Desires and happiness: the sacred and secret cornerstones of economics (excerpt from my forthcoming book)

Desires drive the world, say economists, without pausing to think what desires are. De gustibus non est disputandum ‒ tastes are not to be disputed ‒ recalled the Nobel Prize-winning economists Gary S. Becker and George J. Stigler in a 1977 article, on the subject of “preferences”. Consumers know what they want and that suffices, they argue, for due respect can then be given to human liberty. Let people wish freely for what they will and decide how to enjoy it. That will make them happiest, and will ensure the greatest bliss to the most people in our common world (or technically speaking, maximise utility at individual and social levels). It becomes ever clearer that this is not so for several reasons.

Many academics fail to question what the nature of desires is and are little concerned with the myriad senses of happiness. We hang out the banner of freedom and leave mankind to flounder amidst the greatest undertaking in human life. By so doing we assume the two cornerstones of the system ‒ desires and the pleasure of fulfilling them ‒ as given without delving into them thoroughly. We have chosen cornerstones of a material whose composition is unknown to us. Does this not bring blind faith into building the house of civilization?





Public policy with no common good

I first met the concept of Economic Man as an economics undergraduate. I had to state its basic tenets so often they almost became a mantra: “Man is selfish, maximises his own utility, is fully informed and perfectly rational.” I bore this in mind, even when waking from my dream, but I still questioned whether mankind could really be like this. And I pondered whether it was right for an economist to doubt it? Would such persons be economists at all? I was not drawn to the tidy theoretical realm of modelling. I tended to cast around for where man is, what a good world is, and what could be done to further it. So I moved to the social economics faculty to take up public policy. It was useful, but involved only scholastic learning.

My first job was at the Ministry of Finance, glad to be active at last. My main concern at the Budget Department was how to spend public money (“budgetary expenditures”) justly and fairly, how to gather it well from the proper sources in the form of  taxes (“budgetary revenues”), and inform the public about all this . The collapse of the socialist system in Hungary was followed at the time by a period of opening up. International agencies began to demand accountability in exchange for their grants and loans to needy countries. Concealment could go on no longer. So it was an exciting, prospectful period. Yet I grasped there had been little change in the state administration, influenced as it was by its “customers” ‒ the political elite. The aim was still to hide as much as possible. The issue was rather how to levy money imperceptibly (for instance as value-added tax or consumption levies on “habit-formers” like tobacco and alcohol), even if it hurts the poor most. The other issue was how to spend perceptibly, not necessarily well.

Budgetary Law was a chaotic document in twelve volumes lacking a table of contents. It was hardly possible to gauge from it how much went on health, education, or other major public goals. We were swamped in detail of how this or that little institution was funded and unable to discern where the real choices were. It was a tried tactic. If you want to keep the truth from people and stop them seeing how your firm works, smother them in detail and hide the real strategic decisions and directions. That is what we did as a pivotal ministry serving actual governments. It was an agglomeration of political and fiscal interests. This was the time of privatisation, reorganizing the whole system of ownership, and forming the new economic order. What were junior clerks or even deputy heads of division (as I became later) able to do, even in alliance with same-spirited colleagues? It was like halting a landslide with bare hands. We could not make a revolution, even if we put all our clever heads together, even if we argued for efficiency, saying a cooperative, transparent state could even collect more revenue for a more sustainable economy in the longer term, to benefit all. Who cared?

And it was as if the public eschewed such a revolution as well. People showed no regard for central funds on a daily basis or at election time: they had “their own troubles”. They did not call their leaders to account or elect them by results. They left them alone with the public purse. It was as if people shut their eyes to how gold coins were being spread, while seeking to scoop up any spare pennies for themselves. They freely ignored their own interests and powers. Democracy, liberty, public policy remained empty words. Schools taught pupils to answer right, not to think. To obey, not to seek solutions together. Natural childish curiosity had long been knocked out of them. Behind all this was the experience of the communist regime, when curiosity could cost lives. Public affairs were seen as far above and ordinary people did well to crouch down. Based on their ordeals, I could well understand it all. In that sense they were right to do what they thought best. So I felt helpless and disappointed.

Later in London, I sighed with relief to find in my first year of my doctoral studies that I was quite free to think out what subject-matter in the world truly interested me. The multitude of choices left me baffled, but I was sure of one thing: I had to comprehend and connect to more of the world than its money. I discovered Amartya Sen, later a Nobel Prize winner, who wrote of the importance of capabilities, and I explored the studies of happiness emerging then, and I tried to bring them together. “The economics of happiness” was spawned by large-scale datasets, which enabled analyses of how people’s happiness is affected by external conditions. I began to study that too. Later, I continued to do so in a research post in Vienna.

Yet after a time it seemed too little. Outward circumstances make up only a fraction of happiness. What of the more vital factors: personal attitudes and the realm of human relations?

Desires and happiness are far from being unknown: the terrain of the psyche

I began to move from the realm of numbers into a new one: I learnt coaching and group methods and began to support people and groups. I enjoyed the room for action and play and named the activity the Theatre of the Soul. I noticed that many group members had never found out how to be fully themselves, in an accepting environment that creates space for exploration and mistakes, or how to devise their own responses to matters of true importance to them. It was to their own surprise that they discovered new inner roles and operations. We created adult playgrounds, where childhood curiosity, excitement and playfulness could be felt again. It was a space of freedom and for truth. No one need to preclude anything to become acceptable. One could experience how connecting to the wholeness of life, including its hardships, almost always yields hope, joy and a range of possible new steps. There is no need to force this, it is like the inner order of life. Life wishes to live and succeed within us. It was good to see and assist in this. Such practical happiness research became part of my expanded life.

I found these two realms, economics of happiness and practical psychology were far apart, as if each had its own field, with a blind wall between them. Working as an economist of happiness, I too had sought out what could be changed in the external circumstances, including the way how institutions works. It is exciting: it reveals principles and chances of intervention. We worked out how money pleases people (see Lelkes, 2003, for instance), but only to a smaller extent, and how we tend to get used to good things. So at any given moment, the more affluent are on average more content with their lives, but there are vast gaps between people and destinies, and all in all, money explains only a small proportion of variation in happiness.  This seemed interesting and useful to me, but too little. For one thing, we had not studied a factor more important to the occurrence of happiness: the convictions and beliefs innate in people. We had stopped at the blind wall.

The other realm manages to open the “black box” of human preferences and discern what economics takes as a given unknown: the inner individual world, where desires are born and either met or they fade away. This is a realm of psychology, philosophy and traditions of spirituality. Psychology seeks to help individuals with their thriving, so that they find their true, deep longings and become able to act for them. Philosophy and spirituality view desires from a greater distance and do not necessarily approve them. This realm can help in finding adequate responses to the challenges of successive stages in life, so that the soul is not numbed by fear of change. It can help in life’s inevitable crises and losses, when something quite unwanted happens. Psychology can offer an escape from paralysing beliefs, self-doubt, self-blame, sense of inadequacy, the tyranny of self-criticism that trips people repeatedly before they can move on, or move at all. Here the focus is on the nature of the man’s inner world, convictions and habits, and how they can be shaped. Indeed there is mounting knowledge of how we can live in greater joy and fulfilment. Happiness too can be taught and learnt like anything else. Positive psychology gives further insights into joy, pleasure and happiness. For psychology and inner effort help people see the world as more homy and enjoyable and far broader than imagined. However, there is also a dark side to the realm of the psychic work and its wondrous techniques.

“It is all determined in the inside” is a common belief in psychology, or still more its simplifications in amateur soul-searching. It offers personal solutions. People who cannot find a place in the world are seen as themselves to blame. If you are unhappy and unsuccessful in the world, it is your fault alone. Or your mother’s. But the latter is only a short-term excuse, for it is your fault for not resolving your relations with her. This realm often omits the conditions, the institutional system, the culture that shape the scope in life for some groups and people. It leaves out how skin colour, gender and even a name can have an effect before you even open your mouth. It forgets that a whole life may differ depending on the country, the welfare system or the community in which a person is born, or the values on which these rest. It ignores the importance of physical security and basic needs. So important though internal psychological work is, it is essential in striving for a good life to notice how institutions and the community work.

The way forward

I found that the Golem of Economic Man could be curbed only by combining two realms: knowledge and wisdom on individuals seeking happiness and that on a good community. Individual and communal transformation are tied together and happen in parallel and by each other.

The Golem of Economic Man still raves among us. It threatens our very existence. A big help in curbing it comes from seeing why it is so impassioned and where it draws its strength, and how this passion may be put to better use. What alternative is there, with at least that much creative force?

One main line of argument here derives from the consonance between the psychology of happiness, the present state of the social sciences and the traditions of Ancient Greece. This alternative may be a person whose life is based on values and aims at conscious cooperation with others.

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