Are Humans Fundamentally Good?

My favorite treatment of this question (as a question of philosophy) comes from Xunzi, who wrote an essay called "Human Nature Is Bad," which begins:

People’s nature is bad. Their goodness is a matter of deliberate effort.

The good things that make up civilization, he claims, come from deliberate adherence to codes of conduct and from principles that are adopted through deliberate effort, instead of listening to one's nature.

He, of course, is drawing a distinction between one's reasoned habits and instinctual emotions as if reasoning were not itself an instinctual process, but this seems like the right call to me; the decision relevance of whether humans are fundamentally good is whether, in times of uncertainty, they should trust their 'base nature' or their 'cultivated disposition,' and whether people can be trusted to do the right thing without instruction or systems, or whether those need to be carefully constructed so that things go well. (Hence the founders working carefully on the social contract and institutional design.)

As a questions of history, it depends a lot on what you think is "good," and what you mean by "fundmentally." Pre-state peoples varied widely in their customs, habits, and ability to leave records. What records we do have--like the fraction of excavated corpses who died from human violence--suggest humans now are much less violent than humans then. The development of human civilization does seem to have been progress; if humans 'sprang into existence' as 'good', we would expect things to look quite different.

In real live examples of anarchy, does society devolve because humans are not fundamentally good or because of some other reason?

Many of the things that we think of as markers of civilization, like careful planning and investment in the future, grow much rarer in times of significant uncertainty, like periods of anarchy. The categories you propose feel a bit strange in trying to make sense of this situation. Like, if I decide not to plant a tree because it's a bunch of work for me now, and I don't know who will eat the fruits in the future (since someone else might take the tree from me), one could say the absence of investment is due to my rational pessimism. Or one might say this is because humans don't fundamentally respect the property rights of others, which is a sign that human nature is bad. Or one might say this is because humans don't naturally believe in the lie of private property, which is a sign that human nature is good. Or one might say that this is not because of deficiencies in human nature broadly construed, but because of the actions of a handful of assholes who ruin everything for everyone else.

Humans aren't fundamentally anything. We're highly variable, complex calculators, without much input validation on what we learn about or how we react to novel stimulus.

It's complicated:

• most people are capable of feeling empathy towards other humans, but some are psychopaths;
• empathy can be turned on/off depending on whether the other person is perceived as "in my group" or "outside my group", which happens for various reasons;
• care for other people is balanced against care for myself;
• there may be strategic reasons to appear better/worse than one would be otherwise, e.g. one can help others to signal wealth, or hurt others to signal they are not to be messed with;
• even when people agree on what is good, it is often difficult to coordinate on sharing the costs;
• people with good intentions may do bad things, e.g. because they have mistaken beliefs.

I probably forgot a few important things here.

My personal approach is that most people are good, but the few bad ones can do disproportionate damage -- it is much easier to hurt other people than to help them, easier to lie than to find out truth, easier to break things than to fix them.

Often the problem isn't inherent goodness or badness, but the incentive structure that an environment creates, and whether people's natural tendencies to want to be high status results in benefit for everyone or not. In an environment with no one who has the exclusive right to the use of force, violence becomes a means of acquiring resources and status. If you set up the rules correctly (and people view you as a legitimate source of laws), people are incentivized to work towards the common good.