Rational Capitalist on Facebook

Thursday, April 2, 2009

Say Cheese

The Financial Times reports:

World leaders on Thursday heralded the G20 summit as the day the world “fought back against the recession” as they put on a show of unity that lifted global markets and mapped out a new future for financial regulation.
And what exactly did these people accomplish?

Gordon Brown, host of the summit, said the meeting marked the emergence of a “new world order”, as he unveiled what leaders claimed was a $1,100bn package of measures to tackle the global downturn, including support for lower income countries and a $250bn plan to boost the international money supply.

...France’s president Nicolas Sarkozy, meanwhile, said the summit’s agreement on a new regulatory regime and crackdown on tax havens showed “a page has been turned” on an era of post-war “Anglo Saxon” capitalism.

So that's "The New World Order"? They are going to spend a few trillion dollars. And where will they get the money? They will create it out of thin air or "boost the international money supply" and coordinate the use of force to plunder loot in offshore jurisdictions. So that's the plan: counterfeiting and extortion. Was this a meeting of the Five Families or heads of state? Is there a difference anymore?

Note that they claim they are fighting "back against the recession". As I said in a past post, Must Things Get Worse Before They Get Better?:

It's almost as if they believe there is a mystical force shadowing the nations' economy which necessitates recession and malaise and which can not be understood or resisted.
That post went on to analyse the ridiculous notion that recessions are somehow "inevitable" and explained what is needed to end it. Of course, from an economic perspective, the plan they have hatched exacerbates the very causes which are responsible for the crisis - easy money, government intervention and regulations leading to moral hazard in the banking system, and the expropriation and redistribution of productive assets to the unproductive.

When I first saw the picture above I believed it had to have been a doctored photo created to mock the absurdity of this meeting. When I realized it was not a joke it dawned on me that it is actually a perfect concretization of what is happening. I think that the frivolous connotation of the photo is the result of several related factors.

Here we have a group of pragmatist politicians that have no understanding of what is causing the economic crisis and would not even think to analyze the causes of the crisis . As I have detailed many times, pragmatism is the philosophy that holds that there are no absolutes and that man must simply act [
1, 2, 3]. Since these men are pragmatists, i.e., they hold no firm principles, anything and everything is open to negotiation and compromise. So, on the one hand, their giddiness is related to genuine happiness. To the extent that these men can negotiate, compromise, and simply "act" regardless of the content or likely outcome of that action, they are like pigs in slop - jovially, eagerly executing plans that panels of outside "experts" have advised them will work. Additionally, I believe at some level, these men believe they control reality. I quoted AR in this post [1, 2]:
A later school of more Kantian Pragmatists amended this philosophy as follows. If there is no such thing as an objective reality, men’s metaphysical choice is whether the selfish, dictatorial whims of an individual or the democratic whims of a collective are to shape that plastic goo which the ignorant call “reality,” therefore this school decided that objectivity consists of collective subjectivism—that knowledge is to be gained by means of public polls among special elites of “competent investigators” who can “predict and control” reality—that whatever people wish to be true, is true, whatever people wish to exist, does exist, and anyone who holds any firm convictions of his own is an arbitrary, mystic dogmatist, since reality is indeterminate and people determine its actual nature.[emphasis mine]
Consequently, the higher the stakes, the more reality they believe they control. This picture conveys a subconscious emotional response - the unadulterated joy of the power luster - but power not just over other men, power over reality itself.

I believe there is another factor which accounts for the tone of this picture. Quoting Ayn Rand on the nature of emotions:

But since the work of man’s mind is not automatic, his values, like all his premises, are the product either of his thinking or of his evasions: man chooses his values by a conscious process of thought—or accepts them by default, by subconscious associations, on faith, on someone’s authority, by some form of social osmosis or blind imitation. Emotions are produced by man’s premises, held consciously or subconsciously, explicitly or implicitly.
Unlike the subconscious emotional response noted above, to experience intense happiness, one would have to hold a conscious conviction which would serve as the base to elicit a positive emotional response. From a moral perspective, the pragmatist is a blank page - he holds no firm principles or convictions. Therefore, overtly, he must be told how to react. In this case, there is no doubt in my mind, that the handlers instructed these men to project a positive image, i.e., to appear to be enthusiastic and happy in order to convey a sense of control and optimism to the world. They were instructed to seem positive despite the fact that the world is in a profound economic crisis that threatens civilization itself and despite the fact that their plan will worsen the crisis. This is in effect a double dose of pragmatism in that the leaders need to be told how to react and the handlers believe that by controlling outsiders' perception of the leaders it will somehow cause a positive reaction in the economy.

To see this even more clearly, imagine someone who is rational but confused about the present economic crisis meaning that they have the capacity to apply logic to observation but they are honestly having difficulty comprehending what is happening and what they should do about it. Woudn't the dire implications of his inability to rationally solve the problem be cause for a profound feeling of frustration and concern? If you were to take a picture of such a person, wouldn't his consternation be obvious?

This picture is a concretization of pragmatism. In a world devoid of reason and principles, where there is no right and wrong, where nothing is sacred and where there is nothing of value - the political leaders of a crumbling world laugh - at themselves and reality. It exposes these men for what they are - inane opportunists, guided by their intellectual masters, who know when to smile and say cheese.


C. August said...

Great post! I particularly liked the AR quote about pragmatism and the conclusions you drew from it.

"This picture conveys a subconscious emotional response - the unadulterated joy of the power luster - but power not just over other men, power over reality itself."

I wonder if they really think they control reality though, or if they simply hold that the collective thought of the public is all the reality they need. If they control the polls, who cares what happens? They have the power.

Your concluding paragraph is stellar. And when you talk of the leaders' "intellectual masters, who know when to smile and say cheese," I immediately think of Cass Sunstein and the behavioral economist "dream team" that is advising Obama. I wrote about it just last night, here. Your examination of pragmatism and power lust captures them perfectly.

Per-Olof Samuelsson said...

Good post! Yes, I think this is entirely true. (I don't know what else to add..)

obambi said...

What, me pragmatic?


I don't want to know the source of the problem and assign blame, I just want to fix the problem with the solutions that have emerged from the growing consensus.

Galileo Blogs said...

Nice job, Doug. I am enjoying all of your posts on pragmatism. It is the intellectual disease of our age and fighting it is of paramount importance.

Most people do not know what it is, nor that it infects their thinking. That is why they recoil in horror at anyone who holds that principles are absolute. Their recoiling is more of a reflection on their thinking method -- pragmatism -- than it is of a reaction to the content.

They object to *how* we hold our ideas even more than to the actual content of our ideas.

Michael Neibel said...

Excellent post Doug. That photo looks a lot like a schoolyard of kids. The children really are in charge.

The Rat Cap said...



I have seen this since college days 20 years ago - I rarely get an argument on content - it is outright hostility to method - the "how can I take this seriously" or "simplistic" variety

Ardsgaine said...

Very astute. I think the corollary is that the more dishonest they are, the bigger their smiles.

Galileo Blogs said...

Interestingly, the "simplistic" charge is only leveled against ideas in the humanities, whether philosophy, sociology, economics, etc.

Generally, you don't get that with the physical sciences. I say generally, because I can see evidence of pragmatism and a worship of complexity when it comes to environmental issues. But that is because environmentalism is more of a sociological, even a religious viewpoint, than it is science.

Still, in the hard sciences, no one will accuse you of being simplistic when you uphold the absolutism of chemistry or most principles of physics.

What accounts for the difference? Why is it when I describe the absolute properties of water, everyone nods in agreement, but when I explain the absolutism of capitalism, people think I am naive, simplistic, dogmatic, or even cultish?

I have my guesses, but I am curious to hear the thoughts of others.

I suppose my question can be rephrased as: Why is pragmatism the modern thinking method in the social sciences, but not in the "hard" sciences?

garret seinen said...

Good post Doug, but I think while their collective happiness outlook may well be due to a handler's request, it also captures their economic nativity. Each of the players endorses the viewpoint, "all will be fine if we can just get the people to start spending again". They will do all they can to present a confident, happy state of mind to the audience.

I am sure that this group of political populists is unable to grasp why, despite the volume of money they have 'created' the public is ever more reluctant to act as they were told they would be acting.

Their evasions of reality knows no bounds.

Objectiveman said...

Obama said during the town hall meeting in response to question about environmentalism that the carbon footprint of America was far bigger then that of India's.

He wanted to reduce this carbon footprint while simultaneously saying America is rich and India poor. Does he realise what he is saying is that he wants to reduce America to India's level?

What worries me is his power to fulfill the warped vision of his reality.

The Rat Cap said...


You ask an excellent question about the difference between the physical sciences and the humanities which manifests itself in exactly the way you described, i.e., the physical sciences seem to value "simplicity" whereas the social sciences regard simplicity as the hallmark of naivete or even "cultishness". You ask "what accounts for this difference?"

I have a theory related to your question on which I would like to get your thoughts. In fact, I will hopefully do a post on this topic as it is so critical and I would like to follow your lead in stimulating some discussion.

I believe there are two interrelated issues. The first problem is essentially one of epistemology, particularly, the method of induction or going from specific observations to general principles. Physical scientists accept it (at least implicitly) and social scientists do not.
Secondly, the essential distinction between the physical sciences and social sciences is the issue of free will vs determinism. In other words, the physical world is deterministic and issues related to human interaction or behavior involve free will. I think induction is easier with regard to deterministic actions but more difficult with regard to human behavior. In other words, there is a problem as it relates to the validity of induction itself and then there is the problem of how to apply induction in areas that involve free will. If philosophers are still debating whether we can know whether the sun will come up tomorrow, how in the world could they accept a generalization from facts to morality (the so-called "is-ought gap") or any philosophical claim?

(Even if we lived in a culture that revered reason and where induction was thoroughly accepted, I believe there would still be a epistemological issue of how to apply induction properly to cases that involve free will. It appears that some social scientists today treat humans as if they were determined and others who accept free will take it to imply randomness. My view is that this is a false alternative. Humans possess free will but they are not random either. This means we can make generalizations about human behavior but we also can not treat them as molecules or planets. One must keep the context.)

To elaborate on the above, the physical sciences which study "deterministic" phenonmena still regard induction as a valid method to acquiring knowledge and generally use the method properly at least on an implicit level.

I believe that "simplicity" in this context refers to the ability of an abstract principle to be used to explain a myriad of concrete phenomena. In other words, I believe that what most physical scientists mean by "simple" is really "general". For example, the principle of gravitation can explain phenonmena on earth such as falling and the tides and also explain the orbits of the planets and galaxies, etc. The atomic theory can explain chemistry. Maxwell's laws can explain electromagnetism. The ability for a theory to explain ever more phenomena is regarded as a value in the physical sciences because properly, knowledge is a progression towards more generality.

As I claimed earlier, the social sciences do not appear to accept the method of induction. In fact, a great part of modern philosophy is dedicated to casting doubt or skepticism regarding induction. Philosophers can't generalize on principle. Kant's analytic-sythetic dichotomy separated concepts into two categories: a) propositions related to observations (statements that are not just simply definitions) are not provable and b) statements that follow from the definition. In other words, a deduction from a definition can be valid but not the other way. That's why you see modern philosophers study symbolic logic and "language". To them, this type of deductive analysis is the only realm of "truth". If you propose a generalization from observation, it is inherently unprovable and therefore suspect. On this theory, any general claim requires faith or belief in the absence of evidence. Therefore, to the modern philosopher, an Objectivist who cites principles must be equivalent to a religious mystic. The more passionate one is about their position, the more they resemble a member of a cult or a religious fanatic.

The inability to formulate general principles from observation logically must lead to one of two directions. Either you lean towards gathering observations without principles or you lean towards formulating principles without observation. The former is "empiricism" and the latter is "rationalism" (I realize those are the terms used by Objectivists not by academic philosophers.)

Economics provides a good example of the tendency towards the false alternative of empiricism or rationalism brought about by the dismissal of induction.

Most economists are "empiricists" in the sense that they reject any generalization and rely only on statistical measurements of actual data. There is another school that is completely rationalistic - the so-called "perfect competition" theory which assumes "perfect information" and "perfect rationality", etc.

So, the dismissal of induction leads to problems. Then as I said, even for those inclined to be scientific (use induction) there are problems associated with how to apply it to man.

I think that this explains why many in the social sciences tend toward empiricism (observation without principles). [In philosophy, there is a tendency towards rationalism (theories that have no basis in reality)]. Many social scientists wish to be "scientific" so they take the outward form and methods of the physical scientists and drop the context (dealing with free will). They wish to use observations and formulate mathematical models (although they are not possible or even relevant) so they treat human behavior as if humans were atoms or planets (without free will). In other words, there appears to be a relationship between empiricism and determinism. You see this tendency in psychology and economics especially. There are many physicists in the field of finance now that exhibit this tendency. Many of the popular books on behavioral economics have this tendency (to state the results of empirical studies as if people are lab rats.) I'm not sure if they assume determinism because they want to be empiricists or they are empiricists because they believe in determinism.

Anyway, I think these factos (induction generally and induction as it applies to free will/humans) accounts largely for why people accept physical scientist claims more readily than social sciences. Note that this seeps into the physical sciences as well and those fields are under attack too as we can see with environmentalism and modern physics.

I hope this helps. Let me know what you all think.

madmax said...


Your response to GB's question was excellent. I hope you will pick up this question again with some future blog post.

The Rat Cap said...


Thank you. I'm working on a post presently. Thanks for the encouragement.

garret seinen said...

I’ve never considered pragmatism to be anything much more than a non ideological outlook on life but after reading your post stressing how debilitating an effect it can have on the thought process recently, I can see that I’m mistaken and need to redefine the meaning clearly in my own mind. I’ve put these thoughts together over the past couple of days

I have difficulty accepting that a human mind can consistently hold a pragmatic outlook, deciding that reality is what everyone believes it to be. I can however, easily see that an inconsistent pragmatic approach with deviations allowing both reasoning and perceptual powers to smooth over the areas involving life and death rational decisions.

Because so much of the world we live in consists of applying manmade rules to human actions, the pragmatist is often able to function well and even to be financially successful. There are individuals who thrive in regulatory environments, where all the rules are laid out and memorization brings success. But the success would unfold only for the strongest minds as the economy of understanding complex things by way of cohesive ideas is not available to the consistent pragmatist and, only those people with exceptional memory skills could cope

The economy of thinking made possible by using a rational, conceptual based system to integrate ideas into understandable pieces allows even the people with lesser intellectual capacity to fully understand complex thoughts.

But the pragmatist evaluation and its application to the sciences provides an explanation to a phenomena that has long troubled me. I often wondered at the absurdity of some of the flaky so-called scientific studies or reports, claiming proof for an idea that logic or induction proves without any statistical analysis. Something like an evening news report documenting that most obese people eat more than the people with no weight problems, or some similar fact totally reasonable with out any study.

I believe the researchers hold the view that a fact can only be discerned from observation, that for the experiment to be objective the researchers must be completely unbiased to the point of ignoring reason, until the results are tabulated and then, only statistical analysis constitutes proof.

Does the true pragmatist fully rejects induction as a means to knowledge? And is the rejection of the inductive process at the root of pragmatism?

I have always considered pragmatism to be a beneficial trait for a person in business and a despicable vote-gathering tool in a politician. I’m beginning to see the personal destruction that the inability to understand the world or the actions of people around oneself would bring to any questioning individual. We all require an understandable future to feel comfortable about the future.

Without the ability to do inductive thinking, all issues boil down to my poll verses your poll. To the pragmatist, numbers count, status of supporter count, even the sophistication of the presentation makes a difference. Only the facts, if not presented glamorously are ignored.

Is there any thinking going on or is every thing decided by the opinion of an other, an outsider because the individual has lost the ability to discriminate? Does the pragmatist inevitably derive any sense of self-worth from the opinions of others? Is the modern belief that we need rules for everything the normal outcome of pragmatic thought? Is it responsible for the elitist idea, that the common guy lacks the ability to look after their own life and needs help?

I think it is the basis of the belief that only an event that has taken place before can be properly evaluated, the financial community's statement, " we're in new ground here. We've never tried this before so we don't know if the printing of this much money will work". And the pirate situation, where we fear the sailors may get hurt if they are given guns, or they may shoot the wrong people, or we don't know who to punish to stop the piracy.

I’m starting to think pragmatism may be responsible for far more damage than I had originally thought. Is this roughly how you see pragmatic thinking affecting the events around us?

Thanks Doug. I'm looking forward to that upcoming post also.

gary seinen