The Systemic Nature of the Economic Crisis

Arturo Hermann

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317627609
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The most prominent aspect of the current financial crisis is its systemic character which manifests itself in high levels of inequality, rampant unemployment, economic and social insecurity and environmental decay. This book explores the potential of a pluralistic and interdisciplinary approach for a deeper understanding of the manifold aspects of the economic crisis.

This book examines the potential of a number of contributions from heterodox economics and psychoanalysis in providing a deeper understanding of these problems. The book analyses some of the most debated aspects of the concepts of market, democracy and socialism and explores the role of structural ties between economic, social and psychological aspects of collective life. It also addresses the main economic aspects of the crisis and pays particular attention to a number of structural imbalances, and to the psychological interpretation of these phenomena.

By drawing together approaches from heterodox economics and psychoanalysis, this book adopts a pluralist and interdisciplinary approach to the study of these phenomena and manages to overcome the fragmentation so often present in social sciences.

Part I

The psychoanalytic approach and its potential for a better understanding of economic and social phenomena

In this part we provide in Chapter 1 an outline of the main psychoanalytic concepts.

Then, in Chapters 2 and 3 we focus attention on their potential for the study of economic and social phenomena and for the analysis of the social change.

Also in connection with these issues, in Chapter 4 we address some controversial aspects of psychoanalysis.

1 The perspective of psychoanalysis

An outline

1.1 Introduction: the origin of psychoanalysis and the controversy between Freud, Adler and Jung

The aim of this and the subsequent chapters is to provide an account of the psychoanalytic approach and its relevance for a better understanding of economic and social phenomena. As we shall see, the psychoanalytic perspective, by helping acquire a deeper understanding of the complex interaction between persons and society, can be particularly useful in the analysis of the systemic character of the crisis and the process of social change.

In this account we refer in particular to the theories which maintain a reference to the Freudian approach. The reason for this is that we believe that these psychoanalytic contributions, although highly amenable to an interdisciplinary collaboration, have been largely overlooked in the analysis of societal phenomena.

Three groups of factors may have contributed to this situation: (i) the difficulty for social scientists and psychoanalysts to go beyond the methodological scope of their complex disciplines; (ii) a tendency among social scientists to interpret Freud’s work as being chiefly based on ‘biological needs’ and thus, on these grounds, to be rather sceptical of its usefulness for analysing social phenomena; (iii) furthermore, the intrinsic multifariousness of psychoanalytic issues and the partly different views of ‘psychoanalytic schools’ may have contributed to making it difficult for social scientists and psychoanalysts to build a sufficiently integrated ‘conceptual core’ for the study of economic and social phenomena.

Let us now address briefly the well-known divergences in the early stage of the psychoanalytic movement,¹ which ended up in the creation by some members of the former ‘Psychoanalytic Committee’ – in particular, Alfred Adler and Carl Gustav Jung – of new psychological schools.

We can stress here, without entering into a detailed analysis of these theories, some interesting aspects: (i) by seeing that controversy in retrospect, the personal element related to the formation of ‘transference’ feelings seems to have played a relevant role. In this regard, Freud was considered by Adler and Jung as authoritarian and intransigent whereas he regarded them as ‘stubborn and rebellious sons’.

Probably, both sides were partly right, but the result was one of intense ‘transference’ which ended up in a permanent estrangement. (ii) These aspects were reinforced by the circumstance that in these instances, as often happens in the case of a new theory, the issues at the stake tend to be stretched to the extremes. In this case, the most controversial point was the role of psycho-sexuality in the formation of psychological disturbances. As is known, Freud stressed its role whereas Adler and Jung downplayed it. However, both sides employed, especially in the emphasis of the debate, a simplistic notion of sexuality. As we will make clear later on, Freud’s account of this issue is not always clear, but it is important to note that his concept of sexuality was much broader than a simple bodily dimension as it involved the role of feelings and emotions.

On the other hand, Adler and Jung, although critical of Freud’s notion of psycho-sexuality, never denied its role in the development of personality. (iii) These aspects have been greatly elaborated by the subsequent development of psychoanalysis, in particular within the theories of ‘object’ and ‘interpersonal’ relations, which highlight the complexity of relations between the bodily and mental aspects of personality and the paramount need for the person of establishing sound interpersonal relations. (iv) Considered in this new light, the theories of Freud, Adler and Jung do not seem so incompatible as they appeared before. Of course, they remain different, but pivotal concepts developed by Adler and Jung can be jointly employed in the analysis of social issues.

The main concepts elaborated by Adler [2011 (1925)] pinpoint, in particular, (i) the feeling of inferiority and the corresponding will for power, (ii) the creative self and the finalism of existence, (iii) the importance of a ‘social sentiment’, which implies the need for the person to establish sound interpersonal relations.

The perspective expounded by Jung [1968 (1964)] centres, in particular, on (i) the notion of ‘complex’, which pertains to a system of conscious and unconscious representations of a person embodying a strong affective orientation; (ii) the concepts of collective unconscious and archetypes, which describe the ideals, symbols and representation typical of many societies; (iii) the notion of individuation and finalism as a way to express the authentic needs and orientations of personality.

As can be easily seen, Adler’s and Jung’s perspectives can complement in significant ways Freudian (and in particular, post-Freudian) contributions, and also the contributions that pinpoint the role of psychological sciences in the analysis of social phenomena. We can mention, among others, the contributions² of social psychology, of cognitive psychology, of ‘humanistic psychology’, of Pragmatist psychology (cf. also the second part), of psychology and sociology of emotions. Moreover, a useful collaboration can be established also with experimental economics as new insights can be gained by simulating in an ‘experiment’ what economic behaviour could be in the real world.

On the basis of our approach, we believe that the ‘experiments’ need to be integrated with the analysis of individual-society dynamics. This implies, on the one side, the analysis of the emotions and motivations of single persons, and on the other, the study of the characteristics of the broader collective context. Of course, we are aware that it is not always easy to carry out these kind of analysis and that some simplifications can be expedient in some instances. However, in our view, this should not become the rule and researchers should always be aware of the complexity of the issues under investigation.

1.2 The basics concepts

In order to illustrate the basic concepts of psychoanalysis, the first question we need to answer is: what is psychoanalysis?

Psychoanalysis can be defined (see, in particular, Freud, 1924, 1933. Also Fenichel, 1945; Fine, 1979; Laplanche and Pontalis, 1967; Nagera, 1969) as a discipline, founded by Sigmund Freud, characterized by a method of enquiry consisting in explaining the unconscious meaning of speech, actions and imaginative productions of a person. This method can be employed: (i) for the treatment of neurotic disturbances and, in this case, rests on the free associations of the person which constitute the basis for an open and tentative interpretation of the possible reasons lying behind such conflicts; (ii) for the analysis of human activities in their social context for which free associations may not be available.

One key question raised by the previous definition is: what is neurosis? A concise and very effective definition of neurosis – formulated by Freud for the first time in 1894 – is that of a defence against incompatible representations. As observed by Fine (1979), psychoanalytic theory can be considered a development of this first insight.

A broad definition of neurosis is that of a psychological disturbance, where symptoms are the symbolic expression of a psychic conflict, which has its roots in the person’s infantile life and constitutes a compromise between a desire and a corresponding defence.³ A central feature of neurotic disturbances is that they bring about a hindrance, more or less severe, to the normal psychological development of a person. The reason for this is that the neurotic person is, to varying degrees, unable to overcome the conflicts associated with his or her development stages.

However, neurotic disturbances should not be regarded as something ‘bad or abnormal’ but as the typical expression of the structure of human personality, with all the related problems, weaknesses, contradictions and ambivalence. In that connection, one central insight of psychoanalytic theory is that much of our psychic life possesses an unconscious character.

In Freud’s theory the definition of the unconscious assumes different meanings,⁴ one of them referring to the area of mental activity (feelings, emotions, thoughts) of which the person is unaware as a consequence of a process of ‘repression’. But, why does a person need to activate such a ‘repression’ process? One answer is the infantile development of a person is a highly complex process that is likely to undergo several conflicts.

The conflict considered central by Freud within the scope of his theory of libidinal stages⁵ of development is the Oedipus complex. In broad terms, the Oedipus complex can be defined as the organized whole of a child’s loving and hostile feelings toward its parents.

In the paradigmatic example, the affective desire and sexual fantasies⁶ of a child towards the parent of the opposite sex may trigger intense feelings of jealousy, rivalry and anger toward the ‘rival’ parent. As a consequence of these feelings, the child is likely to fear punishment, also because it tends to feel guilty for experiencing such feelings. All the emotions associated with this situation can become highly distressing for the child, and, therefore, it tries to repress all the related feelings. As a result of the attempt to repress (mostly at an unconscious level) the emotional conflicts associated with the Oedipus complex, much of its contents become unconscious.

Of course, the attempts to repress all the feelings associated with the Oedipus complex cannot be very effective, and so cannot help to relieve the emotional distress. As a result of this situation – in which there is a desire, considered ‘bad’, and a corresponding defence trying to repress it – a neurotic disturbance arises, which may express itself in many different forms of behaviour and fantasies.

The purpose of such a disturbance is, according to the previous definition, to realize, in a symbolic, distorted and unconscious way, both the instances of the desire and the defence. In this sense, it represents a defence from incompatible representations.

Needless to say, the dynamics of the Oedipus complex are far more tangled than could appear from this brief description. Owing to this complexity, throughout his research activity, Freud identified many aspects and forms of the Oedipus complex and many neurotic disturbances which may be caused by it.⁷ In this regard, it is important to note that Freud himself and later psychoanalytic contributions stressed the importance of every stage of life⁸ for the formation and evolution of personality and of the related psychological disturbances (cf. also the next chapters).

Freud’s conclusion that the Oedipus complex tends to represent a universal experience for human beings has received much criticism.⁹ We will discuss this issue in more detail in the next chapters. Now, we can observe that Freud was well aware that the Oedipus complex involves many aspects and may assume various forms and intensity according to the culture, society and family situations in which a child’s life develops. An interesting analysis of these aspects is contained in Totem and Taboo (1912–1913), Civilization and Its Discontents (1939) and others.

As shown in these studies, the Oedipus complex will acquire different forms and intensities according to, among other factors, the personalities and conflicts of the child’s caretakers. Since these individual aspects also interchange with cultural factors, the role of the latter (and, more generally, of the collective dimension of life) is likely to play a central role in shaping the characteristics of the Oedipus complex. As observed before, Freud considers individual and collective psychology as two complementary aspects of the same phenomenon – owing to the circumstance, stressed in particular in his Group Psychology and the A...