Cooperation, Not Retaliation, Can Restore Social Order

– January 11, 2021 Reading Time: 4 minutes

In the early 1980s, political scientist Robert Axelrod and associates published several influential articles and books that showed, using logic and computer simulations, the conditions under which cooperative behaviors will evolve by means of natural selection.

Axelrod et al. model life as a series of binary encounters where “players” or organisms have two choices, cooperate or defect. They usually invoke a theoretical game called the Prisoner’s Dilemma (PD) and explain it via an unlikely scenario involving cops and criminals but all the game really models is a choice between “trading and raiding.”

If both players trade, each gains a little. That is usually modeled as equal but need not be. What matters is that the gains when both players trade (cooperate) are larger than the payoffs when both parties raid (defect). If one player defects while the other cooperates, however, the raider wins big and the trader is expropriated and loses big.

John Nash won a Nobel Prize for showing, among other things, that if you ever find yourself in a one-round PD game the rational move is to defect, as explained here (and lots of other places). As Axelrod and others noted, however, Nash’s beautiful mind couldn’t explain the existence of so much cooperation in nature, including the natural human propensity to truck, barter, and exchange. It certainly did not explain the spontaneous cease fires that evolved on the Western Front during the Great War either.

The problem wasn’t with Nash’s solution, or the game itself, it was with the assumption of only one interaction. What makes rational sense when dealing with a stranger only once may not make sense when encounters are repeated. So Axelrod and friends developed strategies in a PD with repeated interaction, programmed them into a computer, and let them have at it. They tweaked some parameters but found the same strategy consistently won: TIT-FOR-TAT.

If that makes you picture a body part, get your mind out of the gutter. It’s from a hoary expression that means equivalent retaliation. The strategy is simple but brilliant: cooperate at first (sound familiar?) but then do what the other player did in the previous round.

To understand why it won the simulations, consider other strategies, like DEFECTOR, which always raids. If it encounters a SUCKER, which always cooperates, it will do extremely well. Think Lord and Serf or enslaver and enslaved. If DEFECTOR encounters another DEFECTOR, though, they fight endlessly and end up with nothing. SUCKERS lucky enough to engage with other SUCKERS, by contrast, slowly enrich each other through peaceful trade but remain vulnerable to incursions by DEFECTORS.

TIT-FOR-TAT, by contrast, says “I want to trade, but don’t mess with me.” If a player using that strategy encounters a SUCKER or another TIT-FOR-TAT player, trade commences and continues as long as both shall live. But if it encounters a DEFECTOR, TIT-FOR-TAT defects defensively. If a DEFECTOR playing a mixed strategy changes up and starts to cooperate, the TIT-FOR-TAT player will too, and both will begin to enjoy the benefits of trade, suffering only the opportunity cost of missed trades in earlier encounters.

The real world is of course much messier than all that, so it is important to be as precise as possible about what Axelrod uncovered. HIs results are not the same as the “non-aggression principle.” The biggest difference is that TIT-FOR-TAT retaliates against any defection without the need to define violence or property. What matters is the actual outcome of the previous interaction, not niceties of language.

What makes the last four years so interesting is that Democrats and Republicans had been cooperating with each other for decades, each content to take turns at the public trough based on election results that hinged on their relative skill at manipulating median voters to accept their competing narratives of the causes of exogenous shocks like recessions and terrorist attacks.

Most Americans also cooperated with the party duopoly/government, convinced that taxes and other impositions were the price of civilization because government educators self-servingly told them (repeatedly) that without government they would be transportation-infrastructure-less losers doomed to die of food poisoning if not in a gunfight in some dusty alley at high noon.

Thanks to home and private schooling and just plain common sense, though, many Americans began to wonder if they were not perhaps being expropriated by the federal government a bit too much. In 2016, tens of millions of them partially rejected the party duopoly equilibrium by voting for Donald J. Trump, whose promise to “Drain the Swamp” in Washington was just what they wanted to hear.

Democratic leaders construed Trump’s election and his efforts to disrupt politics-as-usual as a defection requiring retaliation against Republican leaders and Trump himself. When their impeachment effort failed, they broadened their attacks to the point that now millions of Americans who are not, were not, and never would be Trump supporters feel the effects of Democrat retaliation, which apparently includes deplatforming conservative scholars and exaggerating the seriousness of a certain virus.

Their TIT-FOR-TAT genes aroused, millions of non-Trumpers now feel like they have to retaliate too, which will trigger yet others to retaliate against them too. We have been witnessing the cascading effects begin to affect business decisions, a very troubling trend that could have catastrophic economic effects.

If Twitter manages to ban all but The Woke from its platform, for example, we may end up with a Democratic and a Republican social media. But why would it have to stop there? Maybe we will see the return of Jim Crow-like regulations: these water fountains, movie theaters, highways, banks, and schools are for Blues and these separate but equal ones are for Reds. (Like the “mixed breeds” of old, Libertarians may be shunned by both and be forced into cultural interlocutor roles.) That would be economically inefficient but one way to restore some cooperation by limiting the extent of the market to fellow political tribespeople.

A much better solution is to restore cooperation between all as soon as possible. We know from history and Axelrod’s simulations that cooperation will eventually arise again, but it could take decades, centuries, or even eons to reemerge and none of us can wait that long.

Thankfully, humans are not animals or computer programs.

We have agency and reason and can see that the current cascade of retaliation and retribution is “unsustainable.” A great statesman focusing on first principles could, perhaps, cut the chain of retaliation and restore widespread cooperation. I don’t know if such an American exists, but I know it isn’t Donald Trump or Joe Biden.

Robert E. Wright is the (co)author or (co)editor of over two dozen major books, book series, and edited collections, including AIER’s The Best of Thomas Paine (2021) and Financial Exclusion (2019). He has also (co)authored numerous articles for important journals, including the American Economic Review, Business History Review, Independent Review, Journal of Private Enterprise, Review of Finance, and Southern Economic Review. Robert has taught business, economics, and policy courses at Augustana University, NYU’s Stern School of Business, Temple University, the University of Virginia, and elsewhere since taking his Ph.D. in History from SUNY Buffalo in 1997. Robert E. Wright was formerly a Senior Research Faculty at the American Institute for Economic Research.