The Mind of the Market
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About the book
How did we evolve from ancient hunter-gatherers to modern consumer-traders? Why are people so emotional and irrational when it comes to money and business decisions? Bestselling author Michael Shermer believes that evolution and evolutionary psychology provides an answer to both of these questions through the new science of evolutionary economics.
Drawing on research from neuroeconomics, Shermer explores what brain scans reveal about bargaining, snap purchases, and how trust is established in business. Utilizing experiments in behavioral economics, Shermer shows why people hang on to losing stocks and failing companies, why business negotiations often disintegrate into emotional tit-for-tat disputes, and why money does not make us happy. Employing research from complexity theory, Shermer shows how evolution and economics are both examples of a larger and still somewhat mysterious phenomenon of emergence, where one plus one equals three.
Along the way, Shermer answers such provocative questions as, Do our tribal roots mean that we will always be a sucker for brands? How is the biochemical joy of sex similar to the rewards of business cooperation? How can nations increase trust within their borders? Finally, Shermer considers the consequences of globalization and what will happen if nations allow free trade across their borders.
Throughout this entertaining and surprising book Shermer considers the morality of markets in a discussion of what he calls virtue economics. Although we are selfish and altruistic, cooperative and competitive, peaceful and bellicose, in the main the balance is heavily on the side of good over evil. For every random act of violence that makes the evening news, there are 10,000 nonrandom acts of kindness that go unrecorded every day. Markets are moral and modern economies are founded on our virtuous nature. The Enron model of business is the exception and the Google motto of “Don’t Be Evil” is the rule.
The Mind of the Market will change the way we think about the economics of everyday life.
January 4th, 2008 at 10:52 am
I haven’t read the book but have met Mr Shermer face-to-face twice to discuss the Holohoax and 666isMONEY.
Has Mr. Shermer considered the opposite of a “Market Economy” i.e., a Moneyless, Non-Market Economy?
Many famous people believed in eliminating money, including Jesus (if he existed), Karl Marx, Nikoli Bucharin, Plato (the “Guardians” were NOT allowed to have money), Tolstoy, Bertrand Russel, Buddha, Saint Francis of Assassi, Saint Thomas Moore (“Utopia”), Edward Bellamy (“Looking Backward”), Pol Pot, Fidel Castro, Muammar Gadafi.
A truely evolved civilization does NOT require money.
I hope Mr Shermer allows this comment and responds.
More info at my website.
January 4th, 2008 at 1:58 pm
Dear Ms. Baranow,
What a political rogue’s gallery! Those fellows you name have one thing in common… all were/are utopians. But even in utopian societies there has to be some standard of trade such as, “I’ll give you a bushel of the apples I grew for a bushel of your ears of corn.” Might as well have money so that everything is valued according to an established standard to facilitate trade.
It isn’t money that’s the problem, it’s people and their highly-evolved and always idiosyncratic self-interest. Beware any society that asks you to forego your self-interest for “the greater
good.”
January 5th, 2008 at 2:33 pm
I am so happy that Mr. Shermer is turning his powerful intellect and rational thought processes to understanding and explaining the market to a mass audience.
As for Ms. Baranow’s comment, I would answer: No market can truly exist with freedom. A market consists, SOLELY, of free actors acting freely. Some would replace the phrase “free actors” with “consenting adults.” However it is phrased, the point is that markets, to exist at all, require free actors to act freely. If those free actors, then, determine (freely) that money is a useful facilitator — a means of transacting those free actions, then those actors will use money. If they freely choose some other way of facilitating the transaction, money will cease to exist. Put another way, money has most emphatically NOT been imposed by sinister outside forces or corrupt governments, it has been invented by the grassroots economic actors as a means of carrying on commerce. Sinister forces may then attempt to control or corrupt the use of money, but that is a different issue.
To repeat: consenting adults have created, and continue to use, money in pursuance of their freely-determined self interest. What could be more civilized than that?
January 7th, 2008 at 7:52 pm
Ms. Baranow,
Anything beyond a Stone Age existence requires exchange, a division of labor. If you and your family or tribe had to make everything you used, you would be limited to the same standard of living as paleolithic humans had. And to have a division of labor, in which people specialize at making different things and performing different services, you need trade. And to have trade beyond simple, inefficient barter, you need a medium of exchange, i.e., money. In short, the more evolved (i.e., complex, because we’re not using “evolved” in the true Darwinian sense) a society, the more it needs money.
January 8th, 2008 at 8:27 am
I am happy to see that Michael Shermer has combed new territory in his knowledge, lecturing, and teaching. This new book certainly looks to be one of his most fascinating works about how we all work together (as organisms) and how we reached this current state of civilization and culture.
January 9th, 2008 at 9:01 am
Dear Michael,
I’ve been fascinated reading your new book and frequently invoke points that you’ve made when debating with friends about certain science and religon issues.
The one area that I have trouble with is seeing how an unregulated free market can even begin to tackle the massive change that needs to occur in order to combat climate change. We need a complete revision of the energy sector and I don’t see how that can happen without strong government-led action. If anything, it seems to me that the last century has only shown us that without established standards and enforcable environmental law industry heads down a road that we end up regreting.
I’m curious where you stand on all of the climate change plans that have been proposed by the current democratic candidates.
Thanks,
Ryan
January 14th, 2008 at 8:32 pm
Franklin, I think what Raquel was talking about is about altruism. If you read Marx and all the utopians she quoted, they all focus on the altruism of humanity. Division of labor etc, are done by means of being altruistic to one another. In a sense, in a total utopia, everyone will be kind to one another, and the whole concept of maximising utility for oneself is suppressed… hence the lack of need for money.
Of course, this is impossible. Marx for one stated that it is only possible when humans are at the pinnacle of civilization – i.e. everything is automated (correct me if I’m wrong, I read Marx a looong time ago)
January 15th, 2008 at 6:58 am
I am looking forward to reading your book. I just learned about it just now. I’ve been arguing for an evolutionary basis for free markets for a while now. Looks like I need to get on the ball before you write about the evolutionary origins of property rights in territorial fishes — unless you already have. I posted a short piece on that topic on my blog a while back, though, so perhaps I have beaten you to the punch either way. :-)
January 17th, 2008 at 11:38 am
RyanR,
The free market will provide the incentive for an articulate scientist to debunk all the ridiculous “science” which you have inhaled if you believe that the climate has changed or will change because of human activity.
Fortunately for you, our country doesn’t believe in government strong-arming people like into believing the truth.
January 20th, 2008 at 9:53 am
I enjoyed your presentation at Cato on C-Span 2. Your study of the evolutionary forces at work in shaping human society is an inspiration. Your conclusions strengthen my apprehension and appreciation of the laissez faire regime. Your answer to the question lamenting the public ignorance of economics was very instructive, namely that the apprehension and appreciation of the evolutionary market economy is also evolutionary. However, I found your suggestion that political contrivances (rule of law, etc.)are somehow essential to the market stability to be incongruent. It seems to me that politics is opportunistic and parasitic (ref. Bastiat) whereas economics is creative, productive and humane. How does politics provide order lacking in the market without any science or knowledge of such?
January 28th, 2008 at 9:24 am
Okay, I bought the book, only got as far as the 4th Chapter and had to put it down. I wrote an unfavorable review for Amazon.
The preface to the book was the most revealing! Did U know Shermer was an evangelical Christian?! He also studied economics with ppl who love Ayn Rand!
Someone sent me an email several years ago with Rand’s Money Sermon/Rant without identifying the source. I thught the person who sent me the email was the author, so I responded, sentence by sentence to Rand’s Rant here: http://www.666ismoney.com/LetterstoRaquel.html
January 30th, 2008 at 9:30 am
Ms. Baranow – Mr. Shermer obviously believed stupidities in the past (evangelical Christianity). He no longer does. Can you say the same?
March 13th, 2008 at 7:47 pm
@RyanR
The answer is that, in a free society, it would be up to the scientists to tell us that the world was heating up and we were responsible for it. It would then be up to us to decide if we cared enough to do something about it.
If we did care, we would voluntarily change our consumption patterns. Any ACTUAL (as apposed to potential) problems would be dealt with by the market.
The idea that an all-powerful government should FORCE us to save ourselves is unethical.
March 20th, 2008 at 10:12 am
Friends, friends! You get so-o-o intellectual here.
I perceive that the markets and government operate just like one human mind. Some part of us says, “Maximize your profit!” Another part says, “Make your resources last!” Sometimes we chase profit too long and get burned. Other times we are hoard our resources too long and miss an opportunity.
We have multiple personal interests to resolve and we have multiple societal/national interests to resolve. We need both markets and some government to intelligently steer our collective car. As Ross Perot often said, “It’s just that simple.”
March 20th, 2008 at 11:31 am
I think Mr. Shermer deserves some actual book review comments in this space, so here goes. I’ve read many of his books and my favorite has been, “How We Believe”
I thought “The Mind of the Market” hit many high spots but wandered quite a bit in topics. I bought the book hoping to focus on the evolutionary forces working in the market economy and individual choices therein. Often I found myself saying, “I don’t think we’re in Kansas anymore.” The chapter, “The Value of Virtue” was an example of time spent on moral emotions.
One of the strongest sections began on p. 252 with the discussion of trade as a bonding agent between tribes/countries. Bistiat’s maxim, “Where goods do not cross frontiers, armies will” reveals great insight to human behavior. And yet, I think there is something deeper here that bridges divides in addition to trade. That is when we can begin to tell good people from bad among a different tribe/race. This the transition point that allows trust and trade to begin with those selected people just as we do with our known group.
I was aware of this in myself as I came to know more black people. I was uncomfortable when I could not tell a good black person from a bad black person. I realized I interacted with lots of white people that were good and bad, but that didn’t make me cautious about whites. I soon realized it was because I could spot good from bad and acted accordingly. I have since learned that is gating item for me with all different groups with which I interact.
March 20th, 2008 at 2:02 pm
I downloaded Mr. Shermer’s talk at the Cato Institute, and got about 30 minutes in before deciding that I would no longer belong to the Skeptics Society because of the pro-market babble this gentleman was spewing. It was about when he cites Google as so being so beatific and exemplary that I couldn’t stomach the bubble-headed claptrap any more. There is nothing to talk about – when a professor and author and writer can be so autistic about such essential matters, seeing fairies and goodness sweeping oe’r his wonderland of $187 million CEO golden parachutes and bloated billionaire criminal robber barons, there has to be more than polite demurral.
March 25th, 2008 at 5:06 am
This article says it all. http://www.richmondliberty.org/mt/2008/03/the_mind_of_the_market.php
June 16th, 2008 at 11:41 am
I heard your interview on the Leonard Lopate show on WNYC, member station of NPR, and loved it! I will be sending you an e-mail to the address listed below.
I just wanted you to know that I have been thinking about a book like this myself, and about further application of evolutionary concepts as I have learned about them through RadioLab, anybody interested should check out their website: http://www.wnyc.org/shows/radiolab/
July 25th, 2008 at 5:13 am
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August 13th, 2008 at 3:19 am
Well you gave an audience to a some rather far fetched ideas like a holocaust denier . On one hand you did portray “The Secret” as mean sprit ed mysticism on the other you tried portray capitalism as some Utopia .
Unfortunately a totally capitalist state with no protection for workers the consumer or the environment or any minimum safety net can only lead to some feudalistic third world society .I think Twilight Zone narrators Rod Sterling or Forest Whitaker would have had trouble reading this ridiculous scenario with a straight face
September 1st, 2008 at 5:00 am
After I read the book I wanted to make critical comments. But then I read some reviews and decided that I wanted to tell people to read the book.
I have further comments on my blog.
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