Not by Genes Alone, Peter Richerson and Robert Boyd, eds., Chicago, 2005.
Moral sentiments and Material Interests, Herbert Gintis, Samuel Bowles, Robert Boyd, and Ernst Fehr, eds., MIT, 2005.

Moral sentiments and Material Interests is, from my point of view, an enormous advance on all the orthodox economics I've ever read. My primary complaint is "What took so long?" For decades now economics has been spreading disinformation, and it's about time that they started looking at reality. (The ev psych ideas found in the Gintis book are more fully developed in Not by Genes Alone. I should note that both books include a lot of technical argument which I haven't even touched upon. What I've written here is only a summary of the conclusions, written from the point of view of a non-biologist and a non-economist).

The book's starting point is an empirical look at the actual economic behavior of individuals, in order to see whether it matches the rational-self-interest assumed by economic theory. It is found that it doesn't, and the actual behavior observed is next interpreted in terms of evolutionary psychology. Finally, the political and social significance of these new observations is sketched.

The empirical studies are standard cash-incentive psych lab tests designed to find out where people actually stand on the altruism / self-interest scale. In general, the tests find that people behave more altruistically than they would if they decided according to rational self-interest. (The tests also find that the degree of altruism varies according to culture, and is not a universal).

The results of these experiments square with my own convictions, but I've always felt that this kind of artificial, low-payoff game-playing is of only moderate scientific value -- there's even some evidence that the authors themselves think this way. To me the real story is that there's never been any evidence at all that economics' assumption of individual economic rationality is valid, and a lot of evidence that it isn't. The rationalizations found in Friedman's Positive Economics have allowed economists to rely thoughtlessly on these unproven assumptions for about five decades, and if a few little experiments are required to convince them to drop this inaccurate and unproven default, that's cool with me. But it's a little like someone cherry-picking Bible verses to make their point to the Vatican.

The authors define three mechanisms leading to altruism and social cohesion: strong reciprocity, conformity, and "costly signaling". These are made possible by innate dispositions evolved in two steps -- simple reciprocity first at the early primate small group level, and the more complex behaviors next at the early human. Altogether they make possible genetic selection for altruism, via net fertility advantages for all members of organized social groups (not simply biological groups or kinship groups) which are successful because their members behave altruistically. Biological competition within the group is suppressed by non-innate social and cultural mechanisms, giving an advantage to members of the group on the average, but not to every individual. This way, with gene-culture coevolution and mutualism, there can be genetic selection for a degree of innate altruism in a way that there could not be without culture and society, which form a kind of artificial environment.

"Strong reciprocity" is what replaces "rational self-interest". It consists of the weak reciprocity described by Axelrod (initial cooperation, continued until the partner defects) plus an additional altruistic propensity to punish defectors even if there's no personal advantage in doing so. In a society of strong reciprocators (altruists both in giving and in punishment), defectors do not have an advantage, whereas in a society of non-punishing altruists, the defectors have an advantage which causes the defector gene to drive out the altruist gene.

Two other behaviors are mentioned. "Conformity" is a weaker principle explaining social uniformity in the absence of the threat of punishment, and mostly applies to cases in which there is no clearly-perceptible advantage or disadvantage for the individual, so he just does what everyone else does. "Costly signaling" only appears in one chapter, which uses the biological concept to explain generosity of the potlatch / largesse / big man type. To me these are less immediately interesting than strong reciprocity, though "costly signaling" is a step on the way toward defining a more complex heirarchal society extending beyond the face-to-face level.

A significant advantage of this book is that it describes a social world which, like the world observed and described by historians, has "multiple equilibria and tipping points" and is thus less stable and less predictable than the imaginary world of equilibrium economics.

In the final chapter Bowles and Gintis point out that local community is always grounded on a fundamental ethic of strong reciprocity. They describe it as a positive force which is usually wrongly maligned by the partisans of the market, the state, and elite culture. This brings them close to the communitarians, for whom the local community is a valid and necessary third leg of society, distinguishable (and sometimes at odds with) both pure market behavior and the state. (A lot of liberationist and libertarian ideology is hostile to the naive sorts of strong retribution that make small-group community possible).

The three innate principles described by these authors can be thought of as a ground for ethics, and the authors speak openly of "trust" and "fairness". However, all actual ethics involves further cultural processing, beyond the innate foundation. For one example, one of the great advances making civilization possible was the suppression of vendetta and feud, which are completely natural developments of "strong reciprocity". For another, the mechanisms of natural ethics described here work best at the face-to-face level. The description, much less the attainment, of fairness (the goal of strong reciprocity) within a large, complex, multi-level society is an extremely tricky and difficult task indeed. (The authors do touch on these questions, and they cite Fried's Evolution of Political Society, which sketches a general view of the move toward complex society).

Anyway, after about fifty years, economics seems to be returning to the real world.

(Slightly revised Sept 29)

Update:

My post got a bit of attention from Donald Luskin:

If the nature of selfishness is more complicated that economics typically assumes, if it is indeed tied up in considerations of family, friends, nation, species -- whatever -- then let the science of economics try to adopt itself to those complexities.

I have trouble thinking of this as a useful addition to the theory of rationality. It reminds me of the Chinese philosopher Chuang Tzu's humorous mysticism: "Yes, I'm selfish! But I'm selfish for the whole universe, not just for me!"

I also have a new piece up at http://www.idiocentrism.com/lazear.htm