The Autistic Intelligence of “Free-Market” Economics

28 12 2010

Autism: a disorder of neural development characterized by impaired social interaction and communication, and by restricted and repetitive behavior.  – Wikipedia.

Autistic Economics: a situation where one theory, that illuminates a few facets of its domain rather well, wants to suppress other theories that would illuminate some of the many facets that it leaves in the dark. – Post-Autistic Economics Network

The Problem: Markets are Incomplete as a Steering Mechanism

The received economic theory and embodied socio-biological system by which humanity lives today will not solve the larger ecological issue of our time, which is how do we live sustainably on this finite biophysical planet. A pricing system of ‘free markets’ coupled with an ideology of hyper individualism will now begin to extinguish not only human civilization, but much of the biosphere as well.

Such a system, so conceived, has led to unprecedented material welfare the world over, there is no doubt. Yet, it has been clear for some time that money-based free-market pricing is adaptive only moderately and in constrained situations. As recent economists such as Joseph Stiglitz and Nicholas Georgescu Roegen have demonstrated – for at least 50 years now – there is never a genuine, inter-generationally neutral valuation of resources, human time, merchandise, services etc that arises from money based prices. Even with some attempt to deliberately take into account buyer-seller asymmetry of information, cross subsidies, externalities, and monopolistic pricing and production – the four failures of markets to which the received economic theory admits – all prices and values are arbitrary. Georgescu Roegen calls prices “parochial.” The pricing system is not a reliable steering mechanism.

Individualism is a False God

More pernicious and troublesome to our human predicament today, however, is our collective, neurotic belief in individualism. I am talking in particular about American culture, where the individualist psychology creates a culture of predatory capitalism where exploitation of children, sick people, elderly, animals and the environment is considered routine and acceptable business practice. Historically, America has been the land of opportunity. People from all over the world have immigrated to it in order to leave the oftentimes oppressive, unfree and impoverished homelands of their ancestors; and to seek and build their own fortunes in this open, resource rich and “pro-business” nation state. What has transpired here over several generations, and now amplified by its apparent “triumph over communism,” is a self-perpetuating belief of constitutional libertarianism, that lives psychologically in practically every man, woman and child who grows up here.

This psychology, while in the past it may have served some “developmental” purpose, it is now completely at odds with the survival of our and other species of beings. In a nutshell, the nugget of American free market individualism, to which academic economists give lip service, is the lonely person whose view of life is strictly of self and self interest. His or her emotional, affective world is reduced to ego and egoistic advantage. His entire universe of feeling is reduced to, in the words of psychiatrist Trigant Burrow, “social adaptation in the light of personal and social gain.” All relationships, even intimate ones, are opportunities for self gain. In America today, pursuing one’s livelihood, engaging with others and with society is a solitary game of manipulation and exploitation.

Furthermore, as Burrow also identified, “in this artificial gauge of conduct measured by standards of personal advantage there has established in the individual a criterion of life that rests upon an unwarranted assumption of personal supremacy and absolute privilege.” “Each of us is an unconscious overlord striving to secure the supremacy of his own personality.” (p. 24…29?, Social Basis of Consciousness, Burrow) Through this neurotic distortion of life abetted by the American cultural belief in libertarianism there becomes this inflexible assumption of personal absolutism and autocracy. Every adult American is a petty tyrant. Each person is utterly self centered and autocratic.

It would be merely ironic, if it were not now catastrophic, that this orientation is emblazoned in a philosophy of political economy called “Neo-liberal” and “neo-classical” theory. This theory, espoused by such folks as Milton Friedman, Ronald Reagan, Alan Greenspan, Chicago economist and Nobel Laureate, Robert Lucas, the Bush/Cheney/Gerstner syndicate, even domestic terrorist Timothy McVeigh considers money and markets, coupled with extremely self-centered, sociopathic individuals to be a steering mechanism for society as a whole. It is social Darwinism dressed up as moral norm. Dog eat dog, trust is for fools, he who has the most toys wins, government is the problem, he who has the gold sets the rules, might makes right. What started with Reagan’s famous comment in 1980, “government is the problem,” climaxed in 2006 when Vice President Dick Cheney sneered, “So?!” when ABC correspondent, Martha Radditz pointed out that most Americans were against the war that his administration started.

At that moment, the Vice President of the United States needed no longer hide his contempt for democracy. His personal victory and ideological triumph were complete. His game plan was right in line with the hyper individualism, Social Darwinistic doctrine of our day: Get “elected” to office, pillage the public sector. When self interest is everything and public interest is a laughable nothing, then attaining absolute power and exploiting people by the millions is simply rational. By Cheney’s thinking, you would be stupid if you did not do this.[1] By the end of his term, 2008, the country was in ruins – overextended by adventurist war to the tune of trillions of dollars (to future taxpayers) per year, and freefalling into a financial collapse from which will probably take a century to recover. Needless to say, the reforms that will resolve this climax of the doctrine of self interest are beyond Cheney’s comprehension.

Not only is the external system of markets and money-calibrated exchange and investment incomplete, but the internal psychology of individualism is misguided, delusionary, and dangerous.

Markets Do Not Determine Right Scale

The free-market pricing system is not a generic problem-solving device that allows human culture to find a ‘natural dwelling’ in balance with the rest of the earth. Its ability to adapt human needs and physical options is adequate only in narrowly proscribed situations. It works in some places, but despite its widespread popularity among American economists and the American people in general, it is not going to solve our ecological problem of scale. Finding “right scale” – how big the human “footprint” should be – will not be achieved through the free-market system alone. Other forms of human communication and deliberation must be used as well (more here about this:   ) At best, the market as an economic mechanism is incomplete.

The classical/neoclassical theory of markets and prices, which has been operative since Adam Smith, has also been wrong about social inequality and poverty. But, as many have pointed out (such as Herman Daly), with steady economic – physical – growth over the past couple of centuries, the errors of the theory around inequality were mitigated. As long as everyone’s boats floated higher, it didn’t matter so much that inequality kept growing.

Now we are reaching the upper limits of physical impact that the human species can have on the earth. Over the next 40 years, if the human population doubles as demographers expect (see Exhibit 1), and these beings intend to attain a material standard of living equivalent to the USA (see Exhibit 2), there is no way this earth will sustain such a move without catastrophic alteration of itself. Nonetheless, with our free-market-pricing logic, we are driving headlong into this future.

Exhibit 1 Exhibit 2
Source: Angus Madison

CHARTS TO COME

By our conventional economic wisdom, particularly the free-market, money-calibrated pricing system, we will deplete all non renewable resources like oil and coal, and along the way, we will extinguish many if not most animal and plant species (so called “renewable resources”). A pricing system figures into this in only, as economist Nicholas Georgescu-Roegen would say, a “parochial” way.  No matter how scarce and therefore high priced these dwindling animate and inanimate things become, the simple fact of large numbers of human mouths will wipe them out. And, as an artifact of the money and market-priced system, ever-widening personal income disparities will generate some persons and corporate entities who CAN afford to purchase these very highly priced items.

To be clear, the intelligent and needed schemes, such as cap-and-trade systems or intergenerational equity schemes, are not strictly market systems, even though they may use markets for key parts of their process. In these systems, the upper limit of resource use, i.e. the right scale, is determined prior to the market process – by political debate and scientific consensus. The “cap” level is not a money-auction result. The cap quantity is, for example, the total amount of carbon to be allowed into the atmosphere; it is the total number of fish to be taken in one season; etc. These upper quantities are determined by stakeholders in deliberation. Rights to produce within that determined quantity is allocated by a market auction, but not the level itself. Strictly speaking, the process for managing resources with these schemes is outside of the so-called autonomous system of prices and interconnected markets. Thus, our “steering system” has extra-market devices and they are other than market competition.

The neo-liberal vision does not want to recognize this. It wants everything to be market driven.

Economy is a Communication Process and Markets Serve Only One Kind of Communication

The deliberation required to set and design the right scale of our human habitat is not widely recognized as categorically separate from the market process. Until this is recognized, and until the dynamics of that deliberative process are better understood and integrated with market activity, our world civilization will not have a generalized steering device concerning its economic actions. Indeed, the steering process we believe ourselves to possess – individualistic, self-serving action mitigated by competition – will make things worse. Prices and markets do perform adaptive functions here and there. But it is wrong to consider the pricing system as sufficient unto itself. Given the mandate to steer us collectively to right balance with the earth, the economic theory of free-market prices is glaringly inadequate. It won’t get us there.

Now, one of the virtues of the received neoclassical theory of economics (what I’ve been also calling the ‘traditional theory’ and ‘conventional wisdom’) is that it conceives itself as a communication system. This is true. Frederick Hayek wrote a wonderfully lucid piece in 1945 about how an economy of prices and free markets enables a society to manage its limited materials in the most adaptive and responsive way. Hayek’s statement as to how knowledge is used by and is distributed throughout society by thousands of independent budgetary decisions informed by market prices – a wholly decentralized process – is essentially a recapitulation of Adam Smith’s insight of the “invisible hand.”

Prices and markets perform an information processing function. What I am going to put forth in this essay is that markets are a specific instance and kind of communication, “information processing” device. Not only do we need other kinds of devices, but we need to articulate a broader, more general conception of communication in order to see new possibilities of a general steering device for spaceship earth and species being of homo sapien.

Communication and information processing is the solution to our ecological and social problems, to be sure. It is just not only with prices and markets. There is a more comprehensive manner of communication that will be the solution. In this essay, I attempt to articulate this more general conception of economy as a communication process.

Economics – both from theoretical and practical knowledge interests – needs a more comprehensive view of communication beyond the market and pricing system. This broader conception, as I will attempt to demonstrate, shows up most conspicuously (from the standpoint of traditional economics) as two new domains: the domain of intersubjective knowing among people (including science, deliberation of many kinds, culture, education, enterprise management, and so forth) and the domain of intrasubjective knowing – individual consciousness aka self consciousness, self actualization, etc. – as constituted in conversation.

Making this expansion of economics as communication requires an epistemological shift out of Cartesian duality toward what is being called a participatory epistemology. The characteristic of participatory knowing is that the awareness, whether individual or group, is part of a process of unfoldment. Objective detachment and rationality of the knower is never completely possible. There is always a quotient or component of indeterminacy, uncertainty, unconsciousness, and ambiguity. The individual person is sentiently dealing with a whole field of dynamically changing relationships with other persons and things. There is never an all knowing “God’s eye view” for the individual nor group. Any rational objective assessment that does happen, is more of a snap shot in time. Rational behavior in either markets or the broader economic process is not only “bounded” (as Nobel economist Herbert Simon suggests) but is only a stepwise, punctuated static fractal image, so to speak, of a much bigger chaotic, indeterminate and overdetermined process. How the human should “be” in this – including his or her action – will never be adequately conceived by a theory that subscribes to the Cartesian duality of subject-object. Cartesian duality, while valuable in many ways, is ultimately blind as a critical guidance of action in and engagement with the world. Another mode of awareness, complementary to the Cartesian mode, is needed. It is characterized as lucidity, intuitiveness, participation-in-process, non-duality.

The Solution: Conscious Economics

How we understand economy, at individual and collective levels, and in theory and practice, is what is critical for our finding our appropriate ecological footprint on the earth. Consciousness needs to be put squarely into it. Two critical aspects of consciousness here are the personal, which amounts to self observation and emotional maturity, and group, which amounts to cultivating a public receptiveness to pluralism, empathy and compassion.

The field of behavioral economics, although explicitly psychological, is not “conscious economics.” Too often, its unexamined intentions are how to get more productivity out of people; how to more cleverly market consumer goods to people; how to harvest capital gains in asset markets ruled by mob psychology; and so forth.

A conscious economics, stemming from a non-dual, participatory epistemology will lead to a completely reconstructed economy-ecology because it explicitly incorporates human intersubjective dimension (including how one shows up in conversation with others) as well as mindfulness of the individual, observing his or her own internal narratives and conversations. Once these interior depths and transpersonally emerged identifications are accepted into economy, then a much greater adaptability, power, and grace is possible.


[1] The Carlyle Group, Cheney and Bush’s investment firm, is one of the largest private equity firms in the world. Josh Kosman describes these firms as predatory. See “Private Equity: The Buy Out of America.”





Depth Psychology and the Predicament of the Modern Mind

5 09 2009

Remarks on Cosmos & Psyche by Richard Tarnas

The first two parts of Richard Tarnas’ book, Cosmos & Psyche, are a great discussion about the predicament of the modern mind. They stand alone and are indirectly related to the main thrust of his book, the astrological interpretation of history (covered in the remaining six parts).

In these first two parts, Tarnas reviews the current mindset of the modern person. With the rise of science, the world has become disenchanted, soulless. This is in contrast to earlier epochs and indigenous cultures today that see an anima mundi, a world spirit, the entire cosmos as a living, conscious being. The earlier, primal worldview had meaningfulness in the happenings of events.

The participation of the individual human in this larger encompassing world soul, was always a mystical way of living – the so called participation mystique.

But science made the external world simply the inert mechanistic movements of meaningless phenomena. The only meaningfulness is within the human psyche, nothing but a subjective projection, not anything objective. Science has been good in that we are given greater control over and autonomy in nature, but it has come at the great expense of existential alienation.

Tarnas quotes cognitive scientist Steven Weinberg, “The more the universe seems comprehensible, the more it also seems pointless.”

One of the fundamentals of the modern outlook is the subject-object split.

This basic ontology of the world to the modern person appears to have the knower (i.e. the person or the subject) to be separate from what he or she knows about, the known (i.e. the object, the things in the world outside of him- or herself). The subject-object split is a split between the inner experience of consciousness and the outer “objective” real world. The Romantic sensibility favors the inner. The scientific, classic Enlightenment outlook favors the latter. Both the Romantic and the Enlightenment views hold to this basic split between inner and outer. Today, we unconsciously think “me versus the world” is natural and absolutely real. As Tarnas says, this may be the foundational belief of the Copernican revolution. It is the basis of the Copernican paradigm shift that ushered in the modern world view.

Tarnas then makes a good case – which I totally agree with – that the emergence of psychology, particularly depth psychology, holds the key to transcending this paradox.

“Depth psychology engaged the Enlightenment’s epistemological challenge set by Kant as it attempted to discern the deep structural principles that inform human subjectivity, those enduring patterns and forms that unconsciously permeate and configure human knowledge and experience.Yet, contrary to Kant’s narrow list of a priori categories, these underlying forms were repeatedly discovered, beginning with Nietzsche and Freud and above all by Jung and his successors, to be mythic, symbolic, even numinous in nature.”

In the process of investigating the mind, psychologists, especially William James and CG Jung, began reflecting and criticizing what rationality and rational knowing means as well. The conventions of the modern scientific rationality suddenly became part of the focus of investigation. “Depth psychology attempted to bring the light of reason to the deep mysteries of human interiority, yet often witnessed the converse: the light of reason reevaluated, transformed, and deepened by the very mysteries it sought to illuminate.”

Also, depth psychology led to the recognition that the vast majority of influence on a person’s behavior and thoughts was entirely unconscious. This conflicts with the Cartesian “cogito ergo sum” of Enlightenment view that the person is highly aware and in control of his thinking and behavior.

Among other things, Jung expanded the concept and domain of the unconscious to be both personal and collective in nature.

But the real crux and breakthough that psychology brings to the predicament of an isolated psyche in a meaningless cosmos is the concept of synchronicity. A synchronicity is, says Tarnas, “the dramatic coincidence of meaning between an inner state and a simultaneous external event seemed to bring forth in the individual a healing movement toward psychological wholeness, mediated by the unexpected integration of inner and outer realities.”

Like dreams, synchronicities move the psyche from its problematic one-sidedness toward greater wholeness and individuation. They serve to deepen the integration of conscious and unconscious, and pushes the individual to surrender his/her “conscious attitude of knowing superiority.”

Synchronicities open the psyche to a larger vision.

Synchronicities, according to Jung, work through archetypes. “The underlying meaning or formal factor that links the synchronistic inner and outer events .is archetypal in nature.”

One of the keys to archetypes is that they can be understood in a multiplicity of ways. There is no single meaning to an archetype. And archetypes, as my dream worker teacher Jeremy Taylor frequently points out, seem to blend from one to another. For example, the Oedipus archetype is about many things: a man’s sexual attraction to his mother, the inter-generational conflict in a Patriarchal culture (where sons overthrow their fathers), blindness and seeing via ESP, among many other interpretations. The Oedipus archetype can turn into the Hero archetype and the Hero archetype can turn into the Divine Child archetype which has elements of the Trickster archetype, and so on.

In his later years, according to Tarnas, Jung conceived of archetypes as being a field in which the psyche and cosmos both exist. The field is both inside the person and outside in the world.

It is not that archetypes cause events, in the conventional understanding of causality. But that there is a larger field of meaning underlying and patterning all that happens, in the external world as well as in the interior of the psyche.

Because of the multidimensional and multivalent nature of archetypes and plurality of meanings that archetypes have, there is no strict determinism in what happens in events. There is freedom of participation and co-creation. Though the archetypal signature is discernible to the person within the flux and diversity of the observed phenomena, the events and outcomes themselves are shaped by many relevant circumstantial factors and co-creatively modulated and enacted through human will and intelligence.

Thus by synchronicity and its archetypal meaning, things are not concretely predictive, but “archetypally predictive.”

With this background and metaphysical introduction, Tarnas sets the stage for his astrology. He considers astrology to be a class of synchronicities.

Astrology correlates external events (the positions of planets) with internal consciousness and personal dispositions. Again, there is no strict causation or concrete predictive capacity, because the archetypal nature of planet symbolism allows for a lot of wiggle room of particular circumstances and human responses. “Individuals with the same alignment could be on either the acting or the receiving end of the same archetypal gestalt, with altogether different experiential consequences. Which of all these related multivalent possibilities occurred seemed to be determined largely by contingent circumstances and individual response rather than by anything observable in the birth chart or planetary alignments per se.”

Anyway, I am enjoying the book and will read more of it. But these first two sections have been very meaningful for me.





Consciousness and Economics

1 09 2009

Healthcare provides good examples of the relationship of consciousness to economic outcomes.

For example, the other day my friend Patty K. sent me a factoid from Integrated Medicine: A Clinician’s Journal. It said,

Chronic disease accounts for 70% of annualized US healthcare costs, mostly due to continual hospital admissions for acute exacerbations or comorbidities of underlying chronic disease.3 Clearly, our current model of curative medicine is failing and not fiscally sustainable. We need an affordable, scientifically based model to bridge to an acceptable new medical paradigm—for doctors, patients, and the nation.

Here is a dramatic quantitative indicator — 70% of total healthcare costs in the nation — and it all stems from a mindset, in this case, about curative approaches to health taking a higher priority than preventative approaches.

To me this underscores the primacy of consciousness in economics. Thus, if you change the qualitative consciousness, and you will change the quantitative economic outcomes.

Another example of consciousness in economics is again found in healthcare. Here my friend Alok S. brought my attention to a great piece of investigative journalism of  Atul Gawande printed in The New Yorker.

It chronicles how norms and values are created and upheld by different groups, even when those groups are ostensibly doing the same thing, in this case, practicing healthcare.

One group of doctors and administrators in McAllen, TX is very entrepreneurial and financially incented, to say it kindly. As owners of their clinics, and making commissions on every referal to other specialists, the cost per patient care in that community is one of the highest in the country.

By contrast, other groups — such as those in El Paso, TX, or Minneapolis, MN — even though practicing the very same professions, take more of a service and collective sensibility to their work. Patients are NOT profit centers. Consequently, health care is delivered to their community at half the cost of the McAllen group.

In both examples, the consciousness of the economic agent determines objective cost outcomes. How that agent comes to have the particular consciousness is of great importance.

Traditional economics has assumed a very singular, mono-type of human being: rational, self interested, perfectly knowledgable about all relevant data to his or her economic well being.

Not only is this a silly view of human nature, but, as these two examples illustrate, it completely misses the real leverage point of making economic differences.

The emerging area of “behavioral economics” is a good start in breaking this down. But so far, in my opinion, the work relies on a very rudimentary behavioral psychology. The behavioral economist still holds him- or herself separate from the phenomena that he/she is observing.

What is needed is an economics science that is self-reflective and examines its ontological assumptions. This is what I am interested in. It is a conscious economics.

For more on consciousness and economics, click here: http://consciouseconomics.wordpress.com/2010/04/25/conscious-economics-overview/