The intangible economy and the decline of liberal reason

Pankaj Mishra has lamented the decline of liberal rationality

In an article in The Guardian today, Indian author Pankaj Mishra lamented the apparent decline in liberal rationality.

“Committed to seeing the individual self as a rational actor, we fail to see that it is a deeply unstable entity, constantly shaped and reshaped in its interplay with shifting social and cultural conditions,” Mishra writes. “For nearly three decades, the religion of technology and GDP and the crude 19th-century calculus of self-interest have dominated politics and intellectual life. Today, the society of entrepreneurial individuals competing in the rational market reveals unplumbed depths of misery and despair; it spawns a nihilistic rebellion against order itself.”

Mishra called for “greater precision in matters of the soul” and to anchor thought “in the sphere of emotions”.

Thousands of other articles about “post-truth” politics have been written in 2016 in the wake of the UK’s vote in favour of leaving the EU and the election of Donald Trump as US president.

It’s as if something entirely new has happened.

But people have always depended upon emotions when making important decisions. When has rationality guided choices about life partners or children? Even apparently fact-based decisions about food, drink and clothing are at least partly driven by feelings.

According to some psychologists, the majority of peoples’ actions are apparently irrational and based on emotions and identity.

Facts play a role, but they can be overridden.

And this is happening more and more as a result of radical change in the structure of advanced economies.

Economies used to be dominated by the production, sale and consumption of tangibles. Individuals, households, firms and the state could refer to the physics of what was being made, sold and consumed.

Human imagination was confronted by the harsh facts of scarcity and the lack of knowledge necessary to make the things people desired.

In the tangible economy, evidence-based science was only way these limitations could be addressed.

But more than 80 per cent of output and employment in many advanced economies is accounted for by services; intangibles with no physical characteristics. And many working in tangible industries are not directly employed in making things; they work in service disciplines including accounts, marketing and management.

In services, value is exclusively created through constructive interaction at the level of the individual. That value is wholly intangible and only intuitively perceptible.

In other words, a growing proportion of the labour force is involved with a creative activity where feelings are at least as important as facts.

It is consequently unsurprising that the radical change in the mode of production from tangible production to intangible creation is having political consequences.

But the underlying factor is as unchanging as the beaks of eagles.

The desire to produce and reproduce and to create and trade owes more to what is going on inside peoples’ heads than developments in the world their senses perceive.

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