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Shermer's 'Mind of the Market' Reviewed in L.A. Times

Reposted from:
http://www.calendarlive.com/books/la-et-book25jan25,0,1864564.story

Man's true nature meets market economics.

Back in the 17th and 18th centuries, philosophers typically began political treatises with an exploration into the "state of nature," the premise being that the ideal form of governance should follow logically from mankind's true condition. But what is mankind's true nature? Good or bad? Thomas Hobbes took a famously dour view: Life is "solitary, poor, nasty, brutish, and short," at least without the rule of a Leviathan. Jean-Jacques Rousseau, however, justified direct democracy by claiming that man is naturally compassionate, "born free, and everywhere he is in chains."

Oh, pity these thinkers! For they were writing before armies of social scientists learned to coax subjects into rooms with half-silvered mirrors and into high-tech brain-scanning machines, generating reams of data on what people are "really" like.

But would any of this have changed our dead philosophers' minds about human nature? After all, the evidence remains decidedly mixed -- at best, we are a wondrously complicated mess of contradictions and stunningly silly tendencies. And one of those silly tendencies is the "confirmation bias" -- that is, people tend to believe only the evidence that confirms what they already think.

Such is the pleasure and frustration of the new book "The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales From Evolutionary Economics." On one hand, we have author Michael Shermer, founder and director of the Skeptics Society, captivating raconteur of all the greatest hits of behavioral, evolutionary and neuropsychology, provider of wonderful cocktail party material, like the one about 50% of an audience challenged to count the number of completed basketball passes failing to notice the gorilla walking across the crowded court. But we also have Shermer, the tendentious libertarian, doing logical back-flips unbecoming a self-proclaimed skeptic to marshal human nature's unruly contradictions into a political program of minimal government and extreme market capitalism.

Interestingly, Shermer's first target is the very neoclassical economics on which so much free market fundamentalism has been built. He has a legitimate beef with the discipline's fundamental assumption that people can be reduced to nothing more than rational, self-interested utility maximizers. Rather, he contends, whether we are selfish or altruistic depends on the context: "We evolved to display within-group amity and between-group enmity."

But it's more than just a matter of intention, he says: It's in our genes. Or, more colorfully: "We cooperate for the same reason we copulate -- because it feels good." Even trust is a chemical reaction brought on by close contact, which triggers the release of the hormone oxytocin in all but the 2% of us who are classified as sociopaths. And "mirror neurons" in our brain help us feel empathy. This makes sense evolutionarily too, Shermer argues, because "more often than not the most adaptable thing you can do to survive and reproduce is to be cooperative and altruistic."

So what about the bad traits? Fear and anger, Shermer asserts, evolved to help us to avoid and defend against danger. Only in the wrong environment, like, say, the corporate culture of Enron, does evil actually proliferate. But, he insists, Enron is the exception, not the rule, and that if most people behaved this way, market capitalism "would have collapsed centuries ago." (In fact, the modern invention of market capitalism has almost collapsed multiple times and would have but for repeated interventions by governments.) Citing research showing that autonomy and self-reliance make people happiest, clearly, he concludes, "if you want happiness and freedom, you have to minimize government interference." (Conveniently, since people are naturally altruistic, there's no need for government interference anyway!)

So why doesn't everyone see this as clearly? Well, that's easy, Shermer says: It's because "our brains evolved to deal with a world that bears only slight resemblance to the vast, messy crowds of information in the modern marketplace." As he entertainingly recounts, experiments show that humans are irrationally risk-averse, terrible at making guesses and remembering things properly, highly susceptible to group-think and so on, until it's clear: Yup, we're really dumb. And, wouldn't you know it? We also have this vestigial "folk economic propensity" to think anything as complex as capitalism must be run by a government acting as God. And so any trade protectionism we feel is just a lingering byproduct of "our evolved social psychology of group loyalty."

Wait a second! Isn't this the same psychology of group loyalty on which Shermer has built his whole people-are-basically-good foundation that justifies minimal government? This group loyalty is now bad because it undermines trade and support for a market economy? Which is it?

Call it Shermer's paradox -- a helpful reminder of just how challenging and quixotic it remains to build a coherent political philosophy upon the sands of our conflicted and chimerical natures, even with all the great advances we have made in fascinating cocktail party tidbits.

Lee Drutman is co-author of "The People's Business: Controlling Corporations and Restoring Democracy."

The Mind of the Market Compassionate Apes, Competitive Humans, and Other Tales From Evolutionary Economics Michael Shermer Times Books: 310 pp., $26

TAGGED: BOOKS, CRITICAL THINKING, REVIEWS


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