The Psychology of Capitalism
November 24, 2011 at 12:27 am 3 comments
In my last post, I talked about democracy and free-market capitalism. But though I am not uninterested in political systems and economics as such, I am even more interested in the psychological effects of different political and economic systems.
Free-market capitalism has undoubtedly achieved much and continues to do so. Even issues like the environment might ultimately be better solved by a (more or less) free market than any alternative system. At least I’m open to the idea. But what of the human psyche? Does a consumer culture have ill effects on a psychological level?
Some noteworthy psychologists have thematized this. I am thinking, for instance, of Erich Fromm, who talked a lot about the contrast between “having” and “being,” and he asks whether the “having” culture of capitalism produces psychologically healthy individuals. People, according to Fromm, do not exist as independent individuals within a societal framework. Rather, their characters are molded by the socio-economic structure, and it is possible, says Fromm, for that whole structure to be psychologically unhealthy. In the case of capitalism, he believed that it produces a “manipulated personality” that is estranged from the world, from others, and from itself. (See, for instance, Fromm’s book The Sane Society.)
What do you think? Is free-market capitalism better at producing material advances than psychological well-being? Are there inevitable ill effects of capitalism on the human psyche?
Entry filed under: Economics, Psychology. Tags: capitalism, Consumerism, Erich Fromm, society.
1.
Justin Oliver | November 24, 2011 at 4:06 pm
I think you are right to question to effects of consumerism has on our culture.
But I think rise in consumerism has largely been the spurred by government intervention to “stimulate demand” and other such policies. Keynesian economic analysis puts more emphasis on economic aggregates and the role of consumers in stimulating the economy. After all, the consensus of mainstream political analysis is that economic policies are determined successful to the extent they promote increased consumer spending and GDP. I’d think that fault also lies with supply side economists, many of whom promote monetary inflation, which increases the incentive to spend money before it loses its value.
Meanwhile, free-market economists who oppose government intervention, particularly from the Austrian school, stress the important roles that saving and producing have to do with economic progress.
2.
rockomnibus | November 25, 2011 at 5:47 am
Regarding possible ill effects of capitalism on the human psyche, Adam Smith was quoted by Daniel Gilbert: “The pleasures of wealth and greatness… strike the imagination as something grand and noble, of which the attainment is well worth all the toil and anxiety which we are so apt to bestow upon it… It is this deception which rouses and keeps in continual motion the industry of mankind.”
Gilbert concurred, and summarized Smith’s sentiment thusly: “The production of wealth does not necessarily make individuals happy, but it does serve the needs of an economy, which serves the needs of a stable society, which serves as a network for the propagation of delusional beliefs about happiness and wealth. Economies thrive when individuals strive, but because individuals will only strive for their own happiness, it is essential that they mistakenly believe that producing and consuming are routes to personal well-being… There is no cabal at the top, no star chamber, no master manipulator whose clever program of indoctrination and propaganda has duped us all into believing that money can buy us love. Rather, this particular false belief is a super-replicator because holding it causes us to engage in the very activities that perpetuate it.” (Stumbling on Happiness)
In the context of your question, I derive from Gilbert’s conclusion that capitalism feeds into this mistaken notion of happiness, leading individuals more toward materialism than might be psychologically healthy for us.
What’s interesting to me is how weighted personal decisions are toward financial concerns. If a consideration involves a fee that would require an hour or two to recoup through one’s wages, then it can very well be a heavy influence on our decision. Or if two seemingly similar choices differ significantly in their monetary gain, the higher dollar value is often likely to sway us. Curious how we naturally extract the idea of worth from our mode of currency. Saying “Is it worth it to do this?” subconsciously leads us to the mercy of our pocketbook.
So yes, for these and other reasons, it’s reasonable to be asserting that a consumer culture has real general ill effects on a psychological level. It formalizes our thought processes, and shifts some of the meaning we assign to well-being.
3.
jacobschriftman | November 27, 2011 at 8:26 pm
Thanks for your thoughtful comments, Justin and rockomnibus! Much appreciated.