The Dismal Mind - Economics as a Pretension to Science - Part IWritten by Sam Vaknin
"It is impossible to describe any human action if one does not refer to meaning actor sees in stimulus as well as in end his response is aiming at." Ludwig von Mises
Storytelling has been with us since days of campfire and besieging wild animals. It served a number of important functions: amelioration of fears, communication of vital information (regarding survival tactics and characteristics of animals, for instance), satisfaction of a sense of order (predictability and justice), development of ability to hypothesize, predict and introduce theories and so on.
We are all endowed with a sense of wonder. The world around us in inexplicable, baffling in its diversity and myriad forms. We experience an urge to organize it, to "explain wonder away", to order it so that we know what to expect next (predict). These are essentials of survival. But while we have been successful at imposing our mind on outside world – we have been much less successful when we tried to explain and comprehend our internal universe and our behaviour.
Economics is not an exact science, nor can it ever be. This is because its "raw material" (humans and their behaviour as individuals and en masse) is not exact. It will never yield natural laws or universal constants (like physics). Rather, it is a branch of psychology of masses. It deals with decisions humans make. Richard Thaler, prominent economist, argues that a model of human cognition should lie at heart of every economic theory. In other words he regards economics to be an extension of psychology.
II. Philosophical Considerations - The Issue of Mind (Psychology)
The relationships between structure and functioning of our (ephemeral) mind, structure and modes of operation of our (physical) bodies and structure and conduct of social collectives have been matter of heated debate for millennia.
There are those who, for all practical purposes, identify mind with its product (mass behaviour). Some of them postulate existence of a lattice of preconceived, born, categorical knowledge about universe – vessels into which we pour our experience and which mould it. Others have regarded mind as a black box. While it is possible in principle to know its input and output, it is impossible, again in principle, to understand its internal functioning and management of information.
The other camp is more "scientific" and "positivist". It speculated that mind (whether a physical entity, an epiphenomenon, a non-physical principle of organization, or result of introspection) – has a structure and a limited set of functions. They argue that a "user's manual" can be composed, replete with engineering and maintenance instructions. The most prominent of these "psychodynamists" was, of course, Freud. Though his disciples (Jung, Adler, Horney, object-relations lot) diverged wildly from his initial theories – they all shared his belief in need to "scientify" and objectify psychology. Freud – a medical doctor by profession (Neurologist) and Bleuler before him – came with a theory regarding structure of mind and its mechanics: (suppressed) energies and (reactive) forces. Flow charts were provided together with a method of analysis, a mathematical physics of mind.
Forward to the Past - Feudalism and CommunismWritten by Sam Vaknin
The core countries of Central Europe (the Czech Republic, Hungary and, to a lesser extent, Poland) experienced industrial capitalism in inter-war period. But countries comprising vast expanses of New Independent States, Russia and Balkan had no real acquaintance with it. To them its zealous introduction is nothing but another ideological experiment and not a very rewarding one at that.
It is often said that there is no precedent to extant fortean transition from totalitarian communism to liberal capitalism. This might well be true. Yet, nascent capitalism is not without historical example. The study of birth of capitalism in feudal Europe may yet lead to some surprising and potentially useful insights.
The Barbarian conquest of teetering Roman Empire (410-476 AD) heralded five centuries of existential insecurity and mayhem. Feudalism was countryside's reaction to this damnation. It was a Hobson's choice and an explicit trade-off. Local lords defended their vassals against nomad intrusions in return for perpetual service bordering on slavery. A small percentage of population lived on trade behind massive walls of Medieval cities.
In most parts of central, eastern and southeastern Europe, feudalism endured well into twentieth century. It was entrenched in legal systems of Ottoman Empire and of Czarist Russia. Elements of feudalism survived in mellifluous and prolix prose of Habsburg codices and patents. Most of denizens of these moribund swathes of Europe were farmers - only profligate and parasitic members of a distinct minority inhabited cities. The present brobdignagian agricultural sectors in countries as diverse as Poland and Macedonia attest to this continuity of feudal practices.
Both manual labour and trade were derided in Ancient World. This derision was partially eroded during Dark Ages. It survived only in relation to trade and other "non-productive" financial activities and even that not past thirteenth century. Max Weber, in his opus, "The City" (New York, MacMillan, 1958) described this mental shift of paradigm thus: "The medieval citizen was on way towards becoming an economic man ... ancient citizen was a political man".
What communism did to lands it permeated was to freeze this early feudal frame of mind of disdain towards "non-productive", "city-based" vocations. Agricultural and industrial occupations were romantically extolled. The cities were berated as hubs of moral turpitude, decadence and greed. Political awareness was made a precondition for personal survival and advancement. The clock was turned back. Weber's "Homo Economicus" yielded to communism's supercilious version of ancient Greeks' "Zoon Politikon". John of Salisbury might as well have been writing for a communist agitprop department when he penned this in "Policraticus" (1159 AD): "...if (rich people, people with private property) have been stuffed through excessive greed and if they hold in their contents too obstinately, (they) give rise to countless and incurable illnesses and, through their vices, can bring about ruin of body as a whole". The body in text being body politic.
This inimical attitude should have come as no surprise to students of either urban realities or of communism, their parricidal off-spring. The city liberated its citizens from bondage of feudal labour contract. And it acted as supreme guarantor of rights of private property. It relied on its trading and economic prowess to obtain and secure political autonomy. John of Paris, arguably one of first capitalist cities (at least according to Braudel), wrote: "(The individual) had a right to property which was not with impunity to be interfered with by superior authority - because it was acquired by (his) own efforts" (in Georges Duby, "The age of Cathedrals: Art and Society, 980-1420, Chicago, Chicago University Press, 1981). Despite fact that communism was an urban phenomenon (albeit with rustic roots) - it abnegated these "bourgeoisie" values. Communal ownership replaced individual property and servitude to state replaced individualism. In communism, feudalism was restored. Even geographical mobility was severely curtailed, as was case in feudalism. The doctrine of Communist party monopolized all modes of thought and perception - very much as church-condoned religious strain did 700 years before. Communism was characterized by tensions between party, state and economy - exactly as medieval polity was plagued by conflicts between church, king and merchants-bankers. Paradoxically, communism was a faithful re-enactment of pre-capitalist history.