Saturday, May 9, 2015

The Long Arm of the Cold War

One thing I didn't mention earlier (but you can find in the literature) is that a great deal of rational choice and behavioral economics research was sponsored by the Defense Department. RAND Corporation, ARPA, Office of Naval Research...

You might call the military-industrial complex an "invisible hand" guiding vendors to the marketplace of methodological individualist ideas. Paid for with YOUR tax dollars -- or at least by siphoning off part of the increment in national income stimulated by funding research on rational choice. When I posted these thoughts to Economist's View, anne responded with the following column from 2011 by John McCumber:

The Failure of Rational Choice PhilosophyBy JOHN MCCUMBER
June 19, 2011 
According to Hegel, history is idea-driven. According to almost everyone else, this is foolish. What can “idea driven” even mean when measured against the passion and anguish of a place like Libya?

But Hegel had his reasons. Ideas for him are public, rather than in our heads, and serve to coordinate behavior. They are, in short, pragmatically meaningful words. To say that history is “idea driven” is to say that, like all cooperation, nation building requires a common basic vocabulary.

Rational choice philosophy promulgates a clear and compelling moral imperative: increase your wealth and power!

One prominent component of America’s basic vocabulary is ”individualism.” Our society accords unique rights and freedoms to individuals, and we are so proud of these that we recurrently seek to install them in other countries. But individualism, the desire to control one’s own life, has many variants. Tocqueville viewed it as selfishness and suspected it, while Emerson and Whitman viewed it as the moment-by-moment expression of one’s unique self and loved it. 
After World War II, a third variant gained momentum in America. It defined individualism as the making of choices so as to maximize one’s preferences. This differed from “selfish individualism” in that the preferences were not specified: they could be altruistic as well as selfish. It differed from “expressive individualism” in having general algorithms by which choices were made. These made it rational.

This form of individualism did not arise by chance. Alex Abella’s “Soldiers of Reason” (2008) and S. M. Amadae’s “Rationalizing Capitalist Democracy” (2003) trace it to the RAND Corporation, the hyperinfluential Santa Monica, Calif., think tank, where it was born in 1951 as “rational choice theory.” Rational choice theory’s mathematical account of individual choice, originally formulated in terms of voting behavior, made it a point-for-point antidote to the collectivist dialectics of Marxism; and since, in the view of many cold warriors, Marxism was philosophically ascendant worldwide, such an antidote was sorely needed. Functionaries at RAND quickly expanded the theory from a tool of social analysis into a set of universal doctrines that we may call “rational choice philosophy.” Governmental seminars and fellowships spread it to universities across the country, aided by the fact that any alternative to it would by definition be collectivist. During the early Cold War, that was not exactly a good thing to be.

The overall operation was wildly successful. Once established in universities, rational choice philosophy moved smoothly on the backs of their pupils into the “real world” of business and government (aided in the crossing, to be sure, by the novels of another Rand—Ayn). Today, governments and businesses across the globe simply assume that social reality is merely a set of individuals freely making rational choices. Wars have been and are still being fought to bring such freedom to Koreans, Vietnamese, Iraqis, Grenadians, and now Libyans, with more nations surely to come....


jed said...

All good stuff to bring to the surface. There are a lot of ironies here, including (a) Government sponsoring a sort-of-anti-government philosophy and (b) the philosophy lending itself to "rational calculation" of policy without actual capitalist enterprise.

But I'd like more information on one point. McCumber says "preferences were not specified: they could be altruistic as well as selfish." But my understanding is that this really isn't true -- "other regarding" preferences are ruled out, for technical and/or ideological reasons. (The other Rand hated altruism.)

Do I understand correctly? And if so, what, technically, is the definition of "other regarding preferences". I've tried to think that through but it seems impossible to capture cleanly.

Unknown said...

Walker this was brilliant. All of a sudden a lot of vague connections became a tight nexus. Lots to chew on here, thanx.