naked capitalism

By Philip Pilkington, a journalist and heathen currently living in Dublin, Ireland

Belligerent ghouls
Run Manchester schools
Spineless swines
Cemented minds
– The Smiths, The Headmaster Ritual

Human beings have always and probably will always construct moral systems around which they structure their thoughts and actions. Some of these are quite simple and basic – for example: laws that prohibit murder. But some are remarkably complex – massive theological, metaphysical and religious systems that are disseminated in varied forms among countless numbers of men.

But here’s a question: to what extent is economic theory – I mean: the ‘highest’ tenets of economic theory – an arbitrarily constructed, yet extremely intellectually sophisticated moral system? By that I mean: a system of postulates constructed to limit and restrict our actions and thoughts. And if we find that economics is simply an arbitrary system of thought, no different in essence from the theologies of yore, is there an alternative approach that won’t have us slipping into dogma?

In order to get a clearer view of this we must first try to understand what the purposes of moral systems of thought are and how they are constructed. For that we will briefly turn to the field of anthropology.

The origins of metaphysics and morals
In the 1940s and 1950s certain anthropologists and philosophers began expounding an interesting collection of ideas. They saw societies as being wholly structured around certain laws and customs. This was perfectly in keeping with the theories of the classical anthropologists at the turn of the century, who noted that primitive societies organised themselves around what they referred to as ‘totems’ – that is, myths about origins – and ‘taboos’ – that is, customs that were so deeply ingrained in the psyches of tribe members that to violate them was simply beyond comprehension. The newer generation of anthropologists – referred to as the ‘structuralists’ – expanded this to all walks of human life. The structuralists argued that even in modern society there were certain habits of thought that were so deeply ingrained that for the individual to violate them would cause enormous psychological discomfort.

Perhaps the most colourful of these was the esteemed British anthropologist Mary Douglas. In 1966 Douglas published a fascinating and idiosyncratic book that was soon to become one of the most widely cited in the field of anthropology. The name of this book is ‘Purity and Danger’ and it can be previewed at Google Books.

In ‘Purity and Danger’ Douglas argues that most of our contemporary practices of dieting and personal hygiene are, in anthropological terms, nothing more than rituals structured around primitive taboos erected by society. She compares these to the rituals found in Leviticus – the book in the Bible that lays down ironclad laws and rituals for the Hebrew people. Douglas pointed out that, when it comes to diet and hygiene, contemporary man is not that much more rational than the first of the Jewish people. She argued that we follow our rules of hygiene and dieting – many of which have dubious scientific bases – for the same reasons that primitive tribes-people follow their rituals. And when we overstep these boundaries and break our hygienic or dietary rules, the psychic consequences are just as dire as they would be for the primitive who forgets to enact his ritual. The result is a feeling of anxiety or panic which can vary from mild to quite severe.

Douglas was not arguing that we shouldn’t wash our hands after going to the bathroom or that we should pick up food when it falls on the floor and eat it without washing it. No, she was merely pointing out that these were highly ritualised acts; based more on psychic taboos internalised by the individual through contact with the social group than they were some sort of rational instinct for self-preservation. These are, in short, ‘symbolic boundaries’ with which we structure and limit our actions.

The structuralists also noted that this is true of the way Man organises his thoughts – and perhaps even his perceptions. A merchant sailor at sea in 1400, for example, would quite literally organise his space-perception around certain taboos. He might think that past a certain point on a map there were man-eating dragons. Not only does this sailor organise his thoughts about the world around this superstition, he quite literally conceives of the space he moves about in with reference to this myth. If, for example, he was to sail near these uncharted waters he would likely experience acute anxiety. Perhaps, if he were suffering from malnutrition, he might even hallucinate a dragon and reinforce the myth.

Systems of morality seem to spring from a similar impulse. People seek to limit what they are permitted and not permitted to think and do around certain – often arbitrary – symbolic principles.**

These limiting principles – or, ‘symbolic boundaries’ – were usually arbitrary intellectual constructs. However, they were often extremely sophisticated. The French anthropologist and founder of structuralism Claude Levi-Strauss, for example, noted that some of the shamans he encountered in the Amazonian rainforests had logically worked out metaphysical systems that were easily as impressive as some of those he had studied at university. These metaphysical systems were then watered down and disseminated among the population of the tribe or village who would then structure their thoughts and beliefs around this system.

So, what is the relevance of all this? Well, what if this is what many academic economists are doing today? They sit around universities, as the shamans sit around their tents, constructing cryptic intellectual systems that few outside the circle can understand which lends these systems a certain gravitas. The economists then pass these on, in watered-down and half-explained form, to students who then go on to govern us, directly or indirectly, and dictate how we live our lives.
The shaman guides the actions of the village elders; the pope crowns the king; the economist equips the educated citizen for civic life.

Economics as metaphysics and morals

Is ‘higher’ economics really a metaphysical construct? I think so. But before I make this argument let’s get a little familiar with what ‘metaphysics’ actually is.

Ask three philosophers what ‘metaphysics’ is and you’ll get three different answers. I consider metaphysics to be a process of thought that seeks to understand fundamentals about the nature of reality based on reasoning alone. In this metaphysics is opposed to empirical verification and, it should be said, opposed to most contemporary philosophy and social science.

Metaphysicians tend to create airy constructs of how the world works – and they often do this entirely in their own head. A good example would be the German philosopher G.W.F. Hegel. Hegel believed that there was a universal force moving history which he called Reason. All actions were thus tending toward a certain outcome that he could, in a sense, work out in his own mind. Hegel reached these conclusions through grandiose logical arguments with almost no reference to reality.

The problem with this sort of reasoning should be clear: its rubbish. It is, when you look at it closely, just an intellectual system that is worked out by some guy sitting in his study. It has no more validity than biblical stories about how Adam and Eve were the first humans and were expelled from the Garden of Eden, or the idea that the world sits on the back of a turtle.

These are all just stories worked out arbitrarily by people who should know better. They are not open to empirical verification and are generally useless from a practical point-of-view. They are the same sorts of systems as the ‘totemic’ myths that are generated in tribal societies. So, while the Christian claims that we are descended from Adam and Eve, the Native American claims that we are descended from the eagle. All the while Hegel claims that we are descendents of Reason.
So, is economic theory just one of these stories? Certain central aspects of it, I think, are.

Taken at a very base level, the notion that there is an ‘invisible hand’ that irons out inconsistencies and increases the efficiency of the production and circulation of goods is basically the same claim that Hegel made about history being moved by a force called Reason. (Indeed, Adam Smith was one of Hegel’s references, perhaps even one of his key references). This claim, when made by either Smith or Hegel, can be traced back in turn to the Protestant tradition of predestination. The reasoning here is absolutely metaphysical and like the metaphysicians of yore it carries with it a moral lesson to be passed on to disciples.

Yet, if we dig a little deeper we find that even the more developed and less theological claims of economics are strongly metaphysical.

Take the example Yves uses in her book ‘Econned’ of how economists conceive of the demand function. There she shows, drawing on the excellent work of Steve Keen, how economists make huge generalisations about the people they study. They assume, for example, a single consumer that consumes the same goods and then projects this onto all consumers.

This is pure metaphysical reasoning. The economists concoct an idea in their heads which they then use to construct a theoretical edifice which falls apart when the original idea is shown to be false. They then derive a sort of ‘moral code’ from this construct which tells people how they should behave. In this case, students are told that this is how people should behave if they are to produce efficiently and effectively.

How is this different from the shaman who makes up a myth about the origins of the tribe and then derives moral lessons from this myth that he then teaches to the tribes-people? It’s not.

Let’s take an invented example – but one very similar to the real totemic myths studied by anthropologists. The shaman might say that the tribe was born out of a monkey’s mouth and thus the monkey is a sacred creature that cannot be hunted without first performing a certain ritual – say, a certain hunting dance.

Here we have an identical method of reasoning as we do in economics departments. Belief systems are constructed upon arbitrary assumptions (that are probably untrue). The shaman claims that the tribe was born out of the monkey’s mouth, while the economist claims that all people consume in the same way. The shaman or economist then distils out certain ‘lessons’ – moral lessons – about how people should behave from these totemic myths. These lessons are then handed down by the elders of the tribe or by the government of the state to dictate how the village should be run. The village elders then ensure that people perform the ritual dance before hunting the monkey, while statesmen tailor their policy proposals to fit in with the economists’ metaphysical system.

Economic ideas – such as the myth of the ‘single consumer’ – serve the function of ‘limiting principles’ for the way people in our contemporary society are allowed to think about the world. To think outside these ‘symbolic boundaries’ is not to be taken seriously. And yet, these boundaries are simply metaphysical constructs built up by economists and then disseminated to the population at large as a type of moral system.

Economics, then, is the totem – its simple moral lessons, the taboos. And this is how we in the modern world organise our thoughts and actions. When we go to the bathroom our systems of hygiene tell us that we should wash our hands; when we discuss public policy our moral systems tell us that we cannot undertake certain actions as economists have worked out that such actions are ‘wrong’ when their metaphysical models are considered. To violate either of these taboos is to risk social isolation and exclusion.

Is there an alternative way of thinking economically?

Okay, so let’s say this is true. Economics is today what religion was in older historical times and totemic myth was in tribal times. Is there some way that we can euthanise the ritualistic elements of economic theory? Yes, I think there is.

Consider law – a discipline which economics bears far more affinities to than any science. Law also has its origins in the ritualistic and religious aspects of social organisation. Our current legal system is the direct descendent of this; much like the way economic determinism – and by that I mean Adam Smith’s ‘hidden hand’ – is the direct descendent of Protestant predestination. However, law has, to a large extent, done away with silly metaphysical speculations and got down to the nitty-gritty of doing business. Law has, in most cases, become an operational discipline.

Economics, as we have pointed out above, is today taught to citizens – through the universities and schools, but also through the media – in order to guide them in their actions. This is especially true of those citizens who go on to wield power over others and direct the institutions that govern our societies. So, why not cut out the metaphysics and the morals altogether and simply teach people what the levers of economic power in our societies actually are and how they can be used?

Economics was moving in this direction after Keynes had founded macroeconomics as a discipline. To a large extent after Keynes economics came to be seen in operational rather than moral/metaphysical terms. All that seemed to change when Milton Friedman – channelling the Austrian School, who explicitly founded their ‘theories’ on moral judgments – tried to re-establish macroeconomics as catering to a certain moral and metaphysical view of the world. Larry Summers once wrote that although Friedman is seen by academics as an ‘innovator’ of monetary policy, one of his most important contributions lay “in convincing people of the importance of allowing free markets to operate”. Summers got it.

Friedman snuck the metaphysics back into the discipline through the back door and the results have been regressive, both intellectually and socially. Economics has become, once again, a metaphysical doctrine boiled down to a few crass moralisms that are spoon-fed to the educated public. Its proponents, in true moral and metaphysical style, claim to be championing ‘freedom’, but any reasonably detached observer should clearly be able to see that this is the ‘freedom’ handed down by a preacher to his congregation. It is really a subtle way of telling people what to do and assuring them that such authority is founded on some sort of Natural or Divine Law.

One school, however, has managed to keep to the operational way of viewing economics. I’m talking, of course, about the Modern Monetary Theorists (MMTers, to use the jargon).

The MMTers stick to a wholly detached description of the way the economy works. They describe the actual working of the money and credit systems; they also describe how the system of national accounting works. There is no metaphysics here. This is just a description of how these processes work from an operational point-of-view.

Describing these systems is like a lawyer describing a body of laws. The lawyer – provided he is not a hack – is not going to tell you what you should or should not do, instead he lays out what you can and cannot do and lets you decide from there.

Is this not a far better way of educating citizens? Let them know what can and cannot be done and then let them decide from there. Don’t fill their heads with theoretical and speculative rubbish about ‘ideal consumers’ and the like, but explain how the system works and let them decide how they should direct this system through the democratic processes that we base our societies on.

This would, of course, greatly restrict the power of economists. In policy circles today economists play the role of the court-priest. They deploy their esoteric and impenetrable ‘knowledge’ to tell policymakers what they should and should not do. To constrain economists to simply explain how the system works is to give them a role closer to that of the lawyer. The policymaker consults a lawyer to figure out what he or she can or cannot do and then makes a decision from there. Similarly, he or she might consult the economist, if the latter was seen as an operational role rather than as that of a seer.

This would, of course, threaten the role of the economist in society today. One can imagine that it is rather nice to be thought of as a divine, laying down metaphysical principles about the ‘inner’ workings of the world and deriving from these timeless truths and moral certainties that we mere mortals can then submit to. So, one can also imagine that these preachers and their flocks will respond to such a challenge with moral outrage. It is the outrage of a priest who has been told that his God is an invention, concocted in his mind to be used as leverage over his fellow men.

One will also be sure to encounter a sort of religious fear in the minds of the citizenry. For many of them – policymakers included – to simply describe how the system works without genuflecting before the Great Ideas of the metaphysical System is to blaspheme. The crowd falls silent, waiting for some Divine Justice to be unleashed upon the heathen who dares speak in such a way. And yet the storm never comes.

It is like the 15th century sailor being told that there are, in fact, no dragons beyond a certain point on the map. To do so is to disrupt the ‘symbolic boundaries’ that he has erected in his mind to structure his world. Extreme disorientation is likely to follow and from that, fear and anger.
So, it is only gradually – very gradually – that we can expect this to change. But change it must.

** As an aside, Sigmund Freud had recognised this long before the structuralists. He even went so far as to show how similar certain neuroses – especially what he called the ‘obsessional neuroses’ (OCD etc.) – were to primitive rituals. He also noted that certain phobias were remarkably similar to taboos. It was soon to be recognised that these tended to arise as ‘substitute’ structures to replace incomplete internalisation of societies more ‘normal’ symbolic structures. But we are not here engaged in a history of thought so we shall move on.