Jungian Economics

In much of social theory, and especially in its subsets of economics and political economy, the concept of rational agency is taken as axiomatic – and, it can be argued, it needs to be so in order to build theoretical models with any kind of predictive efficacy, because it is taken as equally axiomatic that irrational behaviour is unpredictable. In general, we simply assume that individuals, groups, institutions etc. will take their decisions (on buying, selling, saving, investing, voting, forming an opinion etc.) as a result of some kind of conscious calculation as to their own best advantage. These decisions range from the narrow to the broad, from private wealth to public welfare and from immediate gratification to long-term (sometimes inter-generational) benefit, but we assume that they are underpinned by some form of rational agency, a conscious calculation. Economic theory has tended to work on a further axiom to the effect that ‘best advantage’ or ‘welfare’ can be safely reduced to a quantifiable, financial calculation – the conscious, individual or institutional decisions of a fictional homo economicus.

Now of course, we know that these assumptions are highly questionable. In Alan Greenspan’s view, ‘entirely false’ (Here, 3:30-4:02). On reflection, common sense tells us that people behave, both individually and collectively, in all sorts of ways that do not fit this pattern. Altruism is as much part of human nature as profit maximisation, whether through a broader (impossible to quantify or financialise) concept of welfare, or through a simple ethical commitment to altruism for altruism’s sake. Sometimes altruism occurs rather thoughtlessly, through conformity with a social norm. The basic premise of rational choice theory is that aggregate social behavior results from the behavior of individual actors, each of whom is making their individual decisions, but how can a combination of self-interested and altruistic choices be aggregated? For an analysis of misplaced faith in axioms of rationality in economic theory I know nothing better than Jonathan Aldred’s excellent book Licence to be Bad

But non-rational (in the homo economicus sense) behaviour is not limited to forms of altruism. Sometimes people just shoot themselves in the foot: sometimes while knowing it, sometimes without any idea that they are doing so. And sometimes human behaviour seems to be simply unaccountable. Instances like this can occur on a large scale and can be highly influential, often enough as an aggregation of individual views and decisions that fly in the face of all rationality.

I have struggled for many years to come to terms with such events, searching for some kind of explanatory framework, something that might explain the inexplicable. The temptation is always to focus on small scale particulars, a clever piece of PR, a well-timed or persistent journalistic campaign, a slogan that captures the zeitgeist. But these simplistic, individual factors do not help to answer the far deeper question of how it is that each gains traction, causing opinions to be formed, votes to be cast, decisions to be made. In discerning a pattern, in answering that deeper question, I have concluded that an old idea, Jung’s collective unconscious, constitutes a useful tool. Jung’s original concept was of a shared, hereditary set of contents comprised of instincts and archetypes. As Ruth Snowden explains: ‘An archetype can be experienced in many ways – as a story; as a pattern or an image, such as a mandala; as a mythical or archetypal character, or even as an emotional feeling.’

My own contention is that the archetypes of the collective unconscious can include characterisations such as the intruder, outsider, thief, invader; and that these can become associated with generalised feelings of unease or threat. Where Jung saw manifestations of the collective unconscious in religion, fairy stories and mythology, I look to certain patterns of social and economic behaviour as externalisations – in particular, irrational or non-rational behaviour that it is difficult to explain in any other way. Some examples indicate my line of thought:

• In Britain the 2009 parliamentary expenses scandal took hold of the public imagination, each successive revelation ramping up the sense of outrage. Heads rolled. Michael Martin, Speaker of the House of Commons, resigned and there were six cabinet and ministerial resignations. Seventeen backbenchers and six peers were also subject to resignation, de-selection and/or forced to make repayments. Five MPs and two peers were given prison sentences. By any modern historical standard this was an extraordinary head count. The only reason a government did not fall was that there were wrongdoers in every major political party. Nobody had access to any moral high ground. The parliamentary expenses scandal and the 2008 financial crisis were contemporaneous, the inception of the latter pre-dating the former. A connection between the two events is rarely made, but I believe this is wrong, and that they are closely related. It was as if a collective thought process occurred, but was never overtly stated: ‘Something has gone terribly wrong, those in charge have let us down badly but it’s all too complicated and we don’t understand just exactly how. But here’s something much simpler to comprehend, and it involves those in charge, demonstrating their untrustworthiness, so let’s focus on that instead.’ Thus a major public opinion reaction can be seen as a response to an archetype of the betrayer linked to an emotional response to an incomprehensible threat. The irrationality of this response is easy to quantify: the average impact per capita on the electorate of the dubious expense claims amounted to something like five pence; the impact of the 2008 financial crisis was many thousands of pounds per capita. It was as though the man on the Clapham omnibus was content to argue over being short-changed a few pence on the purchase of a loaf of bread while his house was being stolen.

• The UK’s 2016 vote in favour of Brexit came as a surprise – even to those who had argued most vociferously for it. Every credible expert and commentator had pointed out that it would be economically destructive, but this counted for nothing in the minds of the majority. Informed opinion (that is to say, those with a rationally argued case) has characterised the Leave vote as a national act of self-harm. Attempts to explain this have ranged from external interference through social media to clever PR suggesting that a Leave vote would restore British sovereignty (‘taking back control’). Others have seen it as an instance of populism, a rejection of privileged ‘metropolitan elites’. I have pointed out that there had been a three decade propaganda campaign against the EU in some British newspapers. All such explanations ignore the fact that their ’causes’ require an ex ante fertile ground in order to gain any traction. People in substantial numbers needed to feel a deep unease about the status quo – an unease that overcomes any rational argument put to them about their economic welfare. That unease is best understood as a collective unconscious reaction to social change, an emotional reaction to an amorphous threat bound up with archetypal images of the outsider (people whose first language is not English), the intruder (‘waves’ of immigration, luridly portrayed as a horde of foreigners on large UKIP posters) and the betrayer (metropolitan elites insensitive to the conditions facing ordinary people).

• The American evangelical vote is a well-established phenomenon as a key component in the Christian Right’s political orientation. George W. Bush’s electoral success owed much to his overwhelming support from white evangelical voters, who comprise 23% of the vote. In 2000 he received 68% of the white evangelical vote; in 2004 that percentage rose to 78%. A major factor in the white evangelical vote is the socially conservative ‘pro-life’ anti-abortion position. The supposed theological basis for this is the bible’s stated ethical prohibition of taking human life. In 2003 George w. Bush launched the Iraq war with fatalities running into many thousands, but as the numbers show his vote amongst this section of the electorate increased by ten percentage points in 2004. For a variety of reasons many will find this contradiction unsurprising, but it does stand in need of some explanation. Social conservatism in the American electorate is not ethically consistent. Again, as with support for Brexit, my contention is that we need to examine the mechanism of the collective unconscious to understand this. If social conservatism itself is driven, at least in part, by a deep-seated emotional unease in the face of social change, then we have an answer – one that helps us understand how conscious rational choice is suppressed in the formation of public opinion, erasing problems of contradiction and inconsistency.

• The rise of populism has been a notable political phenomenon in recent years, with much agonising over its causes and effects. Ray Dalio has done an excellent job of quantifying it, and his index of populism shows it to be at its highest level since the 1930s. In a LinkedIn summary of his work he identifies populism’s causes as follows: ‘Populism is a political and social phenomenon that arises from the common man being fed up with 1) wealth and opportunity gaps, 2) perceived cultural threats from those with different values in the country and from outsiders, 3) the “establishment elites” in positions of power, and 4) government not working effectively for them.’ We might reasonably ask whether these are causes or symptoms. Is populism merely a political articulation of a deeper unease? I would argue so. (2) is a typical instance of the outsider/intruder archetype.(3) and (4) are instances of the betrayer archetype. (1) merely offers objective confirmation of the betrayer’s failure to protect electorates from the perceived threat of (1). Suketu Mehta has pointed out how these factors can be combined to create the populist narrative: ‘A battle is being fought today in the public squares, at political conventions, on the television, in the opinion pages: a battle of storytelling about migrants. Stories have power, much more power than cold numbers. That’s why Trump won the election; that’s why Orbán, India’s Narendra Modi and the Philippines’ Rodrigo Duterte won power. A populist is, above all, a gifted storyteller, and the recent elections across the world illustrate the power of populism: a false narrative, a horror story about the other, well told.’

This issue of the populist narrative ties in with Jung’s contention that myths reveal the workings of the collective unconscious. These narratives are classic instances of the modern myth, a story that takes hold and exerts its power simply because of its resonance with the contents of the collective unconscious. Ray Dalio made much of his reputation by identifying key trends – foreseeing the 2008 financial crisis. Gillian Tett has a similar reputational pedigree and here is a fascinating quotation from an interview with her available on YouTube. Speaking (at 23:00) of a major influence on her thinking, the French sociologist Pierre Bourdieu, she quotes him as saying “The most powerful cultural constructs are those that exist at the border of conscious and unconscious thought.” She goes on to talk about ‘stories we accept and don’t really challenge very hard’ – in other words, the modern myths that well up from the collective conscious and which find their articulation in the resonant positions of populist politicians.

Indeed, I would argue that, in each of the four examples I have given, there is a similar process at work. Archetypes are awakened by mythological narratives and reinforced by news media, especially the Internet’s turbocharged rumour mill; amorphous emotions of disquiet and unease are both confirmed and amplified by these narratives; at Bourdieu’s ‘border of conscious and unconscious thought’ the nexus of emotion, archetype and myth gives rise to action and opinion that seem irrational and cannot be explained in terms of any reference to calculations of self-interest or collective welfare. As an illustration, consider Andy Beckett’s report of a conversation with Jonny Gordon-Farleigh, editor of Stir ‘The Magazine For The New Economy’: ‘Gordon-Farleigh has spent years trying to interest people in forming co-operatives, and not always succeeding.“Contemporary capitalism has produced a pacified, passive workforce,” he says. “A lot of people even like to feel a bit alienated by capitalism – to not really understand how it works.”‘ If this the case, then it speaks of an apparently self-harming irrationality answering a deeper psychological need, the need to achieve consonance with emotional impulses welling up from the collective unconscious.

Are My ‘New’ Archetypes Legitimate?

In an attempt to establish an explanatory framework I have invoked several archetypes that do not figure in Jung’s work: principally The Outsider, the Intruder and the Betrayer. Are these legitimate? Do they represent, in Jungian terms, genuine universal, archaic patterns and images that derive from the collective unconscious? Jung’s primary concern was to explore the psychology of the individual, but man is a social animal and we are entitled (at least by observation of the patterns of social organisation common to other primates) to assume that a group identity reaches far back into the evolutionary path. If this so, then it is not unreasonable to assume that group identity, with all its associated themes of security and integrity, should be a core aspect of the psychological make-up of group members. This being so, the archetypes that I have invoked would be fundamental to the psychology of group members, and would be entirely legitimate within the kind of explanatory framework that I am seeking to establish.

Are The Archetypes ‘Unexplained Explainers’?

‘In theory, Jungian archetypes refer to unclear underlying forms or the archetypes-as-such from which emerge images and motifs such as the mother, the child, the trickster, and the flood among others. History, culture and personal context shape these manifest representations thereby giving them their specific content. These images and motifs are more precisely called archetypal images. However it is common for the term archetype to be used interchangeably to refer to both archetypes-as-such and archetypal images.’ – Wikipedia citing Anthony Stevens. So, in Jungian terms, my Outsider, Intruder and Betrayer are really archetypal motifs which ‘…refer to unclear underlying forms or the archetypes-as-such…’ Is there, or can there be, any evidence for these underlying forms, or am I relying on an explanatory device that remains, in itself, unexplained? Jung was aware of this issue, and made copious efforts to produce empirical evidence for his underlying archetypes-as-such in the form of analysis of recurring themes and symbols in mythology, religion, dreams etc.. For some this process will always be unsatisfactory, falling short of scientific standards for empirical evidence, or calling on an apparent circularity of argument. For my own part I am satisfied by two distinct counter arguments:

• Do the archetypal motifs meet a standard of plausibility as part of an explanation for behaviour that would be otherwise inexplicable? If so, then they have a utility that other, partial, explanations lack.
• We should not even consider arguments based on the impossibility of empirical investigation of the collective unconscious and its archetypes. Their ontological status is more like that of Kantian categories or the axioms of Euclidian geometry. Again, utility is the best guide to their validity.

Conclusion

So what might Jungian Economics or a Jungian Political Economy amount to? On one level it fails to meet general community standards in the economics profession: I have no equations, and it is not at all clear that there is any pathway to quantification (although Ray Dalio’s Index of Populism might offer some hope of methodological progress). I am not particularly concerned by this. It is merely an idea, a way of looking at things. If it forms a basis for further critical thinking, a questioning of some assumptions embedded in economic theory; if it offers a different way of looking at political economy and how decisions are made; if it offers an insight into how irrationality influences our politico-economic culture; if it does those things, then it is worth articulating, and it is worth serious consideration.