As many of you know, I have been following some of the thinking going on in the wake of the financial collapse for some time. For my money, one of the most fertile areas of this new thinking is taking place among those who blend psychology, neuroscience, linguistics, economics and politics. People like Joe Brewer of Cognitive Policy Works (see cognitivepolicyworks.com) have been attempting to blend all these disciplines into a path to dismantle the conservative corporate juggernaut that has so dominated our political/economic life for the past 40 years. An essential component involves deconstructing the now widely-accepted notion that capitalism works because it is natural, the natural child of human nature pursuing democracy and freedom. And at the heart of this free capitalism idea is the notion of the “rational actor” pursuing his own “self-interest.” This notion—not as old nor as self-evident as one might think—argues that capitalism’s “invisible hand,” which runs a free-market economy without interference, is really embedded by nature in us all, millions of us who as “free” individuals make rational decisions in pursuit of our own self-interest. We weigh the merits of products and decide which is best. We compare value—either in quality, or cost, or longevity, or whatever serves our interests best. We comprise, in that sense, the demand side of the supply-demand cycle. Producers then respond to our demands, and supply the best (usually least expensive) products to serve our needs. Thus, without any interference from a state or government, the market adjusts itself to these rational decisions naturally and freely made by millions of people, and society moves toward that “best of all possible worlds” promised by Candide.
The problem is twofold. First, this notion of rational actors fitting exclusively with democracy did not simply appear out of nowhere; it was the product of specific economists and thinkers at the Rand Corporation at the specific time in our history when such a theory was desperately sought. And second, the idea that we humans make decisions with the “rational” part of our brains is increasingly seen to be false or partial. Joe Brewer explains both of these in his article, “The Death of Self-Interest Fundamentalism,” easily found on the above mentioned website, or on commondreams.org (4/28/2010). What I will do here is try to outline the gist of the argument—one I think is key to understanding what happened in 2008, as well as what is happening now in the seemingly daffy eruption of tea party activists accusing Barack Obama of forcing “socialism” down our throats—using material from some sources cited by Brewer.
To begin with Rand and “rational choice theory,” its story is told in compelling detail by S.M. Amadae in his book Rationalizing Capitalist Democracy, University of Chicago Press: 2003. What Amadae demonstrates is that in response to the apparent gains of socialist theory in the United States during the Great Depression and beyond, and the alleged worldwide threat from communist Russia during the Cold War, theorists sought out a new approach to economics that could combat it. The solution became the “self-interested strategic rational actor.” The idea evolved out of both economics and game theory, especially as elucidated by John von Neumann and John Nash (of A Beautiful Mind fame), which provided the mathematical “proofs” for the theory. The math is not important here; what is important is that economists and thinkers at Rand (the first think-tank, put together to combat the perceived Cold War threat of Soviet communism) worked out theories that changed the emphasis of democracy from one that sought to find the greatest good for the greatest number (too close to communist ideas) to one that made the economic consumer, the rational actor, the center of economics, of public policy, of democracy itself. In this scheme, the market became not simply an aspect of democratic government; it became its very core: “Market sovereignty is not a complement to liberal democracy; it is an alternative to it,” wrote Eric Hobsbawn. That is, the market replaces the res publica, the public arena of politics, because economic activity actually replaces the need for individual political decisions. With rational actors seeking their own self-interest, the government shouldn’t need to do anything. Society, via the market decisions of rational actors, controls itself. As Amadae summarizes it: “Participating in the market replaces participation in politics; the consumer replaces the citizen.”
With rational consumers making all the important decisions freely and in their own self-interest, then, democracies reach the kind of happy equilibrium that planned societies, always referred to as irrational societies, cannot. Rather, these planned economies lead to serfdom—which was the title of a book by one of the movement’s key thinkers, Friedrich von Hayek: The Road to Serfdom. Though Hayek himself did not go as far as some of his followers at the University of Chicago, his deep critique of collectivism led to the conclusion that the basic ideas of European (i.e. free) civilization can only be found in societies based in democracy, science and capitalism; socialism, fascism, and totalitarianism, by contrast, are perversions of western civilization that are not only unfree, they are also irrational. Karl Popper (The Open Society and its Enemies) took up this notion when he criticized Marx’s ideas—including notions like “the will of the people” or theories of social justice—as leading to a “precarious irrationalism.”
Now we can see where the lunatic fringe known as the tea party gets its slogans from. If social justice and/or the common good are seen as perversions of democracy, as infringements on freedom and each individual’s right to self-interested activity, then anyone who proposes measures like health care for all is a fascist or a socialist or some other totalitarian beast. He, and all who think like him—those dreaded liberals—are trying to steal freedom. They are trying to enslave freedom-loving Americans. They want to lead America to serfdom. 'Over our dead bodies. The right to own and bear arms, which these socialists are also trying to abolish (nevermind that Democrats have kowtowed to the gun lobby so abjectly that they publicly admire, as Elena Kagan did recently, the beauty of prized weapons) can and will be used to stop them.'
And all the while, throughout all such ranting and raving from tea partiers and Republican congresspersons alike, we are supposed to believe that this mess of confused, paranoid thinking is the product of “rational actors.” That, indeed, the recent collapse of Wall Street was also the result of the genius of the free market directed by all those “rational actors” enthroned there (most of whom, it should be noted, play both ends of this game—on the one hand saying that those who bought their toxic products knew the risks they were taking, i.e. were “rational actors;” and on the other, subscribing fully to the dominant marketing game of subliminally appealing to consumer emotions when inducing them to buy useless, irrational products).
The second element, though, makes plain why the whole theory not only falters, but produces the kinds of hysteria noted above. That is because the economic theory of rational actors is based on a fundamental falsehood which behavioral economists and neuroscientists have been elucidating for years. The full story is complex and still being formed. But the basics are quite simple. Humans do not make key decisions based on the rational part of the brain. Their decisions, rather, come about either before rational consciousness has a chance to even think, or from deeper areas of the brain that govern the emotions. Rational consciousness—the ego in Freudian parlance—is too often a ‘rationalizer.’ As neuroscientists like Michael Gazzaniga have demonstrated, the left brain, the verbal rational side, usually provides a good story line to explain what it finds itself doing. It is a narrator. It rationalizes activities that subconscious processes have already decided to embark upon. I have written about this in discussing a book by Dan Ariely called Predictably Irrational. Jonathan Haidt makes the same point in more telling psychological detail. In his notable essay, “The Emotional Dog and its Rational Tail: A Social Intuitionist Approach to Moral Judgment,” (Psychological Review 108: 2001), Haidt points out that though reasoning can be a factor in making a moral judgment, it is intuition—“the sudden appearance in consciousness of a moral judgment without any conscious awareness of having gone through steps of search, weighing evidence, or inferring a conclusion”—that plays a far more decisive role. Note the language. Though we all presume (and economists base their whole ‘science’ on the presumption) that when we make a judgment, we reason it through by ‘weighing evidence’ and inferring a conclusion based on the facts, the truth more often is that our process is ‘sudden’ and outside our conscious awareness. It is intuitive (based in early training and bodily experience). The reasoning process—and it is there—more often follows our decision. As Haidt notes, “The reasoning process is more like a lawyer defending a client than a judge or scientist seeking truth.”
But don’t psychological ‘tests’ show that subjects reason about conclusions when making judgments? Haidt explains that the problem lies with the interview process. When a stranger (research psychologist) asks questions and challenges a subject’s tentative judgments about hypothetical moral issues, the subject is then likely to engage in reason to ferret out the truth in ways that we imagine we do all the time: “Standard moral judgment interviews may therefore create an unnaturally reasoned form of moral judgment, leading to the erroneous conclusion that moral judgment is primarily a reasoning process.” The other process that can distort things is that people adjust their judgments (using rationality) to conform with their theories about how the world works. So, if someone believes in a “just world” in which people generally get what they deserve, and is confronted with a situation where innocent victims get hurt, his or her world view is threatened. Rather than change the world view, such people change their view of the innocent victims, by blaming them: they must have done something to deserve it.
It is rather easy to see how this might work in the economic or political arena. If there are poor people, and our democratic, free economic system rewards work and effort, then the people who are poor must be defective: they refuse to work, or don’t want to work. There is no reason to help them or “reward” them for their poverty. Nor is there any reason to provide them with health care or any other care. That would deprive good people of their hard-earned money. It would deprive them of their “freedom.” Anyone who proposes such a thing must be irrational at best, and a diabolical socialist or communist at worst.
When it comes to irrationality, there is one more element in Haidt’s analysis that deserves mention. Psychopaths are people who show a general lack of affective reactions, particularly those that would be triggered by the suffering of others (sympathy). However, they are able to reason perfectly well, and even solve hypothetical moral problems. Antonio Damasio has studied such defects and found a deficit of functioning (or even destruction) in the pre-frontal cortex area of the brain. The central deficit here is “loss of emotional responsiveness to the world in general and to one’s behavioral choices in particular.” When such people are faced with real decisions, Damasio has found, they perform badly, “showing poor judgment, indecisiveness, and what appears to be irrational behavior.” In short (and the full argument is far more subtle and detailed than I can be here) irrationality often associates with emotional deficit. Decisions about moral behavior and much else depend on having emotional responses to other human beings. It is not those who are concerned about the social welfare of others—like those dreaded liberals and socialists—who are “irrational.” On the contrary, it is those who have raised the false flag of cold, calculating reason to the status of the godhead—especially in economic/social matters—who can be considered irrational.
To sum up: the market fundamentalists who have nearly destroyed the American economy have done so under the banner of the so-called free market, raised to the level of an almighty controller of all things, including democracy. They have essentially said that with rational actors making economic (consumer) decisions, not just the market but politics itself, the welfare of the entire nation itself, is automatically and invisibly regulated. There is no need for government to regulate anything. There is no need for compassionate politicians to look out for the welfare of the people. There is need only for “rational” consumers making “rational” decisions. But what their beloved science—now in the form of behavioral psychology, behavioral economics, neuroscience, and linguistics—has begun to tell them is that the whole structure is based on a lie. And the response among those who have drunk the cool aid is predictable: outrage, irrationality, attacks on those who violate their most deeply-held beliefs, and the threat of violence against the violators.
One can only hope that Joe Brewer is right when he predicts that the whole sick project is dying. All that remains to be seen is how long it takes, and how destructive its dying gasp will be.