I really should have loved Michael Shermer’s The Mind of The Market, because I am not only a libertarian but also fascinated by evolution and its scientific, economic, and philosophical implications. Moreover, I believe sociobiology can provide extremely important insights that offer a grounding for political philosophy on a genuine, objective human nature. And yet I found the book disappointing and even unconvincing. It is chock full of the hasty generalizations and oversimplifications that have led so many people to keep sociobiology at arm’s length. A good science-based defense of libertarianism will have to be much more rigorous than this.
Shermer’s overall point is to argue that free markets address the social and ethical needs that evolution bred into human nature. On that level of generality, the thesis is unobjectionable—indeed, it simply must be right, since free markets are objectively preferable to centrally planned economies on every conceivable level, because people find them useful and resort to them when they have the opportunity, because centrally planned economies are such disastrous and inevitable failures, and because human beings are in fact products of evolution. But the question is in the details. As Shermer himself acknowledges (although at times he seems to forget it) such social science questions are vastly more complicated than the questions of, say, physics, where models and abstractions can be formulated with great precision. Given the infant state of much of this science, arguments should be advanced with humility.
So when Shermer makes arguments about, say, trust, by pointing to neurotransmitters and fMRI scans, one keeps hoping he’ll add a bunch of qualifiers and acknowledgements that these sciences are new, that the experimental results are not well understood at this point, and that jumping from “oxytocin is associated with orgasms, chocolate, and breast-feeding” to “oxytocin is the trust chemical” is simply not justified. Shermer does include many such disclaimers—but not nearly as many as this book needs.* And he rarely addresses just how dubious much of this research is. For example, he uncritically describes Benjamin Libet’s 1985 experiment timing when people decided to act and when they actually acted—which supposedly shows that people decide to act after they have acted. But, to name one instance, Daniel Dennett explained at length the serious problems with the Libet experiment (or at least with this conclusion) in his recent book Freedom Evolves, and Shermer does not address or cite such criticisms.
This occurs frequently throughout the book, and it is particularly glaring in places where he is using some of the most speculative, cutting-edge science. He repeatedly cites fMRI studies that really don’t tell us that much about what goes on in the brain. (In an endnote on p. 281, he does acknowledge that fMRI images only localize brain activity to an area that contains millions of neurons, therefore not exactly “localizing” brain activity with that much precision.) He accepts without question the existence of the “endowment effect,” even though this is disputed among economists. He repeatedly mischaracterizes the “selfish gene” hypothesis. This all seems to be of a piece with his frequent misquotation—as when he quotes the well-known Edmund Burke quip about “the only thing necessary for evil to triumph” which Burke never said (Shermer even provides an endnote citation—without a page number!) and when he thrice uses bogus Thomas Jefferson quotes (most notably at the opening of chapter 12, where he calls the fake quote “one of [Jefferson’s] most trenchant observations,” even though the quote doesn’t even sound like Jefferson’s writing style.)
I think the biggest flaw in the book is that it doesn’t really make much of a systematic argument: nowhere does Shermer actually show that markets are moral, or even discuss in much detail the relationships between markets and morality. His chapter on happiness has some very interesting details (as well as some dubious ones, like his uncritical reliance on a recent study of dogs wagging their tails that claims that they wag their tails more to one side than the other when happy—a conclusion that I would take with a small pile of salt, at least until the experiment gets replicated several times), but it doesn’t explain why happiness ought to be a consideration in political economy. I believe it ought to be, of course, but Shermer doesn’t really make the argument or connect it to profit-maximizing behavior.
Indeed, Shermer argues that human beings have evolved certain “moral feelings”—a variety that includes everything from love, to envy of other people’s wealth, to aggression in policing social rules, and so forth—yet he doesn’t establish any kind of hierarchy that would explain how these feelings fit into an abstract theory of ethics, let alone of politics. It is true that we evolved these feelings, and that many of them are holdovers from more primitive days, but so what? If I feel spiteful toward a man because he’s driving a BMW while I’m driving a Saturn, and I translate that envy into voting for a Democrat who’s going to soak rich bastards like him with a huge tax increase, have I acted morally or not? I’ve acted on the basis of my impulsive moral feelings, after all, ones that evolved over aeons. But that hardly makes it moral. Morality is a matter of philosophy, not primarily of anthropology, and while a history of morality is useful and interesting, it hardly makes the case for free markets or even for why envy is a bad thing.
Shermer doesn’t make a philosophical analysis of moral beliefs**: he notes that religion makes people feel happier because they feel like they’re part of a group, but that hardly makes religion moral, and the fact that religion is irrational must be considered when we evaluate the self-reported happiness of religious people. They say they’re happy, but if their happiness is based on a delusion, is that really happiness, or some good-enough substitute? (Not to mention the fact that many religions require self-reported “joy” as a doctrinal prescription, undermining the trustworthiness of self-reports.) The bottom-line question, “is profit-maximizing trade a moral activity or not,” can’t be answered without the analysis that Shermer avoids here.
To put it more concretely, he contrasts Google with Enron as examples of morality in the marketplace, but he never really explains why Google’s actions are moral. Indeed, he seems to assume that they’re moral because they give free stuff to their employees and produce idealistic literature about their goal of liberating information. But this is not what makes Google moral, assuming it is. And the fact that Enron’s corporate environment was unpleasant may have led to the failings that caused the Enron scandal, but they do not by themselves make Enron immoral. (I believe the morality or immorality of economic behavior depends on its productivity, because productivity is a value, since it fosters individual human flourishing.)
Frustratingly, there are seeds here of an objective answer to the question Shermer starts out to address. He rightly concludes that evolution has led to the formation of an objective human nature, which does account for our behavior and our happiness within broad cultural boundaries. “Any theory of economics must begin with a sound theory of human nature.” Exactly. But the next step is not economics but morality: given the natural needs of human flourishing that Shermer describes so well in chapter 8, why is flourishing a proper goal of human activity? Should it be individual flourishing, or is selfishness evil? Is self-sacrifice moral? Finally, given the answers to these questions, what sort of social institutions are appropriate? Shermer skips over that middle part. (Fortunately, they have been well addressed in many other writings, like Binswanger’s Biological Basis of Teleological Concepts, Den Uyl and Rasmussen’s Norms of Liberty, Arnhart’s Darwinian Natural Right, Tara Smith’s Ayn Rand’s Normative Ethics, Philippa Foot’s Natural Goodness, and of course Aristotle’s Nichomachean Ethics.)
Things are only slightly better when Shermer discusses economics. Surprisingly, he does not really explain how the market has a “mind,” as the title implies. He briefly mentions Mises’ explanation of the calculation problem; he talks about the invisible hand and about bandwagon effects, but his discussion of how prices convey information that encourage allocative efficiency takes up two pages, and—what really surprised me—he never mentions prediction markets, which is the most intriguing example there is of the market having a “mind.”
I wholeheartedly agree with Shermer that it is regrettable how many people who understand and appreciate the decentralized, bottom-up, emergent process of natural selection in biology are just ignorant of the fact that economies work the same way: they think that economies and social institutions must be planned by an Intelligent Designer (i.e., government). And I entirely agree that free markets are moral, because they furnish the necessary conditions for human flourishing, which is a proper moral goal. But an argument to that effect will need to be more organized, more skeptical, and more tightly reasoned. And it will have to address many issues left alone in this book—such as how centrally planned economies are not just inefficient and unnecessary but positively immoral.
*-Often, Shermer will use appropriate disclaimers the first time he mentions a scientific possibility, and then discard them the second time, as on pp. 186-87, where we find the following: “an increase in per capita GDP raises trust, and an increase in trust raises growth in per capita GDP, so again we find a positive feedback loop driving the system.” Suffice to say that this is a case of correlation being mistaken for causation.
**-Of course it is possible he does this in detail in his other books, none of which I have read.
Update: More here.