Home > Uncategorized > Behavioural economics — still too devoted to ideas it is supposedly attacking

Behavioural economics — still too devoted to ideas it is supposedly attacking

from Lars Syll

Behavioral economics is still ‘in a relationship’ with orthodox economics and, in a relationship, one makes compromises …

maxresdefaultWe all know how stubborn the other side in this relationship is: standard economics will always ‘rationalize’ behavior wherever it can and will only recognize ‘irrationality’ when there is clear and convincing evidence of it. Understandably, behavioral economics devoted itself to finding this evidence – the “anomalies”, in the words of Thaler (1988), which are “difficult to “rationalize”. And surely, it has done an impressive job in finding them.

However, accepting this burden of proof remains problematic, for several reasons. Firstly, it will lead to false positives; ‘rationalizing’ behavior where rationality might, in reality, be absent. What’s more, in doing this, the field will repeatedly lend credence to the flawed concept of the homo economicus. Secondly, it will lead to false negatives; failing to observe ‘irrationality’ (like altruism) when clear and convincing evidence of it is lacking, or perhaps even impossible to produce, thereby ignoring the complexity of human motives …

All of the above is not meant to downplay the achievements of behavioral economics … It is to argue that behavioral economics should not let its “symbiotic relationship” with standard economics limit its own ambitions. This relationship “works well as long as small changes to standard assumptions are made”. We should not fear bigger changes.

Alexander Beunder

Although discounting empirical evidence cannot be the right way to solve economic issues, there are still, in my opinion, a couple of weighty reasons why we perhaps shouldn’t be too excited about the so-called ’empirical revolution’ that behavioural economics has brought about in mainstream economics. 

behBehavioural experiments and laboratory research face the same basic problem as theoretical models — they are built on often rather artificial conditions and have difficulties with the ‘trade-off’ between internal and external validity. The more artificial conditions, the more internal validity, but also less external validity. The more we rig experiments to avoid the ‘confounding factors’, the less the conditions are reminiscent of the real ‘target system.’ The nodal issue is how economists using different isolation strategies in different ‘nomological machines’ attempt to learn about causal relationships. One may have justified doubts on the generalizability of this research strategy since the probability is high that causal mechanisms are different in different contexts and that lack of homogeneity and invariance doesn’t give us warranted export licenses to the ‘real’ societies or economies.

If we see experiments or laboratory research as theory tests or models that ultimately aspire to say something about the real ‘target system,’ then the problem of external validity is central (and was for a long time also a key reason why behavioural economists had trouble getting their research results published).

A standard procedure in behavioural economics — think of e.g. dictator or ultimatum games — is to set up a situation where one induce people to act according to the standard microeconomic — homo oeconomicus — benchmark model. In most cases, the results show that people do not behave as one would have predicted from the benchmark model, in spite of the setup almost invariably being ‘loaded’ for that purpose. [And in those cases where the result is consistent with the benchmark model, one, of course, have to remember that this in no way proves the benchmark model to be right or ‘true,’ since there, as a rule, may be many outcomes that are consistent with that model.]

For most heterodox economists this is just one more reason for giving up on the standard model. But not so for mainstreamers and many behaviouralists. To them, the empirical results are not reasons for giving up on their preferred hardcore axioms. So they set out to ‘save’ or ‘repair’ their model and try to ‘integrate’ the empirical results into mainstream economics. Instead of accepting that the homo oeconomicus model has zero explanatory real-world value, one puts lipstick on the pig and hope to go on with business as usual. Why we should keep on using that model as a benchmark when everyone knows it is false is something we are never told. Instead of using behavioural economics and its results as building blocks for a progressive alternative research program, the ‘save and repair’ strategy immunizes a hopelessly false and irrelevant model.

By this, I do not mean to say that empirical methods per se are so problematic that they can never be used. On the contrary, I am basically — though not without reservations — in favour of the increased use of behavioural experiments and laboratory research within economics. Not least as an alternative to completely barren ‘bridge-less’ axiomatic-deductive theory models. My criticism is more about aspiration levels and what we believe that we can achieve with our mediational epistemological tools and methods in the social sciences.

The increasing use of natural and quasi-natural experiments in economics during the last couple of decades has led several prominent economists to triumphantly declare it as a major step on a recent path toward empirics, where instead of being a deductive philosophy, economics is now increasingly becoming an inductive science.

Limiting model assumptions in economic science always have to be closely examined since if we are going to be able to show that the mechanisms or causes that we isolate and handle in our models are stable in the sense that they do not change when we ‘export’ them to our ‘target systems,’ we have to be able to show that they do not only hold under ceteris paribusconditions and a fortiori only are of limited value to our understanding, explanations or predictions of real economic systems.

‘Ideally controlled experiments’ tell us with certainty what causes what effects — but only given the right ‘closures.’ Making appropriate extrapolations from (ideal, accidental, natural or quasi) experiments to different settings, populations or target systems, is not easy. ‘It works there’ is no evidence for ‘it will work here.’ Causes deduced in an experimental setting still have to show that they come with an export-warrant to the target system. The causal background assumptions made have to be justified, and without licenses to export, the value of ‘rigorous’ and ‘precise’ methods is despairingly small.

So — although it is good that people like Kahneman and Thaler are rewarded ‘Nobel prizes’ and that much of their research has vastly undermined the lure of axiomatic-deductive mainstream economics, there is still a long way to go before economics has become a truly empirical science. The great challenge for the future economics is not to develop methodologies and theories for well-controlled laboratories, but to develop relevant methodologies and theories for the messy world in which we happen to live.

  1. Stitch
    May 29, 2018 at 6:11 pm

    A good redirection of thought for me was the introduction of the concept of Catallactics.
    It is, in essence, a whole field of study already there that you seem to seek:

  2. Prof Dr James Beckman, Germany
    May 29, 2018 at 6:19 pm

    Obviously, Thaler’s laboratory should produce the same results as anyone else’s. But we know how the instructor conditions the students for certain answers, & that students are hardly representative of the larger world. That logic applies equally to the standard model, where “over-educated” (by societal standards), under-experienced (by not looking at natural experiences or at least not comparing other prof’s thinking in detail) writers tell us what the correct logical response to a situation is. Prey tell me what is the correct logic when one is facing death, as in the military or saving a close relative, and the actor charges ahead into danger nevertheless. –Thanks for an excellent introduction to the topic,Lars.

  3. May 29, 2018 at 11:04 pm

    Not just in the lab. In real life too, neoliberalism is causing people to act like homo economicus when otherwise they might prefer to act differently: More compassionate, relaxed, and generally with humanity. The history of the world is the story of peoples who enjoy life and community being invaded and changed by a particular lineage of white west-Europeans who view existence as a competition.

    • Prof Dr James Beckman, Germany
      May 30, 2018 at 11:23 am

      Hi, Pavlos, if you are Greek, aren’t there quite a few ship-owners & others who have the same “Me first & mostly only” approach to life? Try Harrods in London for the Middle East oil crowd. And then there are the Russian oligarchs in the Eastern Mediterranean. Etc. On endlessly for each nation, it seems to me.

  4. Helen Sakho
    May 30, 2018 at 2:31 am

    I couldn’t agree more with the specificities addressed by last comment above (Pavlos’s). Once such brutal distinctions are made between humans and nature, neither humans nor nature stand a chance, often even of sheer survival. In the longer term, even the more enlightened members of the particular lineage that is mentioned has no choice but to return to the ancestral village/commune/community and back to nature. If the village itself was allowed to survive. Very few exceptions remain.

  5. June 7, 2018 at 9:04 am

    Interesting that a “discipline” claiming to be behavioral science shows little knowledge of the history of behavioral science. Following WWII, The Ford Foundation issued several reports and surveyed and worked with major US universities to define and put into action/service behavioral science. The Foundation began with this definition of behavior science. “The Foundation’s use of the term “behavioral sciences” is not equivalent to the usual definition of the social sciences as a certain group of academic disciplines. Rather, it denotes those intellectual activities that contribute to the understanding of individual behavior and human relations, no matter where they may be located academically.” (1952 Report) In this work, Ford worked with and awarded grants to these universities: Columbia, University of Toronto, University of Michigan, Stanford, University of Chicago, and Clark University. To facilitate discussion, the Foundation put forward these talking points.

    1. It refers primarily to a program of research. A major part of Program Five is conceived as a program for research on human behavior, not as an “action program.” Furthermore, it is not expected that the staff of Program Five will itself conduct behavioral research; rather, it will help to initiate and to support such activities.
    2. It refers to the scientific approach. It encourages the acquisition of behavioral knowledge under conditions which, so far as possible, ensure objectivity, verifiability, and generality. It calls for conformity to high standards of scientific inquiry.
    3. It refers to the acquisition of basic knowledge of human behavior and thus it is considered as a comparatively long-range venture. Basic study of the tremendously complicated problems of man cannot be expected to yield significant results in a short period of time.
    4. It refers to the interest of the Foundation not in knowledge of human behavior as such but rather in knowledge which promises at some point to serve human needs. The program is thus oriented to social problems and needs.
    5. It refers to an interdisciplinary approach and not to any single conventional field of knowledge or a single combination of them; traditional academic disciplines as such are not included or excluded. The program’s goal is to acquire scientific knowledge of human behavior from whatever sources can make appropriate contributions. Social scientists, medical scientists, and humanists, singly and in combination, can be engaged on the program. The intention is to use all relevant knowledge, skills, concepts, and insights.
    6. It refers to a broad and complex subject matter, since the program aims at a scientific understanding of why people behave as they do. “Behavior” includes not only overt acts but also such subjective behavior as attitudes, beliefs, expectations, motivations and aspirations. The program seeks knowledge which is useful in attacking problems of an economic, political, religious, educational or personal nature by studying the behavior of human beings as
    individuals or as members of primary groups, formal organizations, social strata, or social institutions. The program is vitally concerned with the cultural heritage by which men live, the social structures they have devised to organize their societies, the goals they pursue, and the means with which they pursue them.
    7. Finally, it is definitely not considered as a cure all for human problems but rather as a contributor to their solution, along with other sources of knowledge and judgment. The goal of the program is to provide scientific aids which can be used in the conduct of human affairs; it seeks only to increase useful knowledge and skills and to apply them wherever appropriate.

    Considering the complexity of the topics, it is not surprising that these guidelines are in places contradictory. Also, not surprising that these discussions continue to the present.

    • Robert Locke
      June 11, 2018 at 3:50 pm

      Ken, my encounter with the Ford Foundation came through its work in transforming management education in US business schools. Read Rakesh Khurana’s Friom Higher Aims to Hired Hands, Princeton UP, 2007, Ch 6, Discipling the Business School Faculty, and you’ll find natural science norms and the neoclassical economics, plus operations research methodologies formed the basis of the education reform. I ran into their work and influence when I held the Esso Chair for two years at the European Institute for Advanced studies in management, Brussels 1982-84. Fortunately I had spent several years dwelvng into German managementsbefore my Brussel’s stint, so I had assimilated some comparative differences. Soon after that I studied Japanese management.

      The postwar Americans thought that their managerialism explained the superiority of tUS industrial systems. That is, they were willing to make management a causual agent fomenting us superiority as long as it was American managerialism. When I wrote, and others tool that other systems of management, In Germany and Japan, proved superior to American in manufacturing, Amercans showed no interest.

      Trump reflects this attitude. He thinks US managers and workers are the best in the world, so he asserts poor trade deals are the cause of US decline in manufacturing. American management likes this answer, because they do not have to take any of the responsibility for us decline in manufacturing. Economists like Trump’s hypothesis, too, since they can continue to ignore the deficiencies of us management in a competitive world.

      • Prof Dr James Beckman, Germany
        June 11, 2018 at 4:14 pm

        Right on, Robert. The German & Japanese superiority in mfg, when it exists, seems connected to keeping workers for life but of course expecting them to be motivated & always learning. Too many American firms I have walked through seem like cheating marriages–neither worker nor manager feels respected & therefore willing to work harder with the other for mutual benefit. Such requires effort by both sides obviously. My sample might be two hundred firms cumulatively on both sides of the Atlantic.

      • June 12, 2018 at 11:20 am

        James, your words capture the results of the long history of hostile labor-management relations in the US. All based on the guiding beliefs of “cowboy” capitalism in which capitalists took whatever they wanted, abused whom they wanted to, and fought every attempt to regulate their actions by laws. Workers got what they could wrest from owners and managers, by threat and force. That relationship softened a bit after the Great Depression with FDR’s New Deal programs and after WWII. But has been gradually sabotaged since the 1970s by both Republican and Democratic Administrations and Congresses. Mostly to follow down the rabbit hole of neoconservatism’s takeover of politics and libertarianism’s take over of both formal and informal economics. Hell, of a mess.

      • Prof Dr James Beckman, Germany
        June 12, 2018 at 12:02 pm

        Ken, the Hell’s Angels “Outlaw” Motorcycle gang presumably rose at the Kaiser Steel Plant in Fontana, California, an area in which I lived for more than 20 years. When I visited the plant in the 1980’s, the anger felt by labor towards any “suit” was palpable. I agree with your analysis from my experience, for sure. Incidentally, the original workers during WWII were largely family of those of European origin who were forced from their Oklahoma, etc homes by the dust bowl conditions of the early 1930’s.

      • June 13, 2018 at 10:48 am

        I’m not up on the history of Hell’s Angels as you are. But I do know CA is the origin point for the gang (club). WWII was a turning point in the position of owners/manager vs. workers in the US. In short, the workers won, at least temporarily. This win was one of several reasons that big industrialists and their supporters like Ford, Du Pont, Robert Clark, William Doyle, etc. (some of who were fascists) plotted but never carried out a coup against FDR during WWII.

      • Craig
        June 11, 2018 at 4:36 pm

        The German and Japanese management style is superior to the more hierarchical US style because it is more cooperative which is an aspect of the new zeitgeist of grace as in flow. Unfortunately the system cannot ascend to the level of zeitgeist change until it resolves the major paradigm problem of total individual monetary scarcity in ratio to total costs/prices with grace as in Direct and Reciprocal Monetary Gifting.

        Systemic evolution reflects and follows the hierarchical pattern of Maslow’s pyramid of self actualization.

      • June 12, 2018 at 11:23 am

        Craig, Maslow missed, or maybe ignored an important factor affecting the operation of his pyramid. Within identified versions of culture, the pyramid functions as Maslow claims. But these are not the end of possibilities for culture. A culture of psychopaths is possible. We have historical examples (Nazi Germany, American capitalism). In the first, racism prevents the satisfaction of any of the needs in Maslow’s hierarchy. Here, the hierarchy is meaningless. In the second, capitalists assign ever greater portions of physical and monetary benefits to themselves, thereby continually reducing available benefits for the remainder of the population. Then the capitalists work to ensure the security and life satisfaction of other members of society is converted into additional wealth and resources for themselves. Maslow was naïve to believe such deviations from his pyramid weren’t possible.

      • June 12, 2018 at 11:18 am

        Robert, this quote from Donald Trump gives us the “drill till you win” viewpoint of most American companies and management. “I’ve always won, and I’m going to continue to win. And that’s the way it is.” Americans win because that’s how the world works. Destiny or God, as you prefer ensures Americans and American companies always win. If they don’t there’s some cheating going on. Manifest Destiny and Exceptionalism guarantee this outcome. In his book, “Foundations of the American Century: The Ford, Carnegie, and Rockefeller Foundations in the Rise of American Power,” Inderjeet Parmar reveals the complex interrelations, shared mindsets, and collaborative efforts of influential public and private organizations in the building of this American hegemony. Focusing on the involvement of the Ford, Rockefeller, and Carnegie foundations in U.S. foreign affairs, Parmar traces the transformation of America from an “isolationist” nation into the world’s only superpower, all in the name of “benevolent stewardship.”

        Parmar begins in the 1920s with the establishment of these foundations and their system of top-down, elitist, scientific giving, which focused more on managing social, political, and economic change than on solving modern society’s structural problems. Parmar recounts how the American intellectuals, academics, and policy makers affiliated with these organizations institutionalized such elitism, which then bled into the machinery of U.S. foreign policy and became regarded as the essence of modernity and control.

        America hoped to replace Britain in the role of global hegemon and created the necessary political, ideological, military, and institutional capacity to do so, yet far from being objective, the Ford, Rockefeller, and Carnegie foundations often advanced U.S. interests at the expense of other nations. Incorporating case studies of American “philanthropy” in Nigeria, Chile, and Indonesia, Parmar boldly exposes the knowledge networks underwriting American dominance in the twentieth century. Follow-up is needed to tie the work of these foundations with the rise of libertarianism and neoliberalism in US domestic politics. Neither of these ideologies is looked upon favorably by these foundations.

      • Prof Dr James Beckman, Germany
        June 12, 2018 at 11:50 am

        Ken, my view is that the US was the only nation left standing. As to elitism, prey tell me if China’s or the EU’s sense of destiny is any different. Very useful to pick up the “keep at it until you win” theme, as this certainly could be Trump’s model as it certainly was among the Bolsheviks.

      • June 13, 2018 at 10:45 am

        James, correct. Every culture has creation myths that explain how it came into existence and how its way of life is sacred and special – blessed by the gods. In this sense the major nation states of the world are different. Whereas America has the directly aggressive mythology of new and raw nation, Britain has the mythology of 1,000-year-old empire set in its ways and serving as educator for the world. Germany praises martial prowess and strength above all, until that is defeated, and a new mythology is called for. This helps us understand some of the international conflicts we see today. But nation states are more than just creation and strength myths. They’re also internal subcultures, cultural changes at different speeds, rifts between “high” and “low” culture, technology, economic equality, etc.

      • Prof Dr James Beckman, Germany
        June 13, 2018 at 12:20 pm

        Ken, we know that Freud, Jung & Adler also tapped into the psychological mechanism, finding many similar myths & interpretations. I recall my father, trained in such, speaking of “Freudian slips”. I have made quite a few ever since. I see the same process in Behavioral Econ research.

      • June 14, 2018 at 1:36 pm

        James, I was trained as a Rogerian. Focus is on feedback to patient to allow her/him to see their life fully and re-create it as they desire, within the limits of what’s possible. All difficult to face up to and to work on rebuilding. I gave up Rogerian therapy, however. Now I apply one or more versions of cognitive-behavioral therapy. It’s more structured and more closely resembles the socialization process of acculturation. The structure of this approach protects both the patient and the therapist, and their interactions. And it forces patients down a path toward acceptance of cultural norms.

      • Prof Dr James Beckman, Germany
        June 14, 2018 at 2:39 pm

        Hi, Ken, yes, I’ve encountered it–useful for many. My father had many patients whose problems with their parenting had not been well enough resolved to allow them normal adult lives, I bumped into Eric Berne, the “I’m OK, you’re OK” guy in my Berkeley days. I suggested his ideas to my father, but already much of his practice was into sedation due to funding realities. Of course, weed was available in those days who wanted to follow Timothy Leary.

      • June 16, 2018 at 7:05 am

        In the words of Freud, our parents damage each of us. But they also are the first ones to socialize their children. That’s a delicate balance. One of my teachers commented to me once that normal is the most difficult notion to deal with in interactions between mental health providers and patients. He is an Adlerian. Take that into account. The one and only upside of returning vets with mental health issues is it helps to highlight those same issues across society. Wealthy people with these problems receive both treatment and protection. Poor people with these problems receive neither. One more negative consequence of economic inequality and psychopaths running the mental health hierarchy.

      • Prof Dr James Beckman, Germany
        June 16, 2018 at 7:53 am

        My father wanted to be a certified Freudian analyst, but was second out of the 36 psychiatric specialists in UC, San Francisco after WWII. Only the first was given the very expensive qualification. My father worked at the Palo Alto Veterans’ hospital & Stanford, at a time when vets of all wealth levels were give excellent care. I think it is much the same today, but private medicine has tried to take advantage of an under-funded VA, a situation similar to the UK today, I believe.

      • June 18, 2018 at 6:03 am

        James, that your father was second is a great honor. And working at the Palo Alto VA after WWII is a sign of quality. The care in VA hospitals today is dismal, and worse. The mental health care is particularly poor. And it’s getting worse each day. The result of 50 years of politicians making veterans care a political football. Something they can support to win elections and then cut and neglect between elections. One more sign, in my book of the decline of American culture. A decline that becomes more difficult to reverse each day. I do a lot of speaking at clubs, Chambers of Commerce, companies, etc. One thing I touch on in most every speech is what holds the US together as a nation. And the things that tear it apart. Right now, the tearing is winning.

      • Prof Dr James Beckman, Germany
        June 18, 2018 at 6:14 am

        Ken, I went to the VA hospital in/near Loma Linda/Redlands before I encamped for Europe in 2002. That was my last personal contact. You are the expert, my friend.

      • June 18, 2018 at 7:54 am

        Wish I didn’t spend so much time in VA hospitals. My last interaction with a VA hospital was late last year when I had micro-fragments from a grenade that exploded in 1969 removed from my back. I got great care. But I am an insider. I work at the hospital weekly. It’s difficult for vets without that connection sometimes to get the care they need. Some of the private hospitals are finally stepping up. They help a lot. But now the current administration is threatening to cut the funds for these private hospital programs. Just can’t get a break.

      • Craig
        June 12, 2018 at 4:43 pm

        Ken, the whole of human life and history is a struggle with oneself, with others and with ideas. The only concept and experience that enables individuals to rise above themselves, others and their ruminations on Life is grace the most basic definition of which is nothing more…and certainly nothing less than love…..in action within oneself and toward others and the world. Rationalism/intellectualism while an excellent and necessary mental tool will never be sufficient to get us to Valhalla because it is all epi-phenomenon. This is not religion it is natural philosophy and a commitment to cultivating the experiences behind dogmas that are intellectualizations of them.

        You’re quite correct to point out that broken or diseased people do not/will not follow Maslow’s hierarchy, but creating an economics, a culture and a world view on grace/graciousness would be the mental infrastructure upon which homo sapiens/wise and discerning man could finally begin to fulfill his species designation.

        Better to light a candle than to curse the darkness.

      • June 13, 2018 at 10:58 am

        Craig, only some human interactions are struggles. Others are simple and pleasant, while others are working outs of specifics of actions and beliefs. And there is love, admiration, respect, etc. as well. If rationalism-intellectualism is epiphenomenon then so also is love, desire, respect, etc. But not to worry. Most of human life is epiphenomenon. Make believe is how humans create and carry out their lives. It’s the way we’re thrown into existence. I’ve worked with “broken” people for years. Don’t assume they, like you and I, believe they are broken. They see themselves as a normal. The purpose of therapy is to change how they understand normal and thus how they act and believe. Therapy is a socialization process. And sometimes a quite invasive one.

      • Craig
        June 13, 2018 at 6:43 pm

        “Most of human life is epiphenomenon.”

        True. However, the definition and experience of Wisdom is that it is DEEPER understanding. Wisdom is the integration of truths in opposing perspectives. ( truth x truth) That’s why you and I and others can agree on so much. We’re integrating a duality. But there is a pinnacle of Wisdom and curiously the striking experience pointed at and written about by all of the major wisdom traditions (satori, samadhi, atonement, grace) is an extraordinarily unified thirdness greater oneness totally conscious one [ (truth x truth) greater truth ] in other words it is an integrated duality within an integrative trinity-unity-oneness-fully conscious-process. Also curiously satori, samadhi, atonement, grace are generally momentary experiences and all wisdom traditions speak of the necessity of mental discipline in order to re-attain/maintain such a state and this is best accomplished by actually allowing the mental interaction of opposites to drop away (which is addition by subtraction and so wisdom as well) so that only self awareness/consciousness ITSELF is left and one can cultivate it so that it undergurds (sp) one’s, now, every fully conscious thought and action.

        Wisdom is both the process of fuller mindful understanding, an awakening experience to an even higher level of consciousness and the continuing dynamic of living one’s life in that higher state.

        Viz economics one can wisely assert, ruminate over and examine economic critique and heterodox theory and yet unconsciously fail to look everywhere for solutions/applications that your theories suggest would be helpful and so get caught up in the complexity of the economy. Then, when one looks directly at commerce and its moment to moment exchanges and thinks economically about its underlying infrastructure (double entry bookkeeping, the money and pricing systems and their digital debit/credit nature, and the summing, totaling, ending and expression points of the point of sale and retail sale) and see that these insights awaken one to the perfect place and times to implement the solutions to the problems one has been ruminating about because they cut through all of the abstraction, complexity and indirectness enforced by the current monetary and financial paradigm of Debt Only….and you have a new and genuine experience and the system attains a lasting state of free flowingness.

      • June 14, 2018 at 1:53 pm

        Craig, I practice a combat art (Jujutsu). One of the most dangerous arts in the world. Most combat arts understand the combat as secondary to the discipline of mind and body the practice creates. In fact, the training and discipline is intended to create a more peaceful and noncombative person. A person with great empathy for everyone and everything around her/him. Someone who uses these combat skills to protect the weak and serve the community. It doesn’t always work out that way, of course, but the intent is important. If this is wisdom, then I understand it well.

        The economy is complex. But it is also created complexly. Humans begin with nothing, except the interactions with one another and nonhumans they encounter. And even the encounters aren’t really encounters till humans create them as such. Humans are powerful creators. It’s wrong to deny and subvert this creativity as the center and origin point of human communities.

  6. Prof Dr James Beckman, Germany
    June 7, 2018 at 2:27 pm

    Hi, Ken, for decades I & other international oranizational researchers have worked with these issues. Everything is context, with both observer & local subjects, and involves values as well as knowledge of behavioral options. “Rationality” is a particularly fraught term in this context. Could we first agree to what is “rational”, by whom & how measured.

    • June 8, 2018 at 8:45 am

      One of the Ford Foundation reports on the construction and use of behavioral science includes the following. “The term ‘behavioral sciences’ refers to all those intellectual activities which contribute to the scientific study of human behavior.” It neither includes nor excludes academic disciplines as such. “In this program the Foundation is concerned with the university’s total resources for the scientific study of man’s behavior.” Thus, the scope of behavioral science turns on the meaning of two words: behavior and scientific. Last time I counted there are sixteen widely used meanings for behavior in behavioral science and more than a dozen meanings for scientific. This lack of consensus on basics puts the entire project of behavioral science in question.

      • Prof Dr James Beckman, Germany
        June 8, 2018 at 10:25 am

        Very useful, as always, Ken. It appears that’s largely why “behavioral economics” is often equated with “conditioned behavior” by research psychologiststs & “modern western academic economics” by those who research the anthropology of economic thought. If you add in what language/nationality enters, we find “ordoliberalism” which as you know is the Germanic world’s variation of neoliberalism in which the state supports the private sector in various ways, whether for or against economic competition but generally supporting a system for labor welfare, with or without labor unions. Of course, we now have China with its “Marxism/Communism with Chinese characteristics”. Mix in that nationalism in all nations, & economic theory is truly a patchwork quilt, is it not.

      • June 10, 2018 at 9:10 am

        We live in a rational world and we live there rationally. That’s what we’re all taught in the west, anyway. And those mistakes are killing our civilizations. For the professional philosopher and in academic philosophy departments rationality claims the criterion of the truth is not sensory but intellectual and deductive. For philosophical rationalists’ certain truths exist that the intellect can directly grasp. That is, rationalists assert that certain rational principles exist in logic, mathematics, ethics, and metaphysics that are so fundamentally true that denying them causes one to fall into contradiction. But over time in the everyday life of ordinary humans rationalism became something more and something quite different. It came to represent democracy vs. autocracy, impersonal vs. actions of specific persons, lawful vs. unlawful interactions, facts vs. values, the academic vs. working life, science vs. emotionalism, aloof scientific observation vs. social reform, the middle-class merchant vs. the traditionalist, objectivity vs. subjectivity, etc. So, knowing whose rationalism in being presented and used, along with how it’s being used are essential for figuring out what happening in the world and how it’s likely to affect us. According to Yuval Noah Harari. “Scientists usually seek to attribute historical developments to cold economic and demographic factors. It sits better with their rational and mathematical methods. In the case of modern history, scholars cannot avoid taking into account non-material factors such as ideology and culture. The written evidence forces their hand. We have enough documents, letters and memoirs to prove that World War Two was not caused by food shortages or demographic pressures. But we have no documents from the Natufian culture, so when dealing with ancient periods the materialist school reigns supreme. It is difficult to prove that preliterate people were motivated by faith rather than economic necessity.” Rationalism has also been married to politics and the history of civilizations, and of course to racism. Over the years we thus see invented the industrious and super-rational Aryans emerging from the north of Europe to lay the foundations for culture all over the world. In our daily lives rationalism does duty on many fronts. Rationalism is the primary basis for life and living in the west. For nearly 500 years it has gone unchallenged in that role. Today it seems rationalism has challengers on all sides.

      • Prof Dr James Beckman, Germany
        June 10, 2018 at 11:31 am

        Hi, Ken, I am enclosing today’s article in the London TIMES on Donald Trump as Emperor Augustus in-waiting. https://www.thetimes.co.uk/edition/comment/wed-better-get-used-to-emperor-donaldus-trump-sb56s032n?utm_source=newsletter&utm_campaign=newsletter_104&utm_medium=email&utm_content=104_10.06.18%20Best%20of%20Comment%20(1)&CMP=TNLEmail_118918_3514098_104. Like Hitler, Mr T uses emotion, apparently erratic behavior & personal castigation (Canadian Premier, Hillary, Obama, etc) to get “down & dirty”
        Isn’t this a brilliantly RATIONAL strategy for a failed real estate developer turned showman? I have no idea if he is consciously aware of this, but advisor Bannon was up to his neck in neoNaziism, Fergueson establishes a connection with Roman emperors.

      • June 11, 2018 at 5:49 am

        Niall is all too often wrong. He’s wrong mostly because Niall does not understand America or Americans. Watch the movie Bushwick for insights on why Niall is wrong. About an invasion of NYC by soldiers of the Southern Army. At one point the main male character, Stupe says, “Trying to take NYC was a mistake. Didn’t know NYC, did they!” Trump may be stopped by a bullet before stopped politically. But if politically, he’ll be stopped by the same thing that stopped the “wealthy coup” during FDR’s Presidency, or the one during the 1950s, or the one that rode in with Reagan – rich people being “traitors to their class” (as was FDR) and public servants who really believe in and practice public service. You are correct, however, about Trump’s rationalism. In one of the several versions of rationalism in ordinary use, Trump is the middle-class merchant opposing all those DC traditionalists (PC folk). It’s complex. A rationalist radical opposing DC “conservatives” who believe the radical is a conservative with the radical making fools of the conservatives.

      • Prof Dr James Beckman, Germany
        June 11, 2018 at 8:05 am

        Good points, Ken, as Niall implied he was in the process of obtaining US citizenship. Stanford is the center of my early experiential universe as one of our family homes was a half-block from San Francisquito Creek, where Stanford begins. I believe I understand the appeal for him socially & intellectually. That said, he is adrift on American culture as you statedf.
        I think the frequent oratorical blasts thrown out in the Roman Forum & elsewhere, with all the additional machinations associated, reminded him of Trump’s “caring” for his people with a new tax act and continuing downward pressure on Obama.Care.

      • June 11, 2018 at 9:20 am

        I often find Wikipedia pages off target and boring. But this part of the page on Niall is right on target. “Ferguson writes and speaks about international history, economic and financial history, and British and American imperialism.[2] He is known for his contrarian views, like his defence of British empire [3], which has been considered “audacious”, “wrong”,[4] “ignorant”, [5] “informative”,[6] “ambitious” and “troubling”.[7] He once called himself “a fully paid-up member of the neo-imperialist gang”.[8]” All these adjectives fit Niall. Niall calls himself an old-line British conservative, from the 18th century. His translation of this to the 21st century is interesting, particularly in the US. He supported and worked with John McCain in the 2008 election, with Romney in 2012. When they lost, Niall kept up a steady stream of criticism of President Obama. Its general tenor can be induced from the title of his 2012 article in Newsweek, “Hit the Road Barack: Why we need a new President,” in which he condemns Barack Obama for not fixing the recession fast enough without a single mention of the obstructionist Republican Congress fighting every bill Obama proposed. Also, when the “Atlantic” fact-checked the article, it concluded that many of the facts cited by Niall are either plainly wrong or at best misleading. Strange actions and omissions for an historian.

      • Prof Dr James Beckman, Germany
        June 11, 2018 at 11:14 am

        All appropriate comments, Ken, as best I know. Interesting that post-Obama he is finding historical context with which to challenge Trump. This, I think, reflects much opinion in and around the Farm, which as you know Stanford is sometimes called.

      • June 12, 2018 at 11:14 am

        Niall pushed Obama and other Democrats because he knew they are unlikely to start a war or destroy the planet. That is, Democrats are not sociopaths. Trump, on the other is a sociopath and is very likely to begin more than one war and do what he could to destroy the planet.

      • Prof Dr James Beckman, Germany
        June 12, 2018 at 11:42 am

        Ken, I wonder how much of his self-destructiveness is intentional at some level of consciousness. I asked the same of Hitler, as any resource assessment would have indicated that Germany did not have a prayer due to limitations of manpower, energy, food & manufacturing capacity once the Allied bombing commenced. But perhaps folks like Napoleon & Alexander don’t consider details like logistics over more than a campaign.

      • June 13, 2018 at 10:40 am

        James, humans act and make decisions based on their histories. The interactions they’ve been through. How each understands the world and the actors in it (human and nonhuman). And based on the biological evolutionary position of the species. This creates hundreds or thousands of possibilities. The deciding factor on which way to go is human judgement. As Andrew Pickering notes, judgement is the unpredictable factor in all human actions and decisions. So, the list of possibilities of why humans act, believe, and decide as they do it a very long one. It includes everything from military training, to fairy tales, to fear of failure, to love of cultural fellows, to childhood traumas, to hatred of other groups or nations. It is the task of historians and social scientists to build pictures of the factors that make and provide impetus for human actions, beliefs, and decisions. For example, many historians have attempted to answer the questions you ask about Hitler and Nazi Germany, Napoleon, and Alexander.

      • Robert Locke
        June 12, 2018 at 3:59 pm

        Ken, James, when we consider the strong-willed like Hitler, we also have to consider their opponents. In 1935, after Hitler remilitarised the Rhineland, directly contravening the Versailles Treaty, the journalist Alexander Woerth interviewed a French official, asking what would be the response, would the French army intervene and throw the Germans out. “No” he replied to Woerth’s question. “We won’t intervene. We might be more easily beaten in four years, but after all that means four more years of life.” I think I read that in Woerth’s book, The Twilight of France. What you do with bullies, who are often badly informed, is stand up to them.

      • June 13, 2018 at 10:51 am

        Robert, excellent insights. No better example today than Donald Trump. Despite all the outcry and promises not to normalize or accept his psychopathic actions, guess what – we’re now normalizing his psychopathic actions. In fact, Trump alone has in my view helped create thousands of new psychopaths and embolden many existing ones since taking office

      • Prof Dr James Beckman, Germany
        June 13, 2018 at 12:32 pm

        We sure have a crowd of street people about him, willing to separate children from their refugee parents, & destroying our health as they bring coal back. Even the contrast in Trump’s treatment of the Canadian & North Korean leaders within a few days of each other has brought little critical commentary. And the public debt-based/reduced taxes underpinning of new employment has hardly been mentioned to my knowledge.

      • June 14, 2018 at 1:43 pm

        James, most psychopaths are not born, or at least what they’re born with does not fully determine what they become. Even those with the right chemical imbalances and brain structures often do not become adult psychopaths. A supportive culture is frequently the determining factor. When “could be” racists, killers, repressors, etc. are met with ridicule and punishment for their anti-social thoughts and actions, it’s not likely these will go beyond feelings and maybe dreams. The conflicts of which counselors or therapists can help alleviate. Trump and his associates are actively helping such people act out their thoughts and feelings about persecuting, hating, and killing certain people for certain reasons. Trump is redefining normal, the mainstream. Research on such transitions shows that once their converts reach 15% of the population they are generally unstoppable. We’re nearing that threshold now. Two options then. The psychopaths take over. Each of us becomes a psychopath or suffers the consequences. Second option, we control or kill them before they control or kill us.

      • Prof Dr James Beckman, Germany
        June 14, 2018 at 2:40 pm

        Ken, some of my German friends noted this about the Nazi’s.

      • June 16, 2018 at 7:01 am

        Popular media (e.g., movies) is an effective way to stop Nazis and similar violent radicals. Great scene in “Cabaret.” Club owner ridicules and tosses Nazis out of the club. Nazis return and assault the club owner nearly beating him to death. No response from police. And there’s the problem. Nazis don’t stop on their own. They must be stopped.

      • Prof Dr James Beckman, Germany
        June 16, 2018 at 7:46 am

        Right on, Ken, as Trump is nothing but a media guy for his voting base. Fox News is not exactly Nazi, but it sure isn’t main stream. Indeed, movies & TV were/are powerful for the general public. Action drama deals with active responses to bad guys (in main stream sense). Right now I am reprising some “Walker, Texas Ranger” shows in which a former world-champion kick boxer–occasionally joined with his female equivalent–kick & punch the bad guys even as all the bullets mostly do no lasting damage. Then they go to church or have a cup of coffee.

      • June 18, 2018 at 7:17 am

        Yes, Trump lives and dies by the media. Right now, he has the entire Republican Party and Fox “News” as his handmaidens in harnessing the media. I must disagree with you on Fox “News.” The overall pattern of Fox is fascist. Although some of its staff clearly are not fascists. I assume to cover the fascist agenda of all of Fox. Chuck Norris is like John Wayne one of my least favorite people. They glorify violent solutions without ever once having to put their life on the line during the violence they glorify. Fake gunfighters, fake soldiers, fake police. Okay for entertainment. Not so good for public policy. The world is complex. Something people like Chuck Norris and John Wayne never can grasp.

      • Craig
        June 16, 2018 at 6:42 pm

        Ken, Correct. By upholding the rule of law….and implementing integrative and actual solutions to the grievances that breed Nazi types and their dis-integrative anger and violence.

      • June 17, 2018 at 9:49 am

        Craig, “upholding,” “doing the right thing,” “solving grievances,” sound great. But doing them is difficult. Fascism works by diverting attention, filling days with surprises and the unexpected, drowning people in threats, racism, parades, and behavioral expectations. Fascism gives the ordinary citizen no way to escape being sucked into becoming a fascist. Left free to choose, most people would not choose to be fascist. But fascists are experts at denying that freedom.

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