Mutation of Economics into the Fifth Integral-Arational Structure of Consciousness

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* Article: “Fifth structure”- emergence in economics: Observations through the thermodynamic lens of world history. By Peter Pogany.

URL = http://www.humanthermodynamics.com/Fifth_Structure_Emergence_in_Economics.pdf

International Gebser Society Conference, Hofstra University, Hempstead, NY. 15th - 17th October 2009


Description

Peter Pogany:

"Gebser’s archeology of consciousness, augmented by its graciously non-positivistic (open destiny) eschatology through archaic-originary projection, presumes the epiphenomenon of socioe-conomic transformation. Since the history of consciousness is also a history of social consciousness, which is never without economic interpretations, it is mirrored by the history of economic thought.

The thermodynamic conceptualization of the human journey provides further warrant to Gebser’s caveat that the mutation of the prevalent mental-rational structure of consciousness into the integral-arational (“fifth”) constellation is a sine qua non for dignified survival. This crucial moment in collective psychohistory is inseparable from a change in the global socioeconomic system, which cannot occur without transcending mainstream orthodoxy in economic sciences. "

Note: Gebser identified five structures of consciousness (archaic, magic, mythical, mental-rational, and integralarational) and showed that mutation of the currently dominant mental-rational structure into the last, “fifth structure” gathered momentum at the turn of the last century.


Excerpts

Economics as the institutionalized ideology of mental-rational consciousness

"Geographic globalization was complete by the end of the 15th century. The visualization of Earth as a three-dimensional object became a powerful catalyst to spatial thinking and the path was cleared for the gradual coming to dominance of mental-rational consciousness. The birth and development of economics as a specialized field of interest coincided with this process.

After the discovery of the Americas, increased agricultural productivity and the massive transatlantic flow of monetary metals facilitated the rapid growth of commerce, industry, and urbanization in Europe. The nation state revealed itself as the viable intermediary unit of organization between local socio-economic milieus and the world at large -- tending toward an exhaustive distribution of the planet. Thinking about social conditions and history brought to life the motivation to quantify phenomena, to build comprehensive analytical models. The rationality of science and technology began to imbue individual behavior with the harsh directedness of cost-benefit calculus.


Nakedly self-centered materialism was elevated to the foundational principle of a world-organizing socio-economic model with the 1776 publication of Adam Smith’s The Wealth of Nations. Many economic historians consider this work the true genesis of economics as an independent field of academic inquiry.

Laissez faire (classical) capitalism drew its ideological sustenance and prescriptions for individual and national conduct from The Wealth of Nations. An ideological conviction took root that blossomed into the following general view: Scientific progress and the magic power of the market are destined to make man (the subject) the master of nature (the object). The free market credo effectively locked the repertoire of socio-economic behavior into the narrow closet of calculative, money-metric self-interest and turned the past into the prehistory of a rationally assessable, eternally valid, equilibrium-centric order.

Although classical capitalism went through a major transformation during 1914-1945 to become incorporated into our contemporary global system (mixed economy/weak multilateralism -- or modern capitalism); its hypostasized ideological core (demanding, thriving on, and conserving mental consciousness in its inflated rationalist mode) has survived to our epoch.


The following quote from the 1991 Nobel Prize lecture of Ronald H. Coase vividly avers this:

“During the two centuries since the publication of ‘The Wealth of Nations’ the main activity of economists, it seems to me, has been to fill the gaps in Adam Smith's system, to correct his errors and to make his analysis vastly more exact. A principal theme of ‘The Wealth of Nations’ was that government regulation or centralized planning were [sic] not necessary to make an economic system function in an orderly way. The economy could be coordinated by a system of prices (the "invisible hand") and, furthermore, with beneficial results.”


Coase explains that a major task of economists has been to elaborate this proposition and to adapt it to new circumstances.

It is telling that contemporary economic orthodoxy identifies Adam Smith’s complex social philosophy, which puts simple economics in a broad ethical context in ways that remain surprisingly relevant today, with the “invisible hand,” an expression that occurs only once in Smith’s 1000-page work.

If worshipful references to Adam Smith are the political rallying cries for market fundamentalism, the “theory of rational expectations” and the “efficient market hypothesis” remain caricature-like attachments to the deficient mode of mental-rational consciousness.

Originated by John Muth in the early 60s, the “theory of rational expectations” became influential in the 90s through the writings of Nobel Laureate Robert Lucas. It is based on the flattering proclamation that the individual is rational and therefore, preoccupation with one’s own welfare will alter expectations attached to government policy: Microlevel decisions alter macro-level policy measures. The dogmatic nature of this elegant theory is revealed only if one remembers that it takes extant conditions (the socio-economic environment with its system and associated axiomatic assumptions about collectively instilled and fully internalized values and beliefs) for generally valid, elementary, and eternal facts.

Praised, criticized, extended (particularly into sociology through rational choice models), amended with psychological dimensions that remove the brutally “selfish” label from mini-max behavior, virtually disabled with damaging arguments and commentaries, the theory has survived as a powerful prop for neoliberal propaganda against the economic and social-welfare-promoting role of the government.

The “efficient market hypothesis” (made famous by Eugene Fama) divides information into the knowable and the unknowable. What is known is already incorporated in traded assets (real or paper). Thus, markets already know what can be known. Consequently, prices have very short memories or none at all. They do not remember where they were a few minutes ago on the floor of the New York Stock Exchange. Psychological-behavioral factors were stacked against it, alternative theories negated it completely, yet the “hypothesis” left an indelible mark on traditional economics to which pilgrims of rational purism regularly return.

Nowhere is academic readiness to conserve values and expectations implicitly linked to mental-rational dominance more openly demonstrated than in awarding Nobel Prizes in economics. Ostensibly liberal as the annual selection of laureates may have appeared over the past four decades, “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” has always been awarded to those who could best improve and protect the prevalent socioeconomic world order dedicated to the basic notion that human beings are homogeneous entities with a “propensity to truck, barter, and exchange one thing for another” (the words of Adam Smith).

Foucault’s complaint about a robust, yet flexible, reciprocity between knowledge and power comes to mind. Through technical jargon and phraseology, study programs, conferences, faculty appointments, prestige- and notoriety-promoting honors, the line of demarcation between “the well known” and “the generally valid” has become systematically blurred.

The conservative ideology of contemporary economics reinforces convictions that keep the potential of individual behavior in a thin enclosure. The maximization of consumption and the accumulation of monetarily measurable assets as the ultimate goals of life is its vehemently protected, enshrined centerpiece. At the bottom of this complicated dynamism silently lies the mistaken belief that humanity’s psychohistory is complete and over."


World History as a Thermodynamic Process

Peter Pogany:

"The present analysis is interfused with the thermodynamic theory of world history, which is briefly summarized below.

Human population and produced artifacts together may be perceived as a material entity, an aggregation of atoms or, even more generally, that of subatomic particles. This entity, culture, has undergone exponential growth through human activity (extended reproduction both biologically and economically), a process called cultural evolution.

As elaborated by Ilya Prigogine, the father of modern disequilibrium thermodynamics, a material entity that gains in size while becoming increasingly complex (where complexification is defined as growing volumes of information generated and transmitted among the entity’s decision centers) must undergo an alternation between relative (dynamic) steady states and bifurcations (chaotic transitions).

By the end of the 18th century, cultural evolution demanded global-scale organization to maintain its accelerating mode. The chaotic transition that began with the French Revolution and ended in the early 1830s led to the establishment of the world’s first global system (GS1), characterized by laissez faire and metal money. It lasted from approximately 1834 (the “birthday of the industrial proletariat” [Polanyi], a year of intense legislation in Britain concerning the poor) until the outbreak of World War I in 1914.

The period 1914-1945 was another chaotic transition that brought the second and current global system (GS2) -- mixed economy/weak multilateralism -- into existence. (Until the end of the Cold War, socialism remained an unsuccessful alternative for global self-organization.)


At present, physical limits are beginning to slow cultural evolution. Its demand for free (accessible) energy (in the form of low entropy matter and energy carriers), and capacity to absorb pollution are coming into conflict with non-expendable terrestrial constraints. As a consequence, the world has either entered or is on the verge of entering another period of chaotic transition.

A new global system (GS3), two-level economy/strong multilateralism, will be needed to create a sustainable balance between culture and humanity’s ecological niche. Micro-activities will have to be made legally subject to globally-determined and nationally allocated macro-constraints. The required transformation of individual behavior and institutions will be vast. " (http://www.humanthermodynamics.com/Fifth_Structure_Emergence_in_Economics.pdf)


Integral-arational consciousness is not prophetic utopianism, it has great practical significance

Peter Pogany:

"The growing anxiety about the failure to perceive the terrestrial sphere as the aggregate material constraint is, therefore, a sign of groping toward the “fifth structure.” As far as economic activities are concerned, the world will eventually have to move from the “cowboy” to the “Dutch” mentality (Kenneth Boulding’s word play). I.e., it will have to learn how to prosper subject to natural constraints as if they were protective levies and dunes. The cowboy in us will have to be reserved for the conquest of outer space to ensure the species’ long-term survival. Multi-year cosmic travel (most immediately to Mars) will require an outlook on life and associated self-comportment that only integral consciousness can secure.

Back on Earth, increased leisure in the context of enhanced social protection and international security will open new vistas for individual creativity, which -- as Gebser told us -- is an evidence of the origin. The fear of not using our time wisely (the “time is money” meme) will dissipate. Angst about seeing one’s life slip away will be mitigated by teleia philia, the Aristotelian idea about friendship based on the mutual recognition of complete, instinct-like selflessness. The dying individual, sharing ultimate desires and transgenerational goals with others, would have a firm sense of continuity. Unconditional compassion expressed through social institutions would remove concern about the welfare of those left behind.

Thus, if the objectification of humanity’s material conditions and goals is necessary for survival, only integral-arational consciousness can perform the tasks implied. Ideally, the GS3 persona will integrate the rationality of the accomplished scientist with a magicmythical “we” sense. Space-time freedom (the “conscious form of non-dimensionality”) rather than ego-consciousness will dominate thought, behavior, and institutions."


Mutation as a process must be macromutation through chaotic transition

Peter Pogany:

"Since institutions cannot drastically change unless socioeconomic behavior is modified to a commensurate degree and since this cannot happen unless a profound institutional transformation occurs, mutation into the new form of global self-organization must be accomplished through a quasi-simultaneous change of institutional design and a corresponding reorientation in thinking, attitudes, moral values, expectations, and intentionality. A period during which the world is out of control, drifting in search of new bearings is implied by both physics and history. The initially large number of suggestions, plans, and blueprints need to distill into historically significant blocks that will subsequently clash until a new mold is forged from the molten amalgam of ex ante feasible solutions. This process led to GS1 through the chaotic transition (or macrohistoric leap) of “1789-1834” and to GS2 through “1914- 1945.

The laws of disequilibrium thermodynamics, as applied to self-organization amidst growth and complexification, render the above-capsulated history an epiphenomenon of a physical process, provided, of course, that we regard the web of interpersonal relations in the socioeconomic sphere as a materially-conceivable entity; that is, if we accept with proper qualifications that social history is part of natural history. A new period of macrohistoric turbulence is on the horizon.

Living within the limits of renewable natural resources and being directly concerned with the imperatives of environmental sustainability implies a more cooperative and less competitive civilization than the current one. However, since personal traits and selfconduct associated with integral consciousness in the socioeconomic realm can become general only under propitious external conditions created by matching institutions; while the development of such institutions presupposes the presence of behavioral characteristic imputed to integral consciousness, global-scale mutation into the “fifth structure” will have to occur through a new chaotic transition." (http://www.humanthermodynamics.com/Fifth_Structure_Emergence_in_Economics.pdf)


Concluding remarks

"Gebser’s contention that signs of aperspectival consciousness emerged and intensified during the 20th century has been confirmed in the field of economics.

Based on adjusted and telescoped Gebserian criteria, we may assert that although this process has not been even; i.e., it shifted over time among strands of endeavors as captured by the three composite criteria, its overall strength has remained intact and may indeed have been even on the aggregate.

Nevertheless, economics, as it is taught and practiced today, remains a significant contributor to the preservation of mental-rational consciousness with its associated institutions, ethics, behavior, and historical narratives. “Maintained Theory,” open and liberal as it may appear, fails to incorporate ecological (resource and environmental) issues into its analysis, discourse, and public commentary. Although integral attentiveness as represented by heterodox critique is growing, it still has not passed beyond marginal significance.

The future role of economics, whether as a catalyst or an obstacle of the contemplated macro-mutation, is open."


Discussion

Gebser’s 19 criteria to Appraise Aperspectival Movements and Tendencies

Peter Pogany:

'Satisfaction of CC1 is registered when mankind is considered an integrum with a singular, common past and future, when institutions and matching individual behavior conducive to a physically, socially, and economically sustainable and dignified life for the entire global population are invoked. All explicit thoughts with such contents or implicit (perhaps concealed) tâtonnement in the same direction tend to diminish the pervasive role the prevailing, deficient mode of mental-rational structure imputes to “egoity.”

Therefore, CC1 is met by theoretical work that treats the world economy as a single unit of analysis. It is met to an even greater extent when our culturally inculcated so-called “rational behavior” is unmasked and challenged by showing that consumption-metric utility maximization and the pursuit of corresponding micro- and macroeconomic objectives is a losing, dead-end ideology.

CC2 mirrors the apprehension of humanity’s thermodynamic context. The “efficient” absorption of time into consciousness presupposes a scientific recognition of the equivalence between time and energy, as made explicit by criterion 12.

Therefore, CC2 is fulfilled by theories that treat the economy as a substratum of nature rather than vice versa; incorporate time (dynamics, inter-temporal analysis, hysterisis) and energy; show awareness of environmental and resource constraints.3

It is fulfilled even more by theories that expose the nonsensical proposition of eternal economic growth in our thermodynamically closed terrestrial sphere, that surmount overconfidence in the totality of mechanical-rationalist, selectively causal explanations and, consequently, abandon belief in the unfailing recurrence of cycles and the exclusive validity of equilibrium-trending dynamic models in the spirit of Newtonian physics.

Economic thought that fosters the supersession of patriarchy (no. 15) and renunciation of dominance and power (no. 16), the two criteria that comprise CC3, is the easiest to recognize. By various degrees, CC3 is also satisfied by calls to complete and expand the social safety net, by the promotion of distributive justice, international and intergenerational solidarity, and by criticizing the notion that self- and national interests are the only human aspirations that any organization of global polity can consider axiomatic.

Since CC3 is the most directly applicable to movements and tendencies in economic theorizing, and since the application of CC1 requires more intense conceptual distillation than CC2, composite criteria represent a descending order of demand for reductive adjustment in the process of making them practicable for the task at hand."


Typology of post-classic economic schools with arational intuitions

"Truly heterodox orientation wants to get rid of the conceptual universe of “infinite wants” economics. It proposes to replace mainstream’s preoccupation with market equilibrium, debt money, and interest with empirical energy accounting and nonmarket economic approaches. Some heterodox scholarship proclaims its origin in the adaptation of new theories that have developed outside economics and have affected diverse scientific fields.

Technocracy was born during the New Deal with the establishment of “Technocracy Incorporated,” an organization that has remained active to present day.

Sustainable material wealth production in harmony with the long-run availability of physical resources is the fundamental tenet of a technocratic future. Economic growth in industrialized countries is possible through enhancing the efficiency of the current level of capital stock. Technocracy advocates a radical new approach to controlling the evolution of technology.

Dependency Theory developed in the 1950s under the guidance of Raul Prebisch (Director of the United Nations Economic Commission for Latin America). It set forth the notion that resources tend to flow from poor and underdeveloped states ("periphery") to wealthy states ("core"), enriching the latter at the expense of the former. Despite losing most of its heterodox edge over the decades, Dependency Theory keeps resurfacing in new forms and remains a constant reference in economic development literature.

Structurtalist Economics emerged also in the 1950s through the activities of the Economic Commission for Latin America and it is closely related to Dependency Theory. Adherents contend that structural and institutional rigidities retard and otherwise negatively influence economic development in the Third World. The discipline has gone through several renewals but retained its critical spirit.

Thermoeconomics dates to the early 1960s. Myron Tribus (MIT, Nobel Laureate) and Nicholas Georgescu-Roegen played crucial roles in its development.

The Encyclopedia of Human Thermodynamics links economists to other scholars in a broader field dedicated to the energy-based analysis of social issues, including the relationship between economic activities and the ecological order (i.e., sustainability). Neo-Ricardism (“sraffian economics”) promulgates insight into the economic process based on a new, closer reading of David Ricardo’s (as well as Marx’s) labor theory of value by Piero Sraffa during the 1960s. The critique originally leveled at the classics turned into an attack on the marginal school.

While the dispute over whether or not “sraffian economics” can be made compatible with the prevailing doctrine of time-resistant, equilibrium-bound economic order has remained inconclusive, the strand has inspired much heterodox research and exposed the fruitlessness of building ever more sophisticated and extensive mathematical models around unquestioned neoclassical axioms.

World Systems Theory crystallized around the writings of Immanuel Wallerstein, particularly since the 1974 publication of his “The Modern World-System.” Despite its failed prediction that the Cold War would end through rapprochement and integration between what was believed to be two separate world systems, the theory is still considered relevant in exploring the development and current problems of capitalism. Bioeconomics began its career in the 1980s. It unites biology and economics in order to develop comprehensive theories about the relationship between the economy and the environment; to apply the concepts and methodologies of life sciences to economics. Practitioners of the field make a point of exposing the lacuna between academic economics and lived reality.

Ecological Economics entered the scene with the 1987 publication of the like-named book by Spanish economist Juan Martinez-Alier (Universitat Autonoma de Barcelona, Spain). Nicholas Georgescu-Roegen, Kenneth E. Boulding, and Herman E. Daly are among the many prominent figures with foundational significance in this branch. In contradistinction to mainstream economics, which considers nature part of the economic process (i.e., the provider of agricultural and mining products), the starting point of Ecological Economics is that the satisfaction of material needs is forever and unchangeably constrained by physical conditions. At least at the global level, output should be considered a throughput that society must bring in line with a judicious use of exhaustible natural resources and with the ecosystem’s absorptive and regenerative capacity.

By combining social and natural sciences, Ecological Economics is interdisciplinary in both its conceptualization and methodology. It places a heavy emphasis on the laws of thermodynamics.

Ecofeminism is a program within Ecological Economics that emphasizes the feminine perspective over environmental and resource problems. Its beginning is dated to 1974 and is closely related to the work of Françoise d'Eaubonne.

Evolutionary Economics has its roots in the works of Marx and Engels, particularly their Darwinian perspective on social evolution. The “American Pragmatic School” (Peirce and Dewey), and the institutionalists, e.g., Veblen, have been cited as early predecessors. Its modern version began during the early 1980s with the works of Richard Nelson (Columbia University) and Sydney Winter (University of Pennsylvania). The compendium entitled The Evolutionary Foundation of Economics (2005), edited by Kurt Dopfer, brought together related research activities in a shared framework. Evolutionary Economics discards homo oeconomicus, the rational optimizer, as the cornerstone of theorizing. Its suggested approach renders the concept of “object of choice” multifaceted and, by taking biological evolution as its model, it finds markethistorically established eternal returns without irreversibility wholly inadequate for the purpose of understanding economic problems.

Econophysics dates back to the beginnings of general equilibrium analysis (in particular to Walrasian modeling) in the early 20th century. It reemerged in the mid-1990s, thanks to the work of Jing Chen (University of Northern British Columbia) and Yi-Cheng Zhang (Institut de Physique Theorique, Fribourg, Switzerland)

Econophysics as we know today first focused on financial data, trying to apply statistical physics to stock market fluctuations. Later, the interest expanded to general economics. The field is interdisciplinary by design and retains a critical perspective on mainstream economics.

Feminist Economics assumed its current scope in 1990 with the establishment of the “International Association for Feminist Economics,” later recognized by the United Nations as an NGO.

Feminist Economics cultivates “gender aware theory and analysis” and has become an outspoken critic of traditional academe’s limited views on the individual, the household, labor issues, and international economic relations.

Post-autistic Economics (a purposefully caustic term) sprang from student disenchantment with the limited and limiting nature of mainstream economic instruction and scholarship in the year 2000. It enjoys top quality professional support and is openly hostile to the neoclassical capture and domination of academic institutions and government positions.

Green Economics began in 2004 with the founding of the Green Economics Institute in the UK. By appending the discoveries and concerns of Ecological Economics to a social agenda, the adherents of the discipline have created a political lobby. The International Journal of Green Economics is the main outlet for research produced in the field.

Complexity Economics began in 1984 with the establishment of “The Santa Fe Institute” (SFI) in New Mexico. SFI is dedicated to the study of complex systems in general. Complexity Economics starts out by considering productive activities an endogenously evolving, adaptive aggregate.

Cybernetics first saw daylight in centrally planned countries in the 1960s. Economists, deprived of signals inherent in market prices, tried to comprehend the broader meaning of system and structure and to quantify interactions between the part (e.g., enterprise) and the whole (e.g., an industry or the national economy). The branch has retained relevance in the post-communist epoch as science -- insufficiently informed about the ecological impact of human activities -- tries to render feedback loops and circular causality between the economy and the environment more concrete. (http://www.humanthermodynamics.com/Fifth_Structure_Emergence_in_Economics.pdf)