What is Fate? The Rationalization of the Human Mind!

I want to talk about fate. I’ll start with some thoughts on the most recent econtalk podcast by Russ Roberts. Russ talks with John Ralston Saul about his book “Voltaire’s bastards” and how we abuse the use of reason today. The abstract:

Saul argues that the illegitimate offspring of the champions of reason have led to serious problems in the modern world. Reason, while powerful and useful, says Saul, should not be put on a pedestal above other values including morality and common-sense. Saul argues that the worship of reason has corrupted public policy and education while empowering technocrats and the elites in dangerous and unhealthy ways.

This podcast is perfect as an entry in the understanding the single fundamental driver of our world and the development it is caught in. It’s about the most secular trend we witness and from which all our struggles, problems and blessings originate from: The rationalization of the human mind and consequently society. Few people understand how pivotal historic events, like the idea of fascism can be traced back to “rational exuberance” of another, long-term kind. J. R. Saul manages to point this out. All (new) economic issues (as well as all society related ones) come from a human mind which is developing more and more by the takeover of rationality in its thinking which consequently builds the world we live in. This trend dates back to enlightenment, and even more so romanticism. It carries other names as “individualism”, “awakening of the I”, “entrepreneurialism”, etc.. As it unleashes, this trend creates “attrition” with current logics which still rule (see initial quote). It eventually always wins but on the way can provoke massive backlashes – dependent on the speed of the process i.e. heat set free.

This is the truly fundamental and inescapable fact of human evolution of the last 200 years. Thus we can rightly call it our fate. This means, our fate is not a certain lifestyle, person, event or attributes to your current life situation as commonly thought of. Our fate is a certain mode of thought, a certain logic which unleashes in our minds and slowly but surely captures all of life’s spheres. Joseph Schumpeter already understood that when he addressed it on his farewell speech at the university of Bonn (1952[1932)]. A masterpiece of foresight. Of course he wasn’t alone. The German Historical School (GHS) knew scholars who saw that early on. The same understanding e.g. is found in Simmel’s “Philosophie des Geldes” in 1900 [2009]. Too bad that these scholars lost their voice together with the 2. World War. After 50 years of cold war, this is now slowly rediscovered. Institutional economics describes the problem of the “rational man” which cannot be committed, thus destroying the fundament of a society which bases on the division of labor. The seminal work here is David Rose’s “Moral Foundation of Economic Behavior” (2011). He is now writing a book where he shows how the dispersion of rationality in the minds led to the fall of big civil societes to show the presented theory. Of course, this is exactly what Saul refers to in this podcast. Another – I guess the biggest strain – of research on our fate is done by sociology. The very readable and nicely written “Das unternehmerische Selbst” by Ulrich Bröckling (2007) is one of the most influential pieces. He writes how our existence more and more turns from “to be” to a constant state of future-oriented “to become”. Entrepreneurial thoughts take over all aspects of our lives. It is easy to see that this “entrepreneur” carries rationality within – he planfully acts. Also the concept of a modern ideal or “hero/leader”-figure which Saul mentions is found i.e. it is the actual object of inquiry of the book.

As economists are usually ignoring or even more so – trained to ignore – sociology, this insight faces a very slow progress to slip into economics. Eventually it will, as it has huge economic implications which cannot be seen yet by academic economics. It is the blind spot of economics to understand what we see as developments of the human mind. Capitalism, socialism, fascism are children of the underlying rationalization development of the mind. The vanishing point is the “homo oeconomicus” or some other rational notion of human action. It is usually agreed upon within economics that this yields problems like emptiness, loss of identity, inability of relationships, etc. But of course, all of these are viewed as economically unimportant or not belonging to economics at all. But the homo oeconomicus carries a nasty economic implication as well: A totally rational human being cannot be committed and thus is the theoretical end (not the beginning!) of a decentralized economy. Those who read Adam Smith’s both books fully know that this is not a contradiction. Of course this is hard to bear for (neo-) classical economists and messes with their utilitarian world view. But this is just another consequence of their blindness to the socio-structural meaning of a general equilibrium model; it assumes an economy of stationary state (and thus certainly not a capitalistic one). Such an economy means feudalism. A fact Leon Walras was totally aware of but is usually fully neglected (Schumpeter, 1997[1937], preface to the Japanese ed.).

By the way, the same critique applies to a lot of “Austrian” and “Libertarian” voices which blame ex-nihilo credit as a problematic phenomenon because it fiddles with property rights. Conversly Schumpeterians see that credit solves a problem with existing property rights. All a matter of ideology. Unconsciously these Austrian and Libertarian voices advocate status quo property rights i.e. in the end feudalism i.e. a stationary world. This is the tragic story of usually admitted fans of capitalism which never can be stationary. And what’s the mainstream neo-classics/NewKeynesian/NewConsensus economics’ stance toward this paradox? You guessed right: It is in any case blind to the issue of credit, property rights and what kind of society it implies.

– JAS


Bröckling, Ulrich (2007): Das unternehmerische Selbst. Soziologie einer Subjektivierungsform. Frankfurt a. M: Suhrkamp.

Rose, D. (2011). The Moral Foundation of Economic Behavior. Oxford: University.

Schumpeter, Joseph Alois (1997): Theorie der wirtschaftlichen Entwicklung. 9. Aufl., unveränd. Nachdr. d. 4. Aufl. (1934). Berlin: Duncker & Humblot.

Schumpeter, Joseph Alois (1952): Das Woher und Wohin unserer Wissenschaft. In: Joseph Alois Schumpeter: Aufsätze zur ökonomischen Theorie. Tübingen: J.C.B. Mohr, S. 589–608.

Simmel, Georg (2009): Philosophie des Geldes. Nachdr. [der Ausg.] Leipzig, Duncker & Humblot, 1907, 2., verm. Aufl. Köln: Anaconda.

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One thought on “What is Fate? The Rationalization of the Human Mind!

  1. […] finding of capitalism is always on the verge of coming back in a stationary stage if rationalisation [economisation / commodification] moves to fast or if it get’s corrupted and neo-feudalised […]

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