Book Review – Interdependent Capitalism

This week, I felt compelled to review Interdependent Capitalism, a book I received as part of a workshop on perverse incentives. Once I cracked the cover, I spent the next few hours reading until I hit the other cover. Most nonfiction doesn’t hit me quite that hard, so Interdependent Capitalism stands out as something of an outlier to me, and I’m glad I have this platform to broadcast it on.

Interdependent Capitalism opens with a discussion of the meaning of a korean term, “gohyang”, which translates to the english term, “hometown”, “a place where one was born or grew up”. For the Yun family (three of whom worked on this book) gohyang speaks to more than just a familiar place where one spent one’s childhood. It is compared to a sacred sanctuary, a centralization of family, and the classic metaphor of home – a place “where, when you have to go there, they have to take you in,” as Frost put it.

Much of the book revolves around the idea of the “kin village”, the sort of environment most of our ancestors lived their lives in, where everybody knew everybody, was more or less related to everybody, and someone from ten miles away was an exotic stranger, and what happens when this is no longer the case. The primary thesis of the book is that, in leaving these environments and going forth into the world, we’ve left a place where everybody had a reason to care for you, and their inclusive fitness would suffer to some degree by cheating you. We live instead in nuclear families, among other nuclear families, all competing to get ahead of our low-relatedness surrounding neighbors.

As relative strangers, we improve our fitness by putting our interests first, and those of our neighbors last, if we bother to list them at all. In other words, our biological evolution hasn’t kept pace with our cultural evolution, and we suffer for it again and again when we expect our neighbors to act like our kin, and they don’t. Mechanisms that had your aunts and uncles serving as your heroes betray you when celebrities become our heroes, and hawk a new diet book that does nothing but enrich them.

Part one contains a story of how, starting from our ancestral family villages, we got to the point of our current, largely atomized state. They coin the term, “kin skin in the game” to refer to investment in social systems due to genetic proximity. From eusociality to incest taboos, different pieces of behavior come under the microscope to show the benefits of working together – when one’s close relatives are the beneficiaries.

However, as genetic lines diverge, separated by distance and outbreeding, the incentive to cheat (at least with those outside the group unit, once the village and now the nuclear family) only increases. With a greater ability to abandon existing relationships for new ones, and a decrease in genetic alignment in one’s society, they claim three phenomena emerge:
First, an increase in “self-dealing” – a term they define to mean a particular kind of defection – not outright theft or robbery, but a kind of dereliction of duty – the public servant who accepts a bribe, or the CEO who invests company cash in a cousin’s business on non-market terms, is self-dealing, as is the employee who books more expensive flights on the company travel card, to accumulate more frequent flier miles.
Second, increased counterparty risk.
And third, decreased win-win transactions based on vested interests.

All of these benefit the atomized individual / nuclear family more than they do the tightly related group, but they also disadvantage those on the losing side of each phenomena, and on the whole, the gains are not commensurate with the losses – especially for the average person, as the least scrupulous and most grasping seek to enrich themselves in win-lose transactions that, while they reduce the total available winnings for everyone, pay off for them specifically at a higher rate.

In part two, the focus is on the race to the bottom line, how systems that aren’t based around inclusive genetic fitness favor those forces who can Goodhart the hardest – making the tastiest food with ingredients that happen to be radically unhealthy, or who can make their packaged subprime mortgages pay the highest returns – on paper, at least, without considering default rates. As they put it, “the system will eventually select for fake news about fake heroes endorsing fake foods.”

From information to olive oil, baseball teams to mortgage lending, our modern systems fail to properly connect the losses from the damages done by self-dealing, to those who do the dealing, often until the institutions they fed on parasitically collapse under the obviousness of their finally deranged behaviors, social trust is further eroded, and a few people who participated are elected as sacrificial lambs to appease the baying mob.

From these ashes, a new race arises – the race to the middle, the race to Goodhart “good enough”: not so bad as to be obviously damaging, but optimized to stay just ahead of that clear tipping point when the need to clean house becomes obvious. Instead they limp on, year after year, failing to either properly serve society, or be so clearly terrible that they need to be disposed of.

One consequence of the movement of institutions to self-dealing is, I think, particularly pernicious. Vampirelike, the self-dealing institution leaves the individual sucked dry, and then to turn to self-dealing themselves, since, after all, “You’ve got to look out for number one. Nobody else is.” This is illustrated through the lens of psychology. I think a telling point is made when they compare the size of floorspace in your average bookstore dedicated to self-help as compared with the floorspace of the help-others section.

What help-others section?


The individual is made champion, held up to be the hero, while those others are the bad guys, the responsible ones. The system abstracts the harm done to others out of our sight, and out of our minds. We build stories about bad guys and good guys even as we line the pockets of the bad guys to drive our cars and eat our meals, ignoring the cost paid in atmospheric pollution and the suffering of farm animals.

So what can we do about this spiral of mediocrity, backstabbing, and suffering?

This is the focus of part three, rewriting the social contract and using existing forces to feed the system to the system, using its own forces and incentives against it. The authors envision a world where compersion is as well known as schadenfreude (and here’s hoping the song about compersion is as catchy as its counterpart.) and more available to the average person. A world of “they statements” made “I statements” for turning depressing situations into personal responsibilities – while their example is of cleaning highways, personally I think of a change I went through, from “Someone needs to save the world” to “I need to do something about the world needing saving.”

As calls to action go, the authors push to “restart at year zero” seems well-supported and thought out, although short on easy to apply, instant win actions. But this is in some ways their primary point – the system is not going to package and advertise the end of the system to you. Instead we are issued mass produced Guy Fawkes masks and told the correct places to protest for maximum visibility and minimal actual change. While the Yuns gesture at some points of intervention, it’s clear that they don’t have all the answers – that all the answers won’t be found if we wait for someone else to find them for us.

It’s time, instead, that we go out and look – and as we go, compliment the person searching next to you for the offered helping hand. Social trust can’t be rebuilt without society, and if you look closely enough, society is built of you and me.