The Happiness Industry (17 page)

The first-ever attempt to compare the happiness levels of entire nations was conducted in 1965, by the former pollster to President Roosevelt, Hadley Cantril.
¹⁰
In collaboration with the Gallup polling company, Cantril surveyed members of the public around the world in an entirely new way, which he termed the ‘self-anchoring striving scale'. Pollsters had historically been
interested in how individuals felt towards specific products, policies, leaders or institutions. Cantril's innovation was to ask them how they felt about their lives, relative to their own aspirations. Attitudinal research had invited people to look outwards upon the world and express their opinion as a number. Cantril asked them to look inwards upon themselves and do the same. This was a landmark in the development of contemporary happiness studies. But in the notion of ‘self-anchored striving', it also hinted at the loneliness and aimlessness of a society with nothing but private fulfilment as its overarching principle.

The problem is that even a society of self-actualization and growth still needs some form of government and recognized authority. Who will provide it? Where will the expertise come from, to write the ground rules of this new growth-obsessed, relativist society?

What we witness, in the period from the late 1950s to the late 1970s, is the rise of a new breed of expert, capable of reconstructing authority for this new cultural landscape. Unlike the scientific and political authorities that they – often deliberately – displaced, their authority was devoid of the traditional moral baggage of professionalism, and rooted instead in a dispassionate ability to measure, rank, compare, categorize and diagnose, apparently uncluttered by moral, philosophical or social concerns. The old experts carried around notions such as the ‘public interest', ‘justice' and ‘truth'. As Bentham might have put it, they were victims of the ‘tyranny of sounds' that theory exerts over the mind. The new experts were simply technicians, applying tools and measures which they were proud to declare were ‘theory neutral'.

At a time when political disputes were raging to the point of violence and beyond, dispassionate scientists, who were simply
qualified to measure and to classify, were an attractive new source of authority. Crucially, this ethos was both counter-cultural and conservative at the same time: counter-cultural, because it knocked the old establishment authorities off their perch, and conservative because it lacked any vision of political progress of its own. In that respect, these experts offered an exit route from the ‘culture wars'. In the biographies of a handful of scholars who moved from the periphery of American academia circa 1960 to becoming the architects of a new competitive-depressive society by 1980, we can see the seeds of neoliberalism being sown.

Bentham in Chicago

There is something a little eerie about Chicago's Hyde Park neighbourhood. Its tree-lined streets of late-nineteenth-century houses feel typical of many traditional upper-middle-class American suburbs. At its heart sits the great University of Chicago, mimicking the gothic style of an Oxford college, complete with mediaeval turrets and stain-glassed windows. Wandering around the leafier parts of Hyde Park, where ivy creeps up walls and lawns are groomed immaculately, the visitor could be forgiven for forgetting where they actually were. A reminder comes in the form of the emergency phones, located in white posts on every corner in and around the university, with a blue light on top. Hyde Park is a sanctuary of peace and scholarship, but it is located in Chicago's South Side, and visitors are advised against straying too far in any single direction on foot.

This cocoon in which the university sits was a significant
factor in the development of the ‘Chicago School' of economics, which was instrumental in the design and implementation of the neoliberal policy revolution. Chicago itself is 700 miles from Washington, DC, and 850 miles from Cambridge, Massachusetts, the homes of Harvard and MIT, the original bastions of American economics. Not only were Chicago School economists tightly congregated in Hyde Park, they were also several hundred miles from the core of the political and academic establishments. They had little choice but to seek debate with one another, and for three decades after the end of World War Two, they engaged in this with a rare fury.

The scholars who became known as the Chicago School began to cluster around the leadership of economists Jacob Viner and Frank Knight during the 1930s. By the late 1950s, they had grown into a tight-knit family. In one case, the family ties were quite literal: Milton Friedman married Rose Director, sister of Aaron, who was the linchpin of the post-war Chicago School. Aside from a certain geographic isolation, these economists had a number of intellectual and cultural traits in common. Among these was the sensibility of the outcast.

Until cracks appeared in the previously dominant Keynesian policy programme during the early 1970s, Chicago was rarely taken entirely seriously as a centre of economics and was only grudgingly offered recognition by Harvard and MIT as the Reagan revolution unfolded. In time, however, the Chicago economists began a steady accumulation of Nobel Prizes. Friedman, who grew into the status of a conservative celebrity as the 1960s wore on, was the son of Jewish immigrants and boasted of his lack of establishment credentials. Gary Becker, another prominent member of the school, admitted that they all had a ‘chip on their shoulder'.
¹¹
Their sense of iconoclasm was fuelled
by the sense that America was run by a northeastern elite of liberal intellectuals who simply
assumed
their right to rule.

Following from this was a shared suspicion of government. One way in which this was aired was via the application of economic analysis to the behaviour of law-makers and government bureaucrats, to demonstrate that they were equally self-interested as businesses or consumers in a marketplace. The work of George Stigler, known as ‘Mr Micro' to Friedman's ‘Mr Macro' (a joke on account of the microeconomist Stigler being over a foot taller than his macroeconomist friend), turned the spotlight of economic analysis away from markets and towards those in Washington who claimed to act in the public interest.

Suspicion of government is not necessarily the same thing as being anti-state, and so it proved. In the most controversial episode of a controversial career, Friedman visited Chile in spring 1975 to offer advice to the autarchic Pinochet regime. For a man who professed anarchist sympathies, this engagement with a military dictator appeared hypocritical to say the least. Friedman simply defended himself as someone who was in pursuit of scientific knowledge and willing to share it with whomever was interested. In any case, the Chicago School complaint against governments was not that they had too much power, but – à la Bentham – that they used it in an unscientific fashion. In short, policy-makers needed to listen to economists more closely, a view that reveals the most distinctive Chicagoan trait of all: the fundamental belief that economics is an objective science of human behaviour which can be cleanly separated from all moral or political considerations.

At the root of this science lay a simple model of psychology that can be traced back via Jevons to Bentham. According to this model, human beings are constantly making cost-benefit
trade-offs in pursuit of their own interests. Jevons explained the movement of market prices in terms of such psychological rationality on the part of consumers, who are constantly seeking more bang for their buck (or less buck for their bang). What distinguished the Chicago School was that they extended this model of psychology beyond the limits of market consumption, to apply to
all forms
of human behaviour. Caring for children, socializing with friends, getting married, designing a welfare programme, giving to charity, taking drugs – all of these apparently social, ethical, ritualized or irrational activities were reconceived in Chicago as calculated strategies for the maximization of private psychological gain. They referred to this psychological model as ‘price theory' and saw no limit to its application.

Nobody seized the implications of this more than Gary Becker. Today, Becker is known for having developed the notion of ‘human capital', a concept that has helped shape and justify the privatization of higher education through demonstrating that individuals receive a monetary return from ‘investment' in their skills.
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More diffusely, Becker's influence has been felt in an approach that reduces all moral and legal questions to problems of cost-benefit analysis. Individuals are addicted to drugs? The price of the drugs is obviously too low, or perhaps the pleasure received from them is too high. Shoplifting is on the rise? The penalties (and risk of being caught) are obviously too low; but then again, maybe it makes more sense to endure the shoplifting than to invest money in closed-circuit television and security guards.

The economists who carried out this work were always fiercely resistant to the idea that they were ideologically motivated. All they were trying to do, they reasoned, was identify the facts, free
from the moral and philosophical baggage that cluttered the minds of their liberal rivals in Harvard and MIT or the politicos in Washington. The behaviourist ghost of John B. Watson hovered in the background, insisting that human activity could be understood in its entirety, with sufficient scientific scrutiny by a detached observer.

Their analyses were tested in the infamous pressure-cooker environment of the economics department's ‘workshop' system. In conventional academic seminars, a speaker reads a paper which the attendees are encountering for the first time. There is no time for an audience member to develop a very acute critique, even if she wanted to. But Chicago's ‘workshop' system was different. Papers would be circulated in advance for reading and authors would have only a few minutes to defend what they'd written before the roomful of colleagues would dive upon them, seeking holes in their logic, pursuing errors in the argument like it was their prey. ‘Where should I sit?' a nervous speaker once asked Stigler, who was organizing the workshop. ‘In your case, under the desk', quipped Stigler grimly.

What if the psychological model or ‘price theory' itself was faulty? What if people
don't
act like rational calculators of private gain, least of all in their domestic, social and political lives? What if economics
isn't
fully adequate to understanding why people behave as they do? In the seminar rooms of Chicago economics, these were the questions that could never be raised. All regimes of radical, sceptical, anti-philosophical empiricism require certain propositions which are exempted from scrutiny. In Chicago, that proposition is price theory, which, from the lectures of Viner during the 1930s through to the current pop-economics fad of
Freakonomics
, has been the central article of faith for an institution that proclaims to have no need for faith.

How to out-Chicago Chicago

An Archimedes who suddenly has a marvelous idea and shouts ‘Eureka!' is the hero of the rarest of events. I have spent all of my professional life in the company of first-class scholars but only once have I encountered something like the sudden Archimedian revelation—as an observer.

It was in these breathless tones that George Stigler recounted one particular workshop in 1960, which took place in Aaron Director's home in Hyde Park. Stigler would never forget that evening and later cursed Director for not having tape-recorded it.
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It became a turning point for his career and for the Chicago School more generally. Arguably, it was a turning point for the project of neoliberalism.

The paper that was discussed that evening was the work of the British economist Ronald Coase, then of the University of Virginia. Coase always resisted the iconic status that Stigler and others were keen to bestow upon him. His career had progressed quietly and methodically, through asking simple scientific questions about why economic institutions are structured as they are. He claimed never to understand the excitement that his work had engendered. He collected his 1991 Nobel with the words ‘What I have done has been determined by factors which were no part of my choosing', a sentiment that would have struck the chip-on-shoulder, competitive individualists of Chicago as akin to defeatism.

And yet, by accident or otherwise, this modest economist with a working class background in Kilburn, London, acquired the role of an ‘Archimedes' for the intellectual bruisers from Hyde Park. In the process, he contributed to a new, more vicious
understanding of how capitalism should be governed, and the form that competition should take. Coase's work ended up a crucial plank in a political worldview stating that there was no limit to how large and powerful a capitalist firm should be allowed to become, so long as it was acting in a ‘competitive' fashion.

Coase has never been described as a ‘neoliberal', less still a ‘conservative'. He was, however, taught by two economists at the London School of Economics during the 1930s, Friedrich Hayek and Lionel Robbins, who were both instrumental in the emergence of neoliberal thought. Robbins and Hayek were seeking to muster a fight-back against the Keynesian and socialist thinking that thrived through the Depression, by highlighting the unique intelligence contained in the price system of competitive markets. Coase breathed this in. More importantly, he was exposed to Hayek's intense scepticism regarding what any social science, including economics, could be capable of knowing.

Armed with a radically sceptical eye, though nevertheless adhering to the basic tenets of ‘price theory', Coase was able to ask a question that his more libertarian colleagues in Chicago had never properly considered: What exactly
is
the benefit of a market anyway? If it's to produce welfare, is it not possible that, under certain circumstances, this can be done even better through different types of organization, such as corporations? In their hostility to state intrusions in markets, Friedman and company had largely just assumed that free markets were intrinsically superior on principle. But paradoxically, this belief also committed them to certain types of state intervention, namely regulation and competition law, which would ensure that the market maintained its correct form.