 19th century had failed. The neo-liberals of the first hour explicitly blamed classical liberalism’s indifference towards the social costs of liberal capitalism for the rise of socialism, communism, and fascism. Both Lippman’s famous book ‘The Good Society’ – which was the inspiration for the meeting in Paris – and the interventions during that meeting were as much concerned with averting the communist threat, as with discussing ways in which the classical liberalism’s blindness for the social costs of free markets could be overcome without compromising the fundamental principals of liberalism. It is telling that one of the names for the new liberalism that was discussed at the meeting alongside ‘neo-liberalism’ was ‘social liberalism’. So, the goal of the neo-liberals was to ‘renovate’ liberalism, take into account the social component more, and making it thus fit for the 20th century. All in all, a great idea!

Unfortunately, that is not how things turned out in the end. The history of the next forty years of the neo-liberal project is one of fierce personal, ideological, and theoretical battles among different schools of liberalism. Increasingly, neo-liberalism turned away from the aim of reforming liberalism, to adopting a much more apologetic view of 19th century liberalism and Manchester capitalism. As the memory of the failures of 19th century liberalism waned, the self-critical view of the early 20th-century neo-liberals evolved into an increasingly confident defence of capitalism and free markets against collectivism and the state.

One key element in this transformation of neo-liberalism was the role that Friedrich Hayek played within the Mont Pelerin Society (MPS) – the principal international organisation promoting neo-liberalism from 1947 onward. Hayek had always been reluctant to call himself a neo-liberal and preferred the terms ‘paleo-liberal’ or even ‘old Whig’ instead. For him, liberalism did not need to be reinvented, but rather should be rid of any pernicious collectivist influence that had corrupted it since the 18th century or so.

A second key element that ultimately made possible the victor of this apologetic view of liberalism over the ‘renovation project’ was the rise of the Chicago School of Economics since the late 1940s around the figures of Aaron Director, Milton Friedman, Edward Levi and others (with the support of Hayek who Director brought to Chicago in 1950).

The distinctiveness of the Chicago School and the break with the ‘renovation project’ can best be illustrated regarding its stance on the question of monopolies, which emerged during the mid 1950s: Both classical and neo-liberals considered monopolies – public and private – as a major threat to a free society and free markets. They held that ultimately monopolies would eliminate competition. The state needed hence to intervene to protect markets from monopolistic tendencies.
The Chicago School turned this view on its head by considering instead that competition would ultimately erode any monopoly. The result of this new analysis was a very benign – I am tempted to write ‘naive’ – view of monopolies, as they were seen as merely temporary phenomena that would naturally be eliminated by market forces. Anti-trust policy on the other hand was now seen as just another unnecessary and pernicious state intervention. From this moment on, the main focus of the Chicago School shifted from protecting the capitalist economy from itself (i.e. from its monopolistic tendencies) towards fighting any form of state intervention.

Robert van Horn describes this crucial episode in more detail than Audier. For van Horn this radical departure from earlier views on monopolies, constitutes the ‘birth hour of neo-liberalism’. However, I would argue that it actually constitutes the beginning of the end of neo-liberalism. The changed attitude towards monopolies certainly was a marked departure from classical liberal analysis of monopolies. However, somewhat paradoxically, it did move the Chicago School closer to classical liberalism in that a key insight of neo-liberalism was thrown overboard, i.e. that a functioning free enterprise system required the state to play a positive role in the economy. For Chicago, the solution to the problem of monopolies was not to guarantee a positive role for the state, but to limit the state. In other words, once again laissez faire had become the solution not the problem. In this sense, the rise of the Chicago School sounded the death knell of neo-liberalism in its original form.

Audier’s book shows in much lively detail how the MPS was the battleground on which the war of neo-liberal ideas was fought. From the beginning, Hayek was opposed to members of the MPS who adhered to an ordoliberal variety of neo-liberalism. With the growing size and influence of the American contingent, Hayek increasingly gained the upper hand in these – at times vicious and personal – struggles over the control of the MPS and its definition of liberalism. The key moment came in January 1962 when the former president of the society Willhelm Röpke decided to leave the MPS. Twenty or so German and Swiss ordoliberals, including Alexandre Rüstow followed him.
Audier calls this schism in the MPS the ‘dawn of the old neo-liberalism’. I would go further and argue that there was not much ‘neo’ left in the type of liberalism that became dominant from then onward, in the sense that the key goal of neo-liberalism as defined in 1938 – namely reforming liberalism to remedy some of its worst shortcomings – had disappeared from the agenda. Rather than seeking a ‘third way’ between socialism and classical liberalism that would combine the best of both worlds, the movement increasingly drifted into extremist ‘all-or-nothing’ arguments like the one most famously exposed by Hayek in the Road to Serfdom. On this view, the tiniest concession on questions of social justice and redistribution was seen as an inevitable slippery slope that could only have one outcome: the creation of a socialist regime akin to Stalin’s Soviet Russia.

In comparison to such uncompromising views that are now considered the base line of economic liberalism, the neo-liberalism of the Colloque Lippman seems like a very benign theory. Indeed, maybe the death of neo-liberalism in the early 1960s was a root cause of the current economic turmoil and more neo-liberalism may be a step into the right direction.
By that, I do not mean to support the view that the global financial crisis was the result of too much regulation and the solution would hence be to deregulate financial markets even further (see here for such an argument). I fundamentally disagree with that argument. What I mean instead is that it might be time for those who have been blindly trusting in markets, to put the ‘neo’ back into liberalism and acknowledge that markets are not self-healing, but require a strong state to protect markets from themselves and society from markets. While this would not constitute a radical change of the economic orthodoxy that many commentators hoped for after the Crisis of 2008, compared to the now dominant views, it would be a step in the right direction and may indeed be the best we can hope for…[1]

[1] With my colleague Mathias Siems, we made a quite similar argument about German ordoliberalism in a piece published in governance

Greed Is Bad. Envy Is Good!

We live in an amoral world, where arguments based on moral norms and values are often greeted with suspicion or derided as ‘quixotic idealism’, ‘irrational nostalgia’ and the like. However, two of the seven ‘deadly sins’ in Christian tradition have recently been extensively debated in public discussions about economic matters: greed (avaritia) and envy (invidia).

Most people probably associate the phrase ‘greed is good!’ with the character of Gordon Gekko from the 1987 movie ‘Wall Street’. It is also related, however, to one of the fundamental assumptions of economic liberalism. Indeed, it summarises – albeit in very crude fashion – the key argument of Bernard Mandeville’s 1714 book ‘The Fable of the Bees’ where he argued that ‘private vices’ will result in ‘public benefits’. Mandeville opposed the view that a society based on virtuous citizens could prosper economically. Rather, it was the self-seeking nature of human beings that ultimately constituted the basis for economic prosperity. His main example was the one of vanity – a private vice – in which he saw the main cause why the British fashion industry could flourish; providing employment and promoting economic growth in Britain.

Based on this analysis, economically liberal thinkers have ever since argued that the inherently ‘crooked’ nature of human beings does not constitute a problem for society, because the invisible hand of the market – if left to its own devices – will transform individual selfishness and even greed into beneficial economic and societal outcomes. After all, as Adam Smith pointed out, we do not rely on the bakers’ benevolence to get our daily bread, but on his regard for his own, economic interest.
Therefore, selfishness, profit seeking, and greed are not a problem, but both an inevitable fact of human nature and beneficial traits, because it is these features that ultimately drive entrepreneurial activity and economic growth. On this account, then, greed is good indeed!

This view has increasingly come under fire at least since the onset of the Global Financial Crisis that started sometime in 2007/2008. Many commentators have put the responsibility for the crisis squarely on bankers’ greed and their obliviousness of the risks associated with the strategies they pursued with a view to increase their bonuses and the value of stock option plans. This criticism has also spurred the debate about executive pay beyond the banking industry. In response to a public outcry about the seemingly ‘obscene’ levels of CEO pay in a time of unemployment and fiscal austerity, various countries have adopted measures to curb executive pay.
In parallel, the overall wealth and income distribution in Western societies has become a topic of public debate once again. This is notably because some people feel – rightly or wrongly – that in many countries the welfare cuts that affect the poorest in society, are not paralleled by a contribution of the rich to improve the country’s fiscal situation, e.g. through increased taxation at the top end of the income ladder, wealth-, or inheritance tax.

Envy – immoral, petty, and dangerous

Defenders of CEO compensation levels and of income and wealth inequalities put this sort of criticisms down to one of the worst private vices, i.e. ‘envy’. [1] Indeed, the phrase ‘politics of envy’ has made a remarkable comeback in recent years in particular in the media. It is often used to delegitimise left-wing attempts to capitalise on the wide-spread malaise about the level of executive pay and about inequalities.[2] The Daily Mail, in the run up to the UK general election of 2015, for instance, interpreted the Labour party’s proposal to increase the top income tax rate as resorting to the ‘politics of envy’ and to class hatred in a desperate attempt to displace the Tory government.
Reducing the unease with inequality to a question of envy in order to delegitimise polices that focus on issues of redistribution, equality or ‘social justice’ is obviously not new. In a book from 2001, the Spanish intellectual Gonzalo F. de la Mora talked about ‘Egalitarian Envy’ and castigated the left’s striving for social justice. Back in 1966, Helmut Schoeck  – an American sociologist of German origin – in a book called 'Envy: A Theory of Social Behaviour' explored the role envy played in human society. He concluded that left-wing movements – including Marxism, socialism, and the new left movements of the 1960s – had their roots in people’s inability to control their envy.

From this perspective, envy is a petty, irrational, and dangerous sentiment that has – at best – the potential to prevent others from excelling and society from progressing; At worst, it stirs up the masses, promotes class hatred, and threatens the stability of society. Clearly, many journalists, politicians, and certainly the economic elite would agree with this analysis. Greed is good, but envy is bad!

Here I want to turn this argument on its head and show that it might be the other way round. Envy, rather than being a dangerous, subversive sentiment that can be instrumentalised by communists and other revolutionaries to overthrow the capitalist society, may be an important mechanism that makes human societies more – not less - stable. There are two potentially beneficial aspects of envy that should be considered alongside its negative aspects.

Envy – greed’s evil twin or the flipside of the same coin?

With the first one, even economically liberally-minded people may agree, as it is essentially the flipside of the greed story: Friedrich Nietzsche in his 1880 tale ‘The Wanderer and his Shadow’ (‘Der Wanderer und sein Schatten’) spoke of ‘Envy and her noble sister’.

“The envious man”, he writes, “is susceptible to every sign of individual superiority to the common herd, and wishes to depress every one once more to the level—or raise himself to the superior plane.” (p.195).

Interestingly, therefore, Nietzsche sees two possible reactions to the feeling of envy: one is to try and hold back those who excel. The other one is to strive to become more like them. That’s what Nietzsche refers to as the ‘good and bad Eris’ (the Greek goddess of discord) respectively.
While envy can lead to socially harmful behaviours that block the progress of individual people and society as a whole, the positive side of envy is– according to Nietzsche - essential to modern society. It is by comparing yourself to others and desiring what they have that people become motivated to strive for personal advancement. So, envy may not be greed’s sisters, but it may at least be its cousin, rather than its (communist) evil twin.

Envy – an early warning system?

There is a second way, however, in which envy may have a beneficial role to play in human societies, which is probably not compatible with an economically liberal view of the world.

The French philosopher and comparative literature professor René Girard developed a human anthropology based on two basic mechanisms: First, ‘mimetic desire’ and, second, ‘the scapegoat mechanism’ (here is a good, very brief summary of his works).
In a nutshell, Girard argues that one of the basic traits of human nature is to imitate others. Indeed, this is the reason why humans are very good at learning. Imitating others implies also, however, that we become more similar to them and end up wanting the exact same things. Therefore, imitation and mimetism may lead to conflicts and tensions among people, which could lead to a situation where life in society degenerates into a war of all against all. That is where the ‘scapegoat effect’ comes in. Given the tensions that exist in any human society due to imitation and mimetism, a mechanism is needed to periodically reduce these tensions (‘clear the air’, so to speak). According to Girard, this mechanism is a cycle of mimetic violence that takes place when the struggle of all against all turns towards a specific victim (the scapegoat) that takes the blame for an undesirable situation. Society becomes united once again in its struggle against the victim that has been singled out; violence is discharged against it; and the order in the society restored. According to Girard this is in biblical terms how ‘Satan expels Satan’ (see his book I See Satan Fall Like Lightning).
This fundamental anthropological mechanism explains not only the nearly universal appeal of the story of the martyrdom of Jesus of Nazareth, but also the recurrent phenomenon of pogroms against minorities.

It does not seem too much of a stretch to argue that envy plays an important role in this process. My argument is of course not that cycles of mimetic violence are a good thing or that pogroms are a positive phenomenon. Rather, given the inevitable nature of mimetic desire, tensions, and the potential for mimetic violence, envy may be an important evolutionary mechanism that allows it a society to detect tensions and react to inequalities before they degenerate into a cycle of mimetic violence.

Economically liberals usually see inequalities – at least up to a point – not only as something natural, but also as an important motivator and reward mechanism in capitalist societies. Yet, one would be hard pressed to fundamentally disagree with the nowadays often-quoted observation by Aristotle that extreme levels of inequality may lead to the breakdown of a democratic society. To be sure we cannot directly apply Aristotle’s arguments to the context of the 21st century. Still, the general idea that while some inequality may be inevitable or even ’good’, there is certainly a level above which the effects of inequality are bad for both economic outcomes and social peace. This seems to be an increasingly widely-acknowledged fact. The global financial crisis of 2008 as sparked off a new debate about inequalities in Western capitalist societies. Piketty’s book ‘Capital in the 21st century’ played no small part in this development, but the topic was also picked up on by various social movements (e.g. the ‘We are the 99%' movement). But even, Forbes has recently asked whether inequality levels in the US may lead to a revolt.

Large inequalities can indeed have very negative effects on societies, and inequality is at least partly the result of greed. Greed – if left unchecked – is likely to lead to income distributions that are sub-optimal for a society in various ways. Poverty at the other end of the income distribution – and the host of social and health problems that go with it – is the most obvious example for such a negative effect; negative effects on demand for consumer products may be another one. If extreme levels of inequality are indeed bad, then envy may be good: Rather than envy being the cause of societal unrest and ‘revolt’ as the Daily Mail, Schoeck and others would have it, envy may simply be a symptom that points towards an unsustainable situation. It may be human nature’s evolutionary response to the fact that too much inequality may lead to the breakdown of society. Envy is a signal that indicates that potentially worse sentiments are festering in a society. In this way, large-scale envy allows it to spot the onset of a cycle of mimetic violence and may allow it to nip it in the bud. In other words, envy may be the little red light that starts blinking, tells you that something is amiss in a society, and that it is maybe time to do something about it. Envy – rather than being a social explosive – may ultimately be the trigger that makes swing back the famous ‘Polanyian pendulum’ towards better regulated markets, more egalitarian income distributions, and hence a more peaceful and stable society.

[1] The Oxford dictionary defines envy as “A feeling of discontented or resentful longing aroused by someone else's possessions, qualities, or luck”

[2] Just how widespread the malaise is at least in the UK can be seen from this poll.