The problem of economy

nik-radzi-527667
If your car is driving at a steady 60mph, do you design all car engines to run only at 60mph? Photo by nik radzi on Unsplash

There is a persistent problem, recurring and recurring, that is to do with an underlying illusion, and an assumption based on it.  The illusion is that a thought or action can be comprehensive; and the accompanying assumption is that there can be a story or method which resolves everything.  I call it a problem of economy, because, once we realise that all resolution is only partial, then we have to admit that, because we cannot comprehend everything, we are only offering ourselves economical sketches of the truth.

Put simply, our brains are not big enough to wrap up everything, and we had better therefore be humble about the systems we rely on.

THE MATERIAL ECONOMY

One example of how this works is out in our material economy – the economy that the news reports on regularly.  An economy is an invention of man, a word, to describe what happens when individual relationships spiral into systematic relationships.  The word business simply means ‘doing things’, and correspondingly an economy is simply ‘a mass of things being done’.  When we describe an economy as growing, we are guessing, in aggregate, how much doing has been done this year.

In other words, the economy, as we describe it, is literally that – a shorthand description to simplify all our business relationships into something we understand.  Humans love summaries: so we invent one number, the Gross Domestic Product, to codify our simplified understanding.  And suddenly we have moved from perceiving several relationships, to perceiving only one number.

WHAT’S THE PROBLEM?

One may well ask, what is the problem with this summarising, this being economical with the truth.  Whom does it harm?

To answer that, I’d like to refer to what happens when recession strikes a modern economy.  When an economy is efficient and happy, everyone simplifies their thinking about it.  Valuing businesses becomes a simple question of profit multiples, for instance.  When life is good, there is no need to delve in, to make things complex.  We do the same in our personal lives.  Sometimes it takes a crisis to understand how complex relationships are.

Things, in fact, get so simple in the good times, that businesses start making profits on simple assumptions.  They mistake a temporary truth for an eternal one.  National lending companies operate on simple growth models.  Banks lend on simple formulae.

In short, humans become economical with the truth when there is no need to justify the truth.

Chains of business interactions start to depend on these simple assumptions, and on narrower and narrower margins.  If you feel that growth is going to be 5% for ever, then you can have 5,000 business sectors, each making easy money on 0.005% of that growth.

THE EFFICIENT ENGINE VS THE OPTIMAL ENGINE

The economy becomes like an efficient engine.  Honing itself until it can make money on practically nothing.  There grows a pyramid of hangers-on, all assuming one thing: things will go forward as they have been doing.

However, there is a problem.  Imagine that you are driving along a motorway at 60 miles per hour.  Your engine is working so efficiently, that you decide that all car engines should be designed to work only at 60 miles per hour or above.  After all, that seems to be the going speed.

You can see that this is absurd.  You have simplified life into a few formulae that work for now.  If you redesigned all engines to work at 60mph, what would happen next?  Would you really be surprised when disaster strikes?

THE OPTIMAL ENGINE

When, suddenly, there is a traffic jam ahead, all hell breaks loose.  Your simple car economy is only built to run at 60mph in a straight line, and so your cars have no brakes, and little steering.  Suddenly there is a big pile-up.

You may feel this is silly.  I agree.  But then how we run economies is silly.  We make the same assumptions about efficiency, forgetting optimality.

We all know the optimal car has good brakes.  The optimal car is very steerable.  The optimal car knows how to achieve some efficiency at different levels of output.

In the same way, we need to build more complexity into our economies.  At the moment they are one-trick ponies, only designed to work at growth of a few percent per year.  Anything else, and we can’t cope, and all argue with one another.

TRANSLATING THE CAR/ECONOMY ANALOGY TO OUR OWN IDEOLOGIES AND BEHAVIOUR

Psychologically, we are all at it.  We are all playing this game of oversimplifying life, and then getting caught short when things change.

It is how your mind is built.  That’s the rule.  You go out and live, and your mind produces for you a simple story to fit what seems to be happening.  You get married, and your mind accepts a story that tomorrow will be much like today, and you will stay together.  But the complexity of experience doesn’t fit our over-simplifying, and sooner or later, you will experience a crisis.

A DEFINITION OF CRISIS

From the point of view of cognitive economy, a crisis is the inevitable result of experiencing an event or change that throws into doubt your simplified model of life.  Your mind has necessarily simplified life, because you cannot possibly think all the thoughts that need to be thought in order to understand everything.  Simple you meets complex life.  And you see it as a disaster.

ANXIETY AND DEPRESSION RE-EVALUATED

How do anxiety and depresssion look from this angle?

Well, anxiety is the response of the mind to pressure beyond its ability to cope.  Something happens which calls into doubt our ability to control our world, and we throw an enormous panic, because we are suddenly reminded that everything is in doubt.  Call it existential angst if you like.  It is existential because we are simple beings, much simpler than experience.  So experience haunts and surprises us all the time.

Depression is the response of the mind to long-term pressure beyond its ability to cope.  In terms of support, it is a response to long-term neglect.  Something happens, and lasts, which calls into doubt our ability to control our world, and our constant panics haven’t worked,  so instead of fluctuating in uncertainty, we slump into a kind of certainty that everything is terrible.  Call it existential depression if you like.  It is existential because we are arrogant beings, much prouder than experience.  So experience disappoints us all the time.  Depression is perhaps more realistic than anxiety – at least it has a world view that allows for a vast range of experience.  Even though, when we are depressed, we forget the positive side of life.  So it is still a simplification.

HOW CAN WE DEAL WITH ECONOMY AND ECONOMIES IN A DIFFERENT WAY?

We know our current methods are unsustainable.  Our simple models of the world, whether ideologies, or operating methods… they are just that, simple.  Our simple view of economies forgets the complexity of our environment, and the fact that it will be ruined soon if we carry on prioritising consumerism.  In our private lives, our cognitive economy manifests in our assumptions about others, our assumption that tomorrow will be like today, our desperate reliance on contracts to make life more predictable.

But you can’t agree a contract with nature.  It refuses to allocate any being to sign on its behalf.

The only solution is to begin to operate with more wisdom, because wisdom is the ability to see beyond the simple models everyone is using in the present; it is the ability to accept that tomorrow we may wake up in a flood, or a fire, or a war, and everything will change.  If you like, if life is a journey, wisdom is our rucksack.  Our store of wisdom is there to help us when times vary, when economies break, when the complexity of life bursts through.

LIVING WITH WISDOM

Material wisdom may involve knowing that, sooner or later, everything is taken away from us.  It may involve questioning our reliance on simple economic growth models.  Ideological wisdom may involve allowing for the fact that our ideologies are all wrong by definition – too simple.  Psychological wisdom may involve recognising, consistently, that nothing we think now will ever be enough preparation for what happens next.  That our minds, and our bodies, are organised around simplifications of life, and those simplifications are not life itself.

Remindful UK logo

SUMMARY

Our brains are built to simplify our experience into assumptions.  When the going is good, because there is no need to analyse, we simplify even more, and take things for granted – habits, money, relationships, natural resources.  We become extremely efficient in our habits, and live in a blinkered world.  Then along comes a crisis, to remind us that life is more complex than our assumptions.  We fold in anxiety and depression.

Perhaps wisdom is knowing, in our bones, that tomorrow may not be like today.  Perhaps wisdom is being humble enough to understand that we are wrong before we start; that everything is in that sense an illusion; that we are always oversimplifying, economising, with our minds and bodies.  If we are lucky, that wisdom may make us better equipped to live in a universe that often doesn’t do what we think it should.

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close