Tuesday, October 27, 2009

Suggestions Wanted for "Can Capitalism Survive?" Debate

Capitalism as a philosophy is based on the incorrect idea that people make decisions to improve their lives by rationally choosing how to best allocate their labor, land, and capital. The underlying assumption is that humans make these decision dispassionately. Recent research reveals, however, that while the human brain has some capacity for rational decision-making, it is mostly emotional in how it processes cognitive information. Thus, the assumption of rational decision making, or maximizing utility, is simply false. We can see this by looking at the recent abuses of capitalism in which some people are making emotional investment or purchase decisions (for example, investing in Madoff schemes that promise unrealistic returns on investment or purchasing a home without a sufficient income) and other people are exploiting those decisions (e.g., Madoff and lenders). Thus, the role of government should be to restrain the excesses caused by emotional brain processing without choking the innovation and weatlh creation that capitalism produces. Fundamentally, however, we must as a society acknowledge that human brains are 98% emotional and only 2% rational and adjust our norms, regulations, and laws accordingly.
Read the Article at HuffingtonPost


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