Essential PolSc
Prisoner’s Dilemma
When I was a young boy, my elder brother and I used to get into physical fights. He was bigger and stronger than me, but I was more aggressive. There is this one fight that still stands out to me. My parents were not home, and we went at each other. The fight ended with a few visible scars on my face, courtesy of my brother's nails.
Both of us were terrified. We knew the costs of our parents getting to know. But the scars needed an explanation. Our self-preservation instincts kicked in. We squashed our beef, started talking strategy, and came up with a lie.
We both had something in it. I was always thought of as the troublemaker. So if my parents knew that there was a fight, I would be held accountable for causing fights. My brother knew that the scars on my face were sure to get him in real trouble.
As expected, our parents came and questioned us. Soon, they smelled inconsistencies in our stories. We were good liars, but my mother happened to have this antenna to catch our lies (I have acquired the skills to beat it as I have grown older). So our parents decided to interrogate us individually. Now, here is a difficult situation.
I didn't know what my brother would say. What if he succumbs under pressure? What if he makes up a story with me being the only villain? What if he breaks our agreement and tells the truth? In all these cases, I would lose out. Maybe he will stick to our agreement! What if he is also thinking about what I would say? So although sticking to our lie was a better strategy for both of us, telling the truth was the safest option. Finally, both of us told the truth, and I ended up with some marks on my thighs (courtesy of my mom) along with the scars on my face.
This is a perfect example of what economists call the prisoner’s dilemma. The prisoner's dilemma is a game theory concept that illustrates how rational individuals may not cooperate, even when it is in their best interest to do so. It is difficult for individuals to cooperate when they are separated and isolated, and when they are not sure if other individuals will cooperate too.
The Collective Action Problem
Something similar happens in collectives too. Think about this: prosperity cannot happen without peace. It only takes one person to create conflict and subvert peace in a community. So communities often develop codes and rules (call it culture) among themselves that everyone can abide by to ensure peace and, hence, prosperity for all. In such a community, everyone has an incentive to follow these codes, for the good of all. In a small group, like a hunter-gatherer band, each family obtains a significant share of benefits from the peaceful order, which outweighs the sacrifices they need to make.
But establishing such an order in a larger group is difficult. This is because, in large groups, each individual bears the full costs or risks of abiding by the rules but receives only a share of the benefits. In larger groups people are separated from each other by virtue of the number of people in the group, and hence a scenario similar to the prisoner’s dilemma happens.
For example, pooling your salary from your work with your family account is something you might do without a second thought. Because this money is to be divided between your family members and the places where it is used are seen by you, you get a satisfying proportion of that money for yourself. But what if your family has 100 members? In such a case, you may not be able to trace where all the expenses are going. You may get a lesser proportion than you give for various reasons (say, a hospitalized uncle has extra expenses). Cooperation to pool money is easier when the family is small and difficult when the family is big. Although cooperation is better in the long term, you don't have an incentive for it. You break away from the family, or you don't give your entire income to the pool.
This is the problem of collective action. Collective action problems exist when individuals, acting rationally in pursuit of their self-interest, have incentives to make decisions that are harmful to the interests of others as well as, ultimately, the individual themselves.
Hobbes, Locke, Rousseau
When groups are large, people tend not to cooperate. People get pushed into prisoner's dilemma situations. The system descends into a 'better fraud takes all' kind of scenario. Thinkers like Thomas Hobbes, John Locke, and Jean-Jacques Rousseau thought about this question and arrived at the social contract theory to propose a solution.
Now, here is the problem they tried to address:
1. Cooperation is better than competition for the good of all.
2. People don't have an incentive to cooperate when groups are large, like a city-state or country.
3. How do we ensure people cooperate in such a way that everyone benefits?
They used this line of thinking to explain the emergence and necessity of the state. Although they disagreed on certain aspects and had varying views on the state and human nature, all three of them agreed on the need for a legitimate authority. They proposed that such a legitimate authority can only evolve through a contract between people in society.
Think about this, when there is no authority, a time without the state ('state of nature'), people tend to do what they please. Hobbes viewed individuals in the state of nature as brutes who are always seeking more. Rousseau thought of individuals in the state of nature as inherently good but corrupted by society. Nonetheless, they stressed on the importance of order in society for peace and prosperity. Hence, people come together and make an agreement or contract. They surrender some of their freedoms to a sovereign authority in exchange for security and protection. The authority is given monopoly of violence for the purpose of preventing excesses by one individual over another. Such an authority allows people to cooperate, because they know that the authority will ensure cooperation from others as well.
Social Contract
Modern conceptions of states are fundamentally rooted in social contract theory. The state’s role is to enable cooperation among different individuals and groups so that peace and order can prevail and hence result in prosperity.
It is important to note that the state stands to serve the people, who established it in the first place. Society existed before the state and can exist without the state. But to enhance efficiency, peace, and prosperity, a state was formed with the consent of members of society. Today, the overarching nature of the state—with taxes, rules on morality, curtailing of freedoms, surveillance, and policing—can sometimes confuse us as to who the real sovereign is. In this context, is good to remember Locke’s conception of the state. For Locke, sovereignty ultimately rests with people and they transfer some of it to the state. He said:
The state exists to safeguard the rights and liberties of citizens who are ultimately the best judges of their own interests; and that accordingly the state must be restricted in scope and constrained in practice in order to ensure the maximum possible freedom of every citizen.
Not all countries have had such an explicit gathering of individuals to sign this contract. But at the end of the day, it is important to develop an awareness and definition of this contract to ensure we don't fall prey to the prisoner’s dilemma.
Homework:
Read this brief article on social contract in the context of India.