Learned Helplessness in Democracies and Economies

Vikas Shah September 30th 2010

Manchester Business School – Transforming Management - http://shah.tm.mbs.ac.uk

In my article of September 01st 2010 "Thinking Ourselves Into Another Recession" I

discussed how psychology plays a critical role in the well-being of an economy.
Using the paradigm of eating disorders, we discussed how:

"...When we talk of economic confidence, business confidence, or even confidence in

global markets, we are talking of the mindset of the majority of participants in that
market. In a 'booming' market, participants feel happy, with little sense of risk- so
they are happy to invest in their businesses, create jobs, buy property, and drive
strong economic figures. In a recessive 'bust' market, we see a standard human
predator response, "a flight to safety" where participants hoard their capital, run
towards safe assets, cease creating employment, cease purchasing property, and
create an overall dip in economic figures. The important lesson, therefore, is for us to
realise the psychological battle the economy is facing- being a state of collective
depression, with markets moving through a daily motion of binge and purge- leading
to either a collapse into increasing volatility, or... if we collectively gain positivity, a
move towards greater wealth, and economic success. "

To extend this further, let's look at an experiment, conducted in 1960 by leading

Psychologist Martin Seligman.

Seligman performed an experiment involving three different groups of animals, who

were tasked to jump over a little hurdle- from one side of a box, to the other- to
escape or avoid an electric shock. One group was given no prior exposure to such
experiments, one had already learned to make a response (to escape from shock) in a
different setting, and the third group had been given a series of shocks they could not
escape. While the first and second groups quickly figured out how to escape the
shock, the third group- rather remarkably- failed to learn, not because they didn't have
the chance to, but because they didn't even try to escape. They became passive, lying
down and taking the shocks. In this one experiment, Seligman discovered the
phenomenon of "Learned Helplessness" which later made a monumental impact on
psychology. As was observed in "The Paradox of Choice", "Seligman and his
colleagues suggested that animals in this third group had learned from being exposed
to inescapable shocks that nothing they did made a difference- they were essentially
helpless when it came to controlling their fate. Hundreds of studies leave no doubt
that we can learn that we don't have control. And when we do learn this, the
consequences can be dire. learned helplessness can affect the future motivation to
try. It can affect future ability to detect that you do have control in new situations. It
can suppress the activity of the body's immune system, thereby making helpless
organisms vulnerable to a wide variety of diseases. And it can, under the right
circumstances, lead to profound clinical depression. So it is not an exaggeration to
say that most of our fundamental sense of well-being crucially depends on our having
the ability to exert control over our environment and recognising that we do."

There is certainly empirical evidence of this in the way societies behave. Every
dictatorship in the world is an example of a society exhibiting learned helplessness,
from Nazi Germany to the current regime in North Korea, citizens have all but
accepted they have no control over their environment- and become passive (and hence
open to manipulation and control). How else could Hitler, for example, pass
legislation through an otherwise rational population for the eradication of all Jews
from civil society?

In contrast to this, the effect on society when people realise they do have control is
profound. "Protests following the 2009 Iranian presidential election against the
disputed victory of Iranian President Mahmoud Ahmadinejad and in support of
opposition candidate Mir-Hossein Mousavi occurred in major cities in Iran and
around the world starting June 13, 2009. The protests were given several titles by
their proponents including Green Revolution, Green Wave or Sea of Green, reflecting
presidential candidate Mousavi's campaign color, and also Persian Awakening. The
events have also been nicknamed the "Twitter Revolution" because of the protesters'
reliance on Twitter and other social-networking Internet sites to communicate with
each other.". In this case, the population- through tools such as Twitter, realised they
did have a choice, did have a voice- and were able to escape this malleable,
depressive state, and try to create change. Similar examples can be found throughout
history including the 2007 anti-government protests in Burma.

The Problem With Democratic Economies

Even in our own developed democratic economies, we see very similar behaviours.
As much as we know that we have a notional say in our governance through voting
and other means- the fact remains that the majority of voters in the UK, Europe and
the USA feel a sense of disconnect between themselves and their political and
economic environments. As Seligman identified, "...fundamental sense of well-being
crucially depends on our having the ability to exert control over our environment and
recognising that we do" so when a voter or economic participant feels they have no
control over their environment (be it because of a recession, policies they disagree
with, decisions made outside their gaze, and so forth) they tend to play a more passive
role in their polis or economy as a result.

Academically, this sentiment also holds true. In a 2005 paper entitled, "The political
economy of freedom, democracy and terrorism" by Kurrild-Klitgaard, Justesen and
Klemmensen of the University of Southern Denmark, the researchers identified that,
"other components of liberal democracy—civil liberties, rule of law and free
markets—may play a larger role as long-term deterrents than simply having free
elections. In contrast, the good news is that if the country goes all the way to a more
complete liberal democracy, then it is likely to significantly decrease terrorism and
political violence."

For those wishing for paradigm from the corporate world- we can see how
organisations who genuinely give their employees the knowledge and ability to exert
control over their employers strategy do extremely well (Google and Apple to name
just two) with many others such as IBM- who operate a far less empowered
governance methodology- simply unable to replicate the growth, innovation, and
agility of their empowered counterparts.

The underlying lesson here for our political, economic and corporate leaders is rather
simple. Saying people have the ability to participate in decisions, and actually
ensuring they can, should not (as the case often is) be mutually exclusive. Our
nations, economies and companies can perform far better where we genuinely allow
and encourage participation in governance and policy from all stakeholders.