The human mind, institutions, and economic behavior.

Author:Wolozin, Harold

In this paper I explore the implications for institutional analysis of recent research on the role of the brain and the mind in human behavior in both neuroscience and neo-psychoanalytic theory. In particular, I cover findings of neuroscientist Antonio Damasio and psychoanalyst Elio Frattaroli as well as those of Jonathan Lear on the role of the mind in human behavior. From these writers I distill the following key points:

* Mind is not another word for brain; it encompasses it.

* The mind is the seat of both the cognitive and the emotional.

* Emotion and the unconscious as key drivers of behavior have been neglected by economists.

* Behavioral patterns including those caused by institutions are programmed in the brain.

* Unpredictable behavior is common because the mind has a tendency to disrupt its own rational functioning.

The Mind and Institutions

In this section I turn to Damasio's research on the functions of the brain for the light it throws on the role of institutions in economic agency.

Damasio on the Brain and Institutions

Focusing on the role of drives and emotions, Damasio maintained "the brain brings along innate knowledge and automated know-how.... [T]here is nothing free or random about drives and emotions. They are highly specific and evolutionary preserved repertories of behavior whose execution the brain faithfully calls into duty" (2003, 205). He described "the powerful connection" between "social phenomena" and the brain. He pointed out that this connection was dramatically posited by Sigmund Freud, almost a hundred years ago, in his depiction of the pervasive role of the superego "which would accommodate instincts to social dictates." What Damasio was talking about is behavior becoming programmatic. In several recent works he has explored this behavior in "neural terms" (1999, 2000, 2003). In his research, he has found that signals to the brain are "imaged" and processed as follows:

In brief, the brain brings along innate knowledge and automated know-how, predetermining many ideas of the body. The consequence of this knowledge and know-how is that many of the body signals destined to become ideas ... happen to be engendered by the brain. The brain commands the body to assume a certain state and behave in a certain way, and the ideas are based on these body states and body behaviors. The prime example of this arrangement concerns drives and emotions. As we have seen there is nothing free or random about drives and emotions. They are highly specific and evolutionary preserved repertories of behaviors whose execution the brain faithfully calls into duty in certain circumstances. (2003, 205) Damasio's focus on social phenomena raises two issues: first, the connection of institutions to the brains and, second, the implications of identifying the mind with the brain, that is, an identity of mind and brain, as opposed to the view of Frattaroli, who views the mind as including the brain and standing above it. I shall expand on this difference below.

What is germane here is that according to Damasio, institutional behavior can be encoded in the brain, hence, in human behavior (Wolozin and Wolozin 2003). This is also a position which appears in bath contemporary and early institutionalist formulations. I shall comment briefly on this.

Encoded Behavior in Institutional Thought

Thus, Huascar Pessali and Ramon Fernandez in a recent Journal of Economic Issues article maintained, "Human wishes and behavior have been molded or changed through time by institutions, and vice-versa" (1999, 265). Describing institutions, Thorstein Veblen a hundred years ago declared, "They are the products of his heredity traits and his past experience" (Veblen 1898, 390). Geoffrey Hodgson termed a "pillar" of Veblen's institutionalism the "psychological mechanisms by which an individual is molded by his or her circumstances" (2003, 550). Walton Hamilton in 1919 charged that economists had "overlooked the part that instinct and impulse play in impelling ... economic activity" (Hodgson 2003, 550, 551). David Hamilton in his 1991 text depicted "[h]uman nature and, thus human behavior, in institutionalism [as] 'a complex of neuro-sensory activity guided in its outward manifestation by the total cultural situation'" (Waller, 2001). We see, in summary, that Damasio's description of programmed behavior in the brain strikes a deterministic chord in institutionalist literature. In each instance of the institutionalists I cite, behavior is encoded in one way or another. Let me now...

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