I do not regret reading this book, but I did not like it. It did not meet my expectations. I expected a discussion of, well, how our economic lives are shaped by biology and psychology. What I found was a standard (and compared to other books, less engaging) presentation of many common ideas from experimental psychology. Rather than a general discussion of economics and psychology, Shermer focused on a narrow point: human beings are not the rational creatures that economists assume we are. This is an excellent point, but others have made it better (such as Sunstein and Thaler in Nudge).

The book has a couple other limitations. The author mixes experimental psychology and evolutionary psychology. Evolutionary psychology has its place; it is certainly interesting to think about why different psychological states evolved. However, it tends to be highly speculative, at least in popular presentations, and I tend to be wary of arguments which depend on it.

The other limitation is that Shermer is a bit too eager to support his libertarian ideology. He makes statements which imply that the psychological tendencies he discusses support this economic ideology. However, the points he makes are so general that to claim them in favor of a particular ideology weakens the whole book.

For example, Shermer shows that trade has a psychological purpose (establishing trust and bonding) as well as an economic one (providing goods not otherwise available). This is a fascinating point, and I would have liked to see the consequences explored at length. Instead, Shermer jumps straight from there to the conclusion that the best economy is one based on completely unregulated free trade. Such an over generalization undermines Shermer's original insight.

All in all, this book stimulated some thinking, but I would not read it again. ( )

Why do we make the choices we make? How much are we a product of culture / marketing? Why do we do the things we do? How much of our lives.. our circumstances ... did we create ourselves? A lot of the books I read approach these subjects. Perhaps, because I read so many of them, a lot of the stories and ideas are becoming redundant.

( )

There is more information in the 261 pages of The Mind of the Market than there is in most books more than twice its size. That is both an advantage and a disadvantage in the sense that the book held the reader's attention even though the fecundity of ideas sometimes bordered on the overwhelming. Michael Shermer, the author of The Mind of the Market, is the publisher of Skeptic Magazine and the author of nine previous books. In this book he attempts to capture the "Mind" of the Market while arguing against previous visions of how the market works while surveying scientific theories that he believes may be used to replace these earlier visions. I came to the book receptive to his support of free market economics, his penultimate chapter is entitled "Free to Choose" - a direct reference to Milton Friedman's classic text of the same name; however I was not convinced that, with all the scientific theories and studies used as examples of "evolutionary" economics and the neuroscience of the market, he made a convincing case. Many of the pieces of the book seemed to just hang there, fascinating little essays on some aspect of science or how "Homo Economicus" no longer exists (or perhaps never did!).

He summarizes his goals as describing 1) How the market has a mind of its own; 2) How minds operate in markets: and,
3) How minds and markets are moral. Each of these goals can be included under the rubric of "Evolutionary Economics" in Shermer's estimation. For my "money" and "mind" I found his attempt to be informative and entertaining if not, in the end, convincing. ( )

I like Mind of the Market more than most because it ties in so well with my emergence marketing ideas. The nascent science of Neuroeconomics is still trying its hat on. Shermer is able to breathe life into data and his NonZero altruistic findings is another favorite idea. Reading Mind soon after NonZero by Wright was informative and suggestive. ( )

Michael Shermer's life is as interesting as this explanation about how our minds haven't yet caught up to our modern economic world. We're hard-wired to make purchases quickly, share our big kills, trade with trusted systems, feel a rush at cooperating, avoid losses, and respond tit for tat. One interesting fact - quoting a Rudolf Rummel analysis - of 371 international wars from 1816 to 2005 where at least 1000 people were killed, 205 were between nondemocratic nations, 166 between a nondemocratic and a democratic, and none were between democratic nations. ( )

Michael Shermer provides Free Market Economics with a scientific foundation grounded in pychology and evolution.

Shermer, an adjunct economics professor at Claremont University and the founder of Skeptic Society, explores the evolutionary roots of our sense of fairness and justice, and shows how this rationale extends to the market. Drawing upon his expertise as a scientist and noted economists, Shermer argues humans are not self-centered. The market itself is moral. Modern economies are founded on our nature.

Drawing on neuroeconomic, behavioral and evolutionary biology studies, Shermer discusses what brain scans reveal about decision-making processes and negotiating. Using studies I was unfamiliar with, he builds on Eric Beinhocker’s comprehensive study of complexity economics, The Origin of Wealth.

Shermer argues economics is far from “dismal.”

1. It is undergoing its most dynamic revolution since Adam Smith penned The Wealth of Nations. Evolutionary, complexity and neuro economics are adding richness and understanding to it.

2. People are passionate about their personal economics and finances. Far being a science of mind-boggling mathematical models, these new sciences add richness and predictability to its study.

Shermer is one of those rare writers with the ability to weave insights from science into economics. His insights bring new understanding to how our human minds create the human markets.

Penned by the Pointed Pundit
March 11, 2008
8:59:55 PM ( )

Critical lessons on evolutionary economics; Jettison the libertarian tripe, February 18, 2008
By S. True - See all my reviews




In "The Mind of the Market" Michael Shermer presents a compelling case for using the tools of evolutionary biology in understanding the dynamics of economic processes. This is largely a vechile in which to setup his libertarian worldview not only as the only scientifically valid view of economic discourse but as the only moral view on such. Here he overstretches the utility of his conclusions & neglects all but the most basic counter argument. In doing so he critically weakens the thesis of the book forcing me to give the two star rating.

Shermer does do an excellent job of pulling data from evolutionary psychology & using that to dispel such economist myths as the "rational actor" etc. His analysis of the data on fMRI scans, primate behavior, & psychological research is careful & directly pertinent to his claim that humans make their economic (& moral) choices not using purely rational means (as has been long supposed by economists) but thru irrational processes that were adaptive behaviors selected for by the Paleoethic environment in which the first humans evolved. On this point I urge the reader to read the book & learn for themselves.

However, the work has its most critical failings when it tries to link these conclusions & findings to the legitimacy & "morality" of "hands off" libertarian economic policy. Here Shermer's careful analysis breaks down & reveals an argumentative strategy blinded by almost doctrinaire dogmatism.

Example:
In decrying anti-trust legislation as immoral & an violation of our right to free trade Shermer writes:
"When stripped of the obfuscatory language of bureaucratese, the Sherman Antitrust Act and the precedent setting cases that have been decided in the courts in the century since it was passed allow the government to indict an individual or company on one or more of four crimes: (1) price gouging (charging more than the competition); (2) cutthroat competition (charging less that the competition); (3) price collusion (charging the same as the competition), monopoly (having no competition)" (p.31)

Shermer conveniently forgets to mention that price collusion is not simple charging the same as your competition, but conspiring with the competition to charge the same price, i.e. "price fixing"; hence, the term "collusion". And since such collusion usually involves setting the price higher than it would have been if competition nad been allowed, that is in fact "price gouging", not charging more than the competition but, charging more than what a fair market price would have been without collusion & price fixing.

Shermer backs this mischaracterization of anti-trust law with debatable cases concerning Alcoa Aluminum & Microsoft Windows. NOWHERE does he address the robbers barons of the early twentieth century such as Standard Oil & Pacific and Southwestern Railroad that held a stranglehold on the political & economic life of the United States & California (respectively) and as protection from whom the Sherman Anti-trust Act was passed.

Example:
Shermer writes on Wal-mart & the backlash against it:
"By dramatically slashing prices and undercutting the competition of smaller retail chains and mom-and-pop stores- causing many of them to go out of business Wal-Mart has hurt the American economy, right? Wrong By employing 1.3 million people (about as many as the military), and keeping retail prices low through quantity purchasing, a McKinsey & Company study estimated that Wal-mart alone accounted for a whopping 13 percent of U.S. productivity gains in the second half of 1990s... Nevertheless during the 2004 presidential campaign, John Kerry called Wal-mart `disgraceful' and emblematic of `what's wrong with America.' That's from a producer-directed perspective, of course. From a consumer-directed perspective, consumers consume Wal-mart products because they can save money doing so, and workers work at Wal-mart because they perceive it to be in there best interests." (p. 36)

Shermer acts as if the only criticism that has been leveled at Wal-mart is that it bad for the economy in that it puts mom-and-pops out of business. He neglects the criticisms that Wal-mart not only forces mom-and-pops out of business but, in doing so helps break down neighborhood ties that such business help maintain, promotes the homogenization of our culture, rides roughshod over local & municipal sensibilities & environmental concerns, causes excess traffic congestion in smaller localities, & creates atheistic displeasing "eyesores" with their "big box" design. But, all of this is difficult to put a dollar value on or quantify so Shermer neglects it. And he never address the criticisms leveled at Wal-mart that it's managerial culture invades the personal lives of its employees or that Wal-mart ruthlessly suppresses all union activity (i.e. right to free association).
Even when promoting Wal-mart's benefits he neglects crucial detail. Yes, Wal-mart creates 1.3 million jobs. But, what kind of jobs? The vast majority are low paying or miniumun wage, part-time jobs without benefits. The reason Wal-mart can claim such a high staff number is because it has a long standing policy of employing people to work just under the minimum nessecary for designation for full time work. In this way it avoids dealing with medical & pension benefits for its staff. Keeping prices low. It simply employs another part-time worker to make up for the man hours. The interests of paying people a living wage in Shermer's world is simply "producer" centered, however.
Also, in extolling the productivity gains Shermer forgets to mention that worker productivity is largely a matter of getting them to work more for less compensation.
And in flippantly stating that workers work there out of there own perceived self-interest, Shermer would have us presume that Wal-mart's largely low skilled workers have perfect choice in serving there own self interest. He neglects the fact that these workers are largely confronted by a plethora of identically bad choices: Wal-Mart, Target, etc.; choices that are largely hemmed in by the identical exploitive working conditions of these big box stores. Saying people work at Wal-mart out of self-interest is like saying that a homeless man eats out of a garbage can out of self interest: it's technically true but, given the alternatives it's hardly an endorsement.

Finally, Shermer performs numerous bits of conceptual slight of hand and bait & switch concerning his advocacy of libertarian economics.
Example:
In writing on the Enron scandal,
"If [the Enron & WorldCom type disasters did not still make headlines] - if such corporate catastrophes caused by egregious ethical lapses were so common that they were not even worth covering on the nightly news- free market capitalism would go the way of the dinosaurs." (p. 217)

Here Shermer begins with corporate structure & effortlessly switches that for free market capitalism. Never mind the fact that corporate structure & free market capitalism, while often linked, are by no means causative of each other, one can exist without the other. And that many have made the argument that corporatism inhibits free market capitalism by leading to monopolism & the inhibition or assimilation of small start up entrepreneurs.
Also, his assertion that if free market capitalism and/or corporatism were so egregious they would have ended now is like the arguing for feudalism in the 13th century by saying, "If it was so bad, it wouldn't have lasted as long." While I support free market capitalism this kind of justification for it is simply lazy thinking unlikely to convince anybody.

In sum, Shermer makes cogent points concerning our evolutionary past & how it impacts our current economic behavior. But, as this is largely in service of his greater thesis concerning the inherent morality of markets when left to "libertarian" principles & that thesis is critically weakened by arguing against straw-men & neglecting substantive counter argument, his work largely suffers. ( )