“The Capital Market . . . is Essentially Totalitarian”

This started out as a comment on Don’s recent post on Hamilton (for which I second or third — the praise). Totting up the word count when I finally lifted my head, I realised it was an absurdly long piece to tack onto a comments thread. In any case, the points I wanted to take up were quite different to those on which Don focused. All of which is to explain (or possibly apologise) to Troppodillians for burdening you with another thread on The Freedom Paradox.

My interest was prompted by Pete Hay’s review of the book (which I haven’t yet read, by the way) in the latest Monthly. He found much to admire (I’ll come back to that) but was, if anything, even less impressed than Don with Hamilton’s journey into German metaphysics.

All very confusing, and more trouble, I think, than it’s worth. In the middle of the book, Hamilton establishes “compassion” and “the will to justice” as the touchstones of his practical ethics, and these thread prominently through the subsequent sections of the work. But we do not need German metaphysics to establish a basis for such principles as informants of a moral life. Indeed, it is hard to see how any necessary connection can be made between the practical prescriptions of a moral life and an elusive and insubstantial universal essence.

Like Hay, I have no trouble with Hamilton’s view that neither inner freedom nor happiness are likely be found in shopping, or materialism more generally. That instead, in Hamilton’s words (via Hay’s review): ” . . . we are free only when we act according to goals and principles that we have given ourselves.” Mind you, these are hardly controversial notions. Everyone from Buddha to Christ to the author of Chicken Soup for the Soul would endorse them. What did raise an eyebrow, though, is Hay’s readiness (and, to judge from the quotes in the review, Hamilton’s) to lay the blame for our unenlightened state on the market, or capitalism, or even liberal philosophy.

From Hay’s review: His attack upon the bedrock assumptions behind liberal philosophy is even more pointed. The coolly rational preference calculator that is the foundation unit of liberal economic, political and social activity is dismissed as a chimera on the basis of evidence from a most unexpected quarter. It seems neuroscience has now conclusively demonstrated that only brain-damaged individuals are capable of entirely dispassionate, utilitarian calculations. This bit of news (could it really have been news to anyone?) is used to mount what Hay terms a devastating and succinct assessment:

The model of the rational agent that forms the basis of neoclassical economics, around which the modern world of free markets is constructed is one appropriate to a society of people who have been rendered incapable of feeling normal human emotions. Rational economic man is a neurological freak. The utilitarian model, in which agents calculate the best means of maximising social welfare, without regard to the effects on [other] individuals, is a sociopathic one . . . . .

All of which, by the way, forms part of a wider concern on the author’s part to put reason back in its box . . . . . . to establish a legitimate ground for emotion and intuition as components within an authentic moral self.

Mainstream economics probably has to take a bit of the rap for providing the soil in which nonsense of this kind can flourish, as I guess do other supporters of rational choice theory. To varying degrees, they all do employ the assumption that individuals are rational actors seeking to maximise their gains and minimise their costs. Still, even the most enthusiastic proponents (of which I definitively am not one) recognise their models are not a full description of reality and certainly most people involved with markets (or business) don’t for a moment believe that cold, calculating reason lies behind a decision to go long pork bellies or buy a new car. It’s a small part of the mix in most cases, and quite often its use, as Hay (and presumably Hamilton) rightly point out, is principally as a form of rationalisation after the event. There are in any case schools of economic and market thought (like Behavioural Economics) in which the persistent irrationality of Homo sapiens sapiens is more fully and explicitly taken into account. Hamilton’s model of the bedrock assumptions behind liberal philosophy would never have been particularly accurate but now borders on the ludicrous.

To make matter worse, early in the review Hay notes (with approval) that Hamilton provides compelling evidence that the capital market . . . is essentially totalitarian. This apparently has to do with the fact that rather than promoting human flourishing, what flourished was . . . . the political power of capital and the culture of consumption, forces that have . . . . turned it into . . . . a sort of market totalitarianism. All due to the deceptive wiles of modern marketing, it seems. Now advertising is almost always irritating, often misleading, perhaps occasionally even a little dangerous but doesn’t it strike you that using the word totalitarian in this context is a good deal more inappropriate than Maserati pushing the notion that a sports car will deliver sexual allure.?

Whatever system we live under, our frailties and imperfections will be played upon. And often preyed upon. If it’s not marketers of consumer goods, it’ll be promoters of lifestyle choices, or spiritual gurus, political opportunists or, God save us, demagogues. At least in a society broadly based on liberal principles, we each have the chance to follow our own path, winding and often pointless though it may be. Maybe societies need to act like an adolescent with his first credit card for quite a while before some more sane balance prevails. In any case, I don’t think putting reason in its box is going to help us to better withstand these temptations. Surely (and here I entirely agree with Hamilton) our only real hope is to work on ourselves, better understand our nature and gradually learn to act according to goals and principles that we have given ourselves.

Perhaps, as Hay suggests, Hamilton will be labeled an enemy of reason by those seeking evidence of his iniquity. Perhaps in some cases this will even be due to his having whipped a neoliberal caricature with (to judge by Hay’s chosen quotes) the critical equivalent of a limp stick of celery. More likely, I fear, is that the blend of obscure metaphysics and what seems an often shallow reasoning will prevent what’s good and valuable in his message from reaching much beyond the already converted. If so, it’s a shame.

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JC
JC
13 years ago

their models are not a full description of reality and certainly most people involved with markets (or business) dont for a moment believe that cold, calculating reason lies behind a decision to go long pork bellies or buy a new car.

What other than cold, calculating reason would cause someone to speculate in pork bellies?

Bring Back "Bring Back Evil Pundit"

Three words: Kermit. The. Frog.

JC
JC
13 years ago

Could be Liam. Or it could be a case of tossing a coin.

I think the piece is based on a wrong premise when it comes to Hamilton. Hams is actually not telling us that consumerism won’t bring us happinesses. He’s actually saying that it will actually make us unhappy.

derrida derider
derrida derider
13 years ago

“Totting up the word count … I realised it was an absurdly long piece to tack onto a comments thread”
OT, that’s opne reason I comment rather than post. It’s terrific discipline.

Besides, I’m rather too fond of arguments that read well in a single para but fall apart when elaborated in a post-length disquisition. :-)

Kerry
Kerry
13 years ago

The Rational man is the assumption on which economic argument is based. Any other assumption leads us to irrational and quite wrong headed and wrong hearted discussion. Its similar in intent to the basic tenet of the taxpayer is basically honest upon which the ATO operates. While it can be proved beyond reasonable doubt to be wrong in specific instances, any other assumption leads the ATO to non-liberal behaviour that is unacceptable. So too the rational man is an assumption. Any other assumption leads economists to argument that is unacceptable.

As for the statement that the modern world of free markets is constructed appropriate to a society of people who have been rendered incapable of feeling normal human emotionsI think this tells us more about the author than it does about modern economic theory or principles.

The need to introduce some heart felt attributes to economic man comes from an acceptance of the Cartesian philosophy independent of Hobbes. If you read Hobbes carefully his selfish man refers not, as modern authors such as Hamilton / Hay seem to believe, to the materialistic man, but to the spiritual man. Hobbes argues (I cant find the book but when I do I can give you the correct reference) that man looks after his own interests. Once you realize he means his spiritual interests, i.e. his own energy field, it makes sense. The modern reading leads us to discussions such as these. Quite in a direction devoid of constructive energy.

JC
JC
13 years ago

Wrong premise? Happiness gets one mention in 1100 words (and then in a way that doesnt contradict the notion that consumerism may actually make us unhappy) and you conclude the whole piece is based on a wrong premise?

I was referring to Hamilton’s usual banter on this subject about how unhappy we are. I thought I was pretty clear with that.

On the first point, even if people use say sun spots to determine entry into the pork belly market there is a case to be made that they are using some sort of defined reason even if that strategy is considered inappropriate by others.

derrida derider
derrida derider
13 years ago

Now, back on topic:

… neither inner freedom nor happiness are likely be found in shopping, or materialism more generally

What gives you the right to presume that? True, it may not make you, or Hay, of Hamilton, or me, free and happy but casual observation suggests there are many free and happy shopaholics.

Yuo may retort that a society of shopaholics is not sustainable, and (who knows?) you may even be right, but that is an entirely different argument.

derrida derider
derrida derider
13 years ago

Grrr. And please, Jacques, can we get a preview button?

JC
JC
13 years ago

Sorry, Ingolf, I was trying to use a little humor but it seemed to got lost in translation…. mine.

good post and good good comment 11.

If Hamilton hates consumerism, he’ll freak out about this

http://property.timesonline.co.uk/tol/life_and_style/property/overseas/article4499716.ece

it only took these dudes about 10 years, but seem to have it down pat.

JC
JC
13 years ago

picking tops sure is a mugs game, but I think Mrs. S may picked Mt. Everest with this one. Mr. S would be proud of her if he were still alive anyways. :-)

Yobbo
Yobbo
13 years ago

Clearly everybody would be much more happy if they spent their time mucking out stables or sweeping chimneys instead of hanging out at the mall.

JC
JC
13 years ago

There’s an interesting book I read years ago about an Austrian psychiatrist explaining how he survived life in a concentration camp. It was very interesting in the way he described his existence, which strangely enough was not an unhappy one if measured within the context of the barbarism he and others experienced. It was the goals and objectives that made his life more bearable and gave him the ability to survive- even being happy.

JC
JC
13 years ago

That’s him. Truly amazing guy. He actually returned and lived in Vienna after the war when one would think that as a Jew you wouldn’t want to be near the place after what had happened to him and his family. He just took up where he left off it seems.

Geoff Robinson
13 years ago

There are many good criticisms to make of liberalism, but it is annoying that many popular social critics appear to ignore all previous debate on the topic.

MMLJ
MMLJ
13 years ago

I freely confess that I am not a student of Hamilton’s work and I find his preachy anti-consumerism disturbing. I cannot pretend to critique him with any philosophical skill.

But Ingolf’s post does help clarify some of the unease.

I have no issue with the views of the likes of Hamilton and others that the road to personal satisfaction does not lie through the doors of the shopping mall.

And feel free Clive and Co to drop out, cut back, make a doco, write a book ( well okay – you do ) and generally seek to lead by example.

As Ingolf points out – our pluralist, consumer society offers the individual numerous avenues to achieve a higher moral purpose – conventional faiths, fundamentalist creeds, New Age spirituality, secular political movements. There is a smorgasbord out there of options for the Seeker to be a Better Person.

Go into a bookshop or crystal shop in one of the dreaded shopping malls and the punters can pick up anything from Marx to the Dali Lama and everything in between – if they chose to make the effort.

And that is the crux for Hamiltonians, I believe. Not everyone is making those preferred choices – for whatever reasons, studied choice or sheer dumb indifference – and it really, really vexes these folk because the new austerity it is an article of secular faith for them.

And hence we seem to arrive at the conclusion highlighted in the post of the review – no rational person is a participant in the market-driven, consumerist economy. You have to be a mental defective or sociopath – that is, of impaired judgement. ( eg Psychopaths make the best market traders – google that one ).

This is apiece with comments by Hamilton and the SMH’s Ross Gittens that consumers are ‘victims’ of capitalism and marketing.

Now I have made my share of dumb and frivolous purchases in my time, and will probably do so again – but I don’t like the implication that I somehow demonstrate diminished mental function by so doing.

Because the extension of this conclusion is that the mentally impaired and emotionally immature cannot be entrusted to make judgements for themselves and their care tends to be entrusted to higher authorities. If you know what I mean.

So I conclude that Hamilton is not actually seeking to make a wide appeal to the non-believers to adopt the course of his well-being mantra. I suspect that he is indeed, as Ingolf says, preaching to the converted – converts who want to hear that they ‘know better’ than the victimised masses and should be calling the shots for the poor deluded consumer worker bees.

Maybe not as others see it – but Ingolf’s post has my thanks for helping order my thoughts on the Hamilton canon.

Geoff Robinson
13 years ago

I work in the same corridor that Peter Hay did once and those who remember him do so fondly. Main Currents is an excellent book.

Tel
Tel
13 years ago

It seems neuroscience has now conclusively demonstrated that only brain-damaged individuals are capable of entirely dispassionate, utilitarian calculations. This bit of news (could it really have been news to anyone?)

Sounds like complete bollocks to me, mind you I’m four steps removed from the original research, if someone can post a link to the neuroscience in question then I’ll be happy to revise my opinion.

I do point out that humans have demonstrated an excellent ability to survive, under a wide variety of adverse conditions, largely due to the decisions we are making with our brains. If survival is not utilitarian, then I’m waiting for a very convincing argument that non-survival is utilitarian. My conclusion: a lot of humans do make good quality utilitarian decisions, most of the time (at least good enough that no other known decision making technique can consistently perform better). Speaking of something better, Hamilton can argue that the free market is totalitarian, but the argument is hollow without offering an alternative… no doubt taking away the free market and telling people what to do would be less totalitarian (and George Orwell is Santa Claus, HO HO HO).

We could argue all day about whether these decisions are dispassionate (or exactly what is “dispassionate” anyway?) but the exact working mechanism of human brains is irrelevant to the philosophical principles of liberty. No one said that “Rational Economic Man” had to be dispassionate, and there is plenty of anecdotal evidence that no only does emotion take a big part in economic decisions, but using emotion actually results in better decisions (where “better” is here used to mean the standard “profit motive” type of better, not my personal moral dimension).

For those who are interested in the workings of human brains, may I recommend “Descartes’ Error: Emotion, Reason, and the Human Brain” which is a long book that might have benefited from a good editor, but presents an excellent argument (with real life examples) that there is nothing irrational about using emotion as a part of our decision making process.

Ka Ching
Ka Ching
13 years ago

What other than cold, calculating reason would cause someone to speculate in pork bellies?

JC,

That is a question you will have to put before Homer Simpson.

It seems neuroscience has now conclusively demonstrated that only brain-damaged individuals are capable of entirely dispassionate, utilitarian calculations. This bit of news (could it really have been news to anyone?)

There is a smidgin of truth to that, the big error though is that clearly the average Joe or Jane can be objective about some things but not all things. I seriously doubt that even in the cases of those brain damaged indivduals they would always be objective and on a global measure may well come out well behind. A fascinating study on deaf people found they were better at detecting liars simply through body language than the not deaf.