Institute of Psychology of Hungarian Academy of Sciences
The activity is a rather peculiar kind of commodity: one may be willing to do it as a work against a wage or to pay a cost against the favour of doing it as a game. The paper argues that the change of neither the positive nor the negative price of the activity determines in an unambiguous way demand and supply of this commodity: when the inconvenience of an activity and its profit or the pleasure of an activity and its cost are balanced a choice is taking place the issue of which is determined by the person’s psychosocial identity as symbolized – positively or negatively – by that activity. The unmotivated choice evokes a cognitive dissonance and by this means the price of the activity turns out to be effective psychologically and not economically.
The main tendency of (both planned and market) post-capitalist system is considered to be the production of personal (and not only material) conditions of functioning of that system. That includes not only production of technical disposition to master things but also that of social disposition to master (or, at least, be superior to) other persons. These are as important an organizing factors for an economic system producing its personal conditions as are value in use and value in exchange for the one producing its material conditions.
Typical cases are cited when the economic activity is not determined by the price of the thing produced by it, but, rather, by the social identity of the person producing it.
A Marxian philosopher – the Hungarian Attila József – argued in 1932 discussing chances of a planning system for the necessity of an etatic collectivization of working people that he considered the main part of the totality of means of production to be collectivized. At the same time J. Hayek and other economists stated that planning is impossible unless the state treats individuals as if they were means and not subjects of production. They maintained that if the individual as a subject chooses what to produce (what occupation to pursue, for example) and also what to consume (what to spend his disposable income on), this double choice will drop a grain of sand – an element of unforeseeable and uncontrollable chance – into the cog-wheel of the planning system.
This truth is easy to verify.
In theory, planning can be assumed to be capable of reckoning with the consumers’ needs and production capacities, making sure that in a certain period the society should have approximately so much capacity, say, for fruit production that may meet the consumers’ demands for fruit. Now, free choice intervenes and distorts this harmony so that fancy spurs fruit consumers to satisfy two-thirds of their needs, for example, with water melon, while the fruit producers feel like utilizing two-thirds of their capacity in, say, the cashew plantations. The harmony between fruit production and fruit consumption as established by the economic means is to no avail: for psychological reasons there will be twice as many cashew nuts and twice as few water melons as required.
In order to secure the planned harmony, the state as the subject of planning is forced to designate, according to some criterion, 1. the privileged category of water melon consumers, or 2. those obliged to produce water melon (or both), and also to enforce through effective measures both the acceptance of the criterion and of the attendant bans and regulations.
Whereas – the reasoning continues – the same achievement, namely the coordination of the consumers’ demands as a concrete manifestation of need and of the producers’ inclination as a concrete manifestation of capacity can be secured by the market instead of by planning without having even those individuals who are left out of the privileged circle or those who found themselves inside the handicapped category to degrade from being the subjects of economic activity into its means. This in turn can be effected by the mediation of the supply-and-demand mechanism in that the overproduction of cashew nuts would reduce their price while the overconsumption of water melons would push up the price of the latter. Then those whose preference for water melon is the weakest would tell themselves: “After all, water melon is not that much better than cashew nuts that I should stick to it now that there is such a big price difference.” At the same time those whose negative preference for water melon production is the weakest would realize: “Water melon production is after all not so much of a nuisance that I should be reluctant to deal with it with the wage difference being as large as it is.” And this price fluctuation would go on until the reorientation of the consumers’ demand and the producers’ willingness reached a point where equilibrium could be established.
Only, the psychological factor – the one that motivates selection, for example – infects the system of market economy, too, with a fundamental insecurity.
A commodity without effective price
So that the market system could function in the above manner, every commodity must have an effective price, one whose reduction would indeed effectively reduce its supply and increase the demand for it. Every commodity, that is not only every product but also that most peculiar of commodities: activity. Its peculiarity lies in the fact that unlike the product which I pass on in exchange for money when I supply it and take into possession in return for money when I demand it, the activity is always exerted by me, whether I supply it or demand it. Also, the activity that I am paid for as work, and the activity for which I am to pay as entertainment are identical as to their physical appearance but antithetical as to their psychological and economic substance.
Be that as it may, in a commodity-producing society work is only done when it is remunerated, and if this price decreases the willingness to undertake the disagreeableness of the activity for that much money must also decrease. On the other hand, we are willing to continue with the entertainment even if we are made to pay its price, but if this price decreases the demand to enjoy the agreeableness of this activity must increase.
When neither the number of those who are willing to supply the work-type activity nor the relevant length of time decreases with a drop in the price of this activity, then this activity will no longer have an effective price. Similar is the case when neither the number of those who fail to resist the temptation of the entertainment-type of activity nor the length of time increases with a decrease in the price of this activity.
Most probably the lower limit of the effective price is over 0: it is presumable that there will be a price above 0 for which no one will be willing to do a certain job or at which a certain entertainment will reach saturation level so that further price cuts can no longer reduce the all-social time spent on the former and increase the time spent on the latter. What is even more likely, however, is that the price turned into the negative – that is, when the person doing the work is got to pay tribute or the one supplying the entertainment is awarded a bonus – cannot be the effective determinant of supply-and-demand.
Nevertheless, both phenomena exist: I described the former as the Tom Sawyer effect and the latter as the Captain Puskas effect in other papers.
It is about the story of Tom Sawyer who passed on the job of whitewashing the fence that was a punishment inflicted upon him to others whom he even got to pay tribute to him – and this fact alone turned work into entertainment. Just as entertainment becomes work the very moment it is paid for – as is depicted by a statement attributed by the Hungarian people to the captain of the famous football team of the “belle epoque” Puskás Öcsi who allegedly reposted to a criticism: “Good pay: good play – bad pay: bad play”. One can glean sociopsychological experiments to bear out the existence of both the TS and the CP effects with the authority of science (see e.g. Deci, 1975; Lepper and Deci, 1975).
Thus a rather odd function is produced for activity. It reveals that if we are paida sufficiently high price, the supply of a particular activity will be high enough: we shall pursue this activity in large numbers and/or for a considerable length of time because although it is disagreeable it is worthwhile as it is gainful; conversely, if we are made to pay not too high a sum for the very same activity, the demand will be sufficiently high: we shall pursue this activity in large numbers and/or for a considerable length of time, because although it is a little costly, it is worth it as it is very agreeable.
And how does this function – too odd to be one either of supply or of demand – behave between this two points?
No less oddly.
If one is paid a sufficiently high price, one will go on with the work according to the above, for although disagreeable, the gain it yields is higher. On the other hand, commonsense would predict that if one is not paid a high enough price one will not continue the work, for although still profitable its disagreeableness is greater. What happens, however, halfway between these two points where gain and disagreeableness are just balanced?
Commonsense and closely related behaviorism can only repeat Buridan’s answer who, as we well know, declared that his ass would starve to death between two equally appetizing bunches of hay placed at equal distances from him as he was incapable of making a choice. The cognitive dissonance theory provides a fundamentally different answer.
According to this theory if the equilibrium of a cognitive system is upset by the emergence of an X factor, the equilibrium can be restored not only by a behavior which entails that what is X no longer exists (as is claimed by behaviorism) but also through a change in a cognition which entails that what exists is no longer X. For instance, in a choice situation the balance can be upset if out of all the stakes the one I choose as the end is not larger than that which I must sacrifice as the means (e.g. the chosen gainfulness is not bigger than the sacrificed agreeableness, or vice versa). In order to restore the balance it is not necessary that this kind of interrelation of the stakes should not exist – it is sufficient that what exists should not be this kind of interrelation of the stakes. In other words, it is not necessary that the person should choose what previously represents a larger value for him and sacrifice the smaller value; it is sufficient that what the person chooses should be more valuable and what he sacrifices should be less valuable for him subsequently.
Several laboratory and field experiments reveal that what a subject chooses in a decision-making situation will subsequently be overestimated and what he sacrifices in the process will be underestimated by him. (See for examples Aronson, 1976, and, especially, Poitou, 1974, who considers situations ideologically evoking individual’s freedom as crucial in what he states to be the mere illusion of cognitive dissonance).
Whenever a stalemate among the consciously deliberated motives brings about the situation of Buridan’s ass, certain unconsciously working factors emerge which stimulate the individual to choose, without a preconsidered motive, what he will subsequently justify to himself.
One such factor exerting a powerful unconscious effect is the imitation built into social identity. It has nothing to do with the physiological reflex of yawning when a witness to a yawn feels the urge to yawn himself. The reflex in question is the one that makes sure that in addition to the fact that observer can class those behaving in a specific way in the same social category (if, for instance, they grow cashew nuts they can be ranked among the cashew-nut growers as opposed to the water melon producers even though X of them might be of the same age, sex, religion as Y of the other category), those who belong to a distinct social category imitate each other as to the behavior that is characteristic of the category.
So do, for example, the physicians who keep treating patients beyond the point from where this activity is no longer more profitable for them than it is disagreeable (exhausting, nerve-wrecking etc.). This is the point where cognitive dissonance enters and the upset cognitive balance may be restored by the person subsequently evaluating the activity exerted even for less gain as something that is not so disagreeable that it could not be recompensed by this reduced gain.
Imitation built into social identity may also be negative: often a person refrains from an activity lest he should become similar to the representatives of the social category of which this activity is typical. If, for instance, you are reluctant – just because you are not a window-cleaner – to clean hospital windows even if it earned you more gain than it is disagreeable, then cognitive dissonance will emerge again, resetting the tilted cognitive balance so that you subsequently judge the activity you did not undertake as something so disagreeable that even that much gain would be too little to remunerate it.
So when it comes about that the price of an activity-as-commodity – for example medical treatment – gradually decreases against a background of a gradual increase in the price paid for another activity, for example window-cleaning, what happens is not that individuals, completely independently from each other, give up the activity one by one recognizing that it is now less profitable than it is disagreeable and that it is more lucrative to earn their living by the other activity, whereas exactly this would be the precondition for the price to be an effective regulator of supply (and demand) in the activity-as-commodity.
What indeed happens when the gain obtainable through, e. g., medical treatment decreases is that it challenges the individuals one by one to face a real choice. Even if each of them decided to give up this activity, it would not be the realization of the related interest, but a choice, for just as much interest is vested in continuing the activity, it being equally profitable and tiring at this point. The persons facing a choice however – although individually their activity burdens them to different extent, thus the decrease of the recompense challenges them to face the choice in different moments – keep (perhaps unconsciously) their identity in mind with reference to one another, as, for instance, doctors, and not window-cleaners. It follows characteristically that the imitation, whether positive or negative, built into this very social identity will swing them off the dead center of the deliberation of Buridan’s ass: the person goes on doctoring like the other doctors do, instead of cleaning hospital windows for higher pay. On the other hand, the activity which one get engaged in even for less money will subsequently be reinterpreted as less disagreeable, while the one refused in spite of more money will subsequently be felt more disagreeable.
Naturally, the above outlined cognitive process cannot take the form of reasoning in which the person, aware of the self-deception, would try to persuade himself that something is not so disagreeable (or is much more agreeable) than he has expected. Anyhow, when the social identity exerts its effect via conscious deliberation and not an unconscious – positive or negative – imitation, it never results in cognitive dissonance.
If this is the case, the person consciously reviews not only whether the activity is agreeable or disagreeable, gainful or costly, but also weighs its social significance, and his interest which he consequently realizes may make him continue the activity even though he is aware it is less profitable for him than it is burdensome, or less agreeable than it is expensive, for he is aware that this is his duty to his social identity (“noblesse oblige”).
Such calculations originated from a sense of duty may play a role in questions related to production as well as to consumption, e.g. when I consume cashew nuts not because it is more agreeable or less expensive for me than the water melon but because I owe that to my social status. This phenomenon is usually labelled with ideological disapproval as “prestige consumption,” seeking “status symbols” and something that is generally typical of “consumer society.”
In sum: a decrease in the price paid for an activity does not necessarily entail a decrease in supply. When instead the number of those decrease who consider this activity so disagreeable that they feel forced to decrease its supply, then this price is psychologically but not economically effective.