Alchemy

by Rory Sutherland

  It is important to add that animals develop distinctive colouration or other strange features for reasons other than the purpose of sexual advertising to prospective mates. There is, for instance, ‘aposematic colouration’, which acts as a warning to predators not to eat or attack you. If you are a poisonous or foul-tasting beetle, for instance, it pays to look highly distinctive, so that birds will quickly learn to avoid eating you.* Lionfish (remember them?) deploy this tactic. Conversely, fruit (which is intended to be eaten) and flowers (which exist to attract the attention of insects) are highly distinctive, in order to encourage ‘repeat visits’.

  In a letter to Alfred Russel Wallace, Darwin wrote on 23 February 1867: ‘On Monday evening I called on Bates and put a difficulty before him, which he could not answer, and as on some former similar occasion, his first suggestion was, “you had better ask Wallace.” My difficulty is, why are caterpillars sometimes so beautifully and artistically coloured?’ Darwin’s theory of sexual selection, where distinctive colouration serves as a signal of sexual desirability, could not apply to caterpillars, since they are not sexually active until they metamorphose into butterflies or moths. Wallace replied the next day, suggesting that since some caterpillars ‘are protected by a disagreeable taste or odour, it would be a positive advantage to them never to be mistaken for any of the palatable catterpillars [sic], because a slight wound such as would be caused by a peck of a bird’s bill almost always I believe kills a growing catterpillar. Any gaudy and conspicuous colour therefore, that would plainly distinguish them from the brown and green eatable caterpillars, would enable birds to recognise them easily as at a kind not fit for food, and thus they would escape seizure, which is as bad as being eaten.’*

  Since Darwin was enthusiastic about the idea, Wallace asked the Entomological Society of London to test his hypothesis. The entomologist John Jenner Weir conducted experiments with caterpillars and birds in his aviary, and in 1869 provided the first experimental evidence for warning coloration in animals. The evolution of aposematism, literally a ‘stay away sign’ or ‘warning off’, surprised nineteenth-century naturalists because the conspicuous signal suggested a higher chance of predation. However, you might also argue that aposematic colouration might be explained as a form of costly signalling: ‘I’m not trying to hide, therefore there might be a good reason not to eat me.’*

  It might be a good rule of thumb for animals to avoid eating brightly coloured animals, since something that doesn’t need to adopt camouflage has clearly survived through some strategy other than concealment, and hence it might be best avoided. Here again, we have a case where doing something ostensibly irrational conveys more meaning than something that makes sense. It has meaning precisely because it is difficult to do. It is not impossible to fake, but it is risky to do so – being highly visible but not poisonous is a mimicry strategy adopted by certain non-venomous snakes, for instance. What makes it risky is that, if any predator learns to tell you apart from the dangerous species you are imitating, he stands to make a killing – at your expense.

  Wearing gold jewellery in South Central LA as a man is a doubly costly signal: it requires that you have the money to acquire the jewellery, but also conveys that you are hard enough to display it in public without fear of theft. I could afford to buy some fairly serious bling, but even on the sedate streets of London or Sevenoaks, I do not think, as a portly and out-of-shape middle-aged man, that I would have the necessary confidence to wear it.

  3.10: Necessary Waste

  It was to explain his theory of sexual selection, and to defend his conception of the origin of species through natural processes rather than intelligent design, that Darwin wrote his second major book, The Descent of Man.* It broached a theory of sexual selection to explain, among other anomalies, how selection for fitness could produce such apparently fitness-reducing features as elaborate plumage.

  The idea is simple, but not obvious. For a gene to persist, the body that carries it needs not only to survive but to reproduce – otherwise the gene will die out. Just as certain features such as acute vision or hearing and the capacity for swift movement will confer an advantage in survival, certain other features may confer an advantage in reproductive success – these are the attributes that allow you to mingle your genes either with larger numbers of mates or with mates that have a higher level of genetic quality. In humans and many other species, the emphasis placed on quality versus quantity may vary between the two sexes. In humans, females are naturally constrained in the quantity of offspring to which they can give birth, and so cannot obtain much advantage through mating indiscriminately; they need to consider other factors such as genetic quality and the resources a man might be able to provide for his offspring.

  But how should a female choose? Not being equipped with a gene sequencer, she relies on a mixture of sensory clues to spot the mating partners most likely to produce viable and successful offspring; age, size and resistance to parasites and illness may all be useful indicators. A creature that survives long enough to reach a great size or age clearly has what it takes to survive. Bullfrogs advertise their size and health by croaking, the deepness of the croak indicating size and its duration indicating fitness. Females which randomly developed a preference for deeper-throated, more persistently croaking frogs would on balance produce better-adapted offspring, since the trait was reliably correlated with quality. The two traits, deep-throatedness in males and a preference for it in females, will then grow in lockstep, since the genes for both will be increasingly found together.

  There is a problem, however: what starts off as a reliable indicator of fitness can turn into an arms race. If you are a fit bullfrog, how long should you keep up your mating call? The only safe answer to this question is ‘for a bit longer than any other bullfrog nearby’. As a result, a quality that starts off being prized as a useful proxy for fitness becomes exaggerated to an absurd degree, a process sometimes known as Fisherian runaway selection. In animals this can be extraordinarily wasteful. It seems that competition over antler size – which led to them ultimately growing to insane proportions – may have led to the extinction of the Irish elk.

  The same competition can be just as damaging to humans when it manifests itself in unrestrained competition through extreme behaviour. Some academics have suggested that the Easter Island human civilisation might have been destroyed by competition between tribes over who could construct the largest and most numerous stone heads. There is no competition to build giant stone heads among modern humans,* but are car showrooms, DIY centres, women’s clothes shops and shopping malls, or the preference for taking more expensive holidays, simply consumerist manifestations of the same uncontrolled competitive drive?

  Of course, this competitive consumerism is not new. In 1759 Adam Smith made the following observation, in The Theory of Moral Sentiments:

  ‘A watch, in the same manner, that falls behind above two minutes in a day, is despised by one curious in watches. He sells it perhaps for a couple of guineas, and purchases another at 50, which will not lose above a minute in a fortnight. The sole use of watches, however, is to tell us what o’clock it is, and to hinder us from breaking any engagement, or suffering any other inconveniency by our ignorance in that particular point. But the person so nice with regard to this machine, will not always be found either more scrupulously punctual than other men, or more anxiously concerned . . . to know precisely what time of day it is. What interests him is not so much the attainment of this piece of knowledge, as the perfection of the machine which serves to attain it.’

  Modern environmentalists also suggest that status-signalling competition between humans is destroying the planet. They propose that the Earth has enough resources to comfortably support the present population if we are all prepared to live modestly, but that natural rivalry can lead to ever-rising expectations – and with it increasing consumption. In many ways, this competition is not healthy – and nor does it necessarily contribute much to human happ
iness. In some ways it places people under an obligation to spend more money than they would otherwise choose to, just to maintain their status relative to other people.

  There is an interesting debate to be had here between business and environmentalists. My contention is that, once you understand unconscious motivation, the widespread conviction that humans could be content to live without competing for status in an egalitarian state is nice in theory, but psychologically implausible.

  Yet the status markers for which we compete don’t have to be environmentally damaging; people can derive status from philanthropy as well as through selfish consumption. For instance, as Geoffrey Miller notes, a tribe where males advertised their hunting prowess by conspicuously sharing meat from their kills would prosper, as a result of economically irrational behaviour. On the other hand, an otherwise identical tribe whose males signalled their strength by violently fighting each other would suffer as a consequence: even the eventual winners of these contests might end up badly wounded and with a lower life expectancy. The first one is a positive sum game, while the other is anything but.* An extreme pessimist might suggest that, although competition for wealth markers is wasteful and harmful to the planet, it is a lot less harmful than many other forms of intergroup or interpersonal competition.*

  Different forms of status seeking have effects on the wider populations that range from the highly beneficial to the downright disastrous. It has always struck me as odd that governments do not generally tax different forms of consumption at widely differing rates depending on their positive or negative externalities (as they do with tobacco, alcohol and petrol). I am, as you might expect from my job, fairly forgiving of most forms of consumerism, but there are some activities, such as the mining of diamonds for jewellery, which seem entirely without merit. I may be alone in saying this, but I don’t think evolution by natural selection was Darwin’s most interesting idea. Earlier thinkers, from Lucretius to Patrick Matthew, had also recognised the basics of natural selection, and many practical people, whether pigeon fanciers or dog breeders, had also grasped the essential principles. Had neither Darwin or Wallace existed, it seems inevitable that someone else would have come up with a similar theory.

  However, the theory of sexual selection was a truly extraordinary, outside-the-box idea, and it still is; once you understand it, a whole host of behaviours that were previously baffling or seemingly irrational suddenly make perfect sense. The ideas that emerge from sexual selection theory explain not only natural anomalies such as the peacock’s tail, but also the popularity of many seemingly insane human behaviours and tastes, from the existence of Veblen goods* such as caviar, to more mundane absurdities such as the typewriter.

  For almost a century in which few men knew how to type, the typewriter must surely have damaged business productivity to an astounding degree, because it meant that every single communication in business or government had to be written twice: once in longhand by the originator and then again by the typist or typing pool. A series of simple amendments could delay a letter or memo by a week, but the ownership and use of a typewriter was a signal that you were a serious business – any provincial solicitor who persisted in writing letters by hand became a tailless peacock.

  Take note that I have committed the same offence that everyone else does when writing about sexual selection: I have confined my examples to those occasions where it runs out of control and leads to costly inefficiencies, such as typewriters, Ferraris and peacocks tails.* This is unfair.

  In the early stages of any significant innovation, there may be an awkward stage where the new product is no better than what it is seeking to replace. For instance, early cars were in most respect worse than horses. Early aircraft were insanely dangerous. Early washing machines were unreliable. The appeal of these products was based on their status as much as their utility.

  The tension between sexual and natural selection – and the interplay between them – may be the really big story here. Many innovations would not have got off the ground without the human instinct for status-signalling,* so might it be the same in nature? In other words, as Geoffrey Miller says, might sexual selection provide the ‘early stage funding’ for nature’s best experiments? For example, might the sexual signalling advantages of displaying an increasing amount of plumage on a bird’s sides* have made it possible for them to fly? The human brain’s capacity to handle a vast vocabulary may have arisen more for the purposes of seduction than anything else – but it also made it possible for you to read this sentence. Most people will avoid giving credit to sexual selection where they possibly can because, when it works, sexual selection is called natural selection.

  Why is there a reluctance to accept that life is not just a narrow pursuit of greater efficiency and that there is room for opulence and display as well? Yes, costly signalling can lead to economic inefficiency, but at the same time this inefficiency establishes valuable social qualities such as trustworthiness and commitment – politeness and good manners are costly signalling in a face-to-face form. Why are people happy with the idea that nature has an accounting function, but much less comfortable with the idea that it also has a marketing function? Should we despise flowers because they are less efficient than grasses? Even Darwin’s great contemporary and collaborator Wallace hated the idea of sexual selection; for some reason, it sits in the category of ideas that most people – and especially intellectuals – simply do not want to believe.

  3.11: On the Importance of Identity

  Remember that without distinctiveness, mutualism of the kind found in bees and flowers cannot work, because an improvement in a flower’s product quality would not result in a corresponding increase in the bees’ loyalty. Without identity and the resulting differentiation, a breed of flower would give away extra nectar for no gain, as the next time, the bees would simply visit the less-generous-but-identical-looking flower next to it. Over time, flowers would end up in a ‘race to the bottom’, producing as little costly nectar as possible and relying on their similar appearance to other, more generous flowers to preserve the bees’ supply of nectar and to maintain the incentive for them to continue travelling from plant to plant.

  We need to consider whether the same process occurs in business, as well as in nature. Are brands essential to making capitalism work?

  3.12: Hoverboards and Chocolate: Why Distinctiveness Matters

  Many of you reading this may be too young to remember fighting over Cabbage Patch dolls or Buzz Lightyear figures, but let us pause to recall what wasn’t quite the hot craze of Christmas 2015, because it provides a valuable lesson in the wider economic importance of brands.

  By this, I mean the Hover Board. Or the Hoverboard, the Swagway, the Soarboard, the PhunkeeDuck or the Airboard. There was never was an agreed name for these things, because they were sourced from a range of manufacturers in Shenzhen and named by the local distributors rather than the makers. The idea had not been commissioned by one large company but rather seemed to arise from experimentation: these unusual origins provide us with a rare and unusual test case of what happens to innovation in the absence of brands.

  The board is an interesting product, and I’m sure many of you may instinctively have wanted to try or buy one, but you didn’t, did you? First of all, you didn’t know which one to buy – some had lights or Bluetooth speakers,* some had larger wheels and some had a higher or lower price. And in the absence of recognisable brands, it was impossible to make sense of the category – as neuroscientists have observed, we don’t so much choose brands as use them to aid choice. And when a choice baffles us, we take the safe default option – which is to do nothing at all.

  Copyright © ICONBIT Mekotron Hoverboard

  What this product needs is a brand. Without a distinctive brand identity, there is no incentive to improve your product – and no way for customers to choose well, or to reward the best manufacturer.

  Secondly, we felt uneasy buying something that cost a few hundred pounds w
ithout the reassurance of a recognisable name. British ad-man Robin Wight calls this instinct ‘the Reputation Reflex’ – although instinctive and largely unconscious, it is perfectly rational, because we intuitively understand that someone with a reputable brand identity has more to lose from selling a bad product than someone with no reputation at risk.* Finally, while we were still wondering whether to take the plunge, news spread that several boards had burst into flames while charging, in one case setting fire to a house. The problem was confined to a few makes, but without knowing which specific brands to avoid, it sullied the whole category.

  Without the brand feedback mechanism, there was no incentive for any one manufacturer to make a safer, better version of the board, since they were not positioned to reap the gains. As a result, the market became a commoditised race to the bottom, in which both innovation and quality control fail. Why make a better product if no one knows it was you who made it? So no one did make a better board, and the whole category more or less died as a result. It may correct itself if better boards arise, or if a shrewd company such as Samsung cannily attaches its name to the best. Noticeably, brands such as Juul and Vype are starting to emerge in the similarly haphazard vaping market.