An Alternative Economic Psychology
Tas Editor, 2006. 294 pp.
The antecedents of this monograph are four editions of the one entitled Foundation of an Economic Psychology that has been published [in Hungarian] by the Hungarian Economic Society in 1990 and reprinted (in 1992) for teaching purposes by the Budapest Economic University. Its second, redacted edition has been published by the Attila Jozsef University (General Economic Psychology, 1996 [reprinted: 1997]). The third, enlarged and redacted edition: Attila Jozsef University Press, 1997 [reprinted: 1997]. The fourth edition: The human potential as capital: An approach by the economic psychology. “Aula” Economic University Press, 1998 [reprinted: 1999, 2000, 2001; an illegal reprint misentitled The human capital as potential: 2002]).
The mainstream psychology is based on a methodological individualism. The proposed monograph presents an alternative to that academism by approaching economic psychology (as well as some features of political psychology, socio-psycho-linguistics etc.) from the aspect of social interaction and social identity, as linked both to micro- and to macroeconomic issues.
I. General Economic Psychology
The economic psychology is claimed by the monograph to have emerged as a science about psychologic phenomena turned into economic factors during a historical period labeled as second modernization and facing the necessity of producing human resources at the cost of consuming material resources.
The FIRST CHAPTER “The Economic Psychology Approach” presents an axiomatic model of the economic man and some contemporary reason for which the real economic activity does not correspond to that model. The psychology of behaviorism that corresponds to the “economic man’ model and three alternative psychologies (that of cognitive psychology, of psycho-analysis and the social psychology) are presented in some details. They are comparatively examined in their capacity to explain market and organizational economic activity of men. The problem of needs of an “economic man” is evoked and a theory of specifically human basic need is proposed as a solution to that problem; the structure of the hypothesized need corresponds to that of a specifically human activity defined along both technical and social criteria.
The SECOND CHAPTER “Mediating Economic Transactions: The Psycho-Social Identity” makes a distinction between two kinds of psychologic phenomena turned into economic factors: technical dispositions of mastering things’ attributes and social dispositions of mastering persons’ relations. It states that unlike the material production depending only on technical attributes of both producing and produced factors, the modern human production is determined also by the factors’ social relations. These latters are dealt in terms of psychosocial identity that is presented as the key-concept of the economic psychology.
Psychosocial identity is considered to be produced by an elaboration of not attributes (whether psychological characteristics of a person or sociological characteristics of his status) but relations. This elaboration is the social categorization. It is from the early childhood on mediated by an unconscious process of semiosis in which the child’s diffuse vocal, motor, postural, vaso-motor or other somatic, as well as developing behavioral, verbal, intellectual and affective manifestations get shaped as signifying factors that are attached to simultaneously shaped social categories as their signified factors so that similar identity factors should be symbolized by similar, and different ones by different symbols. In grown-up people this mechanism is a powerful one for diverting their economic behavior from the rationality norms of economic man: this behavior’s acts get a symbolic value and, thus, their destiny is strongly influenced by that of social identity they symbolize. At the same time, objects of the economic behavior get allocated, according to a territorial mechanism, to one or another social category (whether it is represented by a large or small group or just one person); the possession enables owner(s) to and, respectively, disables others from well-defined economic activities.
II. Special Economic Psychology
The second volume is a sample of application of the general economic psychology’s above findings to various issues of both market and organization behavior.
The THIRD CHAPTER “Managing Material and Human Resources” deals with the economic psychology of manufacturing and purchasing goods, marketing and financing activity, management and development transactions, organizational and socializational behavior. Information management and knowledge economy are dealt with in more details, as approached by economic psychology. In contrast to economics, economic psychology does not consider information management as a merely control process but as one of the real processesin that system; on the other hand, in contrast to psychology, the economic psychology considers the knowledge economy a social and not an individual performance, the monograph argues. While the social identity is considered to be the main factor mediating between individual and social matters, as well as between control and real processes, it is argued that at the same time it creates a new duality: between information and knowledge, on one hand, identity itself and the deed investing someone with that identity. This duality becomes consummate in that of contemporary universities with their bifurcation of the knowledge supply and the diploma supply.
The FOURTH CHAPTER “Managing Human Resources: The Second Modernization”. The modernization is defined as a generalized tendency of artificial intervention by the socio-economic system into natural processes in order to manufacture conditions that are necessary for its own functioning. During a first period, in the 18-19th century the modernization meant, on one hand, manufacturing the material factors the system depended on, and, on the other, making the system independent of the human phenomena that had not been produced by itself. However, from the end of the 19thcentury onwards the actual socio-economic system’s running has no longer been independent of the faculties and needs effective in the population, hence a second modernization imposed upon the socio-economic system the necessity of manufacturing (and not only exploiting) human (and not only material) conditions of its functioning.
This necessity is analyzed in terms of human capital invested either by one of the interested parties (whether the one supplying the human potential or the one demanding it) or the state. Possession relations of human capital are analyzed in details, since the capital invested by the state into the formation of a person’s potential will be organically integrated in his body and mind, and will be inseparable from the physical and mental faculties that were originally given to him.
In the aspect of manufacturing human conditions are investigated the totalitarian states. They are claimed to directly apply the strategies of the 19-century large scale material processing industry in establishing a large scale human processing industry in 20th century. It deals with that human condition, too, that is represented by the social identity marked by either competition or monopoly, a perfect (i.e. e., not disturbed by any monopoly) competition being as important a condition for a market economic system as is a perfect (i.e. e., not disturbed by any competition) monopoly for a planned economic organization.
Paradoxical consequences of such a human processing industry are evoked. When the relations of either competition or monopoly are concerned, the intact juxtaposition of both of them without any bias is nothing but their competition. On the other hand, when either the competition gets eradicated from a socio-economic system (considering the necessities of a planned organization, as is the case for the Bolshevik type totalitarian state), or the monopoly gets extirpated (in order to fit the needs of a market, as in case of a Fascist, a national-socialist kind totalitarian state), the manufactured product is straight a monopoly.
However, the main difference between two types of totalitarian states is dealt with in terms of difference between issues of that human processing industry: those of a fascist type are claimed to establish a large scale industry for peoples attributes, while in Bolshevik type totalitarian societies their relations, too, get manufactured.
The FIFTH CHAPTER “The Bolshevik-Type Version of the Second Modernization”. Bolshevik type societies, instead of being investigated from either an ideological or a politological aspect, are approached, too, by the economic psychology. For such an approach, both structure and functioning of those societies are tested from the point of view of a human capital economy within the frame of the second modernization.
The second modernization’s basic dilemma is presented: the more highly qualified human potential is involved the larger and larger amount of capital is required for its manufacturing – and, at the same time, the larger and larger autonomy is required for that human potential’s running. As far as the required capital is ensured by the involvement of the State the autonomy turns out to be in short supply, but if the aspect of the autonomy makes the state get out from the human business by charging the costs of human development to the individual’s account then capital will be scarce.
Therefore the organizing principle of these societies are not only bureaucracy setting social power to the office a person incidentally occupies but also charisma that sets it directly to the person as referred to his record. Being originated from 20th century’s radical anti-bureaucratic (illegal) mass movements, the charisma provides not only a leader but the whole headquarter of the revolutionary movement and even the whole party as its vanguard with a social power independently from anyone’s office. On the other hand, as far as this collective charisma is concerned, in Bolshevik-type structures the person gets (and loses) his glamour by being invested with (and, resp., dismissed from) a charisma just like with (from) an office: in order to get the social identity that is independent from any appointment one has to be appointed. This procedure of bureaucratically appointing someone to a collective charisma gets institutionalized in the Nomenklatura that links to each other the status of the functionary and the identity of the commissar. Such features of the Bolshevik type social structures, together with a self-establishing machinery of the democratic centralism for the identity of those belonging to the Bolshevik type Party are claimed by the monograph to be psycho-economic devices for keeping in operation a peculiar processing industry whose final mass-product was, for a totalitarian state supplying the capital needed, a rather peculiar version of the autonomy needed: the complicity of the system’s victims. Both the functioning and crash of the Bolshevik type system are analyzed from the point of view of a paradoxical self-establishing psychosocial effect (as opposed to a self-undermining paradoxical effect of the fascist type totalitarian states’ functioning).
Treating the Bolshevik-type organizations’ structural dualism (that used to be best known as a “state and party leadership”) leads on to the closing SIXTH CHAPTER “From the Post-Bolshevik Structures toward an Information-Processing Large-Scale Industry”. The Bolshevik-type twin-features are compared to the twin-structures of the information-processing (e.g., to the duality of the information’s bearer and its place value). The Bolshevik-type structure that is made up of concentric circles is studied as an information processing device in which information may travel exclusively in centripetal and centrifugal directions while its path is strictly blocked between the neighboring but separate peripheral units of each ring (e.g. the primary party organizations). In such a structure the center has a perfect control over the totality of the output informations; hence, this center is enabled to provide 1., the perfect protection of data; 2., the total control of addressees and 3., a virtual periphery set up around any of the concentric rings which can at any moment be substituted by the center for the real one (it is the function of the Ministry of Truth in Orwell’s 1984).
In this closing chapter of the monograph psycho-economical conditions of an information economics are analyzed. The economic psychology
in contrast to economics, does not consider information processing as a merely control process but as one of the real processes in that system; and
in contrast to psychology, it considers information processing a social and not an individual performance,
the monograph argues. Psycho-economical peculiarities of information’s property relations, as well as appropriation and alienation operations are analyzed within modern information management. The social identity processed by social categorization is considered the main factor mediating between social and individual issues, as well as between control and real processes.
A new general tendency of materializing that social categorization in societies’ new splitting in an elite and a mass is critically analyzed as a kind of a radical settling of the second modernization’s basic dilemma: this time both the capital required for manufacturing a highly qualified human potential and the autonomy that is required for its running get focused on the side of the elite, while on the side of the mass there is both factor’s lack. This asymmetry of identities within organization is paralleled by the monograph to markets with asymmetric information (Akerlof–Spence–Stiglitz).