By Tyler Cowen,
a professor of economics at George Mason University and author of "Discover Your Inner Economist"
Thursday, January 24, 2008
THE MIND OF THE MARKET
Compassionate Apes, Competitive Humans, and Other Tales From Evolutionary Economics
By Michael Shermer
Times. 308 pp. $26
Have you ever wondered how people develop trust and live together peacefully? Michael Shermer's new book uses psychology and evolution to examine the root of these human achievements. He notes that the original environment in which people evolved, namely the small groups in hunter-gatherer societies, helped people develop altruism and cooperative behavior.
At the same time, our biological heritage drives human discontent. Our evolution on the East African plains did not equip us to cope emotionally with the large-scale and often impersonal nature of a modern market society. Small tribal groups are used to sharing, not to extremes of wealth. That is why envy is rife. In other words, he says, you may feel that modern capitalism is unfair if you apply the outmoded moral code of the tribe. Shermer believes we nonetheless should look to the market as the dominant mode of organizing social affairs.
The tension between the author's rationalism and romanticism is the most interesting angle in "The Mind of the Market." The scientist in Shermer seeks to root his defense of the market economy in the objective sciences of psychology and evolution. But his background in Ayn Rand's philosophy of objectivism has given him an ardent love of capitalism, peaceful trade and the power of the creative individual mind. Thus a problem arises: If our brains are just computational programs, as indicated by modern neuroscience and genetics, then autonomy and free choice are illusions. That makes it hard to justify such political tenets as individual liberty and the value of the capitalist marketplace. What has to happen has to happen, and what is the point of asking for something better or elevating the dignity of the individual?
Shermer is well aware of these dilemmas. He argues that a free society is the best means of assuring prosperity and the progress of science, and therefore the case for freedom is compelling whether or not we have free will. Markets embody more knowledge and mobilize more expertise than is held by any single human being. That's why South Korea is so much richer and happier than North Korea. Shermer also cites Bastiat's principle: "When goods do not cross borders, armies will." His corollary is that when goods do cross frontiers, armies will not, and so we should base our societies on trade.
I'm sympathetic to Shermer's conclusions, but I fear his standard of evaluation is too blunt an instrument. If the options are capitalism and the Khmer Rouge, no doubt capitalism wins hands down. But to what extent should we restrain capitalism to fund a social safety net? Should our government place heavy taxes on beer and potato chips to fund the National Science Foundation at higher levels? Most broadly, to what extent is it morally permissible to interfere with freedom, or can we even use freedom as a concept in a world where we do social science by hooking people up to brain scanners?
Shermer is famous for founding the Skeptics Society and editing the magazine Skeptic, which debunks claims of the supernatural. His monthly column for Scientific American is a regular plea that reason should govern human affairs. But his book raises very real questions about just how far skepticism should extend. Should we also be skeptical about using moral judgments of right and wrong to address the tough questions of politics? For instance, can we make normative judgments about who deserves to pay how much of the tax burden to finance the U.S. government, or as to whether somebody's job should be protected from foreign trade?
Shermer either needs to dismiss moral philosophy as an illusion and a mere byproduct of human evolution, and thus display skepticism, or he needs to grant it credence and take his own moral stance. Descriptive science doesn't tell us whether it is fair to allow kidneys to be bought and sold, even if it helps explain why some people find the practice repugnant. Judgments of right and wrong cannot be avoided, and thus we tread away from the realm of familiar natural science.
There are really two books within "The Mind of the Market." The science book is finished and polished, yet it does not present fundamentally new results. The book on capitalism discusses important questions, yet it is unfinished and unpolished. Shermer does promise us an entire new book to fill in the missing pieces here. He already has earned the right to our attention; the next question is whether he will give his philosophic and romantic side the greater rein that it deserves and requires. This East African plains ape is optimistic.