The Cynical Psychology of Capitalism

Two years ago, three psychologists and an economist published a long journal article on the dubious psychology that underlies American corporate capitalism. The original title of the piece began with the phrase, "A Taboo Topic," but the authors (myself among them) were warned by a sympathetic editor to be as unprovocative as possible to avoid being instantly written off as leftist ideologues. We deleted the phrase, thus assuring that the taboo against criticizing capitalism remained alive and well.

It's time for us all to confront this taboo. Capitalism rests on several key ideas regarding human motivation and development that fly in the face of much of Western psychology. Here I will focus on two of these: that people are primarily self-interested and that the acquisition of material wealth is the key to happiness. If these "insights" prove false or seriously incomplete, then capitalism unravels at the seams.

Are people fundamentally self-interested? Most theories of human development describe a progression of life stages that begins with an infant's preoccupation with self and then expands that awareness outward, first to family and friends, and then to community, society, and future generations. Although self-interest does not disappear, our sympathies become "more tender and more widely diffused, until they are extended to all sentient beings," observed Charles Darwin in The Origin of Species. Many individuals do not reach the latter stages of human development, but the most mature, wise, and fulfilled among us do. In contrast, becoming stuck or fixated at a particular stage leads to unhappiness and psychological problems.

Similarly, many forms of psychopathology are characterized by a preoccupation with the self and an inability to value the needs and wishes of others. This is evident, for example, in narcissism, sociopathy, and most other personality disorders. Psychological health, in contrast, includes a well-developed sense of empathy and the capacity to put other people's needs above one's own, while still caring for oneself. For most clinical approaches, movement in the direction of greater empathy and compassion, combined with a hefty dose of self-love, is a sign of significant progress.

When we apply this general perspective to capitalism's insistence that people are fundamentally selfish, the economic system comes out looking fatalistic, if not downright cynical. It assigns humanity to a low and easily attained level of moral, social, and emotional development and offers scant hope of collective improvement. Proponents of free enterprise argue that it is futile to attempt to alter our self-serving nature. Rather, the marketplace should organize itself based on the premise that everyone is out for her- or himself.

This brings us to the second key assumption we challenged in our article. The free market has as its primary goal the ongoing accumulation of wealth, which is supposed to provide the best opportunity available for attaining happiness. Yet there now exists a large body of cross-cultural research that shows that after people's survival needs are met - housing, food, clothing, and the like - the relationship between wealth and happiness is negligible. In fact, aspiring to be rich can be harmful. Cross-cultural studies also indicate that the adoption of materialistic values is associated with depression, anxiety, substance abuse, poor social skills, low self-esteem, psychosomatic symptoms (headaches, sore throats, etc.), and diminished life satisfaction. Materialistic values are also related to anti-social behaviors such as cheating and petty theft, racism, and environmental abuse. Materialistic individuals are less empathic and have shorter, more conflictual relationships with friends and lovers than their less materialistic peers. This is not good.

These developmental, clinical, and research-based insights might give us pause as to the psychological wisdom that underlies our nation's economic system. But even if we allow that there may be some validity to capitalism's model of the human psyche as selfish and materialistic, we still have to contend with its cynicism, which is built into the system.

The laws and regulations that form the structure of capitalism mandate selfish and materialistic behavior. For example, by law corporate CEOs have to put profit above all else, including the social good. The corporate culture that emerges from such a structure regards greedy behavior as heroic and compassion as foolish. It aggressively opposes the moral, social, and emotional development necessary to move beyond radical self-interest.

In contrast, other American institutions have been more optimistic about the human condition. Consider the legal principle that all citizens are equal under the law. Of course, it is the rare individual who is without prejudice or bias. But the justice system is not organized on the assumption that people are fundamentally prejudiced and incapable of collective change. Rather, it is structured around the democratic ideal of equality. This is a "practical" ideal in that people are capable of becoming more egalitarian. The system is designed, therefore, to encourage human development.

Historically, Americans have called on many of their institutions to promote individual and social advancement. It is exactly this kind of practical idealism that we need at the foundation of our economic institutions.

Source Citation

Kanner, Allen D. 2009. The Cynical Psychology of Capitalism. Tikkun 24(2): 45.