The most important things in the world exist only in our imagination
How did Homo sapiens came to dominate the planet? The secret was a very peculiar characteristic of our unique Sapiens language. Our language, alone of all the animals, enables us to talk about things that do not exist at all. You could never convince a monkey to give you a banana by promising him limitless bananas after death, in monkey heaven. Only Sapiens can believe such fictions. But why is it important? After all, fiction can be dangerously misleading or distracting. People who go to the forest looking for fairies and unicorns would seem to have less chance of survival than people who go looking for mushrooms and deer.
Fiction is nevertheless of immense importance, because it enabled us to imagine things collectively. We can weave common myths such as the biblical creation story, the Dreamtime myths of Aboriginal Australians, and the nationalist myths of modern states. And it is these myths that enable Sapiens alone to cooperate flexibly with thousands and even millions of complete strangers.
True, ants and bees can also work together in huge numbers, but they do so in a very rigid manner and only with close relatives. Wolves and chimpanzees cooperate far more flexibly than ants, but they can do so only with small numbers of individuals whom they know intimately. If you tried to bunch together thousands of chimpanzees into Wembley Stadium, Oxford Street, St Paul's Cathedral or the House of Commons, the result would be pandemonium. Sapiens, in contrast, gather there by the thousands and together they organize and reorganize trade networks, mass celebrations, and political institutions. That’s why we rule the world, whereas ants eat our leftovers and chimps are locked up in zoos and research laboratories.
At the heart of our mass cooperation networks, you will always find fictional stories that exist only in people's collective imagination. Two Catholics who have never met can nevertheless go together on crusade or pool funds to build a hospital because they both believe that God was incarnated in human flesh and allowed himself to be crucified to redeem our sins. Two Serbs who have never met might risk their lives to save one-another because both believe in the existence of the Serbian nation, the Serbian homeland, and the Serbian flag. Two lawyers who have never met can nevertheless combine efforts to defend a complete stranger because they all believe in the existence of laws, justice, human rights—and the money paid out in fees.
Yet none of these things exists outside the stories that people invent and tell one another. There are no gods, no nations, no money and no human rights, except in our collective imagination.
Let's leave gods and nations aside for a moment, and focus our attention on the economic sphere. The most important players in our modern economy are business companies. What are they exactly? Take Peugeot, for example. Peugeot is one of the oldest and largest of Europe’s carmakers. It was founded by a man called Armand Peugeot, back in 1896. Armand Peugeot died in 1915. But Peugeot, the company, is still alive and well. Today it employs about 200,000 people worldwide, most of whom are complete strangers to each other. These strangers cooperate so effectively that in 2008 Peugeot produced more than 1.5 million automobiles, earning revenues of about 55 billion euros.
In what sense can we say that Peugeot exists? There are many Peugeot vehicles, but these are obviously not the company. Even if every Peugeot vehicle in the world were simultaneously junked and sold for scrap metal, Peugeot would not disappear. It would continue to manufacture new cars and issue its annual report. The company owns factories, machinery and showrooms, and employs mechanics, accountants, managers and secretaries, but all these together do not comprise Peugeot. A disaster might kill every single one of Peugeot’s employees, and go on to destroy all of its assembly lines and executive offices. Even then, the company could borrow money, hire new employees, build new factories and buy new machinery. Peugeot has managers and stockholders, but neither do they constitute the company. All the managers could be dismissed and all its shares sold, but the company itself would remain intact.
Peugeot is impervious to all these upheavals, because Peugeot is a fictional story. It belongs to a particular genre of legal fictions called ‘limited liability companies’. The idea behind such companies is among humanity’s most ingenious inventions. During most of recorded history property could be owned only by flesh-and-blood humans. If in thirteenth-century France Jean set up a wagon-manufacturing workshop, he himself was the business. If Jean had borrowed 1,000 gold coins to set up his workshop and the business failed, he would have had to repay the loan by selling his house, his cow, his land. He might even have had to sell his children into servitude. If he couldn’t cover the debt, he could be thrown in prison or enslaved by his creditors. Jean was fully liable, without limit, for all obligations incurred by his workshop.
If you had lived back then, you would probably have thought twice before you opened an enterprise of your own. And indeed this legal situation discouraged entrepreneurship.
This is why people began collectively to imagine the existence of limited liability companies. Such companies were legally independent of the people who founded them, invested in them, or managed them. Over the last few centuries such companies have become the main players in the economic arena, and we have grown so used to them that we forget they exist only in our imagination.
How exactly did Armand Peugeot, the man, create Peugeot, the company, back in 1896? In much the same way that priests and sorcerers have created gods and demons throughout history and in which thousands of French priests were still creating Christ’s body every Sunday in the parish churches. It all revolved around telling stories, and convincing people to believe them. In the case of the French priests, the crucial story was that of Christ’s life and death as told by the Catholic Church. According to this story, if a Catholic priest dressed in his sacred garments solemnly said the right words at the right moment, mundane bread and wine turned into God’s flesh and blood. The priest exclaimed “Hoc est corpus meum!” (Latin for “This is my body!”) and hocus pocus—the bread turned into Christ’s flesh. Seeing that the priest had observed all the right procedures, millions of devout French Catholics behaved as if God really existed in the consecrated bread and wine.
In the case of Peugeot the crucial story was the French legal code. According to that story, if a certified lawyer followed all the proper liturgy and rituals, wrote all the required spells and oaths on a wonderfully decorated piece of paper, and affixed his ornate signature to the bottom of the document, then hocus pocus—a new company was incorporated. When in 1896 Armand Peugeot wanted to create his company, he paid a lawyer to go through all these sacred procedures. Once the lawyer had performed all the right rituals and pronounced all the necessary spells and oaths, millions of upright French citizens behaved as if Peugeot company really existed.
The end result is that in contrast to all other animals, we Sapiens are living in a dual reality. On the one hand, the objective reality of rivers, trees and lions; and on the other hand, the imagined reality of gods, nations and companies. As history unfolded, the imagined reality became ever more powerful, so that today the very survival of rivers, trees and lions depends on the grace of imagined entities such as Almighty God, the European Union and Google.
Excerpt from chapter 2, Sapiens: A Brief History of Humankind