The Search of Neuroscience for the Quintessence of Economics

By Con George-Kotzabasis—October 03, 2014

A reply to “of markets and minds” --by professor Peter Bossaerts

Melbourne University Magazine

Economics is the application of scarce means for the attainment of countless abundant ends. Since all ends cannot be fulfilled because of the scarcity of resources, human choice selects those ends that are more needful or pleasurable to man than those that are less so. The attainment of those more needful ends is a result of human action. These ends, however, are the fruits of the future and the inevitable uncertainty that is riveted upon it. Therefore human action is always speculation based, however, not upon the throw of the dice but upon ratiocination. Furthermore, actions are determined by the value judgments of individuals i.e., the ends they are eager to attain. These valuations differ among individuals due to the different circumstances and living conditions of these individuals and to the variable desires and wishes that emanate from the plethora of their personalities. There is no constant relationship between these valuations, as they emanate from the different wishes, desires and caprices of an umpteenth of individuals, and are therefore beyond the bailiwick of science to measure them; what scientific method could measure with precision the capricious longings of man and the uncertainty that surrounds his existence?

Professor Bossaerts’ attempt therefore, to identify and control the ‘cells’ of the economy and finance and the complex interactions that determine their course by the scientific method of neuroscience for the purpose of rationally directing the process of the economy to a more beneficial path, is in vain and is bound to fail. Science measures constant relationships in the controlled experimental environment of the lab but cannot measure uncontrolled innumerable variants that determine, in our case, the process of a free market economy. The search, therefore, of finding the inexorably elusive quintessence of the economic process by the tools of the hard sciences, though a laudable task, is purblind, as it cannot see nor understand that science is incapable of measuring the measureless.

The endeavour to supplant and redress, on the one hand, the imperfections of the free market economy, and on the other, the failures of government dirigisme to regulate and direct the economic process of the free market to a more optimal state, by the powerful algorithmic tools of science, will be found to be another futile attempt to direct the economy from a central command post, this time by the methods of neuroscience and not by an omniscient cabal of socialist planners.

In an imperfect and uncertain world, the free market economy will proceed and move by trial and error and continue to spread its benefits to mankind. But the intervention of man’s reason and understanding will substantially diminish the errors by increasing their correction in time by the power of man’s imagination and ratiocination.                 

Will Greece Default and Leave the Eurozone?

By Con George-Kotzabasis


In any crisis of serious proportions consensus between the major political parties is the sine qua non for its resolution. This certainly applies presently in Greece. But the dimensions of the crisis are so Gulliverian that only a titanic struggle of will and resolution by its politicians, guided by wisdom, will at least diminish the scale of the crisis. Regrettably, however, there is a dearth of politicians in Greece of the status of Gulliver and an abundance of Lilliputians. Therefore, a different consensus is materializing among eminent economists, that Greece perforce will have to traverse a different course than that imposed by the ECB and IMF.

Deepak Lal, a former president of the Mont Pelerine Society and a prominent exponent of the Austrian school of economics, predicts a Greek default and an exit from the Euro. To avoid a Greek debt default that would lead to a Eurozone banking crisis, a stabilization program has been imposed on Greece by the ECB and IMF. But unlike other similar stabilization programs, Lal argues, two vital elements are missing: a large devaluation and a restructuring of the country’s debt. “The former is precluded by the fixed exchange rate of the Euro, the latter by the external holdings of Greek sovereign debt by European banks.” The alternative program therefore is to impose a large internal devaluation instigating a precipitous fall in domestic wages and prices through a massive deflation. It is impossible however to believe that Greek politics will allow the country to follow such a course, especially when Greece is likely to be left with a debt-GDP ratio of 150%. Hence, Deepak Lal predicts that a Greek default and an exit from the Euro is the most likely path that Greece will follow.