Published on:21 June, 2019
In an insightful book written 40 years ago, French philosopher, Rene Girard, explains how in our desires, we are programmed to imitate each other. That in turn leads to conflict & grief which in turn creates the need for scapegoats who can act as a lightning rod for our grievances. Great leaders are those who can game this construct by using religion, culture, and other people as scapegoats.
“…in order to succeed one must take up an old problem, one not fashionable at the moment, and radically rethink it…there is nothing, or next to nothing, in human behaviour that is not learned, and all learning is based on imitation. If human beings suddenly cased imitating, all forms of culture would vanish. Neurologists remind us frequently that the human brain is an enormous imitation machine.” – Rene Girard in “Things Hidden Since the Foundation of the World” (1978)
Rene Girard, an original thinker with powerful insights
In 1978, Rene Girard published a remarkable book called “Things Hidden Since the Foundation of the World”. The book, written in the form of a dialogue between the philosopher, Girard, and two psychologists provides deep insights into how societies evolve, compete, fight and resolve conflict. Those insights in turn have implications for how we think about countries and companies.
Girard’s hypothesis unfolds sequentially:
1. Human beings have an innate desire to compete with each other and rise in the world. At the outset, this desire to compete and create new things, conquer new frontiers is a healthy thing as it spurs creativity, innovation and differentiation.
2. Then a complication kicks in because human beings, being social animals. learn from each other and copy each other. As a result, we start coveting the same things as others. For example, in isolation I have no incentive to covet a diamond which to my mind is a worthless stone. However, if 20 people around me begin coveting diamonds (or admission for their children into a certain school or flats on Altamount Road or holiday villas in Goa), then I too am likely to covet the same. Girard calls this “mimesis” i.e. we mimic each other in our desires. Notice that it is almost certain that we will covet things which are scarce in supply; hence diamonds are more coveted than water (at least until water becomes scarce) even though water is far more useful for us than diamonds.
3. As hoards of people start seeking the same things, competition (or mimesis as Girard calls it) intensifies. Then, in the heat of the battle, differentiation takes a back seat as all of us strive to outdo each other in acquiring these symbols of prestige. The logical escalation of this competitive battle is aggression vis a vis each other which sometimes culminates in violence.
4. During this period of intense competition, as unhappiness increases and grievances multiply, society seeks a scapegoat. The scapegoat is deemed to be responsible for all grievances although, in reality, the grievances arise from mimesis. The scapegoat can a be a person (see next bullet) or a community (eg. Jews in Germany in the 1930s, Jews in Hungary today, Muslims in India today, Latino immigrants in Trump’s America).
5. Punishment is then meted out to the scapegoat so as to assuage the masses. In extreme cases, the scapegoat is murdered (eg. Jesus Christ, Julius Caesar). In less extreme cases, the scapegoat serves out a period of punishment (eg. Ram & Sita going into exile, ditto for the Pandavas). Figures in positions of power & influence – Kings in the ancient world, CEOs, Presidents and senior politicians today – partly exist to serve as scapegoats.
6. Since powerful leaders realise that they can be readily sacrificed as scapegoats, they seek to institutionalise ways such that they can distribute the heat arising from society’s grievances (eg. by creating a Board of Directors or a Cabinet or a Parliament) whilst also increasing the supply of potential scapegoats (eg. the Vice Presidents of a firm, various Ministers and civil servants in a Government). A skillful leader who understands the above dynamic, moves preemptively to sacrifice a scapegoat other than herself to address society’s grievances.
7. Religion serves an important purpose insofar it helps our leaders quell grievances with reduced conflict and/or smaller scapegoats. Similarly, in corporate life “culture” serves an important purpose as it forces people to focus on the bigger picture rather than the next promotion round. Ditto for nationalism at the level of the country.
Girard’s central thesis of mimesis (i.e. in our desires, we are programmed to imitate each other) leading to conflict & grief and that in turn creating the need for scapegoats is as simple as it is powerful. We can understand its implications at several levels:
- 1. At the level of the individual, we set ourselves up for a life of strife and unhappiness if we cannot have desires and goals which are different from the people around us. The more differentiated our desires and goals, the lower the chances of us spending our lives fighting empty battles for wealth, power & prestige.
- 2. However, if we do decide to aspire for the same things that many other people want then we have to realise that our success, our ascendancy creates the risk that we ourselves become the scapegoat.
- 3. You can apply this thinking at the level of the company as well. The less differentiated a company’s offering/business model, the more likely that it will be engaged in intense competition with others. Such competition between similar companies is likely to result in almost all the player generating ROCE lower than their cost of capital. That in turn will trigger lobbying i.e. certain companies will push the Government to make somebody a scapegoat. A picture perfect case study of this is how the telecom industry in India has evolved over the past 20 years – all the companies essentially the same product/business model and a result none of them has ever been able generate ROCE above their cost of capital. Their almost daily efforts at lobbying in New Delhi led to the 2G scam and the arrests which followed thereafter.
- 4. For us to generate healthy returns for our clients we have to look for companies which are either utterly dominant in their industries with Himalayan barriers to entry around then (eg. Asian Paints, Nestle, Pidilite, Relaxo) or look for companies whose products/business models are highly differentiated and hence won’t attract competition for a considerable period of time. You will hear more from us on the latter theme in the months to come.
You can also apply Girard’s philosophy at the level of the country but that subject is best discussed on a different day and probably in a different forum.
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Saurabh Mukherjea is the author of “The Unusual Billionaires” and “Coffee Can Investing: the Low Risk Route to Stupendous Wealth”.
Note: the above material is neither investment research, nor investment advice. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services and as an Investment Advisor.
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