We live in hyper-metarialist times, both financial materialism and scientific materialism. It has become so intense, it is scarcely noticed. Yet its consequences are profound, not least for how we understand economics. The concluding remarks of Adam Curtis’ documentary “All Watched Over By Machines of Loving Grace” detail some of them. He argues, using the example of Rwanda — a somewhat long bow — that seeing ourselves, humans, as things rather than creatures with free will — whether it be as like machines (and therefore machines) or as “selfish” genes — allows us both to explain and excuse our habit of doing appalling things to each other.
Curtis highlights one of the central contradictions in the modern anthrosphere. Humans control more and more of nature because of scientific progress, yet our ways of thinking about ourselves are increasingly based on pushing humanness to the sidelines. All for the purposes of excusing and explaining; that is, avoiding moral responsibility. A kind of nausea, perhaps, or despair, whose origins lie in the two World Wars, which has then been followed by a constant succession of murderous conflicts, mostly targeted at civilians. Not to mention the charnel houses of the communist world.
Thus economies are not considered arrangements of human beings freely choosing to behave badly or well, they are thought to be systems subject to impersonal, scientifically identifiable, Market Forces. Capital is in charge, “flowing” about the world like a giant tsunami bending us all to its will (as opposed to what capital really is, which is agreements between people based on an underlying assent about the rules). History is not a series of free choices by the powerful and the powerless, it is believed to be the inevitable march of “selfish” genes, irresistible Hegelian dialectics or some other deterministic impulse. It is no accident that Marxism and the neo-liberalism of the right are both based on materialist assumptions.
“So what?” you ask. “Well, why don’t we put humans back at the centre?” I reply, not expecting to get too far. And in the process put moral thought back at the centre. This, it seems to me, is the proper response to the Occupy Wall Street movement, which is most of all asking us to look at the human consequences of the financial kleptocracy that has almost destroyed the global monetary system. Varoufakis’ discussion on this looks interesting.
It would take a very long time to detail how it could be done, but let’s sketch out a few starting points. First, ditch the pretence of trying to isolate scientific “rules” of markets, whether it be monetarism, Keynesianism or any other “ism”. This aspiration is both impossible and pernicious. When scientists study physical phenomena, the objects they are analysing are not aware of being studied. Molecules, or clouds, or immune systems, cannot change the way they behave because they are aware that scientific laws exist to describe what they do. But humans can. That is why forecasts about what should happen in financial markets are nearly always wrong. Because the traders are aware of what should happen, so do something else. That is why risk pricing does not work, because traders are aware of the risk pricing, so take risks with the risk pricing. And so on.
A second step is to look closely at what humans are like. Let us not call them “laws”; just common sense observations. One starting point is that markets have existed for thousands of years — they are just something we do — and if they are properly policed they are the best way to express people’s self interest (financial markets I consider an exception,; they are more about rule making, legalised violence, and so ensuring their healthy functioning requires a different metric). Consumer markets should therefore be neither demonised nor worshiped, they should be governed properly.
A second sep is to state the obvious fact that self interest is not a panacea, it has limits. The important point about markets is that they do only express self interest, they do not respect collective interest. When a consumer is buying a product, he or she has no interest in the welfare of another consumer buying the same product. Consequently, allowing markets to be applied universally means an inevitable destruction of collective thinking about the wider social good. Especially as it relates to civic life. The right, citing Adam Smith and his invisible hand, has, of course demonised such collective thinking as always counter-productive, inevitably subject to the law of unintended consequences, a law so beautifully described by Paul Johnson in his “A History of the Modern World.”
The claim is, of course, in part true. Charity can create the opposite effect. Government legislation can be counter productive. Regulation can create the very problems it is supposed to prevent. Our thoughts are ours, their ends none our own. But to think that is always the case and so a reason to do nothing is rubbish. It is just another reason for eternal vigilance. Equally, to elevate self interest as the only reasonable motivating force, even moral choice, is preposterous. Unless humans in human systems behave with an eye to what is healthy for the common good, there will eventually be no society, nothing to hold things together. Instead the moral courage is needed to try to protect the common good, then try again when there have been failures. Become grown ups, in other words.
A third step might be to hold our social “scientists” to account. They are, for the most part, a bunch of charlatans. There is no such thing as social “science”. Not only is the “object” being observed aware of being observed and reacting to the observation, it is impossible to repeat experiments, isolate causal variables (even correlation is near impossible) and there is no predictive validity. Not a science, in other words. At best a specialised language. This is not just an intellectual error, it is an invitation to serious moral failing, as one of the Naked Capitalist respondents, Hugh, commented last week (I am going to finish this blog with a few responses). That is, put humans at the centre. There was Hugh, who makes a moral point, about the culpability of practicing such false science:
“I am once again struck by what an absurd body of ideas, or more accurately, self delusions, much of modern economic prejudice-masquerading-as-
You gotta love a description like that. Economics is just a form of charlatanism. Reader Jessica asked the right question, “cui bono?”. Who but our looting elites does it benefit? Bringing these two ideas together is the key point. Economics is not just absurd. It is criminal. Its practitioners are not just ideologically driven careerists. They are rationalizers for and apologists of kleptocracy. They abet criminality. The mistake that so many of us make is according a certain degree of good faith to our elites that simply doesn’t exist. The housing bust was 4 years ago, the meltdown was 3 years ago, the European crisis has been going on for more than a year and a half. There is no way that these elites who claim entitlement to their power, prestige, and wealth based on being so far ahead of the curve could remain, in good faith, so far behind the curve for so long and just happen to make decisions and deliver up rationales that benefit themselves so massively at the expense of everyone else. We cling to the idea that these are really good people who are simply wrong, or even possibly bad people but not really bad, because the alternative is so uncomfortable, that they are not like us, that they are criminal, intend to enjoy the fruits of their criminality for as long as possible, and have no intention to act in any other way. They are today’s expression of the banality of evil. They can not be reasoned with. They can only be resisted and, hopefully, one day put away from the society they have so abused.?
Bigsurtree outlines our increasingly contradictory human condition quite nicely:
We live in the Happy Holocene, where man has left his primitive state and the animal kingdom altogether. That’s why we have things like money, the great transcendent symbol of terrestrial autonomy. And we build weapons to protect this chimera. Western Civilization really isn’t much more than a series of wars of ideas with occasional breathing room for resting up for the next one. And of course real bodies have to be sacrificed so the “winner de jour” feels like a true, proud gorilla.
Lonny notes the lack of knowledge about what really drives markets:
This is one of your best ever Yves. I work oil exploration(as an independant producer) up in Canada for more than 30 years have listened (and watched) as legions of experts on commodity price, risk management, geological or geophysical interpretation, or reservoir modelling engineering expound and move forward with ridiculously simplistic models that are laughable in hindsight. Nature itself, and specifically the financial markets which are driven and modulated by selfish and erratic human behaviour is way more complicated than anything our puny, linear-thinking earthling brains can predict. But then again, guessing the outcomes, rolling the dice (aka wildcatting) is way (way)more fun than working at the sausage factory of life.
Paul Tioxin is no doubt correct in isolating the bad quasi-scientific metaphors used in economics (although I think many neo-liberals like the implication that markets are self organising natural systems):
I am not clear that anyone in economics or social science in general was looking to nature, but to the reigning paradigm of Newton’s mechanics. The world and society were seen not an ecological balance but a well crafted machine, with parts, that could be taken apart intellectually and put back together so that by reason we could understand how everything, including human society works.
Monsierbarso on MB nicely describes why we need to stop worshipping self interest:
Left to their own devices, humans are demonstrably biased towards acting in their self-interest and against the interest of others. That is why there are social, legal and other structures to regulate our behaviour. Markets are no different. Whether those regulating mechanisms perform as they are intended is a different question. To conclude the impulse to regulate is a reaction to complexity misses the mark.
The truth is that there are no explanations or excuses. We can’t hide behind selfish genes, market forces, dialectical materialism. There is only moral responsibility and very imperfect means to meet those responsibilities.