Wednesday, May 17, 2006

Why Socialism Isn't Dead

Capitalism is too important and complex a subject to be left to the economists...” --Jerry Muller
Tuesday, May 16, 2006 The Economic Mytholgap posted by Gagdad Bob at 8:34 AM 17 comments
Yesterday we were discussing Lee Harris’ important piece on Why Socialism Isn't Dead. In it he makes the key point that socialism’s irrationality is its greatest strength. Since it isn’t operating in the realm of logic, it is therefore impervious to being logically disproved. Although it fails time and again, its failure proves nothing, as failure is simply transformed into a step along the way to inevitable success.
This leads to the startling conclusion that “the whole point of the socialist revolution is not that human societies will be transformed in the distant future, but that the individuals who dedicate their lives to this myth will be transformed... in the present” [emphasis mine]. Paradoxically, the purpose of socialism is not to achieve socialism; rather, “the myth of socialism is a useful illusion that turns ordinary men into comrades and revolutionaries united in a common struggle...”
As I have written before, one cannot transcend religion, for religion embodies objective metaphysical truth. Therefore, if one tries to sidestep it, it will simply return in the form of sub-religious magical thinking, such as scientism or socialism. Just as religion is the most fruitful way to “think about ultimate reality,” capitalism is the most fruitful way to think about economics. But just as the person who rejects revealed religion falls back on “natural religion” (i.e., what can be revealed by the senses and perceptions), the socialist falls back on what might be called “natural economics,” that is, a flawed way of thinking about the creation and distribution of wealth that is more or less hardwired into our genes.Remember, only a tiny, insignificant fraction of mankind’s evolution has taken place under modern circumstances. Rather, 99% of our human evolution took place in what is called the “archaic environment.”
Where you situate the archaic environment is somewhat arbitrary, but let’s just go back to the emergence of archaic homo sapiens, which was half a million years ago. It is presumed by evolutionary psychologists that our human traits emerged and were selected during this period of time. Included among these traits would be our “natural” way of looking at the accumulation and distribution of goods.
So if we delve into the archaic environment, what can we learn about Economic Man? Certainly he wasn’t a capitalist. One of the most fascinating economics books I have ever read is The Mind and the Market, by Jerry Muller. What makes it so fascinating is that the book is not a history of economics per se, but a history of what people have thought about economics, which is mostly flat wrong, if not plain absurd. In this regard, it is similar to a history of medicine that looks at all of the crazy beliefs human beings have had about sickness and health. Until about a hundred years ago, you were lucky if most medical procedures didn’t actually harm you. It is the same with economics.
Until Adam Smith in the late 18th century, there was no understanding at all of how wealth was created. Hard to believe, but we are still fighting the same battle Adam Smith was, in that we cannot overcome something deeply irrational in the heart of man when it comes to thinking about wealth. By actually developing a true economic discipline, separate from all of the magical thinking that had previously pervaded the subject, Smith unwittingly detached the subject from its deeper irrational roots--as if he literally developed a “conscious economics” split off from “unconscious economics.” But this doesn’t mean that “unconscious economics” will disappear. To the contrary--like the Freudian unconscious, it will simply come back with a vengeance.

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