Commentaries on current events, political economy, and the Communist movement from a Marxist-Leninist perspective.
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Wednesday, October 25, 2017
A Nobel Prize for a Return to Reality?
of Chicago professor Richard Thaler won the 2017 Nobel Prize in
economics for telling economists something that everyone else already
knew. One of the pioneers of what has come to be called “behavioral
economics,” Thaler has put forward the earthshaking, profound claim
that people do not always, or consistently, act rationally.
why would this seemingly commonsensical observation deserve a Nobel
Prize? Why would anyone believe otherwise?
the catastrophic collapse of the global economy in 2007-2008, a
significant portion of US academic social sciences was constructed on
the assumption that public, political, and economic behavior could be
understood through the prism of individual self-interest and the
presumption of rational choice. Though the crash cast a shadow over
the absolute dominance of that assumption in the field of economics,
it remains the methodological pillar of great swaths of social
scientific research today. The crisis was a much needed reminder of
the folly of investing “rationality” in economic life.
Nobel recognition will put little more than a dent in the
long-reigning ideological disposition to see the individual as
fundamental to scientific analysis, along with the individual’s
self-acquired interests and rationally-determined goals.
Anglo-American social scientists will continue to embrace individual
rational choice as the centerpiece of their explanatory framework, as
the fundamental building blocks for understanding human behavior.
Story Behind the Story
idea of the importance of individuals, interests, and reason in
explaining human action is not a new one. Aristotle’s conceptual
model-- the practical syllogism-- sought to expose the logic of human
action, basing it upon individual ends or desires and the knowledge
of how to attain those ends and desires. But Aristotle did not
believe that reason and interests determined human action with the
force of logic. Instead, he wondered why, in real experience, they
produce the expected results, why people acted differently from what
was, in fact, their best interests. He was convinced that individual
self-interest, reason, and knowledge were not sufficient to explain
how people behaved. The break in the chain of goal-setting and
deliberation was, he surmised, weakness of the will (ἀκρασία).
In this regard, Aristotle anticipated Thaler by over two thousand
the ascendancy of capitalism and its ideological superstructure, the
role of individuals, reason, and self-interest took on a new
importance. At the heart of the capitalist world view is the notion
that the individual
should have the opportunity to place satisfaction of his or her wants
at the center of her or his world and enjoy the opportunity to strive
to realize those goals without the restraint of others (what came to
be today’s popular, uncritically embraced concept of freedom).
The centrality of rights-talk in the modern era follows inexorably.
the same time, the capitalist world view required a social
component to protect and promote the opportunities afforded to
individuals. Individuals cannot pursue every whim without denying
some of the whims of others. Conflict would necessarily follow if
everyone pursued goals with no consideration of others.
the face of it, the two ideas-- individual freedom and social
constraint-- collide, since one person’s intended actions may,
indeed likely will, intersect with the realization of another’s
intended action. Hence, it would appear that guaranteeing freedom of
action in the particular is not always compatible with guaranteeing
everyone the same freedom of action at the same time.
Everyone can’t go through the same
door at the same time; someone’s freedom of action must cede to the
freedom of others.
individual freedoms became the great challenge for thinkers in the
capitalist era. The solution, exemplified canonically by the work of
Hobbes, sought to resolve the conflict between clashing “freedoms”
through the mechanism of a contract,
Reaching into the toolbox of rationality, defenders of the capitalist
ethos argued that rational individuals would see that it was
obviously in each and every person’s best interest to accept
constraints on individual actions. People would recognize that it was
reasonable to surrender complete autonomy to a common good. Thus, the
consent of individuals to forego some freedom of action would serve
as the bridge between individual choices and the common or general
will, between the individual and the social. It would be possible to
both avoid the anarchy of unrestrained freedom and to create a civil
society, while retaining individualism, rationality, and the core of
freedom as much as would be reasonably possible.
this defense of the capitalist world view raises as many questions as
it answers, it met its greatest challenge from the rise of the
workers’ movement and the clash of classes. The challenge was best
articulated in the work of Marx and Engels. They argued that
individual interests and collective or common interests are
qualitatively different. They saw classes as having interests over
and above individual interests taken alone or in the aggregate. Thus,
it is possible for most workers to believe individually that it is in
the interest of each and every one of them to sign a labor contract
and work in a privately owned coal mine under barely tolerable
conditions while it is true that it is in their interest as
a class to overthrow the private
ownership of that mine and not accept the contract.
could both be true?
and Engels maintained that from the class perspective, from the
perspective of the working class as a social whole, the elimination
of the wage system and private ownership of the means of production
represents the true interest of the workers. Or, if you like, there
is a contradiction between the interests of the workers as
individuals and as
claim is not dissimilar to the classic tenet of informal logic, the
fallacy of composition: properties ascribable to each individual in a
class of individuals cannot be necessarily ascribed to the class
itself; properties of the parts are not transferred as properties to
the whole. For example, most of the poor people in the world may be
hungry, but the class of poor people
is not, in any proper sense, hungry.
intellectual defenders of capitalism seek to place shared rational
choice (a fictitious “vote”) at the center of its explanation of
civil society, of the legal, moral, and political edifice
consensually constructed to promote individual freedom. Marxists, on
the other hand, argue that individual consensus cannot exhaustively
account for class interests and the ensuing action and interactions
of classes. The realm of the social is, in important ways, autonomous
from the realm of the individual. Bourgeois social thinking, grounded
in the individual, leaves a host of social phenomena untouched,
it is not the logical divide between the personal and the social, the
gulf between the individual interests and class interests alone that
challenges the worldview erected from individualism, self-interest,
and rationality. The two centuries following the rise of industrial
capitalism saw a growth and development of the working-class ideology
with Marxism at its core.
the aftermath of the Second World War and the Chinese Revolution, the
capitalist world view lost its luster as more and more people in more
and more places seriously considered the socialist option. Newborn
countries freed from the colonial yoke considered socialist
development as an alternative to the course recommended by their
former colonial masters. The Marxist method that gave priority to
class in social analysis found new adherents worldwide. The momentum
of Communism threw capitalism into a panic, not only in politics, but
in ideology as well.
and think tanks mounted a war on the growing credibility of the
socialist option. Thinkers began to work feverishly to meet the
challenge of shoring up the capitalist ideology against the success
of class analysis.
S.M. Amadae demonstrates in her brilliant book Rationalizing
Capitalist Democracy: The Cold War Origins of Rational Choice
Liberalism (2006), much of the new
thinking to legitimize capitalism sprung from Ford Foundation
support, along with the RAND corporation and its stable of hired guns
(the Ford Foundation played a similar role in supporting the effort
on the cultural front as Frances Stoner Saunders documents in her
equally impressive book, The Cultural
Amadae is no advocate of socialism, she clearly sees the construction
of a scientifically credible theory as an increasingly urgent and
conscious effort to arm the capitalist West ideologically against
socialism’s growing popularity. Her careful research shows the
commitment to re-found anti-Marxist social science on the rock of
rational choice theory and its close variants.
than accept the existence of an explanatory framework that goes
beyond a universe of individuals, rationality, and narrow interests,
the new thinking, as embodied in the pioneering work of Nobel
laureate Kenneth Arrow, simply denies that there is any coherent
social choice beyond individual choice.
Arrow argument exhibits an interesting turn.
demonstrates (1951) mathematically that it is impossible (“the
impossibility theorem”) for the rational choice calculus to
generate coherent collective preferences from individual preferences.
For Arrow, this result supports a skepticism about social goals
expressed as collective preferences. While the import of Arrow’s
findings might have generated a healthy debate, the elevated emotions
of the Cold War era and the ideological needs of the anti-Communist
academy promoted the theory-- rational choice theory-- to the head of
the class. A theory that “rigorously” dismissed the
intelligibility of class interests was too valuable to subject to
might have equally and reasonably objected that any theory that could
not account for collective preferences was theoretically defective.
One could turn the tables and argue, as Marx would undoubtedly have,
that collectives, social phenomena were as real, as objective as
individuals. So, a calculus that could not explain class interests
was theoretically “skinny;” foundations built on individuals,
self-interest, and rationality alone were not sufficiently robust to
serve as a foundation for the social sciences. If rational choice
theory cannot account for collective preferences, then jettison
rational choice theory! But in those feverish times, Western
academia-- bourgeois social science-- would not countenance this
reductio ad absurdum
the Arrow moment, rational choice theory spread quickly to other
social sciences. Nobel laureates followed in its wake. This theory
and its variants served as a basis for “grounding American
capitalist democracy. In its guise as ‘objective’ or ‘value
free’ social science, it is difficult to appreciate the full import
of social choice, public choice, and positive political theory for
reconceptualizing the basic building blocks of political liberalism.
In light of the Cold War ideological struggle against the Soviets,
this enterprise of securing the philosophical basis of free world
institutions was critical,” in the words of S. M. Amadae.
choice theory has penetrated deeply into the pores of social science,
especially in economics and especially in the US. Its methodological
ascendance has established it as a gatekeeper against the inroads of
Marxism in Western social theory. Ironically, it has even penetrated
into Western Marxism under the guise of “Analytic Marxism;”
scholars trained in rational choice theory drew the conclusion that
methodological individualism, self-interest, and rationality were
incompatible with major tenets of Marxism-- a surprising conclusion
to all but Marxists!
struggle for a new politics based on the rejection of the dominant
capitalist ideology cannot be won without critically addressing the
failings of rational choice theory. A revolutionary socialist
ideology must confront it directly. It has left much of the social
sciences in the US a barren, but ideologically pure apologist for
capitalism. It contaminates public policy, justifying the explosion
of inequality and the obsession with public sector austerity.
Thaler’s award acknowledges its failings in a small way, but leaves
the dogma intact.