By Hazel Henderson
Copyright © 2017 Hazel Henderson. All Rights Reserved.
Review of Homo Deus: A Brief History of Tomorrow, Yuval Noah Harari, explores brain science and the future of human cognition.
Review of The Undoing Project, Michael Lewis, looks at how cognitive biases invalidate economic models.
Review of Reinventing Prosperity, Graeme Maxton & Jorgen Randers, shows ways this research in cognition reveals policy options beyond economics models.
Homo Deus: A Brief History of Tomorrow, Yuval Noah Harari; Harper Collins (2017)
The Undoing Project, Michael Lewis, WW Norton (2017)
Reinventing Prosperity, Graeme Maxton & Jorgen Randers, Greystone, Canada (2017)
It is commonplace that we humans are meaning-seeking creatures. We recognize patterns, sometimes in accurate scientific breakthroughs or often in pattern-concocting conspiracy theories, ideologies and fake new stories. Making sense and meaning in our lives and out of our experiences is a fundamental characteristic of humans everywhere.
The collective experiences of 2016 from the horrors of Aleppo, ISIS brutality, natural catastrophes, fears of rising seas and global temperatures to the inspiring efforts of millions of unsung heroes in philanthropy, technological breakthroughs—all require and are engendering new and necessary story telling. Sadly, they also produce many stories and fake news by those still in denial.
New political movements arise, steered by upstart politicians weaving explanatory narratives in their drive for power. Deeper stories are needed, plumbing further into our human past, our psyches and our future. This deeper landscape is the subject of three intriguing books: Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari; The Undoing Project by Michael Lewis and Reinventing Prosperity by Maxton and Randers. That two are by bestselling authors attests to the widespread desire for such explanatory in-depth stories.
In Homo Deus, author Harari follows his acclaimed “Sapiens” with a deeper dive into the human condition, often wittily exposing our foibles in this surprisingly readable book. Harari sees human development in four stages: 1) Cognitive as our awareness grew 2) Agricultural use of our environment 3) The invention of writing and money 4)The data revolution of today.
Harari focuses on ways groups of humans coped as our numbers grew, fostering growth with wider cooperation beyond tribes. Humans developed this cooperation through religious beliefs, rules and other trust systems, including use of visual clues: dress, ornaments, physical appearance, including writing and money systems. Today we still search for new trust systems, such as blockchain based electronic platforms, distributed ledgers and cryptocurrencies from Bitcoin to SolarCoin.
Factual evidence supporting these belief systems was found in scientific understanding which has been used largely to confirm beliefs. We see these ancient behaviors still at work today as brain scientists and psychologists discover many irrationalities such as confirmation bias, theory-induced blindness and herd behavior in markets and politics. This explains much of today’s global economy from the rise of corporations, brands, the belief in money as new forms of religion. The success of what Harari calls these “intersubjective networks” was in organizing the activities of millions. One might say that the Information Age has morphed into “meme economies” and that now we all live in “mediocracies” whatever their ostensible form of our nations’ governments, as I discuss in “Build A Win Win World” (1996, e-book 2016).
Harari then takes us into even deeper waters, on how humanism, having dominated over religion, than split into three branches: 1) Liberalism based on individualism 2) Socialism based on communal goals and groups 3) Evolutionary socialism which strives for perfecting humans as the dominate species on our planet, in our solar system and beyond. Harari then exposes the trap in this evolutionary goal, typified by many Silicon Valley libertarians who hype it as achievable by technology, capitalism, philanthropy and big data. This is leading to the “singularity” where our companies, artificial intelligence and robotization overtake most of humanity with an elite of evolved super-humans. This saga also involves loss of control as algorithms take over even more aspects of our lives and the promised Internet of Things turns into “Big Brother” totalitarianism. Harari ends with a key, often taboo issue as our sciences advance: the widening evidence that our vaunted “free will” may be just another story—albeit the narrative on which most human belief-systems and societies are based.
In the The Undoing Project author Michael Lewis sugar-coats Harari’s scary explorations into our human psyches. He tells the personal story of the collaboration in examining deficiencies of the human cognition of Israeli psychologists Daniel Kahneman and Amos Tversky. The unvarnished version of their discoveries of human irrationality is fully detailed in Kahneman’s “Thinking Fast And Slow” (2011). Their discoveries of our cognitive biases, theory-induced blindness and other failings led to the invalidation of most core principles in economic textbooks: rational humans pursuing self-interest with full information leading to efficient markets. Instead Kahneman and Tversky showed that markets were actually governed by herd behaviors and irrational individuals.
The economics profession retaliated in its usual way: by incorporating new scientific research and claiming the new knowledge, whether from psychology, anthropology, ecology , sociology or game theory as a new branch of economics. They award such upstart researchers their Bank of Sweden Prize in Memory of Alfred Nobel, often confused with the real Nobels. Alfred Nobel’s descendant, lawyer Peter Nobel, Nassim Taleb, historian of science Robert Nadeau, chaos theorist Ralph Abraham and I have exposed this intellectual scandal for decades—to no avail. Even Michael Lewis accepts this story and how Kahneman & Tversky received this award and how economic brahmins renamed their psychology as “behavioral economics”! Author Lewis popularizes all this with his deft approach of portraying their personal narrative in The Undoing Project. Yet these discoveries of Kahneman and Tversky are overturning the economic dominance of decision-making in today’s globalized economies, which Lewis applauds.
This new story overthrowing economics is well told in Reinventing Prosperity by authors Maxton and Randers. It provides a key to opening up the global debate beyond the ideologies of left and right, stimulus v. austerity to actually confronting today’s realities of environmental pollution, loss of species, fossilized industries and energy use, which led to climate change. Free from the dogmas of the economics profession (it was never a science), humans can now see and assess our actual condition on planet Earth and our future options for course-correction. These threats and opportunities are clear: we now see that our best energy option is to harvest the daily free photon shower from our Sun as efficiently as green plants’ photosynthesis which provides all humanity’s food.
Authors Maxton and Randers are both conversant from their own scientific perspectives of this need to move beyond economic dogmas. They lay out a path to correct the worst absurdities of economic textbooks: allowing corporations and governments to “externalize” all social and environmental costs of their activities to taxpayers, the environment and future generations. Accountants who formerly allowed those “externalities” are now changing to more realistic models of six forms of capital: finance, built, intellectual, social, human and natural. Their new standards for auditing corporations are based on the extent to which companies have enhanced or degraded all six forms. Financial Management, June 2016 (www.cimaglobal.com).
Authors Maxton and Randers show that there are viable paths to this global transition ratified in 2015 by 195 member countries of the United Nations at COP21 and 22 and the Sustainable Development Goals (SDGs). They show how the politics of money creation by central banks; Quantitative Easing (QE) can be shifted from bailing out past financial mistakes to investing in greening the global economy, reducing inequality and including all humanity in healthier, knowledge-richer future societies. These goals can be steered based on more accurate measures of progress and well-being beyond the failed “economic growth” mantras of GDP. (www.beyond_gdp.eu).
Essential reading for all investors and asset managers!