As decades rather than years began to roll by, I sometimes thought that my lack of real comprehension of our financial systems—mortgages, inflation, interest and other such oddities—might be amiss. Surely I should have a good grasp of the basics of the society I lived in? Of course the basic mechanisms seemed clear enough when spelled out. But the “a-ha!” part of me just never got it. I could see how they worked, in a flat, literal sense; but some essential part of my understanding just glazed over and reached for a nice cosy book on occult philosophy.
When I read a quote by someone (Hazel Henderson, it turns out) saying, “Economics is a form of brain damage,” I realized I wasn’t just being intellectually lazy. (Physical laziness is much more my cup of tea.) I had always felt that to bring myself to truly grok our financial system, I would have to lead my neurons down pathways that would be inimical to their health. Naturally I knew that many fine minds had comprehended it all enough to critique it, and survived without descending into dribbling and hallucinating odd smells. But I realized more and more that I didn’t feel the risk was for me.
This morning, drifting in and out of sleep, I was fixated on the idea that the insanity of economics was being demonstrated with greater clarity than ever before by Gordon Brown. Forget the fact that Brown’s financial “steady hand” is a mere artifact of his dour appearance and recent economic events beyond his control (in 2004 he said: “in budget after budget I want us to do even more to encourage the risk takers”). Ignore the bland salad of jargon that’s used to make it sound like he knows what he’s doing. He’s clearly one of the more retarded specimens. A global crisis caused by excessive borrowing and irresponsible financial institutions? No problem. Let’s borrow even more, and give this money to the institutions!
I know, a Nobel Prize winner weighed in and said that Brown had “defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up.” From where I’m sat, it looks like everyone suddenly got freaked by an apparent confirmation of that sneaking suspicion that our entire system isn’t built to last. And their denial was mightily relieved to see someone else—Brown, whose battle with denial was lost long ago—lead the way out of the unappealing corner we’ve painted ourselves into. Not as many people as you’d hope have seen that Brown’s solution is to just slap paint on our eyes.
Well, doing a quick web search for “economics brain damage” to track my favourite quote down, it was a sobering surprise to find a recent item on a “neuroeconomics” study in the Wall Street Journal titled ‘Lessons From The Brain-Damaged Investor’:
The 15 brain-damaged participants that were the focus of the study had normal IQs, and the areas of their brains responsible for logic and cognitive reasoning were intact. But they had lesions in the region of the brain that controls emotions, which inhibited their ability to experience basic feelings such as fear or anxiety. The lesions were due to a range of causes, including stroke and disease, but they impaired the participants’ emotional functioning in a similar manner.
The study suggests the participants’ lack of emotional responsiveness actually gave them an advantage when they played a simple investment game. The emotionally impaired players were more willing to take gambles that had high payoffs because they lacked fear. Players with undamaged brain wiring, however, were more cautious and reactive during the game, and wound up with less money at the end.
Some neuroscientists believe good investors may be exceptionally skilled at suppressing emotional reactions. “It’s possible that people who are high-risk takers or good investors may have what you call a functional psychopathy,” says Antoine Bechara, an associate professor of neurology at the University of Iowa, and a co-author of the study. “They don’t react emotionally to things. Good investors can learn to control their emotions in certain ways to become like those people.”
Now, as an avid J.G. Ballard fan, I’m not instantly repelled by the idea of “creative pathology”. And the article balances out in the end with a note that the brain-damaged participants in the study often performed less well in the real world (highlighting the “pathology” inherent in the blinkered nature of many controlled scientific experiments). The authors also remark on the fact that our evolved emotional reactions, especially regarding fear, may be maladapted to the modern world, which has arisen much faster than biology can remould itself.
Still, anyone who doesn’t accept the modern world without question can’t help but wonder whether neuroeconomics may end up undermining the worldview it’s designed to serve. To what extent does the potential “advantage” of brain damage in economic activity point to the inadequacy of our neuropsychology? To what extent does it highlight the inhumanity of economics?
One needn’t be fixated on a static idea of humanity to object to economics; to what extent does economics block us from healthier, more desirable ways of being in the world that have yet to be realized?
In any case, we need more than lip service to the fact that crisis is opportunity—not just a dire situation in need of patching up.