Right to rampant risk-taking (7 Sept 2009)

Yesterday I was wondering about whether it makes since to curtail individual freedom in order to achieve a larger efficiency that no one individual will experience as directly beneficial. In particular, it's possible that we like to think we can outwit everyone else when we can't, but that fantasy is more beneficial to us than a smoother-running system.

Steenbarger, a guest poster at Barry Ritholtz's Big Picture blog, calls attention to the research that suggests that certain traders are addicted to playing the market recklessly.

It turns out that a large body of psychological research finds that people who are sensation seekers tend to also be risk takers. Indeed, many hapless traders are attracted to markets precisely because of the stimulation of risk and reward. At the extreme, this makes trading an addiction, not a disciplined quest to exploit market inefficiencies.

Obviously this means market players are not all contributing useful information, and markets themselves are not automatically efficient in that sense. It may instead provide opportunities to express irrationality, to defy reason and take defiant chances. Markets are just another social medium in which individuals can try to leave their distinctive mark, even if it requires acting insanely. And markets may then conduct misleading information to other participants, compounding the confusion and generating unexpected or suboptimal outcomes.

Does that mean such individuals' participation in markets should be curtailed in the name of perfecting markets? Of course we shouldn't, but I wonder though if all the talk about the unfortunate reality of inefficient markets will at some point lead to attempts to perfect them by force and prohibition. A perfect market, as Albert Hirschman pointed out in his "Rival Interpretations of Market Society," requires that participants not be connected by any ties other than commercial ones, ties that might affect their economic-rational judgment: "Involving large numbers of price-taking anonymous buyers and sellers supplied with perfect information, such markets function without any prolonged human or social contact among or between the parties." Perhaps the isolating aspects of capitalist society are self-reinforcing, or at least are reinforced by economistic technocrats who wish to conjure their perfect market, which would reinforce the plausibility of their predictions and enhance their credibility and power. The more that traditional ties are broken, denied, or prevented from forming, the more "perfect" markets can be become; efforts to promote "rational thinking" over emotional or altruistic thinking may work to further our way toward such perfection, until we are all perfectly anonymous in our solipsistic individuality.

Persuasion industry's assault on personhood (5 Jan 2009)

In Shifting Involvements Albert Hirschman cites this 1971 paper by philosopher Harry Frankfurt (who has since gone on to mild mainstream notoriety because of his treatise On Bullshit), in which he calls attention to "second-order desires", or the desires we have about our primary desires. These are what we want to want and, according to Frankfurt, make up the substance of our will, and whether or not we experience it as being free. Frankfurt theorizes that "the conformity of a person's will to his higher-order volitions may be far more thoughtless and spontaneous" than it is for others, who agonize over being able to act on their preferred desires (e.g.: I want to read Marx; I end up playing 1942 on a video game emulator). "The enjoyment of freedom comes easily to some," Frankfurt notes somewhat depressingly, "others must struggle to achieve it."

Hirschman cites Frankfurt's surprisingly accessible essay merely to highlight the fact that we often have multiple sets of preferences simultaneously, which foils the more simplistic models of neoclassical economics with regard to consumer demand. If we want contradictory things at any given moment, it's not clear where we will find our marginal utility; if our wants change in the process of satisfying them, then our incentives are in perpetual flux, flummoxing the calculus that is presumed to drive rational decisionmaking. We end up having to commit now to wants we may not possess in the future, or we may reject one desire in favor of another now, only to find they have switched places later. And so on.

But Frankfurt's essay seems also to have a bearing on the larger question of how the persuasion industry (marketing, advertising, and to some degree, entertainment) scuttles our sense of selfhood, which, Frankfurt argues, hinges on our expression of will. The persuasion industry is seeking always to confuse the communication between our first- and second-order desires; it's seeking to short circuit the way we negotiate between the many things we can conceive of wanting to come up with a positive will to want certain particular things at certain moments. It seeks to make us more impulsive at the very least; at worst it wants to supplant our innate will with something prefabricated that will orient us toward consumer goods rather than desires that are able to be fulfilled outside the market. This can occur without our having been persuaded directly by the advertising messages, simply by overloading us with information and unleashing the "paradox of choice" and worse, optional paralysis. Frankfurt describes it this way:

People are generally far more complicated than my sketchy account of the structure of a person's will may suggest. There is as much opportunity for ambivalence, conflict, and self-deception with regard to desires of the second order, for example, as there is with regard to first-order desires. If there is an unresolved conflict among someone's second-order desires, then he is in danger of having no second-order volition; for unless this conflict is resolved, he has no preference concerning which of his first-order desires is to be his will. This condition, if it is so severe that it prevents him from identifying himself in a sufficiently decisive way with any of his conflicting first-order desires, destroys him as a person. For it either tends to paralyze his will and to keep him from acting at all, or it tends to remove him from his will so that his will operates without his participation. In both cases he becomes, like the unwilling addict though in a different way, a helpless bystander to the forces that move him.

In short, optional paralysis eradicates our identity, especially when we are conceiving of it as being expressed by marketplace decisions. We may argue that it is foolish to found our identity on such stuff, but that doesn't render this sort of anxiety, this being "destroyed as a person," any less existentially terrifying. (It's a good reason, however, to question why identity has become so bound up with consumerism and explore alternatives.) Heavily marketed goods in the competitive marketplace translate into eroded confidence on the part of consumers in what they want and the ultimate meaning of their desires.

Exacerbating the problem, and heightening our ambivalence and akrasia, is that the condition of being a "helpless bystander to the forces" that move us is perpetually in the process of being redefined in marketing discourse as a pleasurable, desirable state; i.e. as a second-order volition worth embracing. Passivity -- an instinctual and inevitable response perhaps to being overloaded with information -- is entertainment, is convenience, is relaxation, is anything but helplessness and alienation from ourselves.

With passivity toward the operation of our will encouraged and celebrated, it's no wonder that we experience more and more of life as being governed by "addictions" -- by compulsions beyond our ability to control -- and that we routinely describe ourselves as becoming addicted to things that are not actually physically addictive (shopping, sex, the internet, World of Warcraft, Facebook, Jamba Juice, etc.). It may be that we want not to be able to control ourselves, as this resolves the contradiction inherent in wanting to will passivity. Our attempts to rationalize our desires fluctuate between pleasurable surrender (we are serenely impulsive, with the speed with which our impulses are gratified serving as an index to our prosperity and to our autonomy) and medicalized despair (we are addicts who are not responsible for our actions, which we stand removed from but which we can't alter to reconcile with our other better desires as yet only vaguely formulated but having something to do with conquering impulses). Our inability to know what we really want ends up being either the illusion of freedom, of keeping options open, or it ends up feeling like a pathological condition that we vainly await the cure for.

Meaningful inconvenience (31 Dec 2008)

Instant gratification, as we all have learned, is readily available on the internet. If I wanted to and had some ethical flexibility, I could check out PopMatters' list of top albums for the year, do a little creative searching involving the word torrent and have all the ones that piqued my interest. The same goes for games, films, books, basically anything culturally current. It is the apotheosis in the society-wide trend toward convenience. We get what we want with minimal fuss and as little human interaction as possible. The triumphs of Amazon.com in the midst of the worst retailing season in modern history also demonstrate how online convenience has conquered America.

But is the ensuing hegemony of online retail merely setting up a backlash? Will we rebound into a yearning for more complex and challenging shopping missions? Will we miss the so-called experience economy? Let me once more go to the bottomless well of insight that is Albert Hirschman's Shifting Involvements. In discussing how disappointment with consumerism might lead to a widespread embrace of public involvement, Hirschman points out that part of the appeal of civic life is that it makes for "a confusion between striving and attaining" that allows the process of involvement to provide as much pleasure as actually achieving the ends one strives for. The process becomes part of the pleasure, if not the better part of it, augmenting the pleasure achieved from the ostensible goal of the process. Therefore the "free-rider problem" -- in which people wait for other people to do the work of public action -- to a degree vanishes. "To elect a free ride under the circumstances would be equivalent to declining a delicious meal and to swallow a satiation-producing pill that is not even particularly effective." Free riders get none of the pleasure of effort for its own sake, which becomes more and more appealing the more commercial interests try to make our acquisitive life effortless, and the more we are stung by the disappointments of mere things. They never satisfy for long, they lose their novelty, they fail to deliver their full promise, they cease to reflect who we are, etc. Public action, as action, expresses our being in a different way, as something that's not merely curatorial. And in public action, the pleasures from the process and the goal compound rather than alternate, as they often do in the classical economists' analysis of consumption, in which we exchange hard-earned money for goods that then provide pleasure. Hirschman points out that under the ordinary conditions of exchange, "the separation of the whole process into means and ends, or costs and benefits, occurs almost spontaneously" -- separating out the pleasure of the process of striving from the pleasure of attainment. This seems to be a perfect description of the instantaneous, near friction-free gratification of online shopping.

But don't we want shopping to be more like public action, and have the process of seeking our holy-grail goods be a substantial part of the pleasure itself? Thanks to digitization, anyone can have lots of media-based stuff, which for me anyway has long been the only stuff that mattered. (I haven't grown up into the world of home furnishings yet.) So the pleasures of mere possession are threatened, as are the pleasures of use -- when you have 49 days worth of music to listen to, it becomes hard to know where to start -- it even becomes a positive source of anxiety. Acquiring the next album seems relatively simple and possibly more pleasurable by comparison.

Hirschman evokes the pilgrimage to describe a sort of private consumption that thrives on difficulty, that becomes more meaningful the more trouble they cause: "The discomforts suffered and perils confronted during the trip were part and parcel of the total 'liminal' experience sought by the pilgrim." The next wave of retail may make a more explicit attempt to incorporate this kind of arduousness into it, meaningful inconveniences that during pilgrimages can take on symbolic significance. In other words, shopping may customarily incorporate the difficulty level that hardcore collectors already make their raison d'etre -- the sort of people who fly to Japan to get a pair of limited-edition sneakers at a boutique whose very existence is a closely guarded secret. Perhaps all the stores of the future will be secret boutiques. (Ugh. I sound like a futurist all of a sudden.)

What ads sell when they fail to sell (30 Dec 2008)

Most people, myself included, are pretty confident that ads have a minimal effect on their decisionmaking; they might make us aware of the existence of certain things, but the decision to act is ours, motivated by some deep inner urge. That analysis, which I often use myself when rationalizing some marketing-driven purchase of my own, seems a fundamental misunderstanding of what advertising accomplishes collectively. Individual ads may inform and persuade us about particular products, but this is what we expect of them, and we stoke our resistance accordingly. We regard the specific advertised product skeptically.

But that expense of skepticism may make us vulnerable to marketing's less overt goals, which are about drumming up consent for consumerism's value system. Sometimes this is a matter of attuning us to its peculiar kind of associational illogic, in which fetishized products have transformational capabilities and sit at the center of all sorts of dramas within everyday life. When commercials make no sense or seem extraordinarily stupid ("the coldest tasting beer" campaign, for example), they are working on this string, trying to establish in our minds that connections between products and feelings don't have to make rational sense to be effective, to exist, to affect our lives. Of course there's no logical reason a shampoo will make us attractive, but the advertising is trying to persuade us that rationality is irrelevant, that feeling flows through different, equally authentic channels. Whether or not we think feeling flows from the particular product advertised becomes irrelevant if we are that much more convinced that it could flow from any product.

Marketing sets up the nonrational system of association that is to govern our appreciation of the things we buy, and at the same time, it encourages us to blame ourselves if we end up disappointed. After all, it's our fault if we end up with irrational expectations because we've been drawn in by commercials that so clearly were nothing more than "fun" fantasies and jokes about quotidian life. In Shifting Involvements, Albert Hirschman remarks on the existence of insidious products (he cites psychoanalysis) which have blame-shifting built into them. With such products, our disappointment with how they failed to transform us turns into disheartening disappointment with ourselves -- we feel as if we had let the product down. ("This shirt had the capacity to make me sophisticated, only I persisted in my boorish ways. Why can't I live up to the sophistication of my wardrobe?") Hirschman suggests we can turn on ourselves in respect to "any purchase that requires discrimination on the part of the buyer." We are always in danger of not living up to our own good judgment. The degree to which we take responsibility for the disappointment inherent in our purchases protects consumerism overall. So ads will frequently work in a theme of how "you make the difference" with the help of a product, which unleashes your potential. Then, when nothing happens, it is because you didn't have that potential, upon which another product can be marketed to dig deeper into you to find it.

Ads also reinforce the ideology of the soundness of private pursuits. As Hirschman notes, consumerism rests on "an ideology that proclaims self-interested behavior as a social duty":

Accordingly, the dogged pursuit of happiness along the private road is not, as we often tend to think, "what comes naturally"; rather, it is presided over and impelled by an ideology which justifies it, not only in terms of its beneficial results for the individual pursuer, but as the surest and perhaps only way in which the individual can make a contribution to the common good.

This is the model for voting through the market as a way of moving society toward some ideal form. If only everyone stopped buying goods made in Chinese sweatshops, sweatshops would not exist. All we need to do is arrange a boycott and buy other things. The barrage of ads associated with an election day theme reinforces this ideology, equating consumer choice in the market with political expression. Sometimes these connections seem comically hyperbolic (vote for fried chicken today!), in which case they work on both this front and the illogic front, conveying a sense that we belong to a society that doesn't privilege rationality and one in which our choice is held to be stupendously significant, no matter how banal the substance of it.

Hirschman continues:

The ideological claims made for the private life thus sustain the individual's quest with two messages: one, the promise of satisfaction and happiness [this is typically the specific, overt content of an ad]; and two, the assurance that there is no need for guilt feelings or regrets over the neglect of public life."

This is the message that slips through even when we resist the specific appeal for a particular product. We don't choose that product, but we accept the flattering idea that such a choice is all-important and our primary social responsibility. Rejecting what is advertised may actually be a way of simultaneously affirming the whole structure which makes possible such a rejection and dignifies it.

More on consumer disappointment (29 Dec 2008)

In Shifting Involvements, Albert Hirschman takes a prolonged look at the ways that disappointment is built in to consumerism. Drawing on Tibor Scitovsky's The Joyless Economy, Hirschman argues that what is pleasurable is not merely the use value of the goods and services we buy, but the process of their taking us from dissatisfaction to satisfaction. That move is what we register as pleasure, not the fact of being in the satisfied state itself. If we merely remain satisfied on account of something we've purchased, then we experience no joy. From this point of view, pleasure hinges on our capacity to be dissatisfied.

This may be in part why needs turn out to be such slippery things, in that we often think we want thing until we have it, whereupon we discover that we really want something else. This movement to disappointment may be less a matter of fussiness than a protective move to guard our capacity for pleasure. Hirschman points out that "we never operate in terms of a comprehensive hierarchy of wants established by some psychologist surveying the multifarious pursuits and 'needs' of mankind." In other words, the hierarchy is always in flux, always in the process of being articulated through our life activities -- in consumer society, predominantly through shopping. We discover who we are and what we want in the process of shopping for ourselves. Shopping becomes the end in itself and the acquired goods mere souvenirs of the pleasure process. (This is the "experience economy" that zealous marketers frequently champion.) But at the same time, we have an innate tendency to be disappointed with what we buy, to preserve the capacity to renew our expectations for surprise, for a repeat of the satisfaction-seeking process. When shopping and identity are conflated, as they are in a consumer society, the result is an inherent, structural tendency for us to be continually disappointed in who we think we are, accompanied with an increasing tendency to try to solve that problem through acquiring more stuff. Journeys of self-discovery launched in the mall are almost by definition never-ending. There are good reasons for our identities to be somewhat fluid and open-ended, but anchoring them to consumer goods subjects them to a distorted set of criteria that undermine any sense of stable accomplishment. Our self-concept gets linked instead to the vagaries of the fashion cycle rather than to our own rhythm of personal growth. We become alienated from our own development and start to feel like we harbor multiple personalities, all of them shallow and fickle.

A similar paradox adheres to our efforts to customize consumer goods. These efforts seem to make the product more durable and less prone to dissatisfy in that it is reshaped to express and suit our needs, and in that we remain actively engaged with it, remaking it afresh. But the customization process may in fact reflect a dissatisfaction with the good's durable usefulness -- we want to distract ourselves from its humdrum utility and render it more exciting, though this excitement can only be short-lived, more so than its utility in most cases. Hirschman points out that in many durable items, we long for a "certain amount of 'built-in obsolescence,' " since this makes for a "radical shift in the pleasure-comfort balance." Replacing a good gives pleasure; getting more use out of something we already have merely supplies unrecognized comfort. By customizing something, and tying it to an expression of identity in a particular moment, we can build in an object's obsolescence by ourselves, without having to rely on the thoughtfulness of manufacturers making goods shoddy for us. By foregrounding a good's ephemeral function of articulating an ever-fleeting sense of self, we undermine its lasting quality of being prosaically useful and make it far more likely that we will want to replace it before it's entirely kaputt. By fusing our personal fashion whims to a durable item, we make its depreciation more recognizable; it becomes something that more evidently falls out of date. It becomes something that gets used up rather than being merely useful. Customization, then, is a matter of adapting useful things to disposability.

The importance of disappointment (24 Dec 2008)

This is not a bah-humbug post about errant Christmas gifts. Rather I have started to read Albert Hirschman's Shifting Involvements, which offers a theory for why societies cycle between focusing on private consumption for satisfaction (a la 1950s) to becoming more involved in social action and political organization and public issues (a la 1960s). (Hirschman, however, does make this heartwarming observation about disappointment: "The 'cost' of disappointments may well be less than the 'benefit' yielded by man's ability to entertain over and over again the idea of bliss and happiness, disappointment-bound though it may be." Disappointment is the price we pay for all that holiday-spirit-style anticipation leading up to today. So cherish your disgruntlement!)

An analysis of how we shift from public engagement to self-involvement seems pertinent to proclamations that because of Obama's election, as Joshua Errett writes in Now Toronto, "Hipsters essentially became hopesters." (Barf.) Virtually every statement in the article strikes me as dubious -- from the genesis of hipsters to the source of their resiliency to their evolution in response to political change. Hipsterism is not a trend so much as it is a disguise term for consumerist ideology. A hipster is a consumer, period. The term helps affiliate consumerism with youth trends, which are actually independent, subject to the fashion cycle. But consumerism, hipsterism, cannot go out of fashion. They describe the prevailing social relations, which will only change with a massive shift in underlying economic relations and ideological assumptions. If hipsterism is to disappear, it would involve a massive economic reorganization, not a change in youth fashions.

Perhaps the depth of the current recession may be sufficient to trigger such a change -- though in Shifting Involvements Hirschman is eager to prove that such changes in consumer orientation are periodic and actually endogenous, that is they require no triggering events but fashion their own triggers through the inherent contradictions in collective social behavior under capitalism. Events don't come as shocks but as culminations. His example for this dialectic is World War I, which trigger massive changes in people's orientation toward satisfaction seeking, but was in itself, to a degree, a consequence of a widespread attitude of boredom with bourgeois prosperity. War was going to cleanse the world of decadence and bring back the time of heroes.It seems a stretch to say that the recession has been welcomed, prompted, as a wonderful return of volatility and market chaos and creative destruction after the so-called Great Moderation, but certainly some commentators take that tack when railing against bank bailouts and how they are preventing the system purge that history seems to be demanding. The resistance to Keynesian economics relates to this -- as these quotes from Krugman gathered by Mark Thoma suggest. Keynes wanted us to stop regarding macroeconomics as a morality play, and recessions as something we deserve for some ideological deviation or another. I'm afflicted by this tendency when I want to regard the recession as our just deserts for consumerist myopia.

Anyway, Hirschman's argument pertains to the question of whether this recession can prompt a lasting reevaluation of the consumerist way of life, or if it's just another moment in a continual cycle that has already proven its resiliency. Hirschman's chief point revolves around the contextual nature of disappointment and how it varies.

Acts of consumption, as well as acts of participation in public affairs, which are undertaken because they are expected to yield satisfaction, also yield disappointment and dissatisfaction. They do so for different reasons, in different ways, and to different degrees, but to the extent that the disappointment is not wholly eliminated by an instantaneous downward adjustment of expectations, any pattern of consumption or of time use carries within itself..."the seeds of its own destruction."

Basically, consumption provides diminishing returns of satisfaction, and with durable goods that are not frequently consumed, the disappointment can't be rechanneled into a purchase of a replacement. So we learn that buying a house is the ultimate reward in life, we do it, it inevitably disappoints, we stave that off for as long as we can and then we refinance and buy a bigger house. But that becomes unsustainable, with the outcome we are now seeing, which is a material expression of the escalating disappointment with a life centered around consuming housing as an end in itself. We tried bigger houses, but that reached its limit. Now we need a new option. Is it plausible to hope that it could take the form of greater public involvement with solving a collective problem like global warming. Will that disappointment be channeled into a green bubble, as we try to derive moral satisfaction from environmentally conscientious behavior?

The problem, though, as Robert Frank points out in his introduction to the new edition of Shifting Involvements, is that treating moral behavior as a consumption good, pursued for personal satisfaction, is that our motivation then weakens as the context changes. The moral satisfaction that we derive from behavior is relative to what everyone else is doing. When we are first on the blick with our Prius, our moral satisfaction is great and palpable. But when everyone already has a Prius, we get less satisfaction from buying one, as we will garner less recognition for our distinctive commitment to doing the right thing. As Frank writes, "the problem may not be that people are disappointed with the concrete results of their involvement" -- the Prius still conserves fossil fuels -- "or that the costs of involvement are high" -- if everyone is buying Priuses, they should become cheaper -- "rather, it just may be that it becomes increasingly difficult for participants to earn moral credit. Once the imbalance between effort and reward becomes sufficiently high, people's attention shifts to alternative pursuits." Hence there may be an endogenous limit to things like recycling, if we presume that people are participating for self-centered moral satisfaction and recognition. Such behaviors need to be removed from the sphere of pursuing satisfactions -- i.e. they can't be seen as part of satisfying personal wants and needs. They must regarded socially as being non-economic duties, a perception that ideology must produce. Hirschman points out that such things as "worship, mourning, family visits ... are not compared with income-producing or consumption activities" thanks to certain "social arrangements." He adds, in a crisp piece of econspeak, that "a good portion of our social arrangements is meant to prevent that equalization-at-the-margin of the satisfactions derived from our various activities which is the crux of the economic model." What is dangerous then, when we extend a consumerist model of buying satisfaction in the marketplace and displaying our identities as though they are competing products on a social market, is that these activities protected by being considered noneconomic will be obliterated. When people fret about the commercialization of Christmas, they are targeting this tendency for economic thinking to come to govern social duties once exempt. There are no especially good economic incentives to make the trip over the river and through the wood to grandmother's house.