A final science of man has no room for the unplanned
Daniel Cloud, who teaches philosophy at Princeton (via a Columbia degree) and runs two hedge funds, blames our hubris in predicting human behavior for the current crisis.
What really produced the change in economics that led to disaster was the simple fact that you could now get away with saying certain kinds of things in public. Some of us honestly thought that history was over. And after all, you can’t have a final, utopian society without having a final, scientific theory of human behavior, together with some mad scientists or philosophes to preside over the whole thing.
[A] market is not a rocket, economists are not rocket scientists, and moral hazard is, in human affairs, the risk that matters most. The false belief that we can collectively see the future using science has led us all to make various binding promises about things in that future that no human being can possibly guarantee. A promise of something that we should know cannot be guaranteed is also known as a lie. That vast tissue of lies is now tearing itself apart.
We could easily be “stimulating” and “rescuing” the economy for a rather long time, in ways that only delay the needed adjustment, before we are finally forced to allow the required creative destruction to occur. But that is not the real problem. The real problem is the pseudoscientific ideology behind today’s crisis. A final science of man has no room for the unplanned and unpredictable recovery that is the only kind a capitalist economy can have after a crisis of this size.
While I applaud his argument that the faith in a complete, closed science of man lies at the root of our overdependence on economic models, I take umbrage with his implicit, free market policy prescription. He argues that because the future is ultimately not predictable, we should not intervene to shape its direction. I wonder if that is the way he ran his hedge funds. What is missing here is the fact that all science is bound in ideology. Therefore, science and its models function as utopian destinations, not descriptions of reality. Consequently, Cloud seems to suggest that the “market failures” identified by ideologically consumed free marketeers were simply objects of scientific inquiry rather than mechanisms for redefining society in the image of the models.
In place of the broken models, Cloud seems to suggest a model of no models. This is equally pernicious. By abandoning the idea that we shape our own collective future through a science of man, he obscures the overwhelming ability of hedge funds and investors to make decisions that shape the future and the fact that they will do so if we do not. Cloud is correct in arguing that there is no final science of man, but errs in jettisoning this essential project.
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