While I was reading up on free market fundamentalism, and I happened across an intriguing article by biologist David Sloan Wilson. As I started reading this article, I was wondering this: Even assuming that a “free market” works wonders in small societies, can societies be scaled up in size guided only by the free market, without formal regulations? D.S. Wilson argues that this is the wrong question. All societies are regulated. The only question is how they are regulated. D.S. Wilson notes that humans are incredibly cooperative, especially in “small face-to-face groups.” In fact, we regulate each other’s conduct so easily in small groups that “we don't even notice it.” This gives us the illusion that there is no regulation keeping things in check. All well-functioning groups, large and small, human and non-human, are highly regulated, however. Small groups often seem to work well without formal regulation, but free market fundamentalists (and others) confuse this lack of formal regulation for the total lack of regulation.

This self-organizing ability to function as cooperative groups is "so perfectly natural" because it evolved by a long process of natural selection, in humans no less than bees. By the same token, functioning as large cooperative groups is not natural. Large human groups scarcely existed until the advent of agriculture a mere 10 thousand years ago. This means that new cultural constructions are required that interface with our genetically evolved psychology for human society to function adaptively at a large scale.

Wilson’s approach makes intuitive sense. Throughout the Pleistocene (from about 2 MYA until 10,000 years ago), people lived in small groups. They lacked written language and written laws. They used unwritten techniques (presumably customs, habits, ostracism and various other informal methods of social control and punishment) to coordinate community efforts and punish cheaters. These informal methods worked well enough and long enough that we can now sit here and ponder how well they worked. But just because those ancient forms of regulations weren’t written down doesn’t mean they didn’t exist. And it doesn't mean that ancient societies weren't tightly regulated. Just as human households are highly regulated without formal rules, so are small societies. So are non-human societies:

These social preferences go beyond our own species. Cooperation and cheating are behavioral options for all social species, even bacteria, and cooperation survives only to the extent that it is protected against cheating. The eternal conflict between cooperation and cheating even takes place within our own bodies, in the form of genes and cell lineages that manage to game the system at the expense of the organism upon which they depend. We call them diseases, but they are really the failure of a vast system of regulations that enable us to function as organisms as well as we do . . .

What about the eusocial insects, such as ants, wasps and bees? Wilson would argue that a well-functioning hive doesn’t simply happen, and it certainly isn’t driven by something as simplistic as the “self-interest” of individual bees:

[B]ee behavior cannot be reduced to a single principle of self-interest, any more than human behavior. There are solid citizens and cheaters even among the bees, and the cheaters are held at bay only by a regulatory system called "policing" by the biologists who study them.

According to D.S. Wilson, you’ll find regulation (informal or formal) everywhere you find a well-functioning society of living organisms. Further, a human society based merely on individual selfishness can’t self-regulate because we can no longer depend on selfishness to be well-tuned or consistent thanks to Daniel Kahneman’s brilliant destruction of rational choice theory. Regulation runs a continuum from informal to formal. It is not like regulation itself just showed up for the first time in modern human societies. D.S. Wilson argues that in all large-scale societies, “regulation is required or cooperation will disappear, like water draining from a bathtub.” Without some form of regulation, all societies become rudderless and unproductive. Therefore, there must always be some form of regulation. The question to decide is “What kind of regulation?”

Let there be no more talk of unfettered competition as a moral virtue. Cooperative social life requires regulation. Regulation comes naturally for small human groups but must be engineered for large human groups. Some forms of regulation will work well and others will work poorly. We can argue at length about smart vs. dumb regulation but the concept of no regulation should be forever laid to rest . . . We also need to change the metaphors that guide behavior in everyday life to avoid the disastrous consequences of our current metaphor-guided behaviors. That is why the metaphor of the invisible hand should be declared dead.

I would agree that the “invisible hand” is shorthand for the informal regulations that have been since prehistoric times to facilitate social coordination of small primitive societies. Rather than declaring the “invisible hand” to be dead, though, it might be more accurate to suggest that the “invisible hand” lives on in modern societies, quietly and substantially supplementing our formal regulations. Seen in this way, the “invisible hand,” used in the complete absence of consciously planned social regulations and laws, is not a method for creating or maintaining a complex functioning modern society. Rather, it is the path back to the Pleistocene.