The Mind of the Market: Compassionate Apes, Competitive Humans, and Other…

I'm a big fan of Michael Shermer's so I was surprised when he came out with a book on economics. 'The Mind of the Market' is his attempt to give a scientific foundation to laissez-faire economics, citing numerous statistics and scientific studies, which he claims gives credence to his belief that this form of economic structure is the most natural and most efficient way for the human animal to engage each other in trade in the market.

I found that the facts he laid out were interesting and convincing. He cites examples of economies that were heavily restricted and as a result did not fare well. In contrast, he shows when these same countries opened up their borders to free trade their economies rose to great heights.

Shermer also cites several studies done in the area of evolutionary psychology which shows that, rather than being entirely driven by selfish desires, humans are more often than not compassionate, giving, and ultimately altruistic primates. In fact, evolution created “reward” pathways which, when we help others, causes a release of dopamine in our brains, thus literally making us “feel good” when we help someone. It's just one of the little pushes, or incentives by evolution, to encourage us to help our fellow man.

Other than science to make his case Shermer marshals examples from the modern business world, citing companies that had an open, non-secretive, egalitarian business model and because of this the company's success soared. However, later on another man became the head of the company and he instated destructive policies driven by cut throat competition and Shermer explains how this model ended up destroying the company.

Well-written with a ton of fascinating scientific and economic facts anyone interested in economics should read this book. ( )

There is more information in the 261 pages of The Mind of the Market than there is in most books more than twice its size. That is both an advantage and a disadvantage in the sense that the book held the reader's attention even though the fecundity of ideas sometimes bordered on the overwhelming. Michael Shermer, the author of The Mind of the Market, is the publisher of Skeptic Magazine and the author of nine previous books. In this book he attempts to capture the "Mind" of the Market while arguing against previous visions of how the market works while surveying scientific theories that he believes may be used to replace these earlier visions. I came to the book receptive to his support of free market economics, his penultimate chapter is entitled "Free to Choose" - a direct reference to Milton Friedman's classic text of the same name; however I was not convinced that, with all the scientific theories and studies used as examples of "evolutionary" economics and the neuroscience of the market, he made a convincing case. Many of the pieces of the book seemed to just hang there, fascinating little essays on some aspect of science or how "Homo Economicus" no longer exists (or perhaps never did!).

He summarizes his goals as describing 1) How the market has a mind of its own; 2) How minds operate in markets: and,
3) How minds and markets are moral. Each of these goals can be included under the rubric of "Evolutionary Economics" in Shermer's estimation. For my "money" and "mind" I found his attempt to be informative and entertaining if not, in the end, convincing. ( )

I like Mind of the Market more than most because it ties in so well with my emergence marketing ideas. The nascent science of Neuroeconomics is still trying its hat on. Shermer is able to breathe life into data and his NonZero altruistic findings is another favorite idea. Reading Mind soon after NonZero by Wright was informative and suggestive. ( )

Michael Shermer's life is as interesting as this explanation about how our minds haven't yet caught up to our modern economic world. We're hard-wired to make purchases quickly, share our big kills, trade with trusted systems, feel a rush at cooperating, avoid losses, and respond tit for tat. One interesting fact - quoting a Rudolf Rummel analysis - of 371 international wars from 1816 to 2005 where at least 1000 people were killed, 205 were between nondemocratic nations, 166 between a nondemocratic and a democratic, and none were between democratic nations. ( )

Michael Shermer provides Free Market Economics with a scientific foundation grounded in pychology and evolution.

Shermer, an adjunct economics professor at Claremont University and the founder of Skeptic Society, explores the evolutionary roots of our sense of fairness and justice, and shows how this rationale extends to the market. Drawing upon his expertise as a scientist and noted economists, Shermer argues humans are not self-centered. The market itself is moral. Modern economies are founded on our nature.

Drawing on neuroeconomic, behavioral and evolutionary biology studies, Shermer discusses what brain scans reveal about decision-making processes and negotiating. Using studies I was unfamiliar with, he builds on Eric Beinhocker’s comprehensive study of complexity economics, The Origin of Wealth.

Shermer argues economics is far from “dismal.”

1. It is undergoing its most dynamic revolution since Adam Smith penned The Wealth of Nations. Evolutionary, complexity and neuro economics are adding richness and understanding to it.

2. People are passionate about their personal economics and finances. Far being a science of mind-boggling mathematical models, these new sciences add richness and predictability to its study.

Shermer is one of those rare writers with the ability to weave insights from science into economics. His insights bring new understanding to how our human minds create the human markets.

Penned by the Pointed Pundit
March 11, 2008
8:59:55 PM ( )