Monday, March 12, 2012

Underneath Economics - Freud, Keynes, Hayek

I've spent a few hours this morning over at the Social Democracy in the C21st blog mostly reading this post and this post on Praxeology; a system of thought that underlies one particular understanding of economics.

I generally find philosophy texts hard going. Particularly now, as it's a long time since I've studied any philosophy and I have forgotten the language. Although saying that, I am currently reading Zen and the Art of Motorcycle Maintenance which is the apparently the most widely read philosophy book. In it Pirsig refers to philosophy as the high ground of knowledge. I did enjoy my time studying the Philosophy of Science - in part that was due to the structure of the course. I was studying Economic History but, because the course was also a requirement for MSc & PHD students, I ended up studying alongside Physicists, Chemists etc from Imperial College instead of just the normal Economics students. It was clear that we all thought very differently about things.

Anyway, I wanted to talk about briefly in this post about Freud. The author of the Social Democracy blog (a very fine blog to which I'm a regular visitor) the mysterious Lord Keynes is dismissive of Freud - in fact Freud is used as a measure of nonsense. Here's what he says:

If Hayek were alive today and gave us an honest answer to this, he would have to class such vulgar Misesian praxeologists as talking nonsense on a par with Marxism and Freudian psychology.

Elsewhere there is also another reference to Hayek who mentions Freud's Life and Death instinct as causing him annoyance when used as an explanation for..... well, everything.

So given that one of my intellectual heroes, Freud, is being attacked I thought I best write a quick post to explain why I think Freud is a good 'un. Before I do I should say that another of my intellectual heroes is Hayek; creating something of an existential crisis for me :)  I'm not going to harp on about Praxeology which will no doubt be a blessed relief to you, dear reader. For what its worth I agree with Lord Keynes that it is flawed. Assuming all human action is purposeful is a silly start for any attempt at understanding. You might as well assume rational self interest ! oh hang on...

You see. You only need to scratch a little beneath the surface of economic thought to realise that you need to have some conception of mind. And that's why I'm standing up for Sigmund. I worry that people have this image of Freud and psychoanalysis as some kind of medico-mystical pseudo-science steeped in C19th prejudices. It's a view of Freud I've some across time and time again. And as far as much of psychoanalysis goes, I'd probably have to agree. But, and here's the thing, the intellectual landscape that Freud eventually arrived at provides (imo) a brilliant, insightful and wonderful conception of mind.

Here's what Freud means to me.

He describes the structure (or architecture) of the mind. [Id, Ego, Superego.]

He describes the nature of relations between Ego and Object as ambivalent. [Co-Existence of Contradiction]

And he describes the fundamental forces of nature which act through the structure and upon the relations. [Life & Death Instinct, Eros & Thanatos. Attraction & Repulsion.]

Yes, he said different things across his lifetime. He also didn't come to his conclusions by mixing chemicals in a jar or measuring correlations between events. But what he suggests about us tallies with my experience of life more than another other attempt to explain our psychology. 

It's this ~base~ Freud that appeals to me. I don't need Neurosis & Psychosis, Repression, or even Concious and Unconscious. 

To bring this back to economics... You'll know that one of the 'real' Keynes' buddies was James Strachey (I say buddy with a knowing wink!). Strachey, a psychoanalyst himself, was most famous for translating Freud's work into English. His and Freud's work sit on my bookshelf today. I've only ever heard Robert Skidelsky refer to Keynes & Freud in the same breath - oh no, wait there is something in John Smithin's 'What is Money' on this too*. But this lack of exploration of the overlap between Keynes & Freud strikes me as odd. I would have thought that if we believed we could understand mind, then we'd understand money**. Or vice versa. It would seem rather strange to imagine some world where we know everything about the human condition and nature and yet still struggled with money. And we are still struggling, aren't we? We haven't reached the 'End of History'.

My own peculiar understanding of Money - and consequentially that subset of Money known as Economics (I'm teasing) - owes much to Freud. Nothing to do with money's anal erotic nature or anything similarly steeped in the more complexity of the application of psychoanalytical thought, it's just because its a simple set of ideas that seem to tally with the way I experience the world. Praxeology - and Homo Economicus more generally - maybe simple ideas but they do not describe our experience of being. That has much more to do with loving & fighting than rational self-interest.

So please, don't think that all that Freud suggested was that you fancied your Mum and wanted to kill your Dad. He went on a weird journey for sure. And he changed his mind about things. But his description of the mind isn't nonsense. Hayek may have thought it was nonsense (although as the faux Lord Keynes hints, he'd have been too polite and respectful to have said so plainly), Keynes (the real one) didn't.

*a brief search has revealed this paper too The End of (Economic) History by Jean-Paul Fitoussi.
** there is of course the very trendy behavioural economics - not my cup of tea, I'm afraid. 

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