Firms Are Under-Trusted

Tyler’s new book Big Business is out next week. I haven’t read it – won’t get access until you do. But in an excerpt he just posted from his final chapter, Tyler considers a big question I’ve pondered before:

Think[ing] of corporations as people … is probably also necessary for social cohesion. … Otherwise politics might treat business too harshly. … Consumer loyalty to corporations, even if irrational, is part of what induces better behavior from those corporations. … positive business incentive, one that would not be present if all consumers were more aware of the somewhat more cynical truth: that corporations should be judged not as friends but as abstract, shark-like legal entities devoted to commercial profit. The more that consumers see the relationship as possibly long-term, the more loyally profit-seeking corporations will end up behaving in a long-term and socially responsible manner. Societies need their illusions in this regard, and thus it can be dangerous to fully articulate and make publicly known the entire truth about business corporations and the fundamentally dubious nature of their loyalty.

So the trick is this: the public needs to some extent to believe in corporations as people, just to keep the system running. Workers need to hold similar feelings, to maintain workplace cohesion. Yet when it comes to politics and public policy, we need to distance ourselves from such emotional and anthropomorphized attitudes. We need to stop being loyal to corporations for the sake of loyalty and friendship, and we also need to stop being disappointed in corporations all the time, as if we should be judging them by the standards we apply to individual human beings and particularly our friends. …

One reason we like to think of corporations as our friends is that we can feel in greater control that way. I’ve already discussed just how much we rely on corporations … you can choose what to buy in the Giant, Safeway, or Whole Foods, but it’s hard to step outside the commercial network as a whole, … people carry around a mental picture of being surrounded by people they can trust, if only salespeople. … it is emotionally very hard for people to internalize emotionally the true and correct picture of those businesses as partaking in an impersonal order based on mostly selfish, profit-seeking behavior. (more)

I’m just not seeing the problem that Tyler sees. We humans do not simply trust everyone; we are quite aware that the interests of others may not align with ours, and that they may betray our trust. We are suspicious of each other, and in fact we are built to be as selfish as we can get away with; when we are trusting and trustworthy it is because our evolved instincts estimate that to be in our interest.

We sometimes misjudge who to trust how much, but such errors do not at all tend to favor for-profit firms. Our egalitarian forager instincts make us especially distrusting of powerful humans and large organizations, especially when it seems logically possible that they may profit by hurting us. Our evolved instincts don’t seem to sufficiently appreciate how competition disciplines for-profit firms today, probably because competition was a less effective force for our distant ancestors.

Compared to ordinary humans that we distrust to a similar degree, for-profit firms actually tend to be much more well-behaved and helpful. So I don’t see us as under an illusion here.

In the above Tyler sounds a lot like what I often hear from AI risk people, who worry that we will trust AIs as if human, and be cut down by AI alien indifference to our plight. I hear similar fears from an overlapping group that fears selfish capitalist firms will eventually destroy us all. I’m much less worried than they.