Imagining the Future & Economic Fictions

“The tradition of all dead generations weighs like a nightmare on the brains of the living,” Marx remarked in The Eighteenth Brumaire, and although we may all make our own futures, we do not make them just as we please. For such reasons, we social scientists tend to look to the past to explain the present, to show the particular historical trajectory that led things to be the way the are. All the same, privileging the past can allow us to forget that people in the present are not trying to (just) recreate yesterday, but have an eye toward tomorrow and next year and the lives of their children and grandchildren.

Unlike Marx’s vivid prose, today the dismal science (qua science) often forgets about the human passions behind their numbers. In the sterile statistical world of GDP and interest rates, it is easy to loose sight of the hopes and dreams, the aspirations and fears—what Keynes termed our “animal spirits”—and the individual lives behind all economic transactions.

In a remarkable new volume, Jens Beckert (Imagined Futures: Fictional Expectations and Capitalist Dynamics) moves us toward conceptually linking the passions and animal spirits of lived experience with a macro-understanding of the workings of capitalism. He does this by focusing on the future, and the fictive qualities of imagining the future that underwrite capitalist dynamics.

In this meticulously researched and engagingly written volume, Beckert uncovers the role of imagined futures as a fundamental driver of capitalism. It is the sort of observation that makes complete sense when you hear it, but that has gone largely unremarked upon until now. He shows that the future orientation of capitalism is based on competition and credit, fundamental elements at the very core of the financial system. (I would add, also the construction of desires, especially in late capitalist formations.) The financial system is built on credit, and demands continual expansion and continual returns. We are all in bad shape if growth stops, as our retirement and much of our insurance depends on markets continuing to expand—not to mention our subjective hopes and dreams. 

Beckert makes the provocative point that a lot of what we consider to be risk (and thus manageable, knowable, predictable) is actually uncertainty. We make up stories about the future, and convince ourselves and others that these are more or less likely (in a statistically predictable manner). For example, investment in innovation requires collectively deciding to believe in a fictional future. And, as with innovation, imaginaries can create structures that make real the fictional expectations (186).

In the realm of consumption, Beckert identifies two key types of symbolic value: (1) positional and (2) imaginative. Positional values (first observed by Veblen) derive from the scarcity of a good and how many others have it; rather than absolute material utility, the positional value of a good is only given by its relation to other goods. With imaginative value, “a good functions as a link between subject and her desired but intangible ideals” (195). Imaginative value gets at what it means to the person herself, more than just positional/status importance. With imaginative value, a good embodies something transcendent.

Berkert’s new book is exhilarating, opening up new possibilities for thinking about (and acting on) the market. It gives us a way to insert the social and the cultural back into the fundamental mechanics of capitalism, from wince it has long been banished.

Jens Beckert’s Imagined Futures: Fictional Expectations and Capitalist Dynamics.  2016, Harvard U Press.

Economics and Anthropology: Stated Preferences, Dignity, and Pleasure

Noted economist Daniel McFadden makes a radical call for his field to pay more attention to the insights of anthropology and other disciplines in his NBER Working Paper "The New Science of Pleasure."  Summing up lots of recent research, McFadden claims that economics needs to look other fields not just to explain irrational anomalies, but to consider that complex subjects are the norm.  As The Economist puts it, "Homo economicus, not his fallible counterpart, is the oddity."

McFadden is on comfortable disciplinary ground in arguing for the inclusion of insights from behavior economics and psychology--the endowment effect, hyperbolic discounting, and other such cognitive quirks have been well documented by Daniel Kahneman and others.

Where McFadden pushes the envelope is his call for incorporating anthropological and social science perspectives into economic modeling to understand the role of identity, social relations, and persuasion in decision making.

The manuscript I just finished (The Good Life: Aspiration, Dignity, and the Anthropology of Wellbeing) echoes a number of McFadden's observations, which I take to be an encouraging sign of the changing zeitgeist.  For example, while economists have long privileged revealed preferences (observable behavior) we need to take more seriously stated preferences (what folks say they want to do).  Revealed preferences are taken by economists to be more real: it is thought that when the rubber hits the road and the cash changes hands, one reveals one’s true preferences.  At the same time, a laser focus on revealed preferences discounts the importance of the cultural—the fact that choices are delimited, as in the all too common scenario we are faced with on the grocery store aisle and in the voting booth of choosing between the lesser of evils. Stated preferences, in not being bound to the immediate here-and-now, often take a longer-range view of overall preferences and ideals. Stated preferences are more likely to be concerned with non-material values; these are given more weight in the long term project of one’s life, one’s overall wellbeing. Often they are connected to identity.    

In my book, I also focus on the role of dignity and fairness, which The Economist also neatly highlights in their review of McFadden's paper: "Dignity is not something mainstream economics has much truck with.  But creating a sense of dignity turns out to be a powerful way of affecting decisions."  It is also a key element of wellbeing.