It seems worth republishing this sequence again, mainly because of my current sequence on The Matter with Things, to which it resonates strongly. The first four posts will appear this week: the last two next Tuesday and Wednesday.
In this sequence, triggered by Carrette and King’s Selling Spirituality, I have looked at how Neoliberals ‘offer – no, demand – a religious faith in the infallibility of the unregulated market.’[1] I have examined the claim that this is assisted by the commandeering of a deracinated spirituality to act as a kind of tranquilliser to damp down any feelings of discontent with the capitalist system. I also took into account how our individualised society relies on psychological approaches, in contrast to more socially oriented cultures, and accepts a perspective on our situation that suggests we have no effective alternative, as capitalism is the best option.
This all combines to reduce the potential for forms of collective resistance.
We need now to look at how a combination of two reciprocally reinforcing factors makes resistance even less likely than even Carrette and King’s model would predict. We need to do this before we look at possible alternatives. I’ll start with complexity, and a related factor, before going on to look at coherence in the next post.
Complexity
Putting the problem at its simplest ‘Economists model people as knowing exactly how the economy works, whereas we would argue that they themselves do not have the full picture.‘[2]
There is fascinating evidence in support of the idea that even the economic experts don’t have much of a clue.
Daniel Kahneman
Daniel Kahneman, in his excellent analysis of our flawed decision-making abilities in general, Thinking Fast, Thinking Slow, turns his attention to what goes on in the process of financial speculation.
Tracking individuals, he finds, does not confirm their sense that they know what they are doing:
Many individual investors lose consistently by trading, an achievement that a dart-throwing chimp could not match.[3]
In Chapter 24, after reviewing the evidence he concludes:
. . . . . financial officers of large corporations had no clue about the short-term future of the stock market; the correlation between their estimates and the true value was slightly less than zero! When they said the market would go down, it was slightly more likely than not that it would go up. These findings are not surprising. The truly bad news is that the CFOs did not appear to know that their forecasts were worthless.[4]
There were exceptions to this general trend in that ‘the most active traders had the poorest results, while the investors who traded the least earned the highest’[5] and ‘men acted on their useless ideas significantly more often than women, and that as a result women achieved better investment results than men.’[6]
This is not a very flattering state of affairs for the economic pundits:
There is general agreement among researchers that nearly all stock pickers, whether they know it or not—and few of them do—are playing a game of chance. The subjective experience of traders is that they are making sensible educated guesses in a situation of great uncertainty. In highly efficient markets, however, educated guesses are no more accurate than blind guesses.[7]
Kahneman’s own research confirms this view. He was invited to investigate the figures of a firm to whom he had been invited to speak. He was given access to a ‘spreadsheet summarizing the investment outcomes of some twenty-five anonymous wealth advisers, for each of eight consecutive years.’[8]
He took the first basic step in this assessment of skill:
It was a simple matter to rank the advisers by their performance in each year and to determine whether there were persistent differences in skill among them.[9]
The rank ordering allowed for the calculation of how well each person’s rank held up over the whole time period studied. The more consistent people were the stronger the correlations would be between each year’s figures. He created 28 correlation coefficients, one for each pair of years.
Then came the surprise:
I knew the theory and was prepared to find weak evidence of persistence of skill. Still, I was surprised to find that the average of the 28 correlations was 0.01. In other words, zero.[10]
Which meant, in effect, that ‘[t]he results resembled what you would expect from a dice-rolling contest, not a game of skill.’ ‘The illusion of skill’[11] is a deeply embedded one in this area, but it is also deeply misplaced. What we learn from carefully analyzed data is that:
. . . . people who spend their time, and earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options. Even in the region they knew best, experts were not significantly better than nonspecialists.[12]
I will return in a later section to another aspect of this problem from Kahneman’s point of view. At this point I need to focus on what others have to say on his main point about the global economic complexity in which this unpredictability has its roots.
In The Econocracy the authors make their position plain: ‘many of the [global community’s] most important facets are not necessarily intuitive are easily observable. . . .’[13] and that ‘the economic knowledge that forms the basis of [the economists’] claim to expertise is often inadequate.’[14]
Wilhelm Streeck points out what makes this complexity even more difficult to fathom:
[There remained] little if any space for collective action, . . . because it was hard for most people in financial markets to understand their own interests and identify their exploiter. . . . The prosperity, relative and absolute, of millions of citizens depends on decisions of central bank executives, international organisations, and councils of ministers of all sorts, acting in an arcane space removed from every day experience and impenetrable to outsiders, dealing with issues so complex that even insiders often cannot be sure what they have to do and are in fact doing.[15]
There are, however, ways we could enhance our chances of decoding some of the mystery if the will was there. The next section explores some of the removable obstacles impeding our progress in this respect.
Tunnel Vision
Let’s pick up the threads of this with Kahneman’s analysis of decision-making in complex social, political and economic situations again. He uses a key expression that needs more examination (my emphasis):
In this age of academic hyperspecialization, there is no reason for supposing that contributors to top journals—distinguished political scientists, area study specialists, economists, and so on—are any better than journalists or attentive readers of The New York Times in ‘reading’ emerging situations.[16]
He feels that two important lessons need to be learned from all this:
The first lesson is that errors of prediction are inevitable because the world is unpredictable. The second is that high subjective confidence is not to be trusted as an indicator of accuracy (low confidence could be more informative).[17]
He concludes that ‘stock pickers and political scientists who make long-term forecasts operate in a zero-validity environment. Their failures reflect the basic unpredictability of the events that they try to forecast.’[18]
This sounds like confirmation of John Donne’s dictum: ‘Doubt wisely.’
How can what other writers say help us unpack the dangers of hyperspecialisation and suggest potential partial remedies?
The Econocracy is a good place to start. They explain that ‘economics students only learn one particular type of economics and . . . they are taught to accept this type of economics in an uncritical manner.’[19] Moreover, they teach ‘this perspective as if it is economics’ which ‘allows economists to see their discipline as a complete system.’[20] They conclude that ‘this amounts to nothing less than indoctrination into the neoclassical way of thinking about the economy.’[21]
So, hyperspecialisation paves the way to patterns of teaching which amount to indoctrination, in their view. They go on to clarify that economists differ in one critical respect from other academic disciplines:
. . . a considerable majority from all the social sciences, from history to psychology, agreed with the statement [that ‘in general, interdisciplinary knowledge is better than knowledge obtained by single discipline’], illustrating that economists are unique in their belief that their discipline has all the answers.[22]
They lack what the authors term ‘pluralism.’ They suffer from a kind of tunnel vision
It seems a no-brainer, then, to realise that, if a system is highly complex, it’s going to take more than one perspective to grasp its patterns with any hope of predicting developments and controlling consequences.
The remedy The Econocracy proposes rings bells for me from a Bahá’í perspective at least. They write:
. . . many of the [global community’s] most important facets are not necessarily intuitive are easily observable. . . . Our vision is of a world in which economic experts recognize that their knowledge of a complex economy is limited and that economic issues are the proper subject of collective democratic debate. The role of experts is to inform citizens of their choices rather than to make those choices for them.[23]
They unpack some implications of this much later in their book:
The kinds of skills and qualities needed by citizens in a broad democracy to function effectively are learned, not innate, and must be practiced to be mastered. They include listening, compromise, the ability to critically evaluate verbal and numerical argument, and developing independent judgement. They can only come through practical experience of being involved in participatory democratic institutions. In this sense, moving towards a system of broad democracy is a process of learning by doing.
. . . . . We have spent considerable time and energy thinking about the pedagogy we use for public education activities because we are aware that embedding critical reflection and pluralism at their core is not easy.[24]
Why do Bahá’í bells ring?
In terms of The Econocracy’s point about ‘participatory democratic institutions’, bells ring because a core discipline of the Bahá’í Faith is consultation. The Prosperity of Humankind contains a succinct statement of its purpose which also conveys a great deal about its methods and assumptions: `the adversarial method, . . [is]. . fundamentally harmful to [the] purpose [of consultation]: [which] is, arriving at a consensus about the truth of a given situation and the wisest choice of action among the options open at any given moment.’ It is basically a process of non-adversarial decision-making which assumes that: (a) no one person can formulate anywhere near an adequate representation of the truth, (b) groups of people, if they pool their perspectives in a collaborative fashion, formulate increasingly accurate but never fool-proof approximations to the truth, and (c) today’s formulation, no matter how useful, may be out-of-date by tomorrow.
Secondly, because Selling Spirituality emphasizes the importance of having a moral compass based in true spirituality to counterbalance purely material considerations, the Bahá’í case for much the same kind of balance immediately springs to mind. A Bahá’í statement on social action addresses this issue:
To seek coherence between the spiritual and the material does not imply that the material goals of development are to be trivialized. It does require, however, the rejection of approaches to development which define it as the transfer to all societies of the ideological convictions, the social structures, the economic practices, the models of governance—in the final analysis, the very patterns of life—prevalent in certain highly industrialized regions of the world. When the material and spiritual dimensions of the life of a community are kept in mind and due attention is given to both scientific and spiritual knowledge, the tendency to reduce development to the mere consumption of goods and services and the naive use of technological packages is avoided. . . . Together, these two sources of knowledge tap roots of motivation in individuals and communities, so essential in breaking free from the shelter of passivity, and enable them to uncover the traps of consumerism.
At present too many of us in so-called ‘developed’ societies, by which I mean ‘industrialised,’ are caught in the ‘traps of consumerism,’ the trancelike mind-set of the markets, convinced they’ll find riches and fulfilment there. We are convinced there is no way out.
Streeck describes this and to a degree subscribes to it:
The problem is, while we see [capitalism] disintegrating before our eyes, we see no successor approaching. . . . There is also the absence of a vision of a practically possible progressive future, of a renewed industrial or new post-industrial society developing further and at the same time replacing the capitalist society today. Not just capital and its running dogs but also their various oppositions lack a capacity to act collectively.[25]
Which brings us back to the other problem, hinted at by the Bahá’í quote above. There is another key capacity that is lacking: coherence. We have to have some sense of how this can be remedied if there is to be any hope of constructive change.
Footnotes
[1] McChesney (1999) quoted in Selling Spirituality – Page 169
[2] The Econocracy – Page 98.
[3] Kahneman – Kindle Reference 3843.
[4] Kahneman – Kindle Reference 4738.
[5] Kahneman – Kindle Reference 3856.
[6] Kahneman – Kindle Reference 3857.
[7] Kahneman – Kindle Reference 3877.
[8] Kahneman – Kindle Reference 3882.
[9] Kahneman – Kindle Reference 3884.
[10] Kahneman – Kindle Reference 3887.
[11] Kahneman – Kindle Reference 3899.
[12] Kahneman – Kindle Reference 3958.
[13] The Econocracy – page 26.
[14] The Econocracy – page 27.
[15] Streeck – page 20.
[16] Kahneman – Kindle Reference 3963.
[17] Kahneman – Kindle Reference 3982.
[18] Kahneman – Kindle Reference 4347.
[19] The Econocracy – page 37.
[20] The Econocracy – page 40.
[21] The Econocracy – page 54.
[22] The Econocracy – page 115.
[23] The Econocracy – page 26.
[24] The Econocracy – pages 152-56.
[25] Streeck – page 35-36.
Everybody Means Something 
Leave a Reply