The markets are rational. From that inviolate truth, a pillar of economic thought since 1776, flows all else modern economics understands about the markets, men, and money. An inalterable belief that markets can be measured, quantified, cut, and pasted in mute acceptance that under it all, lies the consistent and undeniable force of rational behavior, a religion which has gone unquestioned.
The theory of rational markets — that buyers and sellers will always act in their best interests — was given life by Adam Smith in his Wealth of Nations. Born into a moment between ages, the new study of economics grew and developed with its gospel already written and sanctified. Economics became nothing more than competing studies that tried to squeeze the maximum utility out of the blandness of rational, human behaviour. The competition reached a turning point at the end of two brutal wars and an economic depression that sent buildings full of newly minted economists running for their slide rules.
The rational behavior of economics had succeeded in removing over 160 million rational men, women, and children of free will from the market, and with the dull precision of 100 million mallets, rationally pummelled the earth to pieces in its own best interest. Regardless, it still came to pass that "rational", as they say, was written by the victors, and so from the smoke and ruin of trial by fire came the forged steel sword of the American Way, embracing its own best interests by clinging to the myth as flag, an inviolate symbol of the good, the bad, and the ugly.
Patriotism — an exceptionally irrational behaviour — became welded to the economic cause. Free markets are rational. One choice, two options — we are right, or they are wrong. Walking off the battlefields of Europe and into the womb of America at Bretton Woods, no one questioned the unconscious absolute that free markets are rational, blinded as they were by the sheer joy of having lived to tell. And again, the participants of Bretton Woods who built the world we thrash around in today, were doing so in a single moment of time, between two very different ages.
In the time since 1944, we have clung defiantly to our patriotism, our democracies, our guns, and our religion. Empires have fallen, backward societies saved, and the planet has become a patchwork of nominally free collections of consumers and producers, all herded into crayon borders that even at the time defied common sense. The nation state was king, dividing the earth into sections of untenable, fortified camps.
Article comments
— go to most recent comments1 - Baronius
There are a couple of interesting points in this article, but there are also a lot of cliches. Are we supposed to believe that feudalism or some other system would have created the computer? Cigarettes and junk food may be bad, but smallpox and no food are worse: we're living longer than ever, except in precisely those places where free markets haven't taken root. And while calling something a religion may be a good rhetorical move, it takes more than that to demonstrate that capitalism is founded on false premises.
2 - Aetius Romulous
Thanks for the comment Baronius.
Capitalism got us all here, on that we can agree. The question is however, will capitalism (in its current form),get us any further?
There have been substantial breakdowns in the Bretton Woods model, almost from the get go. Civilization is only about 10,000 years old, and the heyday of capitalism only about 50 years of that. If future generations are going to last another 10,000 years, I don't believe its rational to say the current capitalism will be able to go all the way.
I'm suggesting that we simply drop the idiocy of flag waving now, and build an economic system that recognizes the reality of the planet. Then prepare to change it again and again and again as needs demand, without fear of breaking any silly taboo.
That is impossible to even consider when nationalism will attempt to lock its old philosophy in place, not unlike religion has with its old books. Nobody wants unfettered markets to become a Noahs Ark thingy - obviously idiotic but too entrenched in dogma to ever imagine changing.
3 - roger nowosielski
For someone who claims to be non-philosophical, this is quite a philosophical, eloquent, and challenging piece.
I do agree that although capitalism had got us here, it won't do much longer in its present form. Likewise with nationalism, which is quickly on the wane and disappearing.
The brave new world! Yes, we're definitely heading there, although how glorious it will be and how exciting is for the future to tell. Personally, I think it will be kind of drab and less adventurous but, hopefully, more just and fair.
I touched on the similar themes in "The New World Order, Parts I and II" - a kind of vision of the future. You might look at it if you like.
4 - bliffle
Good article, Aetius. Entertaining and insightful.
5 - Aetius Romulous
Thanks for the comment bliffle. Remember though, don't encourage the animals.
And Roger, we may be singing off the same song sheet. Where's the fun in that?
6 - roger nowosielski
Certainly not! I'm not a chorus person. More likely a star.
So let's not congratulate ourselves prematurely and suck each other's dicks before due time (a line from "Pulp Fiction," more or less).
7 - Cindy
Aetius,
Good article. I think if Adam Smith were alive, he'd be wondering what they've done to his song. Not that I liked his song much anyway. But it surely wasn't the tune he had in mind. The rest of us can sing the next line.
I wonder if tears can be sold? There seems to have been a profit in them.
8 - Aetius Romulous
Where is the spirit Melanie's generation had, when they were faced with a world they wouldn't accept?
Where is our Melanie?
9 - Cindy
They're around A.--to my surprise (pretty recently), sometimes they even talk to each other.
10 - Wingnut
Hi gang. Good article, good comments. First, I believe mankind could have been much further advanced, had we used a cooperative system (commune/economyless) to date, instead of a competitive system (capitalism/greeenpaper rat-racing). We would have certainly been more advanced in the OTHER criteria of value measurings... like morals, equality, kindness, repair-ability, reuse-ability, W.H.O. atrocious statistics, etc.
Melanie? Ok, if I remember right, that's an era of anti-establishment, communes, flower-power, sitars, beads, incense, pot, dogs, kids, hippy buses, LSD, music, sharing, storytelling, tree-hugging, bug-hugging, critter-hugging, open-mindedness, avoiding-money, shunning-ownership, Christianity, gurus, and free-loving. If that's what you're talking about, then that's EXACTLY what the USA and planet should be getting back-to.
Yep, we hippies are still alive and well, and we're patiently awaiting the natural collapse of the pyramid scheme called capitalism (see back of USA dollar for pyramid scheme symbol). The problem is actually in the use of economies and ownership (state or private). Economies cause rat-racing, because of enjoyment addictions. That, causes pyramids, which we hippies/moms KNOW are EXACTLY like the one's the kids repeatedly fail-at building. While the upper 1/3 are "heads in the clouds", the kids on the bottom ALWAYS GET CRUSHED from having the weight of the world's knees on their backs. This is seen in capitalism... with the amount of servitude infestation (working FOR others instead of WITH others) (inequality), and we also see an infestation of "pay up or die" and "join or die" done to the 18 year olds. I'm pretty sure "get a job or starve" is a forcing of religion into the competer's church, and thus has killed membership in the cooperator's church (Christianity/communes).
As soon as we quit using economies and ownership, and do potlucks and barnraisings instead, we'll be back on track. It will take putting Christians in charge of the country, though. Hippies will work, too, if they're stalwart and motivated. There will be laws and police, and the strictest law is the newest one. Fairness/equality. Its a place where church and state are allowed and encouraged... to overlap and mingle. Ready to throw the switch and outlaw economies/ownership? Custodianship will still happen. It will be much like the U.S. military supply system... using requisition forms and no monetary discrimination. Luxuries are put into repositories for all to share. Good stuff. At first it feels like a loss of freedoms, but once its tried-on, it feels like a massive gain of freedoms, because it is.
11 - Cindy
Hi Wingnut,
I am pretty much with you on some of that. :-)
I'd have to jump ship with this solution, though:
It will take putting Christians in charge of the country, though. Hippies will work, too, if they're stalwart and motivated. There will be laws and police, and the strictest law is the newest one. Fairness/equality. Its a place where church and state are allowed and encouraged... to overlap and mingle.
Being a Christian, you may be interested in some alternatives other Christians are thinking about.
12 - Aetius Romulous
Interesting and thought provoking comments wingnut.
In the past, I would take exception to some of your thinking but clearly, all bets are off and any idea is a good idea as long as it gets dialogue moving.
13 - Baronius
Aetius, this is what I mean about cliches. All bets aren't off. All economic systems work imperfectly, but this one feeds, clothes, houses (yes, houses), and liberates more people than anything else we've tried. The idea of a communist theocracy doesn't move the dialogue forward at all, because both concepts don't work.
14 - Cindy
Bar,
...this one feeds, clothes, houses (yes, houses), and liberates more people than anything else we've tried. From whose perspective?
And second, so what if it did? What about the rest of the people it doesn't work for?
And third, there are more ideas than "communist theocracy" about.
15 - Baronius
Cindy -
from the perspective of reality
because something that works has a better chance of working than something that doesn't
because I was replying to Aetius' reply to the comment about communist theocracy
16 - Aetius Romulous
Baronius;
"...everything we've tried" is our point of agreement, except where I would include American capitalism in the group of things tried and found wanting. Time to try something else?
That we will find ourselves with something different in a generation is a given. I'm most concerend with the process.
17 - Clavos
That we will find ourselves with something different in a generation is a given.
I don't buy that, but were it to come about I'm glad that:
A. I'm too old to live to see it, and:
B. I have no children.
18 - Aetius Romulous
If you strip it down to the logical, and consider the system we have currently(or at least up till last summer)is only a generation old, then add in the fact that while it continues to be a moving target day to day, we are now in a different system - there is no reason to believe it will ever return.
That's progress, and we should be happy for it.
19 - Cindy
Bar,
Oh, very well then. Carry on. :-)
20 - Wingnut
Thanks for the comments, gang... very kind. You guys and gals are class-acts. Baronius, I'd like to see the abolishment of economies and ownership, so hmmm. Economies/pricetags are not a God-made thing nor are they necessities.
Yes, maybe capitalism IS the best "economy system" ever tried (even though its not - poker chips, greenstamps, and wooden nickles are better)... but... economies always have classing and discrimination. Hierarchies form when using economies. Survival of the richest.
The ONLY way to get past that... is teach about pyramiding in schools and churches, and stop using economies. When the kids do toybox tug-o-wars, what do we parents do? Yep. Take away the thing being tugged-over and so NOBODY gets it, sort of like the government recall happening to those federal reserve notes that capitalists think is "their hard-earned money".
If children can't share, you take away the toys being tugged-over, and that's ownershipism of federal reserve notes and entitles of ownership/store receipts. Besides, if the Christians don't yank the cookieplate out-of the tug-o-warring children's hands, I think God soon will. In that case, the meek shall be doing some inheriting, and being meek, we won't claim ownership of things or money. We won't use either... and we'll likely be more Amish or Quakerish. An Amish-made shovel lasts for about 12 generations. A capitalism-made shovel lasts 12 days.... and sometimes only 12 hours, and is completely un-repairable. Sweet! (...smell of landfills)
21 - Ruvy
Aetius,
Read this piece and found that - how shall we say this - a number of minds are converging in analyzing a problem.
The point you make here - markets are not rational - is a good starting point for a solution, but looking at motives for the way people act needs also to be taken into account. Why would so much effort go into such stupid and self destructive activities as selling, porn, cigarettes and fast food?
Look at the trash hustled on this site for example and tell me the redeeming social value of it all? Yes, it pays some peoples' bills and puts food on some peoples' tables. But beyond that, what is the point of hustling CD's, DVD's, TV shows and books to people who may not have the money to buy healthy food, or the wisdom to drink enough potable water daily, or the determination to make the time to do either?
Crack this nut, and you've gone a long way to seeing What Is Wrong. That doesn't mean you'll have a solution that you can implement or that others can implement. But at least you will have figured out the problem.
22 - Aetius Romulous
Well Ruvy, that is exactly the point of the article - that the notion of free markets, will, and rational behaviour have dramatically changed since the economic blueprint was struck.
Our technology, and the culture it has spawned, is completely out of sync with the economic system, ancient and beaten as it obviously is. In this new culture of individual choice, the stupendous availablity of consumer options, and the process by which unfettered capitalism shapes the choices amongst them, needs to be accounted for in ways the old system never can.
I also make the point that given a situation where the economics have been bundled up with patriotism and nationalism, its hard to imagine how this situation will change as long as some of us cling deseperately to an outmoded political culture that has a vested interest in doing nothing for progress.
So to me, economic collapse will force the issue to be resolved, and it will be resolved on the political fight that will ensue. And that's where the oportunity to contribute will open in ways it never has before.
Just trying to position myself for the big show LOL.
23 - Cindy
Why would so much effort go into such stupid and self destructive activities as selling, porn, cigarettes and fast food?
Markets pit everyone against everyone. People learn to think of lying as just marketing. Exploitation of every weakness, fault, addiction, and appetite is what is expected.
The view that selfishness, competition and exploitation should be the basis of a society, holds it back from evolving beyond that. It's what keeps people in Mark Schannon's cave. (More so, I think than his beliefs about our primitive instincts.) We can decide to change that. It's only a matter of how many people want that change. Not easy, but the more people that come to similar conclusions, the more to create the change they want to see.
We need a new definition of progress too, Aetius.
So to me, economic collapse will force the issue to be resolved, and it will be resolved on the political fight that will ensue. And that's where the oportunity to contribute will open in ways it never has before.
I agree. But as much as that will open possibilities, a lot of people will be hurt. It might be a good idea to consider ways to lighten that impact.
24 - Ruvy
Read Cindy's comment carefully, Aetius. You and she are almost there....
Not quite though. If Mark Schannon takes a serious look at his own heritage and these comments, maybe he'll put it all together. Maybe....
A secular scholar would refer these ideas to Hegel - but they are far older and are related to the Jewish theory of history.
Cheers!
25 - Dan(Miller)
I agree with the thesis that very few people look out for their own long term best interests. That includes consumers, the people who run large and small businesses, politicians, and everyone else. It's why those running businesses apparently look with more concern at their financial prospects for the current quarter than at those for even a year or more in the future. That's why people buy cigarettes, lottery tickets, and a whole lot more stuff. Hell, that's why I've been smoking a pipe for almost fifty years and will continue until I am buried with it stuck in my mouth, lit.
Problem is, who is to say what our individual, long term best interests are, and who is to tell us to abjure those things which produce immediate pleasure but are not in our long term individual best interests? Perhaps a cabal of superhuman wise
menpersons (such as our Congresspersons, for example), but I don't think many of us would tolerate that. Despite best intentions, we have not done a very good job even of reducing the criminal production, purchase and abuse of illegal drugs. Nor have we been entirely successful in reducing violent crime, fraud, and a whole lot of other stuff as to which there is a broad consensus that we should.Nor, for that matter, do I think it would be in our long term best interests to have some superior being tell us what is best for us and require us to comply. Reliance on that sort of thing would, more than likely, diminish whatever attention we, individually, pay to serving our own long term best interests. Current political efforts to make whole those who neglected adequately to look out for their own individual long term best interests, by requiring those who did so to pay for their errors, strike me as counterproductive in the long term. It is an insidious form of enabling a substance abuser.
Having our collective long term best interests decided upon and somehow mandated by a superior cabal, eliminating our freedom to act on our individual short and long term best interests, might work if we had an omniscient, omnipotent and benign global dictator and lacked free will of any sort to resist. We don't, and I don't foresee one coming into existence.
Dan(Miller)