market society

Part 2 of Lecture on Spirituality and Development: Friday, 27th Jan 2017 by Dr. Asad Zaman, VC PIDE — for Students of Religion & Development Paper, Center of Development Studies, University of Cambridge. Link for part 1: Spirituality . 50m Video lecture:


  1. The meaning of development has varied dramatically across time, space, cultures.
    1. When Britannia ruled the Waves:
      Development definition suited Britain: Sea-Power, Coal Mines, Industry, Climate, Race
      No entry for “democracy” in Encyclopedia Brittanica, 1930
    2. Post-War Rise of USA
      Initial Definition: Democracy, GNP per capita – both criteria serve to ensure leadership of USA.
    3. Later, some Oil Economies had Higher GNP/Capita than USA
      So REDEFINE Development to include Income Distribution, so as to keep US on top
    4. Later, Switzerland, Japan and some other Scandinavian countries had Higher Wealth + Lower Gini. How to measure development to ensure USA is on top? Answer: Redefine Development to include Infrastructure
    5. Conclusion: Definition of Development Changes to suit the powerful. Criteria are chosen to ensure that the powerful are on top.
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Friday, 26th Jan 2017: Lecture by Dr. Asad Zaman, VC PIDE to students at University of Cambridge, Center of Development Studies for Religion & Development paper. 40 minute video recording of lecture on you-tube

Part 1: “What Is Spirituality?”:  Modern Secular thought takes spirituality and religion to be diseases which affect weak minds not properly trained in the scientific method. Part I of this lecture explain why this view, which is based on positivist ideas, is seriously mistaken. OUTLINE of this lecture is given below

Separate Lecture Part 2:” What is Development” focusing on how spirituality affects how we think about development and how to achieve it.

  1. Standard Modern Answer
    1. Spirituality is a literary term, used to spice up poetry and novels.
    2. It is like Phlogiston, Unicorns, Ghosts, Souls, God
    3. It is one among many medieval beliefs, like flat Earth, which have been proven wrong.
  1. Why don’t we understand spirituality?
    1. Because we have been trained to think like Logical Positivists, EVEN though this philosophy has been proven wrong! Key wrong positivist beliefs:
    2. Unobservables do not matter for science
    3. Science explains the observable patterns. It may postulate things like atoms, gravity, but this is just for convenience. Existence of gravity is not part of scientific assertion.
    4. Kant: Thing-In-Itself is not knowable, not relevant for science. Wittgenstein: Wherof one cannot speak, thereof one must be silent. ALSO, The human body is best picture of the human soul (That is, observables matter, unobservables don’t)
    5. SCIENCE is the ONLY source of valid knowledge.

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wisdomThe adventure of leaving home, and exposure to unlimited educational opportunities as well as a radically different social environment, made us heady with excitement as freshmen at MIT. We often stayed up all night discussing our new experiences. Since we could not come to any conclusion regarding the most important question we face: “what is the meaning of life?”, we resolved to seek guidance from one of our professors. Most were teaching technical subjects like math, physics and chemistry, but our history professor occasionally talked about the bigger issues of life. Upon being asked, he gave us an answer which satisfied us at the time: he said that first we must learn the little things that we were being taught, in order to be able to answer the bigger questions that life poses.

It was many years later that it gradually dawned upon me that we had been scammed. Our teachers had no answers to these questions, and so they shifted our attention to the questions that they could answer. We were counselled to look under the light, for the keys which had been lost in the dark. It was not always that way. In The Making of the Modern University: Intellectual Transformation and the Marginalization of Morality, Harvard Professor Julie Reuben writes that in the early twentieth century, the college catalogs explicitly stated that their mission was to shape character, and produce leaders. Students were to learn social and civic responsibilities, and to learn how to lead virtuous lives. However, under the influence of an intellectual transformation which gave supreme importance to scientific knowledge, and discounted all other sources and types of knowledge, consensus on the meaning of virtue and character fragmented and was gradually lost. Universities struggled very hard to retain this mission of character building, but eventually gave up and retreated to a purely technical curriculum. Because this abandonment of the bigger questions of life has been extremely consequential in shaping the world around us, it is worth digging deeper into its root causes

Enlightenment philosophers had hoped that reason would lead to a superior morality, replacing what they saw as the hypocrisy of Christian morality. They thought that Truth was comprehensive, embracing spiritual, moral, and cognitive. However, by 1930’s this unity was decisively shattered. The triumphant but fatally flawed philosophy of logical positivism drove a wedge between factual cognitive knowledge and moral/spiritual knowledge. It became widely accepted that science was value-free, and distinct from morality. Prior to the emergence of this division, social scientists had defined their mission as understanding and promoting human welfare. Social and political activism had been a natural part of this mission. However, this changed in the early twentieth century with the widespread acceptance of Max Weber’s dictum that social science, like physical science, should be done from a value neutral perspective of a detached observer.

Positivist philosopher A J Ayer said that moral judgements had no “objective” content, and hence were completely meaningless. Similarly, Bertrand Russell said that despite our deep desires to the contrary, this was a cold and meaningless universe, which was created by an accident and would perish in an accident. These modern philosophies displaced traditional answers to the most important questions we face as human beings. According to modern views, we must all answer these questions for ourselves. No one else has the right to tell us what to do. All traditional knowledge is suspect, and instead of following custom or authority, we should arrive at the answers in the light of our limited personal experience and reason. Indeed, this is a core message of Enlightenment teachings which is built into the heart of a modern education.

The treasure of knowledge which is our collective human heritage has been collected by hundreds of thousands of scholars, laboring over centuries. Imagine what would happen if we were required to use our reason to establish and validate every piece of knowledge that we have. It would be impossible to learn more than a very tiny fragment of this knowledge. As a practical matter, we accept as givens vast amounts of material taught to us in the course of a modern education. This is necessary; if told to re-discover mathematics from scratch, even the most brilliant and gifted child would never get beyond the rudiments of the material in elementary school textbooks. But for the most important question we face in our lives, we are told that all traditional knowledge is useless; we must work out the answers for ourselves. There is a huge amount of discussion, conversation, and controversy contained in the writings of ancients. But we were educated to believe that the wisdom of the ancients was merely meaningless verbiage of the pre-scientific era. Thus, we never learned about Lao Tzu’s saying that loving gives you courage, while being loved gives you strength.  We learned fancy techniques and tools, but never learned how to live.

Real education can only begin after removing positivist blinders, and realizing that we have no choice but to trust the stock of pedigreed knowledge. It takes a lifetime of reasoning to arrive at a few simple results – we can look at the lives of those who made remarkable discoveries and see how, despite the magnificence of their contributions, their work was confined to a narrow and specialized domain.  Furthermore, they were only able to see far by standing on the shoulders of giants of the past. In benefitting from the stock of accumulated knowledge, our main task is to discriminate, to extract the gold nuggets from the mountains of dirt, and to avoid being deceived by fool’s gold. Today, as always, and in all fields of knowledge, the best path to expertise is via discipleship, unquestioning acceptance of instruction from experts. A premature application of reasoning and critical thinking leads to rejection of thoughts which contradict our prejudices, and makes learning impossible. Discipleship requires putting away preconceptions, emptying our cups, and opening ourselves to complex systems of thoughts entirely alien to anything we have ever conceived before. It is only after absorbing an alien body of knowledge that we acquire the ability to understand, reason and critique. A modern education creates multiple barriers to the pursuit of real knowledge that we desperately need to lead meaningful lives, by renaming ancient knowledge as ignorance, and by presenting us with illusions masquerading as knowledge. Like the wife of Alladin, we have gladly given away the ancient lamp for the bright and shiny modern one, without being aware of our loss. The path to recovery is long and difficult, as unlearning requires being open to possibilities and exploring directions that seem patently wrong to our modern sensibilities. It is not easy to suspend judgment and let go of what we have already learned, in order to acquire new ways of looking at the world. Yet, this is exactly what is required, if we are to learn to live, and not waste this unique and precious gift of life that has been granted to us for a brief moment only.

See also: The Secrets of Happiness, and Re-Enchanting the World. Published in The Express Tribune, 26th December, 2016.Posts on Diverse Topics: My author page on LinkedIn. Other works: Index .

One of the core and central properties of markets is that they lead to increasing concentration of wealth at the top. This is because market allocations of goods and services respond to money, automatically conferring great power to those with wealth. For instance, market incentives lead to the production of luxury handbags anmythrealityd briefcases for plutocrats priced at $40,000+. According to the World Health Organisation (WHO), the price of one such bag can save more than 300 lives.

The extremely ugly realities of market societies are hidden from view because markets generate myths to glorify achievements, project illusions and conceal defects. Indeed, the creation of market myths is a second core and central property of markets, which is not mentioned in any current economics textbook. Market myths are crucial to the survival of market societies since knowledge of realities would lead to a revolution of the bottom 99% who are exploited by the super-rich. In this essay, we analyse a few of the central myths of market societies, and contrast them with the realities.

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Modern economic theory is founded on the  principle that human beings “maximize utility”; that is, they choose the best action from among a collection of choices. This axiom is considered self-evident: why would anyone make an inferior choice, when a better option is available? However, the mathematical formulation of this axiom is far from realistic. After all, it is self-evident that human behavior cannot be described by mathematical laws. Critics have invented the term “homo economicus” to describe behavior governed by economic laws, which differs drastically from normal human behavior. We can describe homo economicus as cold, calculating, and callous. We explain each of these terms separately.

The theory of consumimages (9)er behavior which is taught in business school differs drastically from the same theory taught in the economics school. The homo economicus of economists is cold – not subject to any emotional influences in his consumption decisions.  In complete contrast, a fundamental axiom of consumer theory in the business school is that effective marketing appeals to emotions instead of reason.  The proven effectiveness of business school methods in getting consumers to purchase a wide range of completely useless goods shows the superiority of their models of human behavior.

The term ‘maximize’ describes the assumption that homo economicus calculates the consequences of his actions to the last penny, and utilizes any opportunity for even the slightest gain. Nobel Laureate Herbert Simon observed that real human beings do not act according to this assumption. He invented the term “satisficing” to describe the observed behavior of real humans. Satisficing means making a choice which is satisfactory, or sufficient for the purpose, instead of maximizing, or searching for the best possible choice. For a wide range of situations, satisficing is a much better description of  human behavior than the maximization done by homo economicus.

Finally callous refers to the assumption that homo economicus is concerned solely with his own personal gains, and does not have any concern for others. Psychologists who learned of this bizarre theory of the economists decided to test it in a simple lab experiment. They gave some amount of money, like $10, to a subject X, and asked him to divide the money with another subject Y. The subject X was completely free to choose how to divide the money, including keeping all $10 for himself and leaving none for the subject Y. In fact, almost no one did this. Many subjects split the money into equal shares while nearly all gave at least $3 to the other subject. Only economists, blinded by their theories, found these results strange. According to economists, all subjects should keep all $10 for themselves and give nothing to others. Interestingly, in experiments among college students, economics students behaved the most selfishly, occasionally even keeping the entire amount for themselves.

The discovery of the great divergence between homo economicus and real people led to the creation of Behavioral Economics. This discipline studies actual behavior of people via experiments like the one described above. This goes against modern economic theory, which uses mathematics to calculate human behavior. For a long time, behavioral economics was an outcaste subject within the economics discipline. Actual human behavior was complex and varied, and conflicted strongly with the mathematical laws according to which homo economicus behaves. Leading behavioral economists advised their students not to study the subject, since they would have difficulty finding jobs as economists. The situation changed gradually as the radically different predictions of behavioral economists often turned out to be more accurate than conventional economic theory. Robert Shiller used behavioral theories to show that stock markets were overpriced, something which was not possible in the world of the rational robots that conventional economic theories study. After the Global Financial Crisis proved him right, Shiller was awarded a Nobel Prize, and Behavioral Economics acquired a new respectability among economists. Nonetheless, mainstream economists continue to treat behavorial theories as a sideshow, and homo economicus continues to occupy the central place in modern economic theory. We cannot hope for a realistic economic theory until this situation changes, and a more realistic theory of human behavior is adopted for use by economists.

NOTE: The failures of neoclassical utility theory are extensively discussed in: The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature, International Journal of Pluralism and Economics Education, Vol. 3, No. 4, 2012, pp. 366-414

Short Posts on diverse topics: LinkedIn. Index to all works:AZProjects.Closely related:Fundamental Flaws of Economic Theories.

Market fundamentalism refers to a deep-seated ideological belief in the magical powers of the free market to solve any economic and social problem. The term ‘fundamentalisFreeMarketFundamentalismm’ conveys the quasi-religious certainty expressed by contemporary advocates of the free market, who continue to maintain the belief in face of overwhelming amounts of empirical evidence to the contrary. Surprisingly, the term was invented by George Soros, one of the 30 richest men in the world, who has made billions in profits by exploiting this ideology.

The vast wealth of Soros comes from his deep understanding of the weaknesses of the free market.  He became known as “the man who broke the Bank of England” when his short-sale of $10 billion worth of British pounds forced the Bank of England to devalue the pound, earning him $1 billion in profits. Free market ideologues support and permit short sales, even though their damaging effects are well documented. The Great Depression was precipitated and prolonged by short sales, which allowed financial sharks to profit from the misery of millions, just as Soros profited at the expense of a whole country. Later, during the East Asian Crisis, Soros also made profits from short sales of the baht and the ringitt, Thai and Malay currencies, as they were declining. However, he got out of the market early because of the justified fears that Mahathir Mohammad, who is not a free market ideologue, would impose capital controls.

Soros was once a student of Karl Popper, one of the greatest advocates of the free market as a key component of an open society. However, he is among the rare few billionaires who have become disenchanted with the workings of the free market which has created their wealth.  Whereas his mentor regarded Communism and Fascism as the greatest threats to the “Open Society,” Soros has come to believe that the largest current threat is from market fundamentalism, which prevents the regulations necessary to allow a market to function efficiently, for the benefit of all.

Soros argues that markets are governed by reflexive processes, where participants and markets interact and influence each other. The Global Financial Crisis was created because availability of mortgages created demand for houses, which lead to rising prices in the housing market. Rising prices made housing appear to be a profitable investment, which lead to increased availability of mortgage loans and further increases in demands for housing. This lead to a spiralling increase in prices and loans which ultimately became unsustainable and crashed.

Regulation is needed to prevent such excesses of free markets, but the required regulation also becomes a casualty of the reflexive process by which free markets expand their power. For example, during the mortgage-based home buying spree in the early 2000’s which led to the crisis, many states in the USA sought to impose regulations on the mortgage market, to prevent bad practices which were rapidly becoming prevalent. However, these efforts came to naught when financial institutions appealed to the US government regulators, who prohibited the states from intervening in the federal domains.  As the markets expand, they acquire power, which gives them the strength to break any regulatory chains imposed on their path to further power.

Market fundamentalism, then known as laissez-faire, was routed and banished from academia in the wake of the Great Depression, which was an obvious demonstration of the need for regulation. The financial industry was chained, and banks were prohibited from speculation by the Glass-Steagall Act and other regulation in the 1930’s. This led to a prosperous golden age of capitalism which lasted for about half a century. However, history repeats itself because no one learns from it. The Reagan-Thatcher era heralded the start of a new era of de-regulation, which has led to a massive concentration of wealth at the top. The finance moguls pressurised Clinton into repealing the Glass-Steagall act in 1999, which, after a short interval, led to the greatest financial crisis ever seen in history. It is free market fundamentalism which enables the rampage of uncontrolled capitalism which is threatening to destroy the globe and society in its unquenchable thirst for profits. Unless humanity as a whole can chain this monster, as was done after the Great Depression, the future looks bleak.

Published in The Express Tribune
, March 7th, 2016.

Draft of chapter for Routledge Handbook of Ecological Economics: Nature and Society. Editor Clive Spash. Forthcoming


In face of the strong conflict between market norms and social norms, peaceful co-existence is impossible. In traditional societies, markets were subordinated to society. Modern society emerged via a number of revolutions which made society subordinate to markets. This led to a reversal of traditional values of social cooperation and harmony with nature. Instead, men, nature, society became objects to be exploited for creating profits. A market society generates profits by exploiting men and nature, and requires increasing profits to sustain itself. This process has run into its limits as planetary resources are being destroyed on a scale large enough to threaten the planet. Saving the planet requires reversing the transition to modernity by subordinating markets to society. This is a difficult task.


As industrialised human society barrels down the fast track to ecological suicide, there is a well-funded campaign to spread stories that create confusion about problems such as climate change, because environmental protection interferes with corporate profits. Species of plants and animals which evolved over billions of years, and cannot be replaced, are becoming extinct at a rapidly increasing rate. Precious environmental treasures like coral reefs and rainforests are being destroyed. The cost of what has already been destroyed cannot be calculated. In addition, industrialised society is using up planetary resources at a rate which is much higher than the ability of the planet to replenish or renew. The wastes being produced by human beings are changing the composition of the atmosphere, oceans, lakes and rivers, and affecting all forms of life. How can some elite groups act as “Merchants of Doubt” (Oreskes and Conway, 2011) prepared to destroy the planet to make a profit?

Experiments show that humans have radically different sets of internalised norms for markets and society. On appeal to social norms, many will gladly volunteer to donate blood, but will refuse to give the same donation for payment. The conflict between the norms of markets and society means that the two cannot coexist peacefully. Throughout history, markets have been subordinate to society. Modern society is unique in having sought to reverse this relationship, subordinating social relations to market norms. This chapter follows the framework of Polanyi (1944), who describes the bloody battles between markets and society as the “Great Transformation”. The operation of a market society required the conversion of human beings and their habitat into marketable commodities, leading to the dissolution of society and environmental destruction. Current efforts to ‘solve’ environmental problems within the market framework fail to either recognise these fundamental conflicts or to go far enough to address the structural causal mechanisms. In line with social ecological economics [Chapter 1], I will argue that radical remedies are required to address the root causes of the problems. In particular, the great transformation needs to be reversed and the subordinate role of markets to society recognised.

One of the key theses of Polanyi (1944) is that unregulated markets are so extremely harmful to society, that society must take steps to protect itself. In order to understand the history of market societies Polanyi introduces the concept of the “double movement”—on the one hand the expansion of markets, and on the other the efforts to protect humans and Nature against harms caused by commodification. The second movement means that society always blocks complete freedom for markets, but this also means that free market ideologues can argue that any failure of capitalism was due to the failure to fully follow policies of laissez faire.

In this chapter the struggle between market societies and traditional societies is explained as occurring simultaneously on two fronts. One is the front of practice—the replacement of traditional institutions and customs by market institutions. The other is the ideological front—the practice of capitalism that requires faith in the accompanying ideology, which is often strongly opposed to natural instincts and traditional social norms.

For full article (5000 words) see: Markets and Society