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The Psychology Behind ‘No free lunch’

An evolutionary take on value, exchange, and trust


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Tuan Lima

3 years ago | 6 min read

Since the 1930s, the saying “There ain’t no such thing as a free lunch” sprang up in economics and also in popular culture as a very powerful adage, used to condense the liberal idea.

Today we still used it in a broader sense, meaning that you don’t get anything for free. Or, as Fred Brooks put it

“You can only get something for nothing if you have previously gotten nothing for something.”

However, as it happens all too often with aphorisms, the same people who sympathize with it are the ones concerned with relativizing its power. In one of his famous speeches, at the Cato Institute in 1993,

Milton Friedman took care of presenting some counterexamples against No free lunch, which is a maxim he’s himself credited for endorsing, as representative of free markets. According to him, private and free markets, such as the ones in Hong Kong, Japan and in the US, are essentially free.

Stephen Hawking, contradicting the saying, said that the universe is the ultimate free lunch.

So let’s try to go deeper into how we perceive value and into the possibility of exchanging it. Our goal is to understand if that exchange can really happen against nothing.

The discovery of value

Assuming a Darwinian stance, it’s reasonable to state that human beings have evolved to, among other things, identify value to whatever happens in the world that can also have an impact on their lives.

Thus, a piece of bamboo may have value to me, if I can arrange to make a bow out of it, so that I can increase my chances of eating and protecting my family and myself. Similarly, getting information about the existence of a lion footprint nearby may also be of value, even though the footprint in itself is neither eatable nor a tool.

Super Pit gold mine in Western Australia
Super Pit gold mine in Western Australia

It’s important to notice that the process of valuation does not need to be thought through — and couldn’t be so either. Attributing value to things is too complicated a task. We do it unconsciously. Our brain evolved to infer value not only from the thing in itself but also from extra information associated to it: potential for harming, usability as raw material and past experiences.

By the end of the day, we won’t need to reason too much to be able to decide how far we would go to get to a mango tree, if we are hungry.

The rise of exchange

Likewise, it made sense for the perpetuation of the species that we learn to exchange goods, so that we could better capitalize on our proclivity to socialize.

Say, I have a bunch of bananas and another person, with whom I can communicate and who I can trust to some degree, has a spear. If we value each other's property more than we value ours, we would be better off if we could exchange them — that works, as long as both our presumptions of value are correct. In case they were not, that would constitute a developmental cost, and would not have performed well enough to survive natural selection.

Debt-enabled markets

The result of these two cognitive novelties is the development of a proto-market, where whatever can be put into the value basket can also be exchanged for whatever else is there.

Not only that. It’s reasonable (and it feels right) to suppose that we have also developed the capacity to abstract (or internalize) debt as a way of enabling free-flowing of value carriers. But before going into that, let’s first make an important distinction.

Two forms of trust

There exists conscious and unconscious trust. The former manifests itself generally when we use of reason to decide if a thing is trustful or not. They are the ones which are easier to verbalize, like in “I trust this bank”, “I trust her dog” or “I (don’t) trust my political representatives”.

The unconscious trust is the one which is most neglected, for obvious reasons, which doesn’t prevent it from being part of the bedrock of civilization. Just think about it. Isn’t it astounding that we can trust complete strangers without even noticing it?

Consider our traffic system. Say, you are on a two-way road. Cars come and go at speeds of irreparable loss, in case of an accident. So why the hell you act as if there’s no chance that the driver in the opposite direction is not going to play some trick or go kamikaze at you? You don’t even know and that doesn’t seem to be an issue for anybody.

Also, our entire monetary system is predicated on this mechanism. We don’t trust banks, currency exchange bureaus and mints only because we know personally that they are trustworthy. We trust them mostly because they manage to exist stably in our society.

Put in a more symbolic way, which should be no less compelling, it’s as if nature had implemented a system of trust where everybody gets to be born with a credit of trustfulness, which can then be lost has the individual acted dishonestly.

So, going back to debt, in order for us to be able to abstract it, besides attributing value to things and being able to exchange them, it’s necessary that individuals be able of trust towards the people with whom they are negotiating. Which is clearly the case. We are indeed capable of trust, although we like to believe that ours is only reserved for a few chosen ones.

But not only that, to be able to abstract debt, there’s also a requirement of being trustful, which is a more subtle one. Are we really prone by nature to recognize a value received and hold the transaction psychologically as a ticket of obligation towards the agent of value?

We could accept that that’s the case because it could not be otherwise, given all the other subjective rules we have constructed (or rather it’s been constructed on us) so that we could bargain en masse.

In a system composed of autonomous individuals living out of finite resources, there’s no space for truly one-way favors. When something is received, be it an object, a piece of information, or a service, there’s an automatic and unconscious mechanism that takes care of properly recognizing the value attached as much as identifying its benefactor.

If that wasn’t the case, in order for a bargain to take place, the trustee’s character would always have to be known, which is not the case since we do trust who we don’t know (having a bank account is an act of faith) and also we are not very good at evaluating other people’s characters.

I think this biblical passage, from Ecclesiastes 11.1, is enlightening of this phenomena

Cast your bread upon the waters, for you will find it after many days

It’s a call for generous action along with a promise of return, even though there’s no identification whatsoever of whom such a return will come from. It’s implied that, by force of nature, if something was given, something will be given back.

‘No free lunch’ should be regarded not only as an aphorism but as a doorway to an unconscious mechanism which is poorly known, if known at all, but which is too often used for abusive purposes, like free sample oriented propaganda and vote buying. [getting more vigilant of a gift-oriented but not so trustful partner can also be insightful].

Increased awareness of our biases can be of great value in a world where the great multimedia actors are constantly coming out with new techniques for analyzing and inducing behavior.

Back to Friedman

Let’s say there are two ways of enjoying the benefit from something. One way is enjoying something as if it’s inseparable from reality, in which case it wasn’t given and so there’s no need of retribution. It’s what happens with the joy that may come with the sensation of sunlight. We can’t say it’s free, since there was no agency behind its appearance. So we don’t experience the need for returning anything.

The other way of enjoying something is as if it was given. It’s what we have discussed so far. Something was received. Something is going to be given back. Be it money, a gift, a favor or even affection.

It follows that free markets, or the universe for that matter, is not free. Either regarding them as part of the underlying structure of reality or if believed to have been given to us, in which case there will be at least gratitude towards the giver.

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