Sunday, May 21, 2017

Bill Mitchell — Humans are intrinsically anti neo-liberal

Over the course of my academic career and even outside of that I have often been regaled with the claim (as if it is science) that capitalism is the ‘natural’ system for humans because our nature biases us to competitiveness and selfishness. 
So Marx’s famous epithet in his Critique of the Gotha program (1875) – “from each according to their ability to each according to their need” – was dismissed as being against our natural tendencies – a denial of basic human nature. 
It then followed that planned economies and economies where governments intervened strongly to ensure equitable distribution of opportunities and outcomes, was in some way contrived and would surely fail because our human nature would find ways to thwart such interference. 
This has been a compelling and dominant narrative over the last several decades as neo-liberal think tanks, biased media outlets, and politicians from both sides of politics (homogenised into a common economic mantra) reinforced it continuously in print, spoken word and policy. 
We shifted from living in societies where collective will and equity was deemed important organising principles to living in economies where every outcome was in the hands of the individual – including mass unemployment – and the concept of systemic failure that could be ameliorated by state intervention was rejected. State intervention was cast as the devil. 
It is no surprise that economic outcomes for a rising proportion of the population deteriorated as we shifted from society to economy – from collectivism to individualism. 
It turns out that the research into human nature, motivation, decision-making etc largely rejects the ‘competitive selfish individual’ narrative. We are intrinsically cooperative and care about equity. Our basic propensities appear to be collective and cooperative. Funny about that. [paragraphing added for ease of reading on this blog format]
Bill Mitchell – billy blog
Humans are intrinsically anti neo-liberal
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

26 comments:

Kaivey said...

In the book, Debt: The First 5,000 Years, anthropologist David Graeber says Adam Smith got it wrong when he said that in primitive societies they bartered to exchange goods. He just assumed that. They actually just gave each other stuff. Okay, they didn't have much of value, but if you needed a new pair of shoes someone in your village would just give you a pair if he had a spare set, or was good at making shoes. The next day, though, you might help him plough his field, and so on.

Matt Franko said...

"The selfless gene allowed our ancestors to think and act as a group, thereby outcompeting other chimp-like species — literally leaving them in the dust"

Well maybe the "neo liberal conspiracy!" is just the neo liberal cohort cooperating and trying to leave the rest in the dust....

Why complain?

Bob said...

If (---insert attribute---) weren't part of human nature, would there be a word for it?

Bob said...

The crux of the problem is turning a vice into a virtue - and vice versa.

MRW said...

"They actually just gave each other stuff." Not the Sumerians, Kaivey. And that was 5,500 years ago. We have their clay tablets of credits and debits to prove it. It was all based on the harvest. That was when debts were settled. It was certainly the case in 18th and 19th C rural America. Every farmer and family had a tab at the general store and blacksmith, etc, to be settled when the crops came in.

MRW said...

Mitchell is right. And this was actually proven. Adam Curtis covered it in one of his movies. That mathematician/scientist who came up with game theory and made the claims that we were all inherently selfish and out to fuck each other, the one who went mad and needed psychiatric help, admitted later--after he got better--that it was all bullshit. In the meantime, the RAND Corporation proved him wrong. Wish I could remember the name of the Curtis series it was in. Dont think it was "The Trap."

andy blatchford said...

It was The Trap (episode 1 "f**k you buddy") MRW and it was John Nash you are thinking of.

Kaivey said...

I read somewhere how the secretaries at the Rand Corporation were told that being selfish was best, but they would secretly help and cooperate with each other destroying the Rand Corporation theories.

MRW said...

Thanks andy! I'm off to bed, been up all night and not thinking clearly. ;-)

=========================

Kaivey, that was in the Adam Curtis documentary too.

Neil Wilson said...

"They actually just gave each other stuff." Not the Sumerians, Kaivey."

Everybody gives everybody stuff, and then they mark up an account in their head of who they owe and who owes them. We all have an inbuilt accounting ledger.

I give you a pig and put you in my debt to the tune of a pig.

It's innate

Bob said...

Better to "borrow" the things you need. If they're really persistent, then (and only then) do you return the item.

Kaivey said...

That's true, if you don't help your friend with his field then you might not get another pair of shoes when you need then.

Kaivey said...

Thank you, now I remember.

Kaivey said...

Although that's the cynical way to look at it, there's genuine friendship and a desire to help there too.

Kaivey said...

Ever had something for so long your start to think its yours?

AXEC / E.K-H said...

Economics is NOT about Human Nature but the economic system
Comment on Bill Mitchell on ‘Humans are intrinsically anti neo-liberal’

For little children the primary layer of reality is the social here-and-now ― mom, pop, family and neighborhood. The insight that the tiny social bubble is embedded in the non-social reality of region, earth, universe and their past and future development commes latter. Most people do not get far beyond the infantile layer of reality: “Perhaps it is because their horizons are limited in this way that some people are able to imagine that the centre of the universe is man.” (Feynman)

In the myopic Human-centered worldview learning and knowledge relates primarily to the properties/motives/behavior/actions of other humans. In the Universe-centered worldview learning and knowledge relates primarily to the properties/‘behavior’ of Non-human Nature. In very general terms, this gives us two fundamentally different realms: politics and science. It is of utmost importance to keep both realms separated because they are governed by mutually exclusive principles. The accepted currency in the political realm is opinion (= doxa), the accepted currency in the scientific realm is knowledge (= episteme).

In economics the proper separation never took place. There have always been two economixes, political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works (= true theory). (ii) In political economics anything goes; in theoretical economics scientific standards are observed. Fact is that (i) theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers), and (ii), political economics has produced NOTHING of scientific value in the last 200+ years.

The underlying world view of political economics is, of course, Human-centered. Accordingly, the issues have been folk psychological, folk sociological and folk biological: self-interest, greed, utility maximization, profit maximization, rent seeking, moral hazard, bounded rationality, animal spirits, honesty/trust/corruption, power/freedom/oppression, individualism/collectivism, competition/cooperation, survival of the fittest and so on.

ALL definitions of economics implicitly or explicitly contain a Human-Nature core.

“It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)

“Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins)

“The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.” (Mill)

See part 2

AXEC / E.K-H said...

Part 2

It is pretty obvious that the common denominator of the different schools of economics is Human-centric. This is the ultimate axiom of economics and this defines it as so-called social science. Where the schools differ is what the true Human Nature is or should be.

It is also pretty obvious that ALL definitions of economics contain the commitment to science.

Fact is, though, that economics is a failed science. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and ALL got the pivotal economic concept profit wrong.#1 After 200+ years economics is still at the level of a proto-science or what Feynman called a cargo cult science.

What neither orthodox nor heterodox economists have realized is that their definition of the subject matter is methodologically unacceptable. All Human-Nature issues are the subject matter of other disciplines, that is, of psychology, sociology, political science, anthropology, biology etcetera. The subject matter of economics is the structure/‘behavior’ of the economic system, which is an objective non-human entity. The outstanding characteristic of the representative economist is that he dabbles since 200+ years in all Human-Nature disciplines but has NO idea how the economic system works. Fact is that the representative economist does not know what profit is.#2

Because economic theory has NEVER been true economic policy guidance NEVER had sound scientific foundations. The scientific incompetence of economists consists in the fact that they have defined economics as a so-called social science instead of a system science and that they have not realized their fundamental methodological blunder until this day.#3 Since Adam Smith/Karl Marx economics is political economics and ALL political economics is scientifically worthless.

Egmont Kakarot-Handtke

#1 Including MMT see ‘Where MMT got macro wrong’
http://axecorg.blogspot.de/2017/04/where-mmt-got-macro-wrong.html

#2 See ‘Essentials of Constructive Heterodoxy: Profit’
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2575110

#3 See also ‘The Science-of-Man fallacy’
http://axecorg.blogspot.de/2015/10/the-science-of-man-fallacy.html

The Rombach Report said...

"They actually just gave each other stuff."

If someone in your village gives you a pair of shoes, and you help him plow his field, isn't that an example of barter & exchange? When the first European settlers came to North America they would exchange metal hatchets for furs and other items from the Native Americans.

Kaivey said...

Kind of, but they didn't do a swap. You'd help you're friends not expecting to get anything in return, but one day you did expect to get help back. It could be anything you would help with. There was no deal, like, I do this for you if you do this for me. David Graeber was really referring to small tribes rather than advanced civilisations. In that way it was extended friendships. To be truthful, I didn't finish the book. I had a kindle and was earning a fair wage so I kept buying new books. I ended up with a lot of books I half started.

Tom Hickey said...

"The selfless gene allowed our ancestors to think and act as a group, thereby outcompeting other chimp-like species — literally leaving them in the dust"

Well maybe the "neo liberal conspiracy!" is just the neo liberal cohort cooperating and trying to leave the rest in the dust....

Why complain?


Intra-group cooperation and intergroup competition is pretty standard in evolutionary theory. This appears pretty far down the evolutionary scale. Some organisms are loners and others are cooperators.

It's not only the ability to cooperate intra-group that makes humans unique. We have many other capabilities and we are also not limited by kinship ties and can cooperate widely and in varied ways.

We are also species aware and can cooperate consciously and intentionally for the benefit of the species.

Tom Hickey said...

"They actually just gave each other stuff."

If someone in your village gives you a pair of shoes, and you help him plow his field, isn't that an example of barter & exchange? When the first European settlers came to North America they would exchange metal hatchets for furs and other items from the Native Americans.


That's not the way a gift economy works or it would be barter.

In gifting the "accounting" is social. Everyone still does this in their in-group. Families don't keep accounts of favors but everyone knows that there needs to be a balance. Training children in this is part of the socialization process, and those that don't get become life-long brats that are always taking and never give, or when they give it is not really reciprocating. They get a reputation for being assholes.

AXEC / E.K-H said...

Tom Hickey

You say: “Training children in this is part of the socialization process, and those that don't get become life-long brats that are always taking and never give, or when they give it is not really reciprocating. They get a reputation for being assholes.”

This is a fine piece of folk psychology/sociology. The questions is, is it relevant for economics? Not at all! The insight that there are assholes in the world ― to which everybody can readily agree from his own experience ― does NOT advance our understanding of how the actual economy works. Just the opposite. Psychology/sociology are NOT the subject matter of economics but a distraction from the real issues, which, as we all know by now, has led economics into the coal-pit of cargo cult science.#1

Keynes, famously, gave a definition of what the centerpiece of economics is: the monetary theory of production. Note, that this definition of the subject matter eliminates a lot of garbage that has always been dear to mentally retarded economists. Barter, for example. But, more important, it eliminates ALL psychological and sociological issues. In contradistinction to the neoclassical utility maximizers, Keynes correctly defined economics as a system science.

In order not to fall back behind Keynes the PsySoc-Ban has to be issued as one of the Ten Commandments of Economics: Leave all psychological, sociological, anthropological, biological etc. issues to psychology, sociology, anthropology, biology etc.

The PsySoc-Ban has tremendous consequences because standard economics is built upon this set of behavioral axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

The PsySoc-Ban bans the neoclassical approach from economics ― completely from supply-demand-equilibrium to DSGE. So, there is absolutely NO need to reenact Groundhog Day and to moralize again and again about constrained optimization, greed or individualism.

The PsySoc-Ban, though, has one important methodological implication: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” (Feynman)

So, the all-decisive question is: is MMT the replacement of obsolete neoclassical economics?

No! MMT, just like PsySoc standard economics, is axiomatically false.#2 Which brings us to the question, why does Bill Mitchell waste so much time with kicking a dead horse instead of correcting the provable false formal foundations of MMT?

Egmont Kakarot-Handtke

#1 “... but when the road ends at a coal-pit, he [the traveler] doesn’t need much judgment to know that he has gone wrong, and perhaps to find out what has led him astray.” (Hume)
#2 See also ‘Going beyond Wicksell, Keynes and MMT’
http://axecorg.blogspot.de/2017/01/going-beyond-wicksell-keynes-and-mmt.html

Kaivey said...

I'm not an economist, but would this non PsySoc economics bring a good standard of living to most people? Mainstream, or neoclassical, economics boasts about efficiency, but it works people to death and pays low wages, while destroying the environment. I would sooner have less efficiency and a higher quality of life. People are not machines. If we have to add PscSoc to economics to produce a fair and good quality system, is that so bad? Surely in end, ethics and morals come into it. So, can economics be a hard science anymore then than psychology can, as humans are not cogs in a machine, as clockwork as economics might like it to be. We're, irrational, change our minds easily, and have feelings.

Matt Franko said...

FD I've never taken a course in psych or sociology or poli sci or philosophy or any of that.... have no interest... only took Econ 101 and 102 as my social science electives...

Bob said...

Navy brat griping about the new generation of assholes ;)

hog said...

"Mainstream, or neoclassical, economics boasts about efficiency"

it might seem so, but it really isn't. it's all about cutting corners. what seems like most efficient on the micro level, i.e: charging a customer to do all the work himself, may be horribly inefficient from a macro perspective.