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Book Reviews

Market behaviour

The Mind of the Market : How Biology and Psychology Shape Our Economic Lives.  By Michael Shermer. Holt Paperback. New York. 2008.

 Some of the chapters in this book are interesting and informative, despite its author being a self-declared follower of the free-market ideologist, Ludwig von Mises and so an apologist for capitalism and a dedicated opponent of anything that seems to be socialism. Shermer is also a leading American ‘skeptic’ and a Scientific American columnist.

 Economics, as now taught, is an odd discipline. It defines itself as the study of the allocation amongst competing ends of resources in short supply. To express this mathematically it has to make the absurd assumption that the ends are infinite, i.e. that people are infinitely greedy. It also assumes that economic actors (corporations, workers, consumers) act entirely rationally. Von Mises in fact regarded economic decision-making as the archetypal form of rational decision-making.

 In recent years, some economists, calling themselves ‘behavioural economists’, have decided to investigate the actual behaviour of consumers, i.e. individual buyers. Not surprisingly they have found that no consumers (not even the writers of economic textbooks) decide what to buy on the basis of some rational calculation about equalising the “marginal utility” of all the things they buy. All sorts of other considerations enter into their decisions as to what to buy (e.g. what other people are buying, status, etc which the advertising business exploits).

 It could be argued that the study of what motivates consumers is outside the scope of economics. Which is the position we Marxists have taken with our criticism of “the final futility of final utility”. We have left the study of the satisfaction users might derive from the use-values they acquire to psychology. Shermer goes along with the behavioural economists who have done some useful work in demolishing the myth of the rationally-calculating, narrowly selfish homo economicus that is one of the basic assumptions of academic economics. He doesn’t seem to realise that in doing so he has abandoned one of the key assumptions of the von Mises school of economics. In fact he goes so far as to concede that if people really did behave in this way, then capitalism could never have survived; even capitalism relies on the social nature of humans and their biological and psychological need to trust and co-operate with each other.

 Shermer accepts the theories of the “evolutionary psychologists” according to which our reactions and decisions – including in economic matters – are influenced by the fact that our brains evolved when we were hunter-gatherers (as opposed to by purely rational calculations). No doubt our brain did evolve under these circumstances but this does not mean that we are therefore unsuited to live by acquiring what we need to live in any other way. The human brain that evolved is a brain that allows us to adapt to a great variety of ways of acquiring what we need.

 We can live just as much under a capitalist system (where Shermer says we are ‘consumer-traders’) as in a socialist society (where we’d become ‘giver-takers’). If, as the evolutionary psychologists claim, our brains predispose us not to like freeloaders and to get satisfaction out of co-operating, and even helping, our fellow humans, these are features that would fully fit in with socialist society. Shermer thinks that they point to capitalism being the best system for humans to produce and share out wealth.

 However, his defence of capitalism is pretty pathetic. On the basis of studies of the behaviour of people who are still hunter-gatherers today involved in face-to-face barter and of the measured effects on the brains of individuals choosing to buy something, he concludes that ‘trade’ and ‘trading’ is good for us. This ignores that ‘trade’ is not the only way of transferring the use of something from one person to another. There is also giving and taking. So, this is not an argument for buying and selling as best suited to our ‘biology and psychology’.

 But the main flaw in Shermer’s argument is that there is an enormous difference between face-to-face barter and shopping and inter-capitalist trade. Inter-capitalist trade is carried on by states and corporations which do act in the ruthlessly calculating way that orthodox economics supposes individuals do. They do aim to maximise monetary profits in the long or short term. They don’t behave as we humans do. In fact some psychologists (as in the film The Corporation) have pointed out that if a human behaved in the same way as capitalist firms do – concentrating obsessively on one single aim (in this case, making profits) to the neglect of all other considerations – they would be classified as psychopaths.

 Shermer shows up here the flaw in the defence of capitalism put up by ideologists such as von Mises – they assume that present-day capitalism is based entirely on freely-negotiated contracts between individuals, as if production and trade were carried on by individual, or at least small-scale, producers and shopkeepers. This might have been the case in Adam Smith’s day (mid-18th century) but is not the case today. Today production is carried on in large-scale productive units by producers contracted to work for wages, but not by other individuals but by capitalist firms which, while in contract law having a fictitious ‘personality’, are not really persons with biological brains. Their behaviour cannot therefore be explained by evolutionary or any other kinds of psychology, but only by a study of the impersonal laws of the market and profit-making which impose themselves on those who make decisions within them irrespective of what these human decision-makers might think or want.


Made to Waste

Made to Break. Technology and Obsolescence in America.  By Giles Slade. Harvard University Press. 2006.

 In 1960 the American investigative journalist, Vance Packard, brought out a book The Waste Makers. Subtitled “A startling revelation of planned wastefulness and obsolescence in industry today”, it exposed how capitalist firms making consumer goods were deliberately designing them to break down after a calculated period of time so as to encourage repeat sales.

 This new book covers the same ground and is a history of ‘obsolescence’ in America. Slade identifies three kinds: a product can become obsolete because something new, and genuinely better, has been invented (as happened, for instance, to cut throat razors and gas lighting); or because of advertising; or because it had been deliberately built-in to the product (also known as ‘death dating’).

 The manufacturers and their advertisers were quite open about what they were doing. Thus a Justus George in 1928:

“We must induce people . . . to buy a greater variety of goods on the same principle that they now buy automobiles, radios and clothes, namely: buying goods not to wear out, but to trade in or to discard after a short time . . . the progressive obsolescence principle . . . means buying for up-to-dateness, efficiency, buying for . . . the sense of modernness rather than simply for the last ounce of use” (quoted p. 58).

And a Brooks Stevens in 1958:

“Our whole economy is based on planned obsolescence and everybody who can read without moving his lips should know it by now. We make good products, we induce people to buy them, and then next year we deliberately introduce something that will make those products old fashioned, out of date, obsolete. We do that for the soundest reason: to make money” (quoted p. 153).

 This provoked a conflict with engineers, who knew they could make solid products that could last for years, but in the end their reluctance was overcome (they, too, are in the end only hired employees who have to do their employer’s bidding). It is also enormously wasteful as still useable products, and the material resources that went into making them, are simply thrown away.

 Things have got worse since Packard’s day, with the use of soldered circuits in electronic devices that are now part of everyday life. These are easy and cheap to produce but their chipboards can’t be repaired. According to Slade, there is a growing problem of where to dispose of abandoned (but still useable) cell phones (as mobile phones are called in America) which, together with other ‘e-waste’, contain materials that are harmful to the environment.

 Like Packard Slade blames consumers, if not so much as manufacturers. If, he argues, people take account of the effect on the environment of what they buy manufacturers will begin “to adopt design strategies that include not just planned obsolescence but planned disassembly and reuse as part of the product life cycle”. This assumes that the capitalist economy is driven by consumers. It isn’t. It’s driven by the drive of capitalist firms to make as much profit as they can.


Choosing an occupation

 Reports & Reflections on the 2009 UK Ford-Visteon Dispute: a Post-Fordist Struggle. Past Tense, June 2009.

“On 31st of March 2009 Ford/Visteon announced the closure of three factories in the UK and the sacking of 610 workers... No guarantees were given concerning redundancy or pensions payments. The management had made the workers work up to the last minute, knowing that they would not even receive any wages for their final shifts.” In response, workers from the Belfast plant spontaneously occupied the sites and in a few hours were joined by several hundred local supporters. On hearing the news, workers from the Basildon and Enfield plants went into occupation the following day. This pamphlet concentrates mainly on the Enfield occupation, which lasted for 9 days, and is written by a supporter of the workers.

 Of particular interest is the author’s analysis of the role of the union during the occupation, particularly their role “as mediators and defenders of capitalist exploitation”. It is true that the unions’ role is one of mediation and as such does nothing to challenge the material basis of the relation between workers and employers. However as the existence of the wages system is only questioned by a tiny minority this can be of no great surprise; the unions do not work to establish socialism because their members are not socialists. To write off unions as defenders of capitalist exploitation is a step too far, as the author of the pamphlet accepts, “to be without a union would usually be even worse under present conditions.”

 The real question is one of internal democracy and the extent in which the union is run by and for its membership. Whilst all unions do have a certain amount of democratic framework the amount of member participation is often lacking, perhaps not surprising when “unions are generally run today primarily as financial service brokers – "negotiating deals on insurance, mortgages and pensions, medical cover, holidays and car breakdown services" etc – and investment funds with a sideline in industrial arbitration.”  Unions, sometimes under the well entrenched leadership of full time officials, have at times acted against the interests of the working class but such occurrences should not be understood as a fault of the union form per se but as an expression of the contradictions of the position of workers under capitalism.

 The assumption – which is not explicitly stated in the pamphlet but hinted at in certain passages – that capitalism can be overcome through industrial action alone and that this occupation was part of such a process, is not one that should go unquestioned. Workers who struggle to maintain and better their conditions should be commended, but until the working class consciously and politically organise to end the wages system the same battles will have to be fought over and over again. It is true that the bitter experience of the Visteon workers may lead some of them to question the basis of capitalist society, but from start to finish all this struggle was attempting was to get the best from a bad situation, not to bring about world socialism.

 A myriad of experiences from everyday life can provide enough motivation for the disenchanted to ask themselves ‘why do I have to do this every day?’ To steal a pithy phrase from the Socialist Party of Australia “it is Capitalism itself, unable to solve crisis, unemployment and poverty, engaging in horrifying wars, which digs its own grave. Workers are learning by bitter experience and bloody sacrifice for interests not their own. They are learning very slowly. Our job is to shorten the time, to speed up the process”

 The workers at Visteon secured a deal ten times greater than the original offer, their (and our) position as materially dependent sellers of labour-power continues.