In the previous chapter we found that markets contribute to cognitive complexity largely through their influence on the kinds of work people do and their relief of poverty. On the other hand, firms often did not systematically reward complex cognition (often they could not afford to train for it) and they have not, until recently, banded together to give political support for a level of public education appropriate to its influence on the economy. In this chapter I continue the examination of market effects on cognitive complexity by turning to the influence of environmental stimulation and stress on cognition.

The market, as a source of both challenge and stress, by its very nature demands difficult cognitive responses. As a self-regulating system the market is not equipped to regulate or inhibit over stimulation. It has no terminal facilities for stimuli. There is no systemic brake or inhibition (except for individual choice) that might tailor demands to the variety of capacities among market participants. The thesis of this chapter is that market effects on cognition follow a curvilinear pattern whereby they first increase cognitive complexity by their challenges, innovations, and propensities for rapid change, and then often overload the capacities of their participants by their demands for complex cognitions. I first present evidence of curvilinearity in laboratory, field, and historical studies, then turn to evidence of market complexities leading to overload. After exploring some social consequences of this pattern, we will examine models where environmental complexities occur either simultaneously or in sequence, concluding with an examination of adaptive responses in these different circumstances.

The concept of market rationality discussed in the previous chapter assumes a kind of emotional neutrality (except for the anemic schedule of preferences) that is totally unrealistic. In the following discussion we turn first to the central role of emotions in the market economy and then to certain ways in which affect (emotions) and cognition influence each other, as when cognitive processes are called upon to define arousal or when, in reverse, a positivity bias changes perception. Research on emotions greatly alters our understanding of market satisfactions or utility. We then turn to the effects on emotions of market success and failure, followed by a discussion of the effects of good mood on market work and thought. The chapter concludes with a discussion of the relation between happiness and cognition, including speculation on whether rationality is really compatible with happiness, which is the ultimate maximization of utility.

Markets as theaters of emotion

If it be agreed that the theory of market rationality as an approximation to economic behavior is a mischievous fiction, what is to take its place? Some combination of emotion and cognition, no doubt, but the relation between these two is complex. We turn here to a few of the market relevant aspects of this relationship.

Affect and arousal are the most encompassing of the terms dealing with this general area; emotions refer to something more specific, like fear, or pity; mood refers to an affect without specific target. The market stimulates arousal and is saturated with emotion: pride and shame and guilt (the three emotions that are identity related); anger and aggression; self-love, the foundation emotion, as Adam Smith pointed out.

The wants whose satisfaction we discussed in the previous chapter are often a source of pain before they are satisfied. Should one then say that the market is primarily a pain-relieving mechanism or is it primarily a ministry of pleasure? Our analysis of satisfaction and dissatisfaction pointed out the benefits and healthy associations of dissatisfaction. But if dissatisfaction is painful, does this not suggest an asceticism (or martyrdom) that Bentham “took pains” to excoriate and that violates the basic utilitarian basis of the market? The unfinished business of the previous chapter leads to a further analysis of how the market deals separately and jointly with the pains and pleasures that fall within its reach.

To complete the discussion in Chapter 23 of the pains and pleasures that do and do not pass through the market we will start with the classic formulations of Jeremy Bentham, as these are supplemented by his modern empirical successors, showing again the limits of the market's reach. Since these formulations deal with the effects of circumstances on thought and behavior, they have to be supplemented by a further analysis of the internal properties that modify the hedonic effect of what the market presents. We are then ready for the main business of the chapter: How do individuals achieve a balance among these positive and negative stimuli and their internal representations? Toward the end of this discussion we find reasons for assigning the relief of pain to government and the provision of pleasure to the market – and reasons to modify that assignment.

In this chapter and the next I will focus on money. There are sound economic and psychological reasons for this focus. The economic reason for this attention to money, which Schumpeter said was “exalted” by the capitalist system, is that money is the medium for executing the market's central function: coordinating economic activity. The very concept of a self-regulating market requires monetary feedback, and the market's network of transactions depends upon the information that money prices provide. The coordinating function of the market would not work without it. But it is the cognitive function that is of concern here.

Whereas the concept of cognitive development employed in the previous chapters means the growing capacities of the mind to cope with increasingly complex events, cognitive facilitation means the removal of concepts or circumstances that inhibit such development and the use of conceptual technology that permits people to think more clearly about their problems. Money may contribute to cognitive development; I think it does, but it is primarily an instrument of cognitive facilitation, a tool for thinking, and, as we shall see, money may also be a fetter that constrains clear thinking.

Introduction

The market does not and, as I shall argue in the next chapter, cannot give to work the priority that it merits on the grounds of its hedonic and developmental potentials – but neither does it systematically degrade work. What it does is to award to some the advantages of challenging, self-directed work and to others the disadvantages of routine, closely supervised, and unchallenging work. In this chapter we explore the market's distribution system for these kinds of satisfying and unsatisfying work.

The chapter has four principal sections. First, I ask, Who is likely to pay for improving workplace enjoyment and learning? We will find that the market system allocates costs in such a way as to make almost impossible any provision for workplace learning that does not also improve productivity. The second section treats the contribution of family, technology, and market to the stratification of workplace learning. We will discover that the major proportion of the explanation for stratification lies in family and technological processes, not in the market. In line with the argument of Part V, we construct an alternative stratification hierarchy based on work rather than consumer utilities. Third, analysis of the assignment within firms (internal markets) of opportunities for workplace learning shows again how disadvantageous product competition is to workers. And finally, we find in farm work and housework that these facets of the world we have lost need not be mourned. Together this information should help us answer a modified version of the question that has been said to typify political science: Who gets what features of development through work activities, when, and how?

I have suggested two maximands for the market: human development and happiness. Our discussion up to this point has focused more on the conditions of human development (specified as cognitive complexity, personal control, and self esteem) than on happiness, although inevitably hedonic states have entered the analysis. It could not be otherwise. Even though the two goods are separate, the discussion of each implies acknowledgment of the other. When they conflict, that conflict must be noted and the usual alternative basis for support, ethics, must be shown to be supportive. When they are congruent, the hedonic rewards of developmental processes are important incentives for engaging in those processes.

It is for these reasons that there have been many references to hedonic moods in the interpretations of the market experience. Thus, the development of cognitive complexity by the market was placed in the context of joy and sorrow as well as such emotions as pity, guilt, or anger. The hopes and fears stimulated by money symbols are freighted with hedonic implications; insecurity obviously influences happiness as well as the thinking processes noted; one protects one's sense of personal control and self-esteem because one feels unhappy at their loss; we do not object to unemployment solely because of the waste of human resources but also because it makes people miserable; the inability of a system of exchange to comprehend intrinsic motivations is a defect because it deprives people of important pleasures; the frequent failure of money to promote happiness is itself a failure whether or not it also distorts market choices. Over the long journey to this point we have inevitably touched on happiness, the subject of Part VII.

This chapter first presents an analysis and criticism of an economic theory of human development. Next, aspects of market consciousness and the highly theoretical character of the underlying assumptions of market participants are treated. In the last section I analyze criticisms of growth and show the extent of benefits that seem to have been concealed from the critics (the affluence effect).

The value of persons

It normally takes little persuasion to convince people that it is the persons served by institutions, not the institutions themselves, that have the greater value. The point is made in varying terms; sometimes the value is expressed as “human flourishing,” sometimes as “developed existence,” sometimes as “mind.” As the philosopher David Ross comments, “Contemplate any imaginary universe from which you suppose mind entirely absent, and you will fail to find anything in it that you can call good in itself. … The value of material things appears to be purely instrumental, not intrinsic.” And, of course, there is the authority of Kant for the claim that, inasmuch as all other things are exchangeable for something else, only the human person has that supreme value that Kant calls dignity. Inevitably the market shapes how humans flourish, the development of their existences, their minds, and their dignity. As a group of British psychologists have pointed out, “Those who frame economic policy are indirectly framing human psychology. … There will always be human consequences, and usually human costs, to be considered.”

Criteria for judging market effects on personality

One standard, among many, for evaluating personality development is mental health.

If the market does not substantially erode friendship and warm relations, perhaps it changes the nature of these relations, making them more invidious. This result would follow from what is said to be the market's encouragement of “conspicuous consumption,” rivalry, and other forms of invidiousness so vividly described by Veblen. In the first section of this chapter we will discuss the market's invitation to social comparison and its alleged consequences for the way we perceive each other. Whether or not rivalrous relations in the market are worse than elsewhere, friendships might still be disvalued when a choice must be made between friendly relations and material gain. As we shall see in the second section of this chapter, there is reason to believe that this devaluation would bring about the wrong choice: The quality of life studies show that anyone maximizing happiness should probably give friendship (and family relations) higher priority, for satisfaction with family life and actual numbers of friends contribute more to overall life satisfaction, and especially to happiness, than anything the market has to offer. If people followed this set of social priorities, however, they would have to defy the market to do so. The implications of this choice between friendship and income and the various hedonic standards to guide the choice are explored in this second section.

Social comparisons: the effect of the circumstances of others on the self

Montesquieu, Tocqueville, Smith, Veblen, and others have variously claimed that modern society encourages social comparison, Smith attributing it to human nature, Tocqueville to democratic egalitarianism, but both Montesquieu and Veblen attributing this tendency to market institutions.

People do not work for “nothing,” but what they do work for is often not just the pay they receive. Rather, they may work for the pleasure they find in their working activities, a pleasure that Juster has found to be generally greater than people's pleasures in their leisure activities. They may work because meeting the challenges at work increases their sense of personal control, or out of a sense of duty, or because of a pressing need to achieve some high standard of excellence. Wherever their motives may be, people evade the market's focus on exchange, for these motives are satisfied by internal rewards that do not depend upon exchanging money for work. When people work for these self-rewards and not for any apparent external rewards, they are said to be working because of intrinsic motivation and thus working for intrinsic rewards.

Part VI is devoted to an exposition of the nature of such motivation, the kinds of internal self-rewards enlisted, and the consequences for the market of work not motivated by market rewards. These consequences are substantial. In the first place, they destroy the formula on which economists rely: The utility of pay is compensation for the disutility of work. Where work is a positive utility, this formula clearly will not do. Then, substantively, these intrinsic rewards make it impossible for levels of pay to serve as the allocators of human resources, thus upsetting the calculations that are the guarantors of efficiency in the market.

In Chapter 4 we noted the lack of empirical relation between intelligence and education, on the one hand, and measures of happiness, on the other. Stimulated by this finding, and by other considerations, we questioned the actual compatibility of one pattern of cognition, the economists' version of rationality, and happiness. If happiness were our sole maximand, any incompatibility between happiness and cognition should cause us to lose interest in cognition. Such is not the case because our criteria for judging the market is two-fold; it embraces both hedonic well-being and a version of human development embracing complex cognition. In pursuing this interest in market effects on cognition here, we will now examine a very long period embracing what have been called “stages of civilization.” For this purpose we will go beyond what we have called the exchange effect, the effect of market operations on those who participate in those operations, to the affluence effect, the effect of market-induced prosperity on those who benefit from it.

Introduction

What do working activities contribute to happiness and human development? I must defer the discussion of happiness through work to Part VI, however, in this chapter I will report research showing how selected work practices alter world views, improve cognitive complexity, impart a sense of personal control, and enhance selfesteem. Rather than change occupational values, work experience tends to reinforce those values held prior to work and sometimes to stimulate curiosity about the world outside the work setting, increase empathy for the weaker members of a work team, and lead to more challenging leisure activities. For the sake of simplicity, I will call the acquisition of these values and insights by the simple, but here specialized, term of workplace learning or simply learning.

The initial discussion of the concept of work is useful as a contribution to clarity, of course, but it has the added advantage that it facilitates dealing with the sometimes vague border between work and leisure, and so will help us later to treat an idea competing with our notion of work as the source of fulfillment, namely, that it is in their leisure, not their work, that people fulfill themselves.

Introduction

It is much more important for people's well-being that their preferences genuinely express their authentic values and the deepest, least conflicted elements of their personalities than that their market choices be consistent or meet other formal criteria for economic rationality. On reflection, one finds it astonishing that the analyses of economic choices whose purpose is to maximize satisfaction should devote so much attention to the relatively minor problems of transitivity and consistency when the relation between what is chosen and long-term satisfaction is ignored.

In this chapter we will examine this relationship between the choices people make and their long-term satisfaction. In the process I will put in context the particular problem of the previous chapter: What accounts for the persistent belief that money is so important to happiness? We will look first at some preliminary evidence in the quality-of-life studies suggesting people's misinterpretation of their own moods, and then proceed to explore several sources of misinterpretation, such as the separation of thought and feeling in assessing one's well-being; the pursuit of desires that are compensatory for other, frustrated, primary desires; the way people misinterpret their ambiguous feelings of arousal; and how they may, without realizing it, violate biologically favored programs. Following each of these psychological explanations we turn to market sources and consequences of such misinterpretation.

As mentioned, my principal thesis is that happiness and a satisfying life have much more to do with an accurate assessment of the sources of one's feelings of well-being than with “rational expectations,” transitive preferences, marginal equivalences, and objective payoff matrices.

The criteria for a successful market are its contributions to happiness (or utility) and to human development. Human development, in turn, is composed of the cognitive complexity we examined in Part II and of two other elements: a sense of personal control (which is based on self-attribution) and an appropriately high sense of one's own worth, self-esteem. Here in Part III I deal with these two additional elements of the developed personality, treating them more briefly than was thought necessary for cognitive complexity.

Chapter 9 relates the development of a sense of personal control to exchange, claiming that market exchange is the kind of contingent response situation that teaches people that when they act the environment responds. From such experiences of effective action people learn self-attribution, that is, that they are the (partial) causes of the events in their own lives. The correlates of a sense of personal control give it a high status among the elements of a developed personality, but the implied belief that each person controls his or her own fate risks both a false view of causal forces in the environment and an unattractive ethical perspective in which victims deserve their victimization. By itself, therefore, a sense of personal control, enlisting self-attribution as it does, is not a final good.

In Chapter 10 I take up the self-esteem that Rawls has called the most important of the primary goods.

In the previous chapter I quoted Meakin's comments on “a crisis of conscience in the world of work” and his references to “a powerful and vivid indictment of a world that degraded work.” One of the main themes of this book is that most work is not degrading; rather, under certain circumstances, it is a major source of both happiness and human development. Consequently it is crucial that we assess these criticisms of work in the light of the evidence in Chapter 13 and of other empirical studies illuminating the various aspects of the degradation thesis.

Whereas the intrinsic domain challenges the market's central concept of exchange, it is the darling of humanist thought. The humanist devotion to the intrinsic flows from a philosophy of individualism and freedom that prizes self-determination, autonomy, the dignity of man. This philosophy embraces an approach to life that emphasizes the value of things in themselves, of being, as contrasted to doing, of appreciation as contrasted to performance. In this approach it is right that individuals should be guided more by self-rewards than external rewards that make them dependent on their environments. As in aesthetics and ethics and the contemplative religions, a special value is placed on the intrinsic, without reference to costs, causes, or consequences.

But in a social system, it is impossible to value things in themselves and to avoid dependence on the environment; everything has costs, causes, and consequences both for the self and the society. From a social scientific approach the idea of the intrinsic seems ghostly – a quality, substance, or state that is valued in itself without reference to its effects on the individual or society. In the previous chapter we sought to explain how this antieconomic quality could be accounted for; here we examine its effects or consequences.

The first of these sets of probable consequences is wholly benign; it is amazing to see the positive correlates (and probable consequences) of intrinsic work enjoyment. And as we move on to question its effects on learning and to the stimulation of creativity, the results are also favorable to the intrinsic.

The humanist critićism of the market often focuses on the risk that the market's reliance on exchange will lead us to think of each other as instrumental items of exchange. In Chapter 9 I pointed out the way exchange helped people to achieve a sense of personal control; here we examine whether the price of exchange is “the commodification” of friendships. Exchange has its costs, but they are not the devaluation of friendship. It is not the case that because we exchange goods, we think about people in the same way as we think about goods, or that people are degraded by taking part in the processes of exchanging goods for money.

The cash nexus among people

Society has long been embarked on a process of moving from status to contract (Maine), from gemeinschaft to gesselschaft (Tönnies), from communal to associative relations (Weber).

We live in systems

Nature and society are systemic but our disciplines partition these systems to suit our convenience rather than to fit the phenomena we seek to analyze. In this chapter 1 seek to show the importance of a systemic, multidisciplinary approach to the market experience, illustrating it by showing the interlocking nature of several of the main criticisms of the market.

There are five major targets of criticism of the market: influence on politics, efficiency, distributive justice, personality, and quality of life. Market influences on any one of these also influence the other four; hence criticism of market influences on any one implies something about the others. As the ecologists say, “You can't do just one thing.” In this discussion I shall combine the last two targets of criticism, personality and the quality of life, under the heading of the market experience, and in the interest of brevity I will omit political influences. Efficiency (productivity), justice, and personality are intimately interrelated (in a tripartite system each element has two relationships, one with each of the other elements; the numbering system reflects this set of relationships, e.g., l.a, l.b; 2.a, 2.b, etc.):

1.a. Levels of efficiency and productivity affect justice. Most obviously, a just distribution depends upon production, and the relief of poverty requires resources. Many justice theorists have recognized this. Vlastos once pointed out that any just custodian of goods must, as a condition of his fiduciary responsibilities, maximize the resources available to his wards; as Rawls reminds us, even egalitarians must make provision for resource development unless they prize equality over wellbeing. In quite a different sense, economic growth permits Pareto optimal increments to the poor.