Thursday, July 21, 2005
Neo-classical economists have long insisted that the profit motive, the self-interested behavior of individuals to maximize utility at the margins, is the key to understanding how markets work, and thus the moral foundation for any system of ethics in our market-worshipping society. And critics, from Marx on up, have long insisted that the rudimentary, one-dimensional psychology of humankind that emerges from this model is simplistic and insulting, a kind of bourgeois peversion of "man's species being." If humans are always predictable in this way, then they are basically evil from some theological points of view, incapable of unmotivated sacrifice and true goodness. Such a profit-fixated person is not only evil, he is, if recent "neuroeconomic research" disclosed in today's Wall Street Journal is to be believed, probably brain-damaged. Puzzled by the question of "why don't people always act in their own self-interest when they make economic decisions" researchers gathered a cohort of unfortunate people who've suffered damage to the part of the brain that enables them to feel emotions (i.e. the soulful part of the brain) and had them reenact market behavior by playing gambling games (researchers know, if mutual-fund investors don't, that investment is essentially a serious of gambles and probability calculations) and found that having no emotions is a requirement to make efficient financial decisions. Non-brain-damaged people feel fear and satisfaction, emotions that have nothing to do with singlemindedly pursuing more utility. Since the theory must be correct, actual human behavior must obviously be conformed to suit it, so perhaps researchers will next develop a surgical procedure investment bankers can have to remove the emotional center from their brain, so they can be more thoroughly human in the eyes of the economist.
Posted by Rob Horning at 10:07 AM