Mind Of The Market

A very fascinating and enlightening study of economics from an evolutionary vantage point.Evolutionary economics, complexity economics, behavioral economics, neuroeconomics, and virtue economics.Wonderful exploration of the latest science and history in all these areas.Outstanding."The best politico-economic system to date is a liberal democracy and free market capitalism, or democratic-capitalism. In a system of democratic-capitalism, social liberalism and fiscal conservatism is a synergistic marriage that leads to the greatest prosperity, the greatest liberty, and the greatest happiness for the greatest number."Free markets, as much as they are possible, with minimal top-down regulation or hindrance, should be the dominant and guiding principal in creating a flourishing society.This is a book about the science of why and how human brains function the way they do regarding morals and economics, exploring the evolutionary pathways, both biological and social, that led to human brains and human society.It is about the many "built-in" cognitive biases and "flaws" of human brain function, fleshed out with the latest neuroscience, etc..., and how these biases and evolved brain functions affect our morals and economic thought, often irrationally.It is about the history and psychology of the many philosophies regarding morals and economics.It's not so much a political book, as it is a science book about the evolution of human brains, human society and its norms.

In The Wealth of Nations and The Theory of Moral Sentiments, Adam Smith identified the selfish and selfless or altruistic components of self-interest behavior. The former is referred to in economics as crass self-interest, and the inclusion of the latter is referred to as enlightened self-interest. It is argued that just as selfishness is in a person's self-interest, so too is selflessness or altruism. Selflessness, for example, can make a person feel good about himself or herself, win the respect and admiration of others, enable a person to achieve a goal he or she could not achieve on his or her own, or permit a person to claim a deduction of a charitable contribution on his or her income tax return.Most people are aware of the selfish component of self-interest, but recognition of the selfless component is fairly recent. In The Mind of the Market: How Biology and Psychology Shape Our Economic Lives, Michael Shermer expands Adam Smith's treatment of the latter, drawing on the disciplines of evolutionary psychology, sociology, biology, and economics. He stresses humankind's evolved capacity to cooperate as well as compete in efforts to obtain what is wanted. Accounting for both components of self-interest behavior is necessary when explaining the economic behavior of people in both private and public sector markets. The book is well-written and easily understood, much like Shermer's other publications, including his popular column in Scientific American. (This review is also published on frankzahn(dot)com.)

Michael Shermer is always an engaging and informative writer, and this book is no exception. There is quite a bit of good science in here, and plenty to stimulate discussions (I used the book as a summer reading with my biology graduate students, and we all enjoyed it). However, Michael at times gets a bit too close to the evolutionary psychology perspective on things (which I am very critical of), and his libertarianism shows up here and there (again, a position I don't share). Some of my students found that there are too many personal anecdotes, though of course that's a matter of personal stylistic preferences. Again, more than worth the money!

Michael Shermer's book is a wonderful romp through cognitive science (fMRI's et al.) & the abounding evolutionary disciplines including economics, biology and physics. Wonderland. One of its two guideslines is Spinoza's pledge not to scorn human actions but to understand them.He explores the limits and nature of human consciousness and awareness and, as he is wont to do, bites most everyone's dog. So it helps to limber up and step back as you enter this book. And enjoy his splendid investigation of why and how we behave. The Mind of the Market: How Biology and Psychology Shape Our Economic Lives

The chapter on our hard wire biases is excellent. It pulls a lot of information together and is a great introductory primer for those just getting into cognitive theory or a first rate summary for those more well versed. Shermer also shows great clarity of thought on whether we are wired good or bad, noting that moral decisions are often driven more by the circumstances than the wiring. Good stuff on why do-re-mi does not make us happy; we insist on judging oursleves relative to others, and fail to follow the sage of advice of golfer Tom Watson that life is me vs. the course, period. The final Big Idea: just as travel is fatal to prejudice, so is trade and commerce with trusted others fatal to a me,me,me world. Why? When we trade our mind is wired to release dopamine and oxytocin, so that we become "hooked" on the drugs. A worthwhile contribution.

I try to read everthing Michael Shermer writes. This was a little hard to follow. I watch squawk box ( a financial program) most mornings, and I realize the market is driven by emotion as much as by logic. This book did not give me any new information I felt I could use.

This book kept me interested from start to finish. Each chapter gave me new things to think about, as well as solidifying some ideas in my mind such as the power of cooperative strategies within game theory and the wider world.

The writings do not have significant background material on the Financial market. Yes, it gives a good perspective of the historical and socialogical background of human actions and expectation. OK but not great.

In 2010 it's been 151 years (and counting) since Darwin and neo-Darwinism since have failed to generate a theory of culture remotely to the level that Darwin and Wallace (both naturalists) established with their theory of evolution. The most modern sociobiological attempt to provide a Darwinian understanding of culture (which is quite different from taking on culture in it's fullest sense)is by reference to an evolved psychology (Evolutionary Psychology) and this is one approach that Shermer harnesses in trying to convince the reader that economic culture is a Darwinian process and that the economy of human society is the same as the economy of nature.I'll repeat, there is no general theory of culture in the way we have a theory of evolution which binds the biological and botanical species in the organic setting of nature. So Shermer has to pull strands together and 'create' an argument which is largely philosophical, shallow theoretically and is rooted on a dogmatic attempt to construct the illusion of natural selection in the economic realm even though natural selection was a process metaphorised from 'artificial selection' (human design) which was the focus of Darwin's first chapter of 'Origin'.Shermer calls his approach 'integrative science' and from the editor of Skeptic magazine he should really have had his Skeptic head on rather than his Shermer one on. This book never breaks free from narrative because there is no underlying structure to hold it together and the reader is subject to the daily whims and moods of the writer, which is always a danger for books of this kind and that's why an editor can bring a much needed second opinion. I'll give you an example as to the whimsy of Shermer's narrative.[p.8] 'The evolution of our material economy proceeds in an analogous manner through the production and selection of numerous permutations of countless products.'Shermer quite rightly points out that evolution (and this includes natural selection as one mechanism) 'is unconscious and nonprescient - it cannot look forward to anticipate what changes are going to be needed for survival.' [p.8]Immediately this should raise alarm bells because the human system of economy is globalising through planned processes and is 'man'aged in a way that the natural economy is not. In the UK alone without governmental stimulus packages, loan guarantees, incentive schemes and £200 billion in quantitative easing (just printing money) completely undermine the argument Shermer is trying to make.He is aware that there are 'top-down' processes at work through 'the intelligent design' of Government and this is a point Niall Ferguson makes in his 'Ascent of Money' book and similar attempts to Darwinise in explanation the financial history and present of the human economy. The planning, governmental stimulus and most evidently when we just create money through the alchemical quantitative easing, undermine Darwinian arguments and make such attempts, well, look a little desperate and ultimately lazy.Then on page 42, after a narrative journey Shermer then feels he has done a good enough job convincing the reader to deliver a knock-out blow:'Adam Smith showed how national wealth and social harmony were unintended consequences of individual competition among people. Charles Darwin showed how complex design and ecological balance were unintended consequences of individual competition among organisms. The artificial economy mirrors the natural economy.'Mirrors.So from analogy we now have the assertion that the artificial, managed, planned economy of humankind mirrors the natural economy. Shermer is clearly right of centre on political economy and it penetrates almost every page. This is not an objective evaluation of culture and economic culture but an attempt to shoehorn (he calls it integrative science) two beliefs he holds dear: Darwinism and free market economics. When it comes to understanding culture however, these two approaches are deeply flawed. There is a fluidity to the market but the essential managing influence of governments tempors the 'free' in free markets. Moreover, Shermer only attributes top-down to governments when there are many times more lobbyists and special interests trying to shape the process of legislation which makes the very notion of 'government' deeply porous. Even more so if we take the US economy and the character/nature/culture of political funding. Shermer's lack of reference to slavery, indentured labour and low-wage labour as derivative (not just an unintended consequence) of free market capitalism only adds to this very personal view of how the economy works and by framing it as 'integrative science' he weakens the science brand.The big differences between the market economy and the economy of nature concerns the notion of efficiency and sustainability/surplus. Shermer never gets to grips with either of these two issues and the book is poorer for it. Having said that poorly argued books can still be a good read and I would recommend this book. It makes it all the more important that the social sciences generate their 'theory of everything' in a general theory of culture.I'll leave you with one more 'stretch' that Shermer makes in this book. The connection between the artificial economy and economy of nature has went from 'analogy' to 'mirrors' just by the ebb and flow of Shermer's narrative, nothing more. On p.270 at the 'Notes' section Shermer quotes a section from Adam Smith's invisible hand which includes reference to 'the rules of justice', 'system of policy' and 'freest competition'.1. If nature is 'tooth and claw' then the reference to 'rules of justice' is not applicable to he nature setting.2. With no foresight, there is no need to plan and that is what we find with the evolutionary process, not just a lack of need for policy, but there is no directed policy in nature. No written laws, rules, policies and procedures shaping action and thought like there is in the artificial (non natural) economies of man, of which there are several systems of economy, changing over time in a way the imperatives of evolution do not.3. Adam Smith would have to have rewrite core aspects of how he thought capitalism would work if he were here today. The amount of surplus generated by this system would be beyond his comprehension and also the measures that the hyper rich would go to in protecting their wealth through tax avoidance, off-shore accountancy and other 'creative accounting' measures. Every penny that is locked into any one of these measures is not a free penny, it is the prisoner of a mind that uses money for the exact opposite purpose for which it was designed, not to spend but to store, which is different from saving for a purpose. I've already mentioned the influence of special interests and 'big business' and how they undermine the notion of freest competition and this can be seen by the way Western economies and nations can set the terms to a degree with emerging economies. So while the notion of a free market can imply equal opportunity for all the reality is quite different.And how does Shermer's viewpoint summarise this ill-fitting comparison with the economy of nature?[p.279] "Read 'animal' for 'man' and 'population' for 'people', and we have a perfect description of natural selection in nature."Analogy.Mirrors.Perfect.It's a poorly reasoned book which tells the world of knowledge how short neo-Darwinism is in accounting for culture's complexity but it's still a book worth reading all the same.