The Paradox of Individualism and Hierarchy

04/08/2021 The Paradox of Individualism and Hierarchy – Economics from the Top Down
Economics from the Top Down
New ideas in economics and the social sciences
JULY 31, 2020

BLAIR
FIX
The Paradox of Individualism and Hierarchy
In the early 1970s, Geert Hofstede (https://en.wikipedia.org/wiki/Geert_Hofstede) discovered something

interesting. While analyzing a work-attitude survey that had been given to thousands of IBM employees
around the world, Hofstede found that responses clustered by country. In some countries, for instance,
employees tended to prefer an autocratic style of leadership. But in other countries, employees preferred
a democratic approach. These differences, Hofstede proposed, were caused by culture.
Today, Hofstede’s work has blossomed into the field of ‘cross-cultural analysis’. It’s a vibrant discipline
that looks at how attitudes and beliefs vary between societies. The tools of the trade are simple surveys
and questionnaires. But the goal of cross-cultural analysis is ambitious. It aims, as Hofstede puts it, to
understand the ‘software of the mind’.
✹✹✹
Geert Hofstede didn’t invent the idea that culture varies between societies. (That idea is probably as old
as culture itself.) But he did pioneer the quantification of culture. Before Hofstede, there was much grand
theory, but little measurement. Theories of culture date at least to the Greeks, who were perhaps the first
to give culture a name. (They called it the nomos.)1 The modern theorization of culture, however,
probably began with sociologist Max Weber (https://en.wikipedia.org/wiki/Max_Weber).
Like many social scientists, Weber wanted to understand the origin of capitalism. Why, he asked, did
capitalism arise in Western Europe? His answer was that Westerners had adopted a peculiar attitude
towards work — what Weber called the protestant work ethic
(https://en.wikipedia.org/wiki/The_Protestant_Ethic_and_the_Spirit_of_Capitalism). Rather than see
work as a chore, protestants (especially Calvinists) saw industriousness as a virtue. This culture shift,
Weber argued, was key to understanding the emergence of capitalism. Without the idea that work was a
virtue, people would meet their basic needs and then relax. But when work became a goal in itself, the
wheels of capitalist accumulation were set in motion.
https://economicsfromthetopdown.com/2020/07/31/the-paradox-of-individualism-and-hierarchy/ 1/24
While Weber’s specific hypothesis may not be correct, it’s now clear that he was onto something. The
transition to capitalism came with a host of changes in people’s worldview. Evolutionary psychologist
Joseph Henrich calls it becoming WEIRD. This is his acronym for ‘Western, Educated, Industrialized,
Rich and Democratic’. It’s a clever double entendre because people in WEIRD countries are legitimately
weird. From visual perception to attitudes about cooperation, WEIRD people have psychologies that
differ from the rest of the world. (For an exposition, see Henrich’s seminal paper The weirdest people in
the world? (https://www2.psych.ubc.ca/~henrich/pdfs/WeirdPeople.pdf))
That brings us to economics. Like Weber, economists explain the origin of capitalism in terms of a cultural
shift. But rather than focus on work ethic, economists focus on exchange. It’s the belief in unfettered
market exchange, they claim, that leads to economic development.
Interestingly, the quantification of culture seems to support this view. People in developed countries
tend to be more individualistic than those in less developed countries. WEIRD people also tend to be
more skeptical of autocracy and more receptive to norm-shirking behavior (behavior that economists
would call ‘innovation’). This evidence seems to support the narrative (cherished by economists) that
economic development is a product of the free market.
A paradox
Although WEIRD psychology fits well with the free-market narrative, it’s not clear that this narrative is
actually true. In fact, there’s good evidence that economic development involves not the spread of the
market, but rather, its death.
Industrialization is associated with the growth of large institutions — big firms and big governments.
(See Energy and Institution Size (https://journals.plos.org/plosone/article?
id=10.1371/journal.pone.0171823) for a review of the evidence.) Look within these big institutions and
you won’t find a free market. Instead, you’ll find a chain of command that concentrates power at the top.
In an important sense, then, economic development involves not the spread of the free market, but the
growth of hierarchy. (For details, see Economic Development and the Death of the Free Market
(https://economicsfromthetopdown.com/2020/05/19/economic-development-and-the-death-of-the-free-
market/).)
If industrialization involves the growth of hierarchy, we’re left with a paradox. Developed countries are
both more hierarchical and more individualistic than their less-developed counterparts. How can this be
true?
I explore here an interesting possibility. What if individualism does the opposite of what we think?
Rather than promote autonomy, might individualism actually stoke the accumulation of power? This
idea sounds odd at first. But I hope to convince you that it’s plausible.
Narrative 1: Developing through the free market
We’ll begin our journey into culture by looking at the evidence for cultural change. I’ll first look at this
evidence in a way that supports the free-market narrative. Afterwords, I’ll turn this narrative on its head.
To get into the free-market mindset, we’ll drink the neoclassical Kool-Aid. According to neoclassical
economics, the best way to promote economic development is to liberate self-interest. Let people act for
their own gain, say economists, and economic development will take care of itself. This concept of the
‘invisible hand’ defies the ethic (ingrained in many of us from birth) that selfishness is a vice. In
economic theory, selfishness is a virtue.
Despite its counter-intuitiveness, the idea of the invisible hand seems to be supported by cross-cultural
analysis. As societies industrialize, the following cultural shifts tend to occur:
1. People become more individualistic.

2. People become more skeptical of authoritarian power.
3. Norms weaken and people become more tolerant of deviant behavior.
In general, then, economic development comes with greater autonomy of the individual — at least as
perceived by cultural ideals.
Individualism
Let’s look at the evidence for culture shift. We’ll begin with a measure of culture pioneered by Geert
Hofstede. Based on his analysis of IBM employees, Hofstede proposed a cultural spectrum between
‘individualism’ and ‘collectivism’. Hofstede describes this spectrum in Table 1.
Table 1: Individualism vs. Collectivism
Source:
Dimensionalizing Cultures: The Hofstede Model in Context
(http://mchmielecki.pbworks.com/w/file/fetch/64591689/hofstede_dobre.pdf)
Figure 1: As societies industrialize, they become more individualistic. I plot here Geert Hofstede’s
individualism index against energy use per capita in various countries. [Sources and methods]
To measure the individualism-collectivism spectrum, Hofstede created the ‘individualism index’

(http://clearlycultural.com/geert-hofstede-cultural-dimensions/individualism/). The larger this index, the
more individualistic the culture. In Figure 1, I’ve plotted Hofstede’s individualism index (in different
countries) against energy use per capita. Individualism, it seems, tends to increase with industrial
development. So the evidence suggests that if you let individuals pursue their self interest, economic
growth will take care of itself.
While the results in Figure 1 seem straightforward, there’s an important caveat. It’s not clear that
Hofstede’s individualism index actually measures what he claims. Hofstede created the index by
weighting responses to a dozen or so questions, assigning some responses to the ‘individualist pole’ and
others to the ‘collectivist pole’. Unfortunately, it’s not obvious that the questions on the ‘collectivist pole’
are actually related to collectivist ideology. But despite these problems, Hofstede’s results have been
replicated using more credible metrics.2 So it seems safe to conclude that people become more
individualistic with economic development. Point for the free-market narrative.
Power distance
Let’s move on to another cultural metric pioneered by Geert Hofstede — one that he calls the ‘power
distance index’ (http://clearlycultural.com/geert-hofstede-cultural-dimensions/power-distance-index/).
This index measures the degree to which people believe in autocratic rule. When people are skeptical of
autocratic rule, the ‘power distance’ is small. But when people believe that autocracy is ‘natural’ (and
that obedience is a virtue), the ‘power distance’ is large. Hofstede describes the two poles in Table 2.
Table 2: Large vs. Small Power Distance
Source:
Dimensionalizing Cultures: The Hofstede Model in Context
(http://mchmielecki.pbworks.com/w/file/fetch/64591689/hofstede_dobre.pdf)
Figure 2: As societies industrialize, they become more skeptical of autocratic power. I plot here Geert
Hofstede’s power distance index against energy use per capita in various countries. A decrease in the power
distance index indicates that people are less inclined to prefer autocratic rule. [Sources and methods]
In Figure 2, I plot Hofstede’s power distance index against energy use per capita. As energy use
increases, power distance tends to decrease. This indicates that as societies industrialize, people become
more skeptical of autocratic rule.
As with the trend towards individualism, this growing skepticism of power fits with the free-market
narrative. Economists like Milton Friedman love to emphasize the ‘free’ part of the free market. (Never
one for subtly, Friedman drove the point home in a book called Capitalism and Freedom
(https://www.goodreads.com/book/show/51877.Capitalism_and_Freedom)). The cultural evidence
seems to be on Friedman’s side. As societies industrialize, they become more skeptical of autocratic
power, and hence, more ‘freedom loving’. Point for the free-market narrative.
Cultural Tightness
Since Hofstede’s pioneering work in the 1970s, scientists have created many different measures of
culture. Perhaps the most famous is psychologist Michele Gelfand’s distinction between ‘tight’ and
‘loose’ cultures. ‘Tight’ cultures, she proposes, have strong norms and a low tolerance of deviant
behavior. ‘Loose’ cultures have weak norms and a high tolerance of deviant behavior.
Table 3 shows the questions Gelfand uses to gauge cultural tightness. Answering ‘yes’ to questions 1, 2, 3
or 5 and ‘no’ to question 4 indicate tighter culture. From these questions, Gelfand constructs a ‘tightness
index’.
Table 3: Measuring cultural ‘tightness’
Source: Rule Makers, Rule Breakers (https://www.goodreads.com/book/show/39939300-rule-makers-

rule-breakers)
Figure 3: As societies industrialize, cultural norms loosen. I plot here Michele Gelfand’s index of cultural
tightness against energy use per capita in various countries. Tighter cultures have stronger norms and less
tolerance for deviant behavior. [Sources and methods]
In Figure 3, I plot Gelfand’s index of cultural tightness against energy use per capita. As energy use
increases, cultures tend to become ‘looser’, meaning they become less conformist and more tolerant of
deviance. (Note, though, that the trend is weak.)
Our measurement of culture again seems to support the free-market narrative. Economists claim that
competitive markets drive innovation. But this works only if people are receptive to new ideas.
Apparently such openness tends to increase with industrialization. Point for the free-market narrative.
✹✹✹
Let’s summarize this foray into cultural measurement. Industrialization comes with a host of cultural
changes — a fact that is unsurprising. It’s not our DNA that separates industrial humans from our
ancient ancestors. It’s our ideas.
That being said, the direction of the cultural shift is somewhat surprising — especially to critics of
mainstream economics (like me). The evidence points to a cultural shift towards individualism — exactly
what economists say is required for free markets to work. But when viewed through an evolutionary
lens, this cultural shift is odd. The problem is that in evolutionary terms, the interests of individuals
rarely (if ever) align with the interest of the group. Your best option, as a selfish individual, isn’t to
contribute to society. Your best option is to free ride. This means that the success of social species (like
humans) depends crucially not on elevating self interest, but on suppressing it. (See Unto Others
(https://www.goodreads.com/book/show/134244.Unto_Others) for an exposition.)
Contrary to what evolutionary theory claims we should do, humans seem to have industrialized not by
suppressing self interest, but by stoking it. Does this mean evolutionary theory is wrong? Unlikely. The
crucial point is that we’ve so far measured human ideas. But evolution cares only for actions. Now here’s
the curious thing. When we measure human actions, we get a very different story than the one told by
our ideas.
The disconnect between ideas and actions
Ideas are not the same as actions — a fact that the founders of the United States made clear. In crafting
the Declaration of Independence, Thomas Jefferson heralded the unalienable rights of individuals:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator
with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
Curiously, Jefferson wrote these words (which have become synonymous with human rights) while
owning hundreds of slaves (https://en.wikipedia.org/wiki/Thomas_Jefferson_and_slavery). Obviously
Jefferson’s ideas were disconnected from his actions. This example illustrates a basic fact of life.
Although we’d like to think that our actions align with our ideas, they need not.
This disconnect is important, especially if we want to ground the study of culture in evolutionary theory.
In evolutionary terms, all that matters is what our ideas do (to our behavior). What we think they do is
irrelevant. For this reason, evolutionary biologist David Sloan Wilson argues that belief systems are
often ‘massively fictional’. Their claims about the world are different than their effect on behavior:
Groups governed by belief systems that internalize social control can be much more successful than groups that
must rely on external forms of social control. For all of these (and probably other) reasons, we can expect many
belief systems to be massively fictional in their portrayal of the world.
(David Sloan Wilson in Darwin’s Cathedral

(https://www.goodreads.com/book/show/134827.Darwin_s_Cathedral))
Having measured how ideas change with industrialization, let’s do the same with behavior. As you’ll see,
doing so turns the free-market narrative on its head.
Narrative 2: Developing through hierarchy
Human behavior obviously has many dimensions. But here I’ll focus on just one: the tendency to
organize using hierarchy. This tendency needn’t have a direction. But if it did, the cultural evidence
suggests it should be downward. That’s because industrialization brings a shift towards individualism.
With this shift, we’d expect societies to also become less hierarchical. But that’s not what happens.
Instead, hierarchy actually increases.
There are many ways of looking at the growth of hierarchy, but perhaps the simplest is to count
managers. That’s because the job of a manager is to control the activity of other people. It’s a job that,
without hierarchy, couldn’t exist. So counting the relative number of managers gives a window into the
extent of hierarchy.
When we count the number of managers (a measurement of human behavior), we get a very different
story than the one told by the measurement of culture. With industrialization comes a trend towards
more hierarchy (not less). Figure 4 tells the tale. As energy use per capita grows, so does the relative
number of managers. True, this is indirect evidence for the growth of hierarchy. But with a little math,
we can show that the trend in Figure 4 is exactly what we’d expect if hierarchy increases with energy
use. (See Economic Development and the Death of the Free Market
(https://economicsfromthetopdown.com/2020/05/19/economic-development-and-the-death-of-the-free-
market/) for details.)
Figure 4: As societies industrialize, the relative number of managers grows. I plot here the managers’ share
of total employment against energy use per capita. Lines represent the path through time of countries. The black
line is the average trend. For sources and methods, see Economic Development and the Death of the Free Market
(https://economicsfromthetopdown.com/2020/05/19/economic-development-and-the-death-of-the-free-market/).
In light of this growth of managers, our measurements of culture now seem paradoxical. At the very
time that societies became more individualistic, hierarchy actually increased.
To drive this point home, let’s directly compare ideas and actions. We’ll plot our cultural metrics (ideas)
against the managers’ share of employment (action). Figures 5 to 7 show the comparison, with
fascinating results. Our cultural metrics correlate with the growth of managers — but in the wrong
direction. As the relative number of managers grows:
individualism increases (Figure 5)

power distance decreases (Figure 6)
culture becomes looser (Figure 7)
Figure 5: Societies become more individualistic as the number of managers grows. I plot here Geert
Hofstede’s individualism index against managers’ share of total employment in various countries. [Sources and
methods]
Figure 6: Societies become more skeptical of autocratic power as the number of managers grows. I plot
here Geert Hofstede’s power distance index against managers’ share of total employment in various countries.
[Sources and methods]
Figure 7: Societies become ‘looser’ as the number of managers grows. I plot here Michele Gelfand’s index of
cultural tightness against managers’ share of total employment in various countries. [Sources and methods]
It seems that there is a mismatch between our ideas and our actions. When we measure ideas, we see a
trend towards more individualism, more skepticism of power, and greater tolerance for deviance. Yet
when we measure behavior, we see a trend towards more hierarchy. In other words, people claim to
believe more in autonomy while at the same time living as subordinates within ever larger hierarchies.
This is the paradox of individualism and hierarchy.
Resolving the paradox
As a scientist, I live for a good paradox. Why? Because paradoxes signal an inconsistency in our
knowledge that we must resolve. When we find a paradox, one of two things must be true:
1. The evidence (that leads to the paradox) is wrong

2. Our ideas are wrong
So which is the case here? Since empirical research is always uncertain, it’s possible that the evidence
(above) is wrong. But let’s assume that the evidence is sound. This means that both individualism and
hierarchy grow together. How can we resolve this paradox?
We’ll start by defining the concepts at work, beginning with autonomy. To be autonomous is to control
your own actions. By extension, to lack autonomy is to lack control over your actions. Now let’s think
about how humans lose autonomy. “Man is born free,” Rousseau famously noted
(https://www.earlymoderntexts.com/assets/pdfs/rousseau1762.pdf), yet “everywhere he is found in
chains”. The chains are (mostly) metaphorical. We lose our freedom by surrendering control of our
actions to other people. In other words, by becoming subordinates.
The act of subordination is an intrinsic part of hierarchy. A hierarchy is a nested set of power relations
between superiors and subordinates. Because of this element of subordination, it seems paradoxical that
people could claim to believe more in individual autonomy while simultaneously working in ever larger
hierarchies.
Diving a little deeper, though, and we realize that there needn’t be a paradox. The key is that our
perception of the world is likely driven not by the larger social context, but by our interaction with
specific people. In a hierarchy, our perception of autonomy is probably driven by interaction with direct
superiors. Now here’s the crucial part. This interaction is largely independent of the size of the hierarchy
in which we work. If you have a tyrannical boss, you’re going to feel subjugated … regardless of
whether you work in a huge company like Walmart or a tiny mom-and-pop shop. So your perception of
autonomy comes not from the size of the hierarchy in which you belong, but from the strength of the
power relations within it.
This distinction is key. Our evidence for hierarchy (the growth of managers) measures the size of
hierarchies. It says nothing about the strength of power relations within each hierarchy. Now, it seems
intuitive that power relations might strengthen as hierarchies grow larger. But this need not be the case.
In fact, it’s plausible that larger hierarchies actually have weaker power relations. If this is true, it means
that people work in ever larger hierarchies while perceiving that they have more autonomy.
Sam Walton vs. Al Capone
To resolve the paradox of individualism and hierarchy, I’ll distinguish between two dimensions of
power:
1. the number of people you influence

2. the strength of this influence (per person)
The transition to capitalism, I argue, is associated with a vast increase in the size of hierarchies. This
means that the number of people influenced by elites has greatly increased. At the same time, the strength
of influence per person has probably declined, meaning subordinates perceive that they are more
autonomous.
To frame this distinction, consider the difference between Sam Walton

(https://en.wikipedia.org/wiki/Sam_Walton) and Al Capone (https://en.wikipedia.org/wiki/Al_Capone).
As one of the most notorious gangsters in history, Al Capone had near absolute control over his
subordinates. (Disobeying Capone meant risking death.) So in Capone’s gang, power relations were
strong and (perceived) autonomy was likely limited. Now contrast Al Capone with Sam Walton, the
founder of the largest corporation that has ever existed (Walmart). Compared to Capone, Walton’s
control over subordinates was quite loose. And yet despite this looseness (perhaps because of it), Sam
Walton controlled far more subordinates than Capone ever did. Capone demanded exacting obedience
from (at most) a few thousand gang members. Sam Walton, in contrast, demanded loose obedience from
millions of Walmart employees.
I compare the capitalist Sam Walton to gangster Al Capone because mafia organizations like Capone’s
are essentially relics of the past. They’re organized around family ties, with control over the hierarchy
largely a function of lineage. This system of lineage-based organization is probably the default mode of
human hierarchy. It’s common in simple chiefdoms. And it’s found in all feudal societies.
As a rule, lineage-based hierarchies constrict autonomy. By design, inherited status makes it difficult
both to move between hierarchies and to advance within them. Take feudal serfs as an example. If a serf
didn’t like his lot in life, he couldn’t just find another master. (Serfs were tied to their lord for life.) And it
was impossible for serfs to become lords. So vertical mobility wasn’t an option.
The transition to capitalism did away with this suffocating system. In capitalist societies, power became
vendible. This change likely meant that capitalist hierarchies became looser than their feudal
counterparts. The stifling order of birthright gave way to a more dynamic order based on ownership.
And so autonomy increased. (For a discussion of this transition, see Jonathan Nitzan and Shimshon
Bichler’s Capital as Power (http://bnarchives.yorku.ca/259/).)
From feudal clan to business firm
The transition to capitalism saw the demise of the feudal clan (based on the extended family) and the
rise of the nuclear family. It’s a story of the break-up of collectivism and the rise of individualism. (Or so
it seems.)
Looking at the spread of individualistic psychology, economic historian Jonathan Schulz and colleagues
recently found
(https://coevolution.fas.harvard.edu/files/culture_cognition_coevol_lab/files/sciencefull.pdf) that it was
strongly linked to cousin marriage. The lower the rate of cousin marriage, the more individualistic
people’s psychology. The reason for this connection, Schulz argues, is that cousin marriage was a potent
way of unifying the extended family. So when people stopped marrying their cousins, the feudal clan
dissolved into the modern nuclear family.
So why did people stop marrying their cousins? Schulz thinks it was because of the (Western) Catholic
church. In the Middle Ages, Catholic priests became obsessed with incest, and eventually banned cousin
marriage. The effect, Schulz proposes, was to kill the feudal clan and give rise to an individualistic
worldview. It’s a tale of the death of collectivism and the rise of individualism. But this is only part of
the story.
The other side of the story is that at the same time that the family unit shrank (and people became more
individualistic), the family also ceased to be the unit of economic organization. The feudal clan was
replaced by the business firm. And business firms grew larger than any feudal clan ever was. (Think Sam
Walton versus Al Capone.) So people’s ideas became individualistic at the same time that their behavior
became more collectivist.
The double-edged sword
Hierarchy and individualism grow together. That’s what the evidence tells us. I’ve so far tried to explain
how this paradox can be resolved. I’ll conclude by going a step further. Might individualism be a
prerequisite for large hierarchies?
Here’s why this may be true. Hierarchy is an organizational tool that comes with both benefits and costs.
The benefit is that hierarchy is a potent way of organizing large groups. By concentrating power,
hierarchical groups can act cohesively in ways that egalitarian groups cannot. (For details, see Peter
Turchin’s book Ultrasociety (https://www.goodreads.com/book/show/27867828-ultrasociety).) This
cohesiveness is a huge advantage in group competition. But it comes with a cost — namely despotism.
When groups use hierarchy to organize, rulers inevitably use their power to enrich themselves. This
despotism, in turn, undermines the benefits of hierarchy to the rest of the group. So to reap hierarchy’s
benefits, groups must concentrate power without succumbing to despotism.
Perhaps individualism grows with hierarchy because this worldview is a tool for limiting despotism.
This is speculative, but plausible. The idea is that if you believe in autonomy, you’ll tend to oppose
despotism. In so doing, you’ll increase the benefits of hierarchy. The result, paradoxically, is that rather
than destroy hierarchy, individualism actually feeds its growth.
If true, this story turns economic theory on its head. It means that enshrining the rights of individuals
doesn’t lead to atomistic free markets. It leads to collectivist hierarchies. One has to marvel at the irony. By
preaching the miracle of the market, neoclassical economists may have helped forge their own
collectivist nightmare.
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Sources and methods
Individualism and power distance
Data for the ‘individualism’ and ‘power distance’ indexes come from Geert Hofstede’s book Cultures and
Organizations: Software of the Mind (https://www.goodreads.com/book/show/18921679-cultures-and-
organizations). In addition to measures for specific countries, Hofstede reports measures for the
following regions: (1) Arab countries; (2) East Africa; and (3) West Africa. Based on Hofstede’s notes, I
disaggregate these regions as follows:
Arab countries = Egypt, Iraq, Kuwait, Lebanon, Libya, Saudi Arabia, United Arab Emirates
East Africa = Ethiopia, Kenya, Tanzania, Zambia
West Africa = Ghana, Niger, Sierra Leone, Togo
I assign each country Hofstede’s metric for the region.
Cultural tightness
Data for cultural ‘tightness’ comes from Gelfand and colleague’s recent preprint The Importance of
Cultural Tightness and Government Efficiency For Understanding COVID-19 Growth and Death Rates
(https://psyarxiv.com/m7f8a/download/?format=pdf). You can download the data at the Open Science
Framework: https://osf.io/pc4ef/ (https://osf.io/pc4ef/)
Energy
Data for energy use per capita comes from the World Bank, series EG.USE.PCAP.KG.OE. To these values
I add an estimate for energy consumed through food (2000 kcal per day).
Managers
Data for managers’ share of employment comes from ILOSTAT, Table TEM_OCU, series EMPoc1P.
Matching data
Neither Hofstede’s nor Gelfand’s data come with measurement dates. Here’s how I match their
measurements with energy and management data.
According to Hofstede, most of his data was gathered in the late 1960s and early 1970s. I match his
reported metrics with energy data from 1970 (or the available year that is closest to 1970. Managers data
begins in 1990. To match it with Hofstede’s metrics, I average the manager data over the whole period of
available data.
Gelfand’s data was first reported in a 2010 paper. I assume that this was the date of data gathering. I
match Gelfand’s data with energy use data in 2010 (or the available year closest to 2010). I match
Gelfand’s data with the average of managers data over the period 1990-2010.
Notes
1. In their book Capital as Power (http://bnarchives.yorku.ca/259/), Jonathan Nitzan and Shimshon

Bichler put the Greek concept of the nomos at the center of their theory of capitalism. You cannot
understand capitalism, they argue, without understanding the capitalist nomos. Nitzan and Bichler
trace their thinking to Cornelius Castoriadis, who in turn, traces his thinking to Aristotle.
2. Hofstede created his individualism index using a factor analysis of IBM survey questions. On the
individualist pole were people who ranked ‘free time’, ‘job freedom’, and ‘job challenge’ highly. On
the collectivist pole were people who ranked ‘job training’, ‘physical conditions’, and ‘use of skills’
highly.It’s not clear that this collectivist pole is the opposite of the individualistic pole. Rather than
emphasize a lack of freedom or dependence on others, the collectivist pole seems to emphasize job
conditions. There may be a hierarchy of needs at work here. When struggling to meet your material
needs, you’re likely more concerned with job conditions than with personal freedom. But as your
standard of living improves, you become concerned with a ‘higher’ set of needs.Many people have
raised this objection to Hofstede’s individualism index. Still, follow up research that uses more
convincing questions to gauge ‘collectivism’ correlate strongly with Hofstede’s original work (see
Gelfand et al.
(https://www.researchgate.net/publication/275714450_Individualism_and_Collectivism), Minkov et
al (https://www.emerald.com/insight/content/doi/10.1108/CCSM-11-2016-0197/full/html) and Schulz
et al. (https://coevolution.fas.harvard.edu/files/culture_cognition_coevol_lab/files/sciencefull.pdf))
Further reading
Fix, B. (2017). Energy and institution size. PLOS ONE, 12(2), e0171823.
https://doi.org/doi:10.1371/journal. pone.0171823 (https://doi.org/doi:10.1371/journal. pone.0171823)
Fix, B. (2019a). An evolutionary theory of resource distribution. Real-World Economics Review, (90), 65–97.
http://www.paecon.net/PAEReview/issue90/Fix90.pdf
(http://www.paecon.net/PAEReview/issue90/Fix90.pdf)
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 ENERGY
 HIERARCHY
 INSTITUTION SIZE
 PSYCHOLOGY
 CULTURAL EVOLUTION  CULTURAL TIGHTNESS  ENERGY
 HIERARCHY  INDIVIDUALISM  INDIVIDUALISTIC PSYCHOLOGY
 POWER DISTANCE
Published by Blair Fix
Political economist. Blogger. Muckraker. Foe of neoclassical economics. View all posts by Blair Fix
12 comments
1. The Paradox of Individualism and Hierarchy – Olduvai.ca says:

JULY 31, 2020 AT 11:21 AM
[…] The Paradox of Individualism and Hierarchy […]
REPLY
2. Alex Schweinsberg says:
JULY 31, 2020 AT 1:12 PM
Deeply thought-provoking, as always! Would be very interested to see you address what this link
between individualism/autonomy and hierarchy would mean in an energy descent scenario (also
your thoughts on degrowth generally, given the importance of energy in your work). Obviously the
reality of it would be messy, but it’s hard to see a solution to the general crisis that doesn’t involve
some reduction of energy and material throughput. What kind of slack do we have before it starts to
impact the maintenance of large/loose hierarchies and the benefits they provide with respect to
autonomy, etc. The irony you point out at the end of neoclassical (and presumably also libertarian)
ideas helping to forge collectivism is delicious, but how do/will they resolve this contradiction
politically as it becomes more salient? They hold a range of views, but the futures envisioned by the
techno-utopian strands, at least, would seem to require doubling down on energy throughput and
complexity (and therefore hierarchy). At the same time, some on the margins seem to be breaking in
ecofascistic direcitons.Do they bet on being able to stay on top of larger and looser hierarchies or
smaller and tighter ones (valorization of sovereign city-states, etc.)?
Also, you note the possibility of individualism having evolved as a check on despotism (a sort of
immune system, as it were?), but how might alienation figure into this as a sort of self-corroding
waste product (of looseness in hierarchies?) at the opposite end of the spectrum from despotism?
Not sure if all of these issues are suited for this blog, but it would be great to have you weigh in on
them at some point!
REPLY
Blair Fix says:
AUGUST 1, 2020 AT 8:34 AM
Hi Alex,
About degrowth, I think it’s probably inevitable. Barring something like nuclear fusion, I think
once we exhaust our oil reserves, we’re headed for degrowth whether we want to or not. That
being said, I think for the climate’s sake, we should degrow voluntarily and leave the oil in the
ground.
As to what will actually happen, I fear we’re headed for an involuntary collapse. Individual
nations (and people within nations) are capable of reducing consumption somewhat. But
collectively there appears to be a prisoner’s dilemma at play. It’s best for humanity as a whole to
leave the fossil fuels in the ground. But for individual nations (and people), it’s best to ‘cheat’ and
use as much as you can.
The solution to the prisoner’s dilemma, historically, is always some form of collective governance.
So if we had a strong world government, worldwide degrowth could conceivably happen (where
rich nations decrease consumption and poor nations increase consumption, eventually
converging to the same level).
What will actually happen? Your guess is as good as mine. But my fear is that we’re headed for a
feudal future. Looking at history, whenever large societies collapse, the remnants are usually
composed of much smaller hierarchies, with a very closed worldview.
I didn’t mention this in the post (wanted to but ran out of space), but perhaps a better word for
‘individualism’ is ‘impersonal altruism’. This is a term used by Schulz in the paper mentioned in
the post. It means valuing individualism at the same time as widening your circle of trust.
Places like Sicily famously have a very narrow circle of trust in which the extended family is
basically your whole world. Everyone else is your enemy. In the mid-western US (at least
historically, maybe not now), the circle of trust was wide, yet emphasis on individuality
comparatively large. Again, there’s an apparent contradiction. I think the effect of classic liberal
thinking (which emphasizes autonomy) is actually to widen the scale of collectivism.
Hope this answers your questions.
REPLY
3. Joe Clarkson says:
JULY 31, 2020 AT 4:45 PM
Very interesting post. I agree with the general thrust of your analysis, but I think the correlations you
present in the first sections are very weak, with only the energy use against individualism index
having a fairly robust correlation. You mention weak correlation once, but not enough I think.
Also, I wonder if the leveling off and then drop off in the manager’s share of employment at the high
end of energy use is due to the increase in computer penetration of businesses? Perhaps as AI
improves there will be far fewer managers. We’ll let the machines make most management decisions.
Then, when machines do everything and make every decision, we humans won’t have to do
anything at all and we’ll have perfect freedom within our “fully automated luxury communism”.
Sounds like hell to me.
REPLY
Blair Fix says:
Hi Joe,
Agreed that the correlations are weak. What’s interesting, though, is that they all go in the wrong
direction from what we’d expect. But in general, correlations in cultural analysis are weak.
About the levelling off of managers. In the model of hierarchy that I’ve built, this behavior
happens solely because of how hierarchy works. As hierarchy grows larger, the relative number
of managers naturally plateaus. The location of this plateau is a function of the span of control —
the number of subordinates controlled by each superior. So we don’t need anything extra to
explain the plateau.
That’s being said, it’s conceivable that computers have allowed the span of control to increase. But
as far as I know, there isn’t much data on the topic.
REPLY
4. Eric Anderson says:
AUGUST 1, 2020 AT 2:00 PM
Blair, really enjoy your intellectual honesty, provocative insights and hypothesizes. In this article I
wondered about the data sample from IBM, in comparison to personal experience in our third
generation family engineering small business. People are drawn to successful firms frequently by
their culture, if not specifically their leaders/ manager. I wonder what data from less desirable
employments would demonstrate? In data I worry about pre-selection.
Thanks for sharing your talents
regards,
Eric
REPLY
Blair Fix says:
AUGUST 1, 2020 AT 2:43 PM
Hi Eric,
Glad you enjoyed the article.
I too worry about selection bias in the IBM data. Fortunately there are other studies that measure
individualistic psychology. As far as I know, these are more general samples of the population.
If/when I write this research up more formally, I’ll have a look at this other data to make sure the
results replicate.
REPLY
5. Steve Cameron says:
Hi Blair,
Seems you might have found another aspect to hierarchy and institutions that’s worth more research.
My one small comment is that I distrust the concept of individuality. I prefer the nature and nurture
paradigm, which suggests to me that all behaviour is a instinctive or learnt, or at least driven by
learnt beliefs. You mentioned the handing down of culture from one generation to the next via
education in a previous post.
REPLY
Blair Fix says:
AUGUST 2, 2020 AT 11:11 AM
Hi Steve,
I agree that in a social species such as ours, individuality is a myth. That’s the scientific reality.
Still, many people (especially those on the right) delude themselves into thinking that they can
pull themselves up by their bootstraps, independently of the rest of humanity. Although It’s a
foolish illusion, the consequences for behaviour are very real. And its the consequences (not the
ideology itself) that interest me.
REPLY
Steve Cameron says:
AUGUST 2, 2020 AT 11:16 PM
I once went looking for a book called Individuality is a Myth but it doesn’t seem to have been
written yet.
6. Denialists Versus Remakers says:

[…] Consistently we find that individualism promotes dystopian social currents: […]
REPLY
7. Denialists Versus Remakers - The Rabbit Hole says:
AUGUST 4, 2021 AT 10:56 AM
[…] Consistently we find that individualism promotes dystopian social currents: […]
REPLY
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04/08/2021 The Paradox of Individualism and Hierarchy – Economics from the Top Down

Economics from the Top Down

New ideas in economics and the social sciences

JULY 31, 2020

In the early 1970s, Geert Hofstede (https://en.wikipedia.org/wiki/Geert_Hofstede) discovered something

Narrative 1: Developing through the free market

1. People become more individualistic.

Table 1: Individualism vs. Collectivism

To measure the individualism-collectivism spectrum, Hofstede created the ‘individualism index’

Table 2: Large vs. Small Power Distance

Table 3: Measuring cultural ‘tightness’

Source: Rule Makers, Rule Breakers (https://www.goodreads.com/book/show/39939300-rule-makers-

The disconnect between ideas and actions

(David Sloan Wilson in Darwin’s Cathedral

Narrative 2: Developing through hierarchy

individualism increases (Figure 5)

This is the paradox of individualism and hierarchy.

Resolving the paradox

1. The evidence (that leads to the paradox) is wrong

Sam Walton vs. Al Capone

1. the number of people you influence

To frame this distinction, consider the difference between Sam Walton

From feudal clan to business firm

The double-edged sword

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This work is licensed under a Creative Commons Attribution 4.0 License

Sources and methods

Individualism and power distance

I assign each country Hofstede’s metric for the region.

1. In their book Capital as Power (http://bnarchives.yorku.ca/259/), Jonathan Nitzan and Shimshon

Published by Blair Fix

1. The Paradox of Individualism and Hierarchy – Olduvai.ca says:

Hope this answers your questions.

Thanks for sharing your talents

Glad you enjoyed the article.

6. Denialists Versus Remakers says:

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