Austrian Economics Is On The Right Side.
Iain McGilchrist is a neuroscientist, psychiatrist and philosopher who devoted his research work to illuminating the proposition of hemisphere differences in brain function. We all have a left brain hemisphere and a right brain hemisphere, and they function (or “see the world”) differently. McGilchrist makes long lists of the differences in worldview attributable to the hemispheres. We can selectively highlight a few here:
The left hemisphere (LH) deals with detail, the local, what’s in the foreground, and easily grasped. The right hemisphere (RH) deals with the whole picture, including the periphery and the background. this local versus global distinction is one of the major differences in the processing of the two hemispheres.
- The RH is on the lookout for and better st detecting and dealing with what is new. The LH deals with what is familiar.
- The LH aims to narrow things down to a certainty, while the RH opens them up into possibility. The RH is comfortable with ambiguity and holding pieces of information that appear to have contrary implications, whereas the LH makes an either/or decision in favor of one of them.
- The LH’s world tends towards fixity and stasis, that of the RH towards change and flow.
- The RH recognizes uniqueness and individuality. The LH tends towards more generalization.
- The RH is essential for empathy, and emotional receptivity and expressivity are greater in the RH.
McGilchrist’s thesis is that the left hemisphere and its mode of thinking has become dominant in today’s world, and that dominance is a disaster for civilization. Why? What he calls the left hemisphere world
- has lost the broader picture
- favors data over knowledge
- has lost the concepts of skill and judgment
- favors bureaucracy (procedures that are known and predictable)
- elevates quantity as the only criterion versus quality
- dismisses common sense
- discards tacit knowledge
- has a need for total control
- has more anger and aggression
- loses social cohesion
- is characterized by passive victimhood
In the field of economics, we can clearly see McGilchrist’s left hemisphere versus right hemisphere dominance in action. Mainstream economics, the style that is practiced by government and the Federal Reserve, taught in academia and written about in the New York Times, exhibits a left-hemisphere dominated pattern. Austrian economics is more right-hemisphere, in stark contrast.
|mainstream economics||Austrian economics|
|Principally concerned with mathematicization, modeling, aggregates and related variables (x causes y).||Principally concerned with the economic system and its emergence as a result of the purposeful actions of individuals reasoning subjectively.|
|Empirical, working with data series and tables and numerical outcomes.||Verbal and logical, working with language and reason, observing behavior to deduce motivation and purpose.|
|Captures data in re-usable mathematical symbols and algebraic formulae. Seeks to construct reusable/repeatable models.||Deals with uncertainty, dynamics, constant flux, and flow.|
|Equations are solved, models are completed and self-sufficient. Point predictions.||Descriptive and not predictive. Assumes constant change, uncertainty and non-linearity.|
|Positivist, adopting the methods of physical sciences.||Humanist, adhering to the approach of social sciences.|
|The economy as a machine to be tuned.||The economy as a complex adaptive system. Interaction of many components. Emergence.|
The focus of Austrian economics on real people, individuals interacting in the pursuit of subjectively-assessed value, creating a dynamic flow of activity of benefit for all contrasts starkly with the mainstream economics focus on mathematical models and solving equations, aggregate quantities like GDP, and unremitting regulation and government intervention aimed at control.
Until we rebuild our institutions from a more balanced perspective, releasing the hold of the left hemisphere on our thinking and behavior, we are condemned to follow the downward spiral into a command-and-control economy.
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