The habit in economics of using either tenth rate metaphors (without being aware they are metaphors) or to mathematicise human behaviour has largely doomed the discipline to irrelevance, at least when it comes to uncovering anything remotely resembling the truth. It is a determined effort to avoid a central fact. Markets are animated by humans, who, amongst other things, are able to understand the metaphors or mathematical models applied to their behaviour, and to respond accordingly. That means any quasi-science borrowed from physics or biology won’t work in economics. Atoms, plants or animals, are not aware of the models or metaphors applied to their behaviour. Human beings are. (With the possible exception of economists, who don’t seem to be aware of very much at all).
Yet if we accept the centrality of human beings to markets, it still leaves some big questions unanswered. One of those is the question of individual and collective will. It makes eminent sense to talk of an individual’s will; their volition. Only those who believe in a completely mechanistic, determinist universe would have difficulty with that.
But it becomes more tricky when we start talking of collective will, the volition of crowds. Groups of people do not have a “mind” that makes “choices” in the same way that we think a person does. Yet they do seem to have volition, which tends to be characterised as “culture” or, in the case of extreme behaviour “madness”.
I am not about to propose an answer to this problem – there is none, not least because as soon as a plausible explanation emerged it would defeat itself because people would be aware of it and do something different. As the literary critic George Steiner noted, a Freudian slip was only a Freudian slip when nobody knew what a Freudian slip was. Analyses of mind only work when the subject of the analysis – the person with the mind — is unaware.
What I am going to suggest is that the problem of collective and individual will is a central puzzle, and mystery, of markets that requires a different approach. It is a core conundrum. Much of the discussion about the collective will versus individual will has concentrated on the existence or otherwise of an “invisible hand”: a collective altruism versus an individual selfishness. I haven’t noticed too many applying that bold leap of faith in markets when the selfishness of financiers almost destroyed the global financial system on that fateful day in September 2008.
My view is closer to Keynes:
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
A belief, one might add, held by people claiming to be subscribing to a superior brand of rationalism. One is reminded of GK Chesterton’s comment that when people give up faith the problem is not that they believe in nothing, but that they will believe in anything.
Still, the invisible hand is a useful metaphor for the individual-collective tension (please note: a metaphor). Keynes had this to say:
“The master-economist must possess a rare combination of gifts …. He must be mathematician, historian, statesman, philosopher — in some degree. He must understand symbols and speak in words.”
Note his point about symbols and words. A symbol has a specific referent (i.e. isomorphic) and is in itself dead, it has no particular life of its own. Words can have multiple referents, of varying degrees of intensity, and the language can itself be alive. That is, the word’s existence can resonate.
Economists like to use symbols because it creates the illusion that they have authority, they know something. It is a neat trick and nice work if you can get it. But it is deeply dishonest, and, as it has developed a life of its own – as we all hang on GDP statistics, or current account figures, to see whether we are going the right way and our life has a purpose — strangely absurd.
By contrast, the flexibility of language, its potential “aliveness”, makes it more useful to address conundrums like the interplay of individual and collective will. In other words, economists would be well served to become as literary and articulate as Keynes was, and to use first rate metaphors in a self aware way, rather than tenth rate metaphors in an ignorant and pompous way.
That will not lead to the “right” answer about markets. But it could lead to a more mature understanding.