Relational Economics, Trust and The Octopus

Leadership inspiration for better economics

What can an octopus teach us about leadership? And how can this fit into the bigger picture of economics? In the Oscar winning ‘My Octopus Teacher’ (2021 Best Documentary Feature) the – understandably – shy and evasive octopus the protagonist encounters, develops over time a more open and even receptive attitude, its behaviour becoming more off guard and playful. It gradually starts to feel at ease with the flippers and mask wearing creature that shows up every day, making for a shift in the fight, flight, or freeze response. Curiosity does surpass anxiousness, which is a major achievement because the reptile brain can apparently be told to be quiet for a little while.

Empathy helps the process for establishing trust

Now, a question does arise. Is trust directly linked to empathy? Is the latter a necessary precondition for effectively developing trust? First published in 1996 and soon in the best sellers rank, Emotional Intelligence: Why It Can Matter More Than IQ by psychologist Daniel Goleman still is a classic. The author makes it clear that empathy stems and develops from self-consciousness, the awareness of oneself. And the more access we have to our emotions, the more we are capable of noticing, identifying and interpreting the emotions of others. Empathy, so closely linked to our emotional life as it is, simply means knowing how another person feels. While the rational mind makes use of words, emotions are almost always expressed in a non-verbal way, with body language and tone of voice as the most prominent manifestations.

Economics is a trust-based system

Trust is at the root of all relationships. As the latter word, relationships, denotes, this holds for smaller groups of people. When it comes to larger groups like cities, states, companies, and countries, we use the word relations. Both describe the connection and how things are, it is a reference point. While it is not yet very common to view economics as a trust-based system, we can argue that this is exactly what it is. One way or the other, people do depend on each other and this interdependency is to be found at every level. And it is here where trust steps in, a core value which enables us to form mutually beneficial bonds. As a matter of fact, trust boosted our evolutionary history for it was the key to survive and to create the surroundings in which the development of our brain could take a leap forward. In other words, trust served two purposes: it sustained life by ensuring the basic needs were met, and it promoted growth by giving way to curiosity, the innate quality of many different species. On a side note, the word curiosity has its origin in Latin ‘curiositas’, from ‘curiosus’ meaning careful, diligent, curious, and is akin to the Latin ‘cura’, our English care. Which in this Latin context refers to close attention, concern, responsibility.

Trust, care, and curiosity are linked

Why do we mention this here? Because if we want to better understand the inconsistent, doubting, insecure parts of our brain and the subsequent tricky behaviour, we need to know how trust can be enhanced. It is from this vantage point that decisions and actions can set sail over the seas of exploration building better for the future. Economics is a system and we decide how it looks like and what its ethics are. True leadership is values based leadership and by its nature inclusive as well: navigating the interests of all parties with one and the same vessel. Trust-based leadership styles make room for curiosity and secure the safe space for learning, experimenting and the ever so important creative process: starting out from A and not exactly knowing where the journey will end. Thus, trust, care and curiosity are bonding with courage and taking risks.

The Paris Agreement: trust needs some kind of assurance

This is important. For instance, the Paris Climate Agreement is an ambitious set of goals and it is obvious we can only get there together, and by joined efforts. And it needs all to stay in, which is a challenge in itself. Economist Scott Barrett, vice dean of Columbia University’s School of International and Public Affairs, studied how to address the free rider problem (Barrett & Dannenberg, 2017). He designed a game and the outcome wasn’t that surprising: single countries want some kind of assurance that other signatories will contribute, something the pact did not provide. How to do this could be a carrots and sticks approach: “(by) including second best approaches like technology standards combined with trade restrictions.”

Wrapping it up, there isn’t much of a difference with our day to day life. And the basics did not change over time. We all have a need for safety and assurance, and in order for a collective goal to be reached, leadership has to shape and set up the conditions for trust to be both an effective power and a friendly ally.

Authors:

Prof. dr. Lans Bovenberg (professor of ‘Relational economics, values and leadership’ at the Erasmus School of Economics)

Mr. dr. Marina van Driel (advisor Erasmus institute for Business Economics)

References:

Where is the love? Over waarde en waarden (NL). Inaugurele rede 1 november 2019 Prof. dr. Lans Bovenberg.

Economics Education in Balance: Choosing and Cooperating (EN). Inaugural address Prof. dr. A. L. Bovenberg December 15, 2016.

 We Trust. We Share. We Build.