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The Happiness Industry Page 5
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Adding to the confusion is a further philosophical and cultural riddle. As even some critics of the whiplash industry will admit, it is perfectly possible that drivers in Britain or America will, on average, genuinely suffer greater long-term neck pain following a rear-end collision than those in continental Europe. An accident victim who is aware of whiplash, and its possible monetary value, will consult a doctor, wear a neck brace, take rest, recuperation and time off work, and generally act like a victim. The psychosomatic aspects of back and neck pain mean that this person may indeed find herself with long-term problems. Meanwhile, the accident victim who dusts herself off, swaps numbers with the other driver, and sets about getting her car repaired, is likely to feel far less discomfort over the long term. Observable behaviour and subjective sensation eventually bleed into each other.
The medical or neurological response to this sort of problem, encouraged by the insurance industry, is to carry on looking even harder for the physical reality of neck pain. Fraud will be eliminated once the truth of pain has been uncovered. Until that point, truth statements and the like will have to do. This assumes, as per Bentham’s gambit, that accident victims experience a certain quantity of pain that could in principle be scientifically known to an observer, if only an appropriate method could be found. Such a method would likely have to focus on the body in some way. Bentham’s preferred route for measuring utility – using money as a proxy for it – is ruled out on this occasion, seeing as it is precisely the pursuit of money that appears to be generating the problem in the first place.
But what if whiplash is necessarily entangled with the pursuit of monetary compensation? And what if fraud of this sort is not some unfortunate, exceptional and eradicable element of our compensation culture, but an entirely inevitable feature of how our sense of justice and injustice has been colonized by monetary calculation? Deep within the whiplash syndrome, there is the idea of equivalence between the sensations produced via the nervous system, and money. The principle states that a certain quantity of subjective feeling can be counterbalanced by an appropriate quantity of money. Admittedly, this principle may be widely abused, in some societies far more than others. But the very fact that it is impossible to know whether it is being abused, or by how much, tells us something about the absurdity of this presupposition. Maybe, instead of searching harder for the ‘truth’ of physical pain, we should explore if money could ever serve as some neutral, honest and mathematical representation of our feelings.
The authority of mathematics
Joseph Priestley, the man whose work had led Bentham to shout ‘Eureka!’ in Harper’s coffee shop that day in 1766, was a strong influence over the emerging middle class of industrial England. In 1774, he helped to establish the first Unitarian church in the country, which was still an illegal religious movement at the time. Unitarians rejected the orthodox Christian belief in the Trinity of Father, Son and Holy Ghost, arguing instead for a single God. Varieties of Unitarianism had been in existence across Europe since the sixteenth century, though never politically accepted. The English practitioners had been an underground movement until Priestley formally established his church. Understandably, given the suppression they had experienced, they were avid Enlightenment optimists and campaigners who argued for freedoms of speech and religious association.
They were also scientific optimists who placed great faith in the power of mechanics and engineering to advance the progress of humanity. Popular among industrialists, this coincidence of faith with machinery was convenient. A number of Mechanics’ Institutes were founded by Unitarians in the early nineteenth century, in an effort to connect engineering progress to the public good. Mathematics was viewed as especially valuable, where it helped to construct useful machinery and transform the physical world for the benefit of mankind. But it needed pushing beyond the study of the natural world or engineering and into social and political realms. It is scarcely surprising that they immediately viewed Bentham as a kindred spirit.
William Stanley Jevons was born into a Unitarian family in the outskirts of Liverpool in 1835. His father was a successful iron merchant, and the family was comfortably off. Unitarian principles dominated the family and dictated the young Jevons’s education, within which mechanical devices and geometric reasoning were constantly recurring features. As a child, he played with a balancing device as a toy, and such instruments would retain a fascination for him throughout his later career.4 He received his first introduction to economics as a nine-year-old, through the children’s textbook Easy Lessons on Money Matters, authored by the Archbishop Richard Whateley, which was read to him by his mother.5 Aged eleven, he attended the Liverpool Mechanics’ Institution. Throughout this, he was taught to view mathematics as the mark of ‘true’ science, no matter what the object might be.
In the early 1850s, Jevons enrolled to study chemistry at Bentham’s alma mater, University College London (UCL). This also gave him the chance to attend the lectures of another famous Unitarian, James Martineau, a Benthamite who taught a course on ‘mental philosophy’. It was during the 1850s that a distinctive tradition of English psychology was emerging that had parallels with what Fechner was doing in Leipzig at the same time. The use of introspection, to study the inner life of the mind, gained respectability through the mid nineteenth century, especially following Alexander Bain’s 1855 work, The Senses and the Intellect. Bentham’s influence was important to this tradition too, but it was more the speculative, philosophical Bentham, who created theories of pleasure, rather than the technocratic Bentham, who wanted to actually ground politics in physical equipment. With his Unitarian and industrial background, Jevons was more naturally inclined to hard, geometric mechanics. Psychology was all very well, unless it could not be rendered mathematical.
Jevons would have remained at UCL for longer, but in 1853, with his family suffering financial difficulties, his father obliged him to accept a job in Sydney, Australia, as a gold assayer. This required the use of very finely tuned instruments and scales to test the quality and weight of gold, a practice that appealed to Jevons’s mechanical sensibility. Here was a practical challenge, which involved the application of mathematics to the physical world and saw Jevons returning to his childhood hobby of using balancing devices. Not only that, but the object in question would prove to be the critical one in shaping Jevons’s later intellectual career: money. It is interesting to consider that at precisely the same time as Fechner had begun his weight-lifting experiments to look at the mathematical relationship between physical objects and psychic feeling, 10,000 miles away Jevons was working with another form of weight-lifting instrument to test the monetary value of a precious metal. If the three different entities of mind, matter and money could be fixed in some mathematical relation to each other, the implications for the understanding of the market economy would be profound.
While in Australia, Jevons continued to read widely in psychology, exploring Bentham’s work and discovering the writings of another English psychologist, Richard Jennings. He showed comparatively little interest in economics, which was at the time dominated by the figure of John Stuart Mill, and remained within the tradition of ‘classical political economy’ that had been initiated by Adam Smith in the 1770s. Classical political economists concerned themselves with weighty, material and political issues of how to increase the productive capacity of nations through free trade, division of labour, agricultural policy and population growth. They argued in favour of free markets, but principally because this was viewed as a way of increasing production. If wealth was the goal, they reasoned, then the resources that needed studying were physical ones: labour power, food, fixed capital, land. The classical economists had no discernible concern with psychological questions of feelings or happiness. As far as they were concerned, the problems of economics were ultimately those of how best to harness nature.
But while Jevons was in Australia, there were signs that the core assumptions of political economy were about to chan
ge. Jennings was a psychologist, but his 1855 work Natural Elements of Political Economy suggested that economists could not ignore psychology any longer. Given that labour was central to the classical economic view of capitalism, it must surely be relevant that workers suffer different levels of pain as they go through their day, which then influences how much they are able to produce.
It is often said in circumstances of boring or monotonous work that ‘the last hour drags the longest’. Jennings made a similar observation, but specifically in relation to physical exertion: the longer one spends labouring on a task, the harder it gets. Fechner’s observation, that weights feel heavier the longer they are held, picked up on the identical issue. Such insights spoke to an emerging concern among industrialists at the time, that workers were suffering from fatigue, and that the bourgeoisie’s principal source of wealth, namely labor, was gradually becoming depleted. As the nineteenth century wore on, this worry led to an explosion of strange experiments on fatigue and possible ergonomic solutions.6 And so it was via the subjective experience of work, as an exercise that gradually increases in painfulness, that capitalists became interested in how we think and feel for the very first time.
Jevons was drawn into reading economics, thanks to Jennings’s pioneering work. In 1856 he was also drawn into a dispute over the funding of a railway in New South Wales, and his interest in economic theory was piqued further.7 From Jevons’s Unitarian perspective, economics, as passed down by Adam Smith, was not strictly speaking a science: it lacked the mechanical and mathematical rigor. But by starting from a different premise, much as Jennings had already suggested, perhaps this was a domain that was amenable to truly scientific reasoning after all. If the economy could be understood as a mathematical problem, to be solved through the attainment of quasi-mechanical balance, then economics would be placed on genuinely scientific foundations. He wrote to his sister in 1858 letting her know that he was now determined to focus on extending mathematics to the study of society. In 1859, he returned to Britain and re-joined UCL to study economics.
Markets as balancing devices
Money is an extraordinary thing which can cause psychological havoc. In some psychosomatic situations such as whiplash, it may even cause physiological havoc. The central fact about money is that it must perform two contradictory functions at once: to serve as a store of value and as a medium of exchange. When acting as a store of value, it becomes something we cherish and want to hang onto, often by placing it in a bank account. When acting as a medium of exchange, it is something that opens up infinite possibilities to attain other, much more useful and desirable things. This contradiction is manifest in the physical design of money itself, which has to combine a high level of symbolic appeal (in its insignia and shininess) and minimal level of actual physical usefulness.
Interest rates are the main way in which capitalist societies strive to balance these two functions of money. When interest rates go up, our desire to hang onto money increases accordingly; when they go down, our desire to spend it increases instead. Sometimes, we flip between viewing money as everything, and viewing it as nothing. The psychoanalyst Darian Leader has noted how money often plays a central role in the behaviour of bipolar disorder sufferers.8 When they are manically happy, they view money in purely liquid terms, of infinite possibility, with no intrinsic worth of its own. They give it away, spend rashly, revel in the freedom it grants. When they are later depressed, they become weighed down by money’s ubiquitous importance once more, only more so due to the debts and costs they ran up during their mania.
Thus one way of understanding the history of liberal economics, from Smith onwards, is as an ongoing attempt to deal with the bipolar character of money. As we all instinctively recognize, markets are places where goods or services are exchanged for money of some sort. But what we tend to overlook is how odd such an exchange actually is.
How is that a £10 note can be deemed equivalent to, say, a pizza? In order for this exchange to take place, money’s dual roles as both medium of exchange (I am willing to get rid of it) and as store of value (the pizza seller is willing to accept it) have to function simultaneously. How can a piece of pure, numerical symbolism serve as equivalent to a doughy, cheesy meal, without either side feeling hard done by? For if it can’t, then the market system itself becomes completely impossible, and we would end up each having to produce our own food, clothes and shelter. The constant risk is that people either value money too highly (cue hoarding and price deflation) or not highly enough (cue barter and hyper-inflation). The solution offered by economists is to invent a mysterious entity that lurks magically inside the pizza, which they term ‘value’.
Often, we use the word ‘value’ to mean ‘price’, as when someone says, ‘This painting is valued at £1,000’. But it’s quite clear from other uses of the term ‘value’ that it doesn’t mean price at all. If I describe the pizza as ‘bad value for money’, that suggests it really shouldn’t have been exchanged for as much as £10. The value and price of the pizza were not, in fact, equivalent to each other, and the customer was being ripped off. The idea of value allows us to view markets as balancing devices, whose outcome should in principle be fair. By suggesting that value is a quantity like money, economists are able to show how both sides of an exchange are, ultimately, equivalent. When the market for pizzas is working correctly, they argue, ten of these pounds will buy you an equivalent quantity of value. Rather than exchange a quantity (money) for a quality (pizza), both sides of the equation can be represented in numerical terms. The market becomes imagined as a set of scales, which weigh money and value against each other, until the two are in perfect balance. What the idea of value really says is this: money itself is not the most important thing in life, but it is the perfect measure for anything that we do consider important.
So what is value? How is this ubiquitous quantity to be conceived? The classical political economists argued that the value of a good or service derives from the amount of time that has gone into making it. In this case, the pizza’s real worth resides in the amount of time spent producing its various ingredients and cooking it. In principle, if markets are working fairly, the price of the pizza should be equivalent to this quantity of labour time in some way. This ‘labour theory of value’ dominated economics for nearly a century. By 1848, John Stuart Mill was confident enough to write that ‘happily there is nothing in the laws of value which remains for the present or any future writer to clear up; the theory of the subject is complete’.9 But that particular version of the theory never interested Jevons.
On 19 February 1860, Jevons wrote the following entry in his diary:
At home all day and working chiefly at Economy, arriving as I suppose at a true comprehension of Value regarding which I have lately very much blundered.10
The book in which this ‘true comprehension of Value’ would be articulated, The Theory of Political Economy, would not appear for another decade. By then, two continental economists, Léon Walras in France and Carl Menger in Austria, had ‘blundered’ towards a similar discovery. In combination, these three economists unleashed a revolution within economics, eventually producing the narrower, more mathematical discipline that we recognize as economics today.
Shopping for pleasures
A number of English theorists, including Bentham, had wondered whether the mentality of consumers might actually be the decisive factor in determining the price of things. This idea even cropped up in Archbishop Whateley’s children’s book of economics that was read to Jevons as a child. But it took Jevons, Walras and Menger to establish this notion as the new foundation for economics. The question of value remained crucial, for how else could the market be represented as a place of fair exchange? Their novelty was to conceive of value from the perspective of the person spending the money, rather than the person producing the goods. Value would become a matter of subjective perspective.
What marks out Jevons was his determination to build such a theory direc
tly upon the psychology of pleasure and pain. He described his project in sharply Benthamite language:
To satisfy our wants to the utmost with the least effort – to procure the greatest amount of what is desirable at the expense of the least that is undesirable – in other words, to maximize pleasure, is the problem of economics.11
The centrifugal point of capitalism was being shifted. From Adam Smith through to Karl Marx, the factory and labourer were deemed to dictate the price things were sold for in the market. From 1870 onwards, all of this changed. Now it would be the inner ‘wants’ of the consumer where the all-important question of value would be established. From this perspective, work is simply a form of ‘negative utility’, the opposite of happiness, which is only endured so as to gain more money to spend on pleasurable experiences.12 Subjective sensation, and its interaction with markets, was elevated to a central question of economics.
In keeping with his Unitarian roots, Jevons was only prepared to engage in economics if he could find a way of doing so mathematically. ‘It is clear that economics, if it is to be a science at all, must be a mathematical science’, he argued; ‘our science must be mathematical, simply because it deals with quantities’. It’s not clear that Jevons was ever particularly good at maths himself, but his prejudice in favour of such an analysis held nevertheless. Economics could be founded on a science of pleasure and pain, but only on the basis that these psychic entities also obeyed certain mathematical laws. For such a vision of economics to succeed, the mind itself would have to be treated like a calculator.
In the preface to the second edition of The Theory of Political Economy, Jevons expressed his regret that he had retained the term ‘political economy’ in the book’s title and not used ‘economics’ in its place. The distinction is a significant one. He clearly saw his work as a new start for a more rigorous discipline than the political economists had been able to achieve. Once the correct mathematical foundations had been established, the study of the economy would be placed on new and objective foundations.