Reconsidering Identity Economics - Human Well-Being and Governance (2)

8/9/2019 Reconsidering Identity Economics - Human Well-Being and Governance (2)

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Lszl Garai

ReconsideringIdentity Economics

Human Well-Being and Governance

Working draftto be published by

Palgrave Macmillan

2015

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance "


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Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance #


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$%&'E&'

IDENTITY ECONOMICS, INDEED? (an introduction under development)

THE STRUCTURE OF SOCIAL IDENTITY AND ITS ECONOMIC FEATURE

The Double-Sorie! Srucure o" Social #!eni$

#!eni$ %conomics

&o' ousan!ing am #(

SOCIAL IDENTITY IN THE SECOND MODERNIZATION

P)%*M+L%

PS,&.L.G, ./ S.#.-%..M# S,ST%MS

Theses on &uman aial

Deermining economic acivi$ in a os-caialis s$sem

#s a raional socio-economic s$sem ossible(

h$ is bureaucraic conrol over econom$ no ha raional(

PS,&.L.G, ./ +.LS&%3#4-T,P% S,ST%MSThe bureaucraic sae governe! b$ an illegal movemen

The ara!oes o" he +olshevi6-$e s$cho-social srucure in econom$

&*L/-*-*P#T*L#SM - *D #TS .T&%) &*L/ (chapter under development)

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The Double-Sorie! Srucure o" Social #!eni$

$ognitive dissonance is considered as emerging bet+een the social identity of persons and that of their acts, n

analysis is made of the parado.ical conse/uences of their double bind! 'hose +ho are * are supposed not to do+ and are also supposed to not to think that those +ho are *+ould be allo+ed to do +, 'he $ohen-Rosenbergcontroversy is presented here0 revised on this basis0 and illustrated by the t+o authors1 e.periments,It is claimedthat the psychosocial aspect of social identity is complemented by its socioeconomic aspect, Inded 0 the valua-tion of an identity is al+ays a 2udgement of the e.tent to +hich this model should be reproduced, 'he moretolerant or the more ruthless manner of imposing value models of social identity is determined by socioeconomicfactors, %n the other hand0 the socioeconomic positions may be specified by psychosocial factors, 'he

psychoeconomic connection in social identity is accentuated in post-capitalist societies0 turning human facultiesand needs into factors to be produced and reproduced by the economic system,

3o me social psychologists consider that the /uestion of social identity 4is no thing but that of

modes of organiation for a given individual of his representations of himself and of the groupto +hich he belongs4 (5avalloni0 "67*, p, #89), :or others (see0 for e.emple0 3arbin andllen0 "6; bad pay0 bad play4, ?oesthis mean that this sportsman had the social identity of a hedonist player +hen0 at a time ofaustere amateurism0 he claimed a remuneration in proportion to the work carried out=

Looking for indicators of social identity one may start by prefering acts torepresentations, But further on one has to realie that it is the representation of an act ratherthan the act itself that is the matter here0 because one cannot identify socially a personcommitting an act0 +ithout identifying socially the act committed by this person, Is+hite+ashing a fence necessarily +ork= and playing football a pleasure=

@et0 the act of a representation here may be the act itself in /uestion,It is therefore surprising that cognitive dissonance theory does not take into

consideration this +ay of reducing the dissonance, Why not reduce the dissonance of0 fore.ample0 a dishonest act by concluding that 7Some hones eole !o lea! ohers inoerror78 It is as if the cognitive psychologist said 7Those 'ho !eliberael$ !eceive ohersare in fact !ishones eole> or 7&e 'ho acs agains his o'n ineres is really

unreasonable7, ctually it is not said0 to such a degree this implication seems evident, 3till

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the same theory argued since the beginning +ith data of the empirical observation of sub2ects+ho neglect the most real facts of nature (such as0 for e.ample0 a connection bet+een the lungcancer and the use of tobacco0 or a danger of earth/uakes in the area +here one lives), Wouldthe facts of social identity be more real than those of the nature (and0 at that0 of such a lifeimportance)=

:ar from that0 the facts of nature cannot be modified by cognitions, 'o recall thepreceding e.ample0 to class or not an ob2ect among glasses of a set0 to notice or not that itbreaks in no +ay modifies the fact of belonging or not to the glasses of this set nor that ofbeing or not being fragile, %n the contrary0 it is true0 as formulated by Georg Lukacs ("67;)0that the consciousness has an ontological status in society0 meaning for our present study thatcognitions that reflect facts of social identity are also facts of this identity,

'hus0 one carries out actions0 among them socially relevant ones0 such as deceivingothers or revealing the truth to them0 drinking +ine or not0 etc, t the same time0 one mayhappen to think about +hat has been done and its social meaning0 but those acts of thinkingare themselves acts0 too0 and as such they may0 like any other act0 be relevant for one1s socialidentity, &amely0 bringing an action of $e 9 against cognitive dissonance is an act of

thinking that is the most relevant for this matter,If one leads others purposely into error he commits a dishonest act, If one thinks one

may lead others purposely into error and still be honoured0 this thought is another dishonestact, $an someone +ho drinks +ine consider himself as an authentic Aoslem= $ertainly not0since he does something that is prohibited by Islam, &e.t0 may someone +ho considers himas an authentic Aoslem be considered as an authentic Aoslem= $ertainly not0 since he thinkssomething that makes nothing of the sacred interdicts of Islam,

'o be fi.ed0 the criterion of belonging to a category of social identity must be fi.ed atan object level of socially relevant facts and0 at the same time0 at a meta-level ofrepresentations of these facts that are socially relevant facts0 too,

Let us go back to the above three-piece formula for cognitive dissonance, We haveseen that fact # introduces an ambiguity in identity representation, :rom item * I can concludethat

# am no * since I ! " : being given ha * canno !o +;< at the same time fromitem " I can conclude that

* can !o + since I ! " :being given ha # am *;8 'he ambiguity couldintroduce arbitrariness to the definition of social identity +hich +ould be from no+ on amatter of cosideration,

Let us consider0 for e.ample0 the follo+ing statement of H, 'a2fel ("6 and e/ually true that the consensus0 onceestablished0 represents those social psychological aspects of social reality +hich interact +ith thesocial0 political end economic events determining the present and the future fate of the group and of itsrelations +ith other groups4 (pp, ##6-#*D),

Ho+ever0 it is undecided +hether such type of social0 political and economic event incitessomeone to dra+ a conclusion from item * or0 on the contrary0 from item " based in both cases on theevidence of item 2 (see above), Let us suppose that events in a population are marked for a long

historical period by cooperation,For this reason +ill a group be formed be formed (being given the



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principle according to +hich those helping each other)= %r0for the same reason +ill there be formed alarge consensus about the mutual dependency producing mutual hate (being given the e.perienceshared by everyone of a frustration by the impossibility of going +ithout others)=

&o+0 if one +ould venture to reduce dissonance by type *0 this +ould make thedissonance reappear at a meta-level, 'his is represented in the follo+ing formula that is alevel logically superimposed upon the above one (on p, 9)!

l, # am *8, # hin6 ha * can !o +9, * !oes no hin6 ha * can !o +8

'he attempts to reduce the meta-level cognitive dissonance by the modification ofeach of the cognitions +ould produce a very particular configuration!

:or the iem 1+e sa+ above that modification signifies that of the definition of socialidentity, 'he superimposition of this second three-piece formula on the first adds a secondconstraint to that of abandoning one1s identity because of what one does: the constraint toabandon it because of what one thinks. I must recognie that I am no longer an authenticAoslem because I drank +ine> but if in spite of it I claim the identity of an authentic Aoslemit means I consider violable the involable principles of Islam that imposes upon me a secondconstraint to give up my authentic Aoslem identity, In the same +ay0 +hile having committeda dishonest act0 one can only claim the identity of an honest person if he is0 in accordance+ith this dishonest thought0 dishonest, It is this very double bind (cf, Watla+ick et al., "6;7)that brings those +ho are sub2ected to it to an identity crisis ending eventually in amodification of the represented identity,

If0 on the other hand0 it +as iem =that one tried to modify0 +e +ould regain item *and the original dissonance founded on it,

:inally0 the modification of iem 5+ould bring us to an infinite regression! 'o thinkact +compatible +ith the social category *0 then to think that act of thought compatible +ith

membership in this category0 then to think the same thing of the second act of thought0 etc,'his double bind is that of an ideology, :or as far as it is concerned0 the arbitrarinessdescribed above cannot e.ist any more, 'he induction from a fact can only proceed to+ardthe definition of social identity as if their relationship +as also given as a fact, (Let usremember +hat +as said above! 'hose +ho deliberately deceive others are in fact dishonest>he +ho acts against his o+n interest is0 really unreasonable),

'rue enough0 here it is the real social identity that is concerned0 in the sense that it isindependent of 2udgments (4true4 or 4false4) concerning this identity, Ho+ever0 the facts0 thereality of social identity is different from those of natural identity,

'he +ay in +hich nature treats natural identity can be observed by ethologicalphenomena0 such as the pro.imity or distance keeping behavior of animals (Hall0 "67"), 'he

critical distance depends0 besides the present activity0 on +hat one could call the naturalsocial identity of fello+s, nimals0 in the conditions associated +ith a certain type of activity(feeding0 mating0 migration0 fighting0 etc,) let themselves be approached or seek the pro.imityof a certain category of e/uals +hile at the same time keeping a distance from those +ho donot belong to this category, 3upraindividual formations of this nature are organied and made

possible by a system of signals produced by individuals, Ho+ever0 the criterion by +hich theysignify individual belonging to social categories arises from the genetic program of thespecies, 'hus0 once established0 categorial limits +ill be respected unanimously by eachindividual of the population0 independently of individual categorial belonging,

%n the other hand0 for the social identity of man0 its criteria are imposed only uponthose +ho set a value on that identity, 'hus0 if it seems evident to us that someone +ho uses

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illegitimate means to keep others from taking into account their o+n legitimate interests isdishonest0 this is by no means a refelction of natural criteria of belonging to the category ofhonest people, It is merely the proof of our intention to belong to that category! to be honestone must think in a precise way about what one must do to be honest. %n the other hand0 if +esimply take notice of the criteria of a Aoslem identity +ithout finding it evident that a +ine

drinker cannot have this identity0 it is one proof that +e have no intention of identifyingourselves as Aoslems,

'HE3%$IL RELE&$E%:F3@$H%3%$IL I?E&'I'@

'he claim to have a given social identity imposes the criterion of considering certaincriteria as indispensable for belonging to this category0 +ith such evidence that is notcontested0 even by those +ho lack these criteria, 'his can be illustrated by the phenomenon ofthe "sinners remorse" that is perhaps the most parado.ical, sinner is someone lacking actsthat serve as criteria of belonging to a social category valued ideologically and0 for this

reason0 finding himself e.cluded by those +ho legitimately belong there, 'he sinner0 smitten+ith remorse0e!cludes himself and by doing so together with authentic representatives of thiscategory he shows that he belongs to it, too.3inners +ho repent are highly valoried byideological categories because it is this parado. of their social identity that perhaps bestdistinguishes social identity from natural identity (in +hich0 let us remember0 none can sho+his belonging to a category +ithout producing +hat is considered as its signs (cf, Garai0"6


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$here e!ists a correspondence between s!ci!#ec!n!$ic ientity defined by the

distribution of these material conditions of social reproduction between social categories, on

the one hand, and the%syc&!s!cial ientity defining the atribution of more or less value to

social categories, on the other.

3ocio-economic identity endo+s psycho-social identity +ith an energetic aspect

defining to +hat e.tent social categories in a given historical period of a given society refuseto tolerate each other1s e.istence0 representation in a given (familial0 friendly0 club0 +ork etc,)setting0 individual cases of belonging to both categories0 etc,

%n the other hand0 the psycho-social identity endo+s the socio-economic one +ith aninformational aspect that defines +hat kind of social (economic0 national0 religious0 culturaletc,) categories are included in and e.cluded from the disposition of material means ofreproduction,

&o+0 this t+o-+ay determination becomes accessible for the investigation as far as thet+o level organiation of relations and its parado.es are taken into consideration!

'hus0 investigations about intergroup relations (such as the Bogardus survey)0 onlytaking into consideration the ob2ect level of real0 socio-economically created groups1

interaction0 had almost no psycho-social character, 3heriff ("6;;) created artificially this latteraspect0 +hen he got interested in it0 by means of an e.perimental manipulation of such formalcomponents of the meta-level as cooperation and competition, %n the contrary0 'a2fel ("6


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#!eni$ %conomics

4n lternative Economic Fsychology4In HungarianJ

'as Editor0 #DD;, #68 pp,

'he antecedents of this monograph are four editions of the one entitled F!'nati!n !f anEc!n!$ic (syc&!l!)y that has been published in Hun garianJ by the Hungarian Economic3ociety in "66D and reprinted (in "66#) for teaching purposes by the Budapest EconomicKniversity, Its second0 redacted edition has been published by the ttila osef Kniversity&*eneral Ec!n!$ic (syc&!l!)y> "66; reprinted! "667J), 'he third0 enlarged and redactededition! ttila osef Kniversity Fress0 "667 reprinted! "667J, 'he fourth edition! T&e

&'$an %!tential as ca%ital! n approach by the economic psychology8 MulaN EconomicKniversity Fress0 "66< reprinted! "6660 #DDD0 #DD"> an illegal reprint misentitled T&e &'$anca%ital as %!tential! #DD#J),

'he mainstream psychology is based on a methodological individualism, 'he proposedmonograph presentsan alernaive o ha aca!emismby approaching economic psychology(as +ell as some features of political psychology0 socio-psycho-linguistics etc,) from theaspect of social interaction and social identity0 as linked both to micro- and to macroeconomicissues,

#8 General %conomic Ps$cholog$

'he economic psychology is claimed by the monograph to have emerged as a scienceabout s$cho logic he no mena urne! ino economic "acorsduring a his torical periodlabeled as secon! mo!ernizaionand facing the necessity of ro!ucing human re sour cesa he cos o" con suming maerial resources,

'he :IR3' $HF'ER 'T&e Ec!n!$ic (syc&!l!)y A%%r!ac&(presents an a.iomaticmodel of the economic manand so me contemporary reason for +hich the real economicactivity does not corres pond to that model, 'he psychology of behaviorismthat correspondsto the Meconomic manC model and three alternative psychologies (that of cog ni i ve s$cholog$0 of s$cho-anal$sisand the social s$cho log$) are presented in so me de tails, 'hey are

comparatively e.amined in their capacity to e.plain mar ket and organiational economicactivity of men, 'he problem of needs of an Meco no mic manN is evoked and a theory ofseci"icall$ human basic nee!is pro po sed as a solution to that problem> the structure of thehypothesied need cor res ponds to that of a specifically human activity defined along bothtechnical and social criteria,

'he 3E$%&? $HF'ER 'Meiatin) Ec!n!$ic Transacti!ns+ T&e (syc&!#S!cialIentity(makes a distinction bet+een t+o kinds of psycho lo gic phe nomena turned intoecono mic factors! technical dispositions of maste ring hings? aribues and socialdispositions of mastering ersons? relaions, It sta tes that unlike the maerial ro!uciondepending only on echnical aribuesof both producing and produced factors0 the modernhuman ro!ucion is de ter mi ned also by the factorsC social relaions, 'hese latters are

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dealt in terms of s$ cho social i!eni$that is presented as the key-con cept of the economicpsychology.

Fsychosocial identity is considered to be produced by an elaboration of not at tributes(+hether psychological characteristics of a person or socio lo gi cal charac teristics of hisstatus) but relations, 'his elaboration is the so cial ca egorizaion, It is from the early child

hood on mediated by an un con scious pro cess of semiosis in +hich the childCs dif fu sevocal, motor, postural, va so-mo tor or other somatic, as well as developing be havioral,

verbal, intel lec tual and af fective manifestations get sha pedas signi"$ingfactors that are atta ched to si multaneously shaped social categories as their sig ni"ie!factors so that si mi laridentity factors should be symbolied by simi lar0 and diffe rent ones by dif ferent symbols, Ingro+n-up people this mecha nism is a po +er ful one for di verting their eco no mic behaviorfrom the rationality norms of eco no mic man! this behaviorCs acts get a symbolic va lue and0thus0 their des tiny is strongly influenced by that of social identity they symbolie, t the same ti me0 ob2ects of the economic behavior get allocated0 according to a er rio rialmechanism0 to one or another social category (+hether it is repre sen ted by a large or smallgroup or 2ust one per son)> the ossession enables o+ ner(s) to and0 respectively0 disablesothers from +ell-defined economic activities,

##8 Secial %conomic Ps$cholog$

'he second volume is a sample of application of the general economic psychologyCs abovefindings to various issues of both market and organiation behavior,

'he 'HIR? $HF'ER 'Mana)in) Material an H'$an Res!'rces( deals +ith theeconomic psychology of manu"acuring and urchasing goods0 mar6eing and "inancingactivity0 managemen and !evelomen transactions0 organizaional and socializaional

behavior, #n"ormaion managemenand 6no'le!ge econom$are dealt +ith in more details0as approached by economic psychology, In contrast to economics0 econo mic psy cho logydoes not consider information management as a merely conrol ro cessbut as one of thereal rocessesin that system> on the other hand0 in contrast to psy cho lo gy0 theeconomic

psychology considers the kno+ledge economy a socialand not an in!ivi!ualperforman ce0the monograph ar gues, While thesocial iden ti tyis considered to be the main fac tor me diating bet +een individual and social matters0 as +ell as bet+een cont rol and real processes0 itis argued that at the same time it creates a ne+ duality! bet+een information and kno+ledge0on one hand0 identity itself and the deed investing someone +ith that identity,'his duality

becomes consummate in that of contemporary universities +ith their bifurcation of thekno+ledge supply and the diploma supply,

'he :%KR'H $HF'ER 'Mana)in) H'$an Res!'rces+ T&e Sec!n M!ernia ti!n-,'he moderniation is defined as a generalied tendency of artificial inter ven tion by thesocio-economic system into na tural processes in order to manu"acureconditions that are

necessary for its o+n functioning, ?u ring a first period0 in the "


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human :an! no onl$ maerial; con!iions o" is "uncioning,

'his necessity is analyed in terms of human caialinvested either by one of the inerese! aries(+hether the one supplying the human poten tial or the one demanding it) or thesae, Fossession relations of human ca pital are analyed in details0 sin ce the ca pitalinvested by the state into the for ma tion of a per sonCs po tential +ill be organically integrated

in his bo dy and mind0 and +ill be insepa ra ble from the physical and mental faculties that+e re origi nal ly gi ven to him,

In the aspect of manufacturing human conditions are investigated the oa li a rian sa es,'hey are clai med to di rect ly apply the stra tegies of the "6-century lar ge scale material

pro ces sing in dus t ry in establishing a lar ge scale hu man pro ces sing industry in #Dth

cen tu ry, It deals +ith that human condition0 too0 that is repre sen ted by he social i!eni$mar6e! b$ eiher comeiion or monool$0 a perfect (i,e, e,0 not dis tur bed by anymonopoly) competition being as important a condition for a market economic sys tem as is a

perfect (i,e, e,0 not disturbed by any competition) monopoly for a planned economicorganiation,

Farado.ical conse/uences of such a hu man pro ces sing industry are evoked, When therelations ofeiher comeiion or monool$are concerned0 the intact 2u.taposition of bothof them +ithout any bias is nothing but their competition, %n the other hand0 +hen either thecompetition gets eradicated from a socio-economic system (conside ring the necessities of a

planned organiation0 as is the case for the Bolshevik type totalitarian sta te)0 or the monopolygets e.tirpated (in order to fit the needs of a market0 as in case of a :ascist0 a national-socialistkind totalitarian sta te)0 the manufactured product is straight a monopoly,

Ho+ever0 the main difference bet+een t+o types of totali ta rian sta tes is dealt +ith interms of difference bet+een is sues of that human processing in dustry! those of a "ascis $eare claimed to establish a large scale industry for peo ples aribues0 +hile in +ol she vi6$etotalitarian societies theirrelaions0 too0 get manufactured,

'he :I:'H $HF'ER .T&e "!ls&e/i0#Ty%e 1ersi!n !f t&e Sec!n M!erniati!n-,Bolshevik type societies0 instead of being investigated from either an ideological or a

politological aspect0 are approached0 too0 by the economic psychology, :or such an approach0both structure and functioning of those societies are tested from the point of vie+ of a humancaial econom$ +ithin the frame of the second moderniation8

'he second moderniationCs basic !ilemma is presented! the mo re high ly /ualifiedhuman po tential is involved the larger and lar ger amount of caial is re@uire! "or ismanu "ac uringO and0 at the same ti me0 the lar ger and larger auonom$ is re@uire! "orha human oenial?s run ning, s far as the re/uired capital is ensured by theinvolvement of the 3ta te the autonomy turns out to be in short supply0 but if the aspect of the

au to nomy makes the state get out from the human business by charging the costs of humande velop ment to the individualCs account then capital +ill be scarce,

'herefore the organiing principle of these societies are not only bureaucrac$ settingsocial po+er to the office a person incidentally occupies but also charisma that sets it directly

to the person as referred to his record, Being originated from #Dth centuryCs radical anti-bureaucratic (illegal) mass movements0 the charisma provides not only a leader but the +holehead/uarter of the revolutionary movement and even the +hole party as its vanguard +ith asocial po+er independently from anyoneCs office, %n the other hand0 as far as thiscollecivecharisma is concerned0 in Bolshevik-type structures the person gets (and loses) his glamour

by being invested +ith (and0 resp,0 dismissed from) a charisma 2ust like +ith (from) an office!

in order to get the social identity that is independent from any appointment one has to be

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appointed, 'his procedure of bureaucratically appointing someone to a collective charismagets institutionalied in the omen6laura that links to each other the status of the"uncionar$and the identity of the commissar83uch features of the Bolshevik type socialstructures0 together +ith a self-establishing machinery of the !e mocraic cenralismfor theidentity of those belonging to the Bolshevik type Farty are claimed by the monograph to be

psycho-economic devices for keeping in operation a peculiar processing industry +hose finalmass-pro duct +as0 for a totalitarian state supplying the capital needed0 a rather peculiarversion of the autonomy needed! the comlici$ o" he s$sem?s vicims, Both thefunctioning and crash of the Bolshevik type system are analyed from the point of vie+ of a

parado.ical self-establishing psychosocial effect (as opposed to a self-underminingparado.ical effect of the fascist type tota li ta rian sta tesC functioning),

'reating the Bolshevik-type organia tionsC srucural !ualism (that used to be bestkno+n as a Msae an! ar$ lea!ershiN) leads on to the closing 3IP'H $HF'ER 'Fr!$t&e (!st#"!ls&e/i0 Str'ct'res t!2ar an Inf!r$ati!n#(r!cessin) Lar)e#Scale In'stry(.

'he Bolshevik-ty pe t+in-fea tures are compared to the t+in-structures of the information-processing (e,g,0 to the dua lity of the informationCs bearer and its lace value), 'heBolshevik-type structure that is made up of con cen tric circles is studied as an information

processing device in +hich in formation may tra vel e.clu si vely in centripetal andcentrifugal directions +hi le its path is strictly blocked bet+een the neighbo ring but separate

peripheral units of each ring (e,g, the primary party organiations), In such a struc ture thecenter has a perfect control over the totality of the output informations> hence0 this cen ter isenabled to provide ",0 the perfect protection of data> #,0 the total control of addres sees and *,0a virtual periphery set up around any of the concentric rings +hich can at any moment be substituted by the center for the real one (it is the function of the Ainistry of 'ruth in %r+ellCs1AB=),

In this closing chapter of the monograph psycho-economical conditions of an in "or

maion eco nomicsare analyed, 'he econo mic psy cho logyin contrast to economics0 does not consider infor mation processing as a merely conrol

ro cessbut as one of the real rocessesin that system> and

in contrast to psy cho lo gy0 it considers in for ma tion processing a socialand not anin!ivi!ualper for man ce0

the monograph ar gues, Fsy cho-economical peculiarities of in for ma tionCs roer$relaions0 as +ell as a roriaion an! alienaion oe ra ionsare analyed +ithin moderninformation management, 'he social i!en i $ ro cesse! b$ social caegorizaion isconsidered the main fac tor me !ia ing be 'een social an! in!ivi!ual issues 0 as +ell asbe'een con rol an! real rocesses,

ne+ general tendency of materialiing that so cial cate go riation in societiesC ne+sliing in an elie an! a massis criti cal ly analyed as a kind of a radical settling of thesecond moderniationCs basic dilemma! this time both the capital re/uired for manufacturing ahigh ly /ualified human po tential and the autonomy that is re/uired for its run ning get focused on the si de of the elite0 +hile on the side of the mass there is both factorCs lack, 'hisas$mmer$ o" i!eniies 'ihin organizaion is paralleled by the monograph to mar6es'ih as$mmeric in"ormaion(kerlofO3penceO3tiglit),

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance "*
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The srucure o" he monograh

", 'he Economic Fsycho-3ociology pproach

",", Aodeling Economic Behavior

",",", 'he Aarket Behavior

",",#, 'he %rganiation Behavior

",#, 'he pport of the Fsychology

",#,", Behaviorism

",#,#, $ognitivism

",#,*, 3ocial psychology

",#,8, Fsychoanalysis

",#,9, 3ynthesis! Is It Fossible=

#, Aediating Economic 'ransactions! 'he 3ocial Identity

#,", 'he ntecedents of 3ocial Identity in Ethology! 'he 'erritorial and the 3ignifying Behavior

#,",", 'he Human 3pecificity of 3ocial Identity

#,#, Elaborating 3ocial Identity

#,#,", 3ubstantial and :ormal Identity

#,#,",", 3ocial 3tatus

#,#,",#, :ormal :eatures

#,#,",#,", 3imilarity and ?ifferences

#,#,",#,#, $ompetition and Ranking#,#,#, 3ocial $ategoriation

#,#,#,", 3ymboliing 3ocial $ategoriation

#,#,#,#, $riteria of the 3ocial Identity

#,#,#,*, Being ?isposed vs, Indisposed by the Identity

#,#,#,8, 'he 'aboo

#,#,*, 3ocial $ategoriation and 3ocial Listing

#,#,*,", ttributes and Relations

#,#,*,#, QnN-type Identity and Q'heN-type Identity

#,*, Elaborating the Economic Identity#,*,", 'he Farado.ical &ature of Economic Behavior

#,*,#, Froperty Rights and Identity

#,*,#,", Froperty

#,*,#,#, %ffice

#,*,#,*, $ompetency and $ompetence

#,*,#,8, $apital and &et+orking $apital

#,*,*, Economic Fsychology of %utstanding 3ocial Identity

#,*,#,", Aeasuring alue of %utstanding 3ocial Identity (%3I)

#,*,#,#, RacerCs costs and profits! $onverting Aoney into %3I and vice versa

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance "8


15/93

#,*,#,#,", Investing into %3I

#,*,#,#,#, Return from %3I

#,*,#,#,*, symmetric Aarket and %utstanding 3ocial Identity

#,*,#,*, pplying %3I in Human Resource Aanagement

*, Aanaging Human Resources! 'he 3econd Aoderniation

*,", 'he Aoderniation! Aanufacturing Resources

*,",", 'he :irst Feriode of Aoderniation! Aanufacturing Aaterial Resources andIndependency from Human Resources

*,",#, 'he 3econd Aoderniation! Aanufacturing Human Resources

*,#, Flant for the Large 3cale Aanufacturing of Human Resources! the 'otalitarian 3tate

*,*, 'he Human Fotential as $apital

*,*,", Investing and Frofiting

*,*,#, 'hree Frincipal uestions of Human $apital*,*,#,", Who 3hould Be the Investor in Human $apital

*,*,#,#, Who Frofits from Running the Human $apital=

*,*,#,*, Who is the %+ner of the Human Fotential=

*,8, Rather 3trange Aanufactured Froduct! 'he Relation

8, 'he Bolshevik-'ype ersion of 'he 3econd Aoderniation

8,", (Bolshevik (S Aa2ority)! Relational Identity

8,#, Aanufacturing 3ubstantial vs :ormal Identity

8,*, 'he Bureaucratic 3tate Governed by an Illegal Aovement! 3oviet-'ype societies andBolshevik-'ype Farties

8,*,", %ffice and $harisma

8,*,",", $ollective $harisma

8,*,",#, %fficial and $ommissary

8,*,",*, 'he &omenklatura

8,*,#, Large 3cale Aanufacturing of Relations

8,*,#,", Why crushed it do+n=

9, ?ilemma for the Fost-3ocialist FeriodCs Economy! Tno+ledge-Based or Identity-Based=9,", Aanufacturing Tno+ledge and 3kill

9,#, Aanufacturing Identity and ualification

9,*, Tno+-Ho+ or ?iploma=

9,*,", ?istant 'eaching and ?iploma Aills

4e$ 'or!s! social identity> social categoriation> identity markers> document> Behaviorism vs,$ognitive Fsychology> Fsychoanalysis vs, 3ocial Fsychology> psychosocial relations vs,attributes> mar ket behavior vs, organiational economic behavior> money vs, social status>

second moderniation> human resources processing> human capital> Bolshevik type vs, fascist

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance "9


16/93

type totalitarian societies> infor mation management

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance ";


17/93

haers o" he monograh an! some "urher es relae! o is oics an! available in

non-&ungarian

To he "irs chaerC The %conomic Ps$cholog$ *roach

Froblems of specifically human needs,:rench version!)echerches *nternatio na les: sychologie."6;;U6, (9"), 8#-;D,Russian version! +oprosy sikhologii, "6;;U*, ;"-7*,3panish version In! , Luria0 , Aassucco $osta0 R, 5ao and B, 'eplov! roblem tica cientfica dela psicologa actual, Editorial %rbelus, Buenos ires0 "6;


18/93

*""-*##, ($omments! G, ahoda,5ew *deas in sychology, ;!#, "6


19/93

ygotskian implications! %n the meaning and its brain, keynote paper, In! Aehdunarodnaia konferentsiia MTulCturno-istorichesky podkhod! Ravitiie gumanitarnykh naukI obraovaniiaN, Froceedings, Rossiiskaia kademiia obraovaniia i RossiiskyGosudarstvenny gumanitarny universitet, Aoskva0 #"-#8 oktiabria "66;, &o, *, O :ullte.t, Russian version! In! 0ubject, 1ognition, ctivity: 3edicated to +. . ;ektorsky8s


20/93

Interpretation of needs in foreign language psychology and the /uestion of moti ves of ascientific activity in RussianJ, In! A, Iaroshevsky (ed,)! Froblems of the scientificcreativity in the contempora ry psychology0M&aukaN Fubli sher Fublishing house of the3oviet cad, of 3ciencesJ, Aosco+0 "67", ##8-#**,

'o+ards an economic psychology of consumption, $rends in world economy,


21/93

ssociation for Research in Economic FsychologyJ and 33E 3ociety for thedvancement of 3ocio-EconomicsJ, (3tockholm0 "66"),

bout the political systemCs shift in Hungary! $onsiderations of a social psychologist inRussianJ, +engersky /eridian. "66"U", ;6-76,

'he Bolshevik-type psycho-economic system! n essay on a parado.ical psychologicstructure in economy in RussianJ,6;*0"66*U", 7#-7;,

To he sih chaer

bout the notion of information in the research on living systems in RussianJ, In!hilosophical %uestions of biology. M&aukaN Fublisher Fublishing house of the 3ovietcademy of 3ciencesJ0 Aosco+, "67*,

$heses on uman 1apital, /ull e

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance #"
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&o' ousan!ing am #(

AE3KRE :%R 3%$IL $%AFRI3%& WI'HI& %RG&I5'I%&3"

*bsrac8 In modern (+hether small0 large and nation-+ide or global) organiations man has aprime interest in bearing an ousan!ing social i!eni$ base! on a "avourabl$ se lece! saus , 'hemore e.cellent is oneCs social identity0 the greater hisUher chance to ob tain0 at a definite cost0 aneconomic benefit (access to a scarce resource or to an advantageous trans action), Both mone$and anousan!ing social saus are re/uired for an economic chance,

'his paper deals +ith a calculation device for converting the values of these media ting fac tors intoeach other! themeasure o" ousan!ing so cial i!eni$ (A%3I), It ap plies the sa me logic by +hichthe information theory calculates the value of the ne+s about an oc cur rence that might have beene.pected +ith a+ell-defina bleprobability, 'he proba bi lity at is sue for calculatingvalues o" ousan!ing social i!eni$ (%3I) is the one to be estima ted in advance for getting an outstandingstatus in the organia tion and for this proba bility the value is calculated as the logarithm of the

invert of , 'his device for calcu la ting the %3I enables complementary calculation of0 e,g,0additioning0 averaging etc, values,

'he A%3I is presented in the paper0 among other use0 as applied to optimie human resourcesmanagement,

H%W %K'3'&?I&G A I= AE3KRE :%R 3%$IL $%AFRI3%& WI'HI& %RG&I5'I%&3#

Frof, Laslo Garai?3c,

?ept of Economic Fsychology0Kniversity of 3eged0 Hungary*

?r, Aargit T, Tcski $3c

Research 'eam InfluentKniversity of ?ebrecen0 Hungary

The economic s$cholog$ o" ecellence

In the "69Ds and "6;Ds economists0 sociologists0 psychologists and philosophers described0independently of each other and using different terms0 the phenomenon of craving "or saus,'hey claimed that this motivation might become 2ust as much a passion for man in the

modern age as thecraving "or mone$ used to be for those living in the "7-"6thcenturies0 inthat period of classical capitalist formation,

'he change is also manifest in the fact that +hile the former passion prompted to theaccumulation of money0 the latter one may +ell encourage the spending of money not evenearned0 but borro+ed, 'he latter0 ho+ever0 does not bring pleasure through the consumptionof the goods in line +ith their utility value0 but through the fact that the goods ac/uired0 or themoney spent on them0 symbolie status, :or a time it +as customary to describe this period as

" 'o be presented to the conference MInstitution and policy diversity O its role in economic developmentN(?ebrecen0 #DDD),# 'o be presented to the conference MInstitution and policy diversity O its role in economic development(?ebrecen0 #DDD),

* KRL!http!UU+++,staff,u-seged,huU]garaiU3trukt,htmE-mail! garai^mtapi,hu

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance ##
http://www.staff.u-szeged.hu/~garai/e_garai.htmhttp://www.staff.u-szeged.hu/~garai/e_garai.htmhttp://www.staff.u-szeged.hu/~garai/Strukt.htmhttp://www.staff.u-szeged.hu/~garai/Strukt.htmhttp://www.staff.u-szeged.hu/~garai/Strukt.htmmailto:[email protected]://www.staff.u-szeged.hu/~garai/Strukt.htmmailto:[email protected]://www.staff.u-szeged.hu/~garai/e_garai.htm


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the period of a consumer socie$0 and to speak (+ith a degree of social criticism andideological disapproval) of the craving for status symbols and conspicuous consumption, Inconnection +ith this0 it +as emphasied that in his consumption man +as being guided lessand less by the rational goal of achieving the greatest possible 2oy for the lo+est possible cost0or the highest possible profit by the smallest possible inconvenience0 and more and more by

+hat +as re/uired by his position in society, %neCs guiding criteria for purchasing +ereinstead based on +hat +as re/uired by hisUher position in society, It seems that the #D th

century man had an important interest in ac%uiring a somehow e!cellent social identity basedon a favourably selected status.

When individuals0 groups0 states0 and groups of states spend money on kee ping up theirsocial status and their identity +ithin that status their motive for this is not an aristo cra tic orsnob bish eal, Instead0 it may be rather rational! the endeavour to be among those +ith accessto scarce resources0 or to be enabled to participate in some kind of advan tageous transaction,8'he more advantageous the status of a candidate in society among those competing for atransaction0 and the more e.cellent his social identity in regard to others0 the lo+er the

transaction costs +ill be for himUher, :or this reason it might make sense to spend money (or0in more general terms0 invest money0 goods0 time0 chance to take on the venture) onincreasing e.cellence, 'he only /uestion is0 how much money etc. is reasonable to be spenton how important an increase in the e!cellence of one8s identity.

'he present study tends to contribute to giving this /uestion a possibly e.act ans+er,

If money spent symbolies status0 then it could be that the ac/uisition of money grips modernman not because of his earlier passion for chasing it0 but because ac/uired money can alsosymbolie status, ctivity is motivated primarily not by the difference perceptible bet+eencossandro"is0 but increasingly by the difference bet+eenour net income and that ofohers9,

When in the conditions of so-called socialism those urging economic reforms argued thatthe money incentive needed to be put in the service of social goals0 they +ere actuallyspeaking about the motivating po+er of the craving for status +hen they insisted that incomesof people (+ho +ere in theory e/ual) needed to reflect une/ual performance to a better e.tent,'he matter is0 that higher performance does not invariably mean more performance of a/uantitatively measurable kind, 'he performance of an astronaut is perceived to be greaterthan that of an abattoir +orker0 or that of a house+ife0 although the first produces nothingmeasurable in the material sense0 +hile the last-mentioned provides her services over a seven-day +orking +eek0 the merit of +hich can be recorded materially, Ho+ever0 in the record ofmerit our intuition is guided0 it seems0 not by this0 but by unconscious consideration of +hich

performance is the more e!cellent, 'his is +hy one may find it in order for an astronaut to

receive remuneration higher than that of0 say0 a butcher decades after his performance0 +hilethe house+ife0 +ho often continues her +ork until the end of her life0 receives neither a salary0nor a pension,

But remuneration can be on a higher level +ithout the payment of additional money! allorganiations establish a system of benefits +hereby some employees are favoured against the

8 detailed e.position of the arguments can be found in the authorCs book 'he human potentialas capi tal! n approach by the economic psychology (Budapest! ula Economic Kniversity Fress0 "66< O inHun garian)0 in the chapter entitled M model of simple economic behaviour under organiational regulationN,9 In his classic e.periment0 'a2fel (uman @roups and 0ocial 1ategories: 0tudies in 0o cial sycholo gy0$ambridge! $KF0 "6


24/93

rest0 the staff as a +hole against those outside the organiation0 regular customers againstoccasional ones0 and even the totality of customers is favoured against the +hole populationfrom +hich they emerge0 etc, mong the benefits are those +hose utility can be measured inmoney! grantees among the employees0 and to a lesser degree all employees of theorganiation may0 in addition to their regular salary0 be enabled to use items of the

organiationCs movable and immovable property free of charge or at a concessionary rate>they may have access to services paid for by the organiation +holly or in part> regularcustomers might be given discounts +hen using services offered by the organiation0 etc,Ho+ever0 the intuition +e use +hen bearing in mind the value of remuneration seems to beguided not primarily by considerations connected to its sie in terms of money0 but by a+eighing of ho+ distinguishingthe benefit besto+ed actually is,

Higher-level performances0 therefore0 can be re+arded through higher-level pay not on lyin that moreis produced according to the paradigm of material effectiveness0 moreis paid forit but also through remunerating a distinguishedperformance in a distinguishing+ay, s amatter of fact0 +hat is measured is no longer the merit of the things produced, but that of the

per son doing the producing, Behind a distinguished performance our intui tion sus pects acom bination of technical po+ers that is distinguished0 too0 by virtue of its ra ri ty0 2ust as behind the distinguishing remuneration it suspects a personCs distinguished social po +er, Insuch a case0 remuneration by its dis tin guishing po +er symbolies status and0 thus0 dri ves peo

ple through the cra ving for status0 even +hen these people seem obsessed by a craving formoney,

round the time of the political and social changeover in Hungary0 family groups or friendsin vo luntary enterprises +ithin companies and in small private businesses sometimes drovethemselves at an in hu man pace not only to maintain their standards of living or to be able to

purchase goods /uite be yond the reach of the industrial proletariat and +orkers in the cateringindustry0 but at least as much as to sho+ ho+ +ell they +ere getting on, :or them and for otherstoo0 ho+ +ell they +ere doing +as e. pres sed in money or in conspicuous goods obtainable

+ith it, But it +as not the absolute amount that mat tered0 but its distinguishing character, ust asrefrigerators or cars +ere not (as they had been ear lier) suitable for demonstrating ho+ far onehad got0 so in itself an enormous income +ould not ha ve been sufficient incentive to mobiliesuch energy0 if everyone had been able to +ork +ith colleagues se lected by themselves involuntary enterprises +ithin companies0 or in a small-scale independent enterprise,

'he same passion +as described by Tornai as the inner compulsion for e. pan sion0 +hen0 at atime +hen the no+-collapsed socialist system +as still capab le of operating0 he sought an ans+erto the follo +ing /ues tion! MWhat prompts a manager of a company under socialism to makeinvestments or to accu mu la te capital +hen he has no interest in any profit made=N 'he mostimportant ele ment +as0 in his vie+0 that Mthe manager identifies +ith his o+n position, :or such amanager there +ould al+ays be a ba sis for comparison0 in the light of +hich his unit +ould

appear outdated or inferior, ,,,J Aanagers felt a pro fes sio nal rivalry in the best sense of the+ord, 'hey +anted to augment their o+n professional pre s ti ge ,,,J, 'his could be accompaniedby motives perhaps less noble0 but nevertheless understandable from the human point of vie+,With the gro+th of a company or public institution came an increase in the po+er and socialstanding of its manager0 and0 together +ith this0 consciousness of his o+n impor tan ce, ?irecting"D0DDD people feels much better than directing 9DDD, Greater po+er can bring greater ma terial

recognition0 more pay0 bonuses and privileges0 depending on the system of incentives in force,N;

Aore e.actly0 +hat motivates managers in such cases is not so much the ab solute sie of theunit under oneCs direction or the absolute degree of that unitCs e.pansion0 rather the e.tent to+hich those inde.-numbers rank the person or hisUher organiation as compared to others,

; Tornai0 ,! $he shortage0 Budapest! Tgadas\gi s ogi TnyvkiadX0 "6


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Tornai concedes! MIf someone +as appointed0 letCs say0 rector of one of the biggest universitiesin the country0 or +as made responsible for the protection of all the countryCs histo ric monuments0 or +as entrusted +ith care of the countryCs +ater supplies0 then no increasing of eitherhis salary0 authority0 or po+er +ould result from his being able to secure #D per cent greaterinvestment for his sphere of acti vi ty,N Ho+ever Mthe compulsion for e.pansion manifests itselfat every level of the economic hierarchy! from the leader of a brigade consisting of a fe+ +orkers to a minister directing hundreds of thousands or millions of people, When the distributionof investment resources is on the agenda0 all fight so that our brigade0 our company0 our

ministry gets the most investment possible,N7

smaller monetary increase might be accompanied by a more po+erful increase in status,%n other occasions a person might simply give up the idea of getting more money0 because0+hen the possibility arises0 he favours an increase in status instead, %n the other hand0sometimes a person might give up a modestly paying but e.cellence conferring office and beready to accept the lo+er status of competing +ith others on an e/ual basis0 if doing so holdsthe promise of higher income in the future,

Is it possible in such a case to calculate the increase in a status someone must achieve tooffset loss of money0 or ho+ much of a decline in status he should accept for monetary gain=$an an increase0 or decrease0 in status be measured at all= $an a t+ofold0 tenfold0 or fiftyfoldincrease or decrease in status be compared +ith a simultaneously occurring decrease orincrease in money0 in order to establish +hether someone has made a good or bad move +henlinking one to the other=

I am going to present a

Measure o" .usan!ing Social #!eni$

(A%3I) +hich makes it possible to calculate thevalue o" ousan!ing social i!eni$ (%3I)of a +ell-defined social status and the social identity one may get by it,

'he measure of outstanding social identity applies the same logic by +hich the informationtheory calculates the value of the ne+s about an occurrence that could be e.pected +ith a

probability! as it is +ell-kno+n this value is e/ual led to the logarithm of the invert of ,Reference books on information theory point out that M+hen +e +ant to e.press /uantity ofinformation ,,,J in numbers0 +e deliberately and con sciously ignore the content andsignificance of that informationN, 'hus0 Mthe ans+er to the /uestion ?o you like cheese0young lady=C mayJ contain the same /uantityJ of infor ma tion as does the ans+er given tothe /uestion Would you like to be my +ife0 young lady=C0 although the content andsignificance of the t+o ans+ers are obviously entirely different,N

s regards the %3I0 the same relation is valid, $ertainly0 the value of attaining afavourably selected social position or avoiding a negatively chosen one is as high as the stakeit involves, $learly0 if a negatively chosen position is such that it affects one in ten peopledisadvantageously0 then the value of M'hatCs not me0 but someone elseN +ill be different0depending on +hether someone is about to hide in the ne.t round of the MHide and 3eekNgame0 or a commanding officer is decimating his unit, Ho+ever0 the %3I depends not on thesubstance of the stake0 it is based on nothing but the formal relations, 'he e.cellence is asurplus value gotten by the comparison! +hen one gets off +ith a negative selection that+ould have affected not one in ten0 but t+o0 five0 or nine> or +hen sUhe is selected to the more

7 6p. cit.0 p, #D;,

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance #9


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favourable not out of t+o but of ten or a thousand candidates0 or perhaps of total ten millionpopulation of Hungary, 'he rapport may be stated as follo+s!

the smaller the pre-estimated probability of belonging to a favourable social position +ithin apopulation0 the greater the value attached to actually getting that identity,

/ormula 1 Let it be

E the population>

a-O the number of those in the population +hose position is inferior to mine

a F -a-O a value complementing the previous one0 i, e,0 the number of those +hose positionis not inferior to mine hence

@aF 1aF a,

:inally0 the %3I of my position may be calculated aslog10@a,

ccording to this formula in the above decimation case! & S "D and a- S "> hence0 thenumber of those +hose position is not inferior to mine! a S 6> thus p aS 6U"D> its inverse! /aS

"DU6> finally0 the %3I of my position is! D0D8;,

Ay %3I may be defined by my position in various ranks, :or instance0 if in a populationof F 1000 I am the first then

a-S 666a S "aS "U"DDD

@aS "DDD

conse/uently0 the E-value of my position e/ualslog101000 F 9,

By force of the same first place in a group of & S "D!

a-S 6a S "aS "U"D

@aS "D

thus0 my E-value is!log1010F 1,

If in the same population I take not the first0 but the second place0 then the correspondingcalculation is!

S "Da S #aS #U"D

@aS 9

hence0 the e.cellence-value is! log105 F 0>H,

What happens0 ho+ever0 if I am neither first0 nor second0 but share +ith someone else first

< I myself am included in this number_

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance #;


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and second places= 'his position must be someho+ more e.cellent than a second placeoccupied alone0 but less e.cellent than a non-shared first place, Ho+ can these connections bereckoned +ith=

'he inde. number e.pressing the difference can also be calculated in such a +ay that theposition is evaluated not only in relation to those on top0 but also in the opposite direction0 to

those at the bottom of the population, :or this0 the procedure to be employed is similar to thatof :ormula " above!

/ormula 2 It is to be settled by

O the population

b-O the number of those in the population +hose position is superior to mine>

b F -b-O a value complementing the previous one0 i, e,0 the number of those +hose positionis not superior to mine6

b F b O the previous probability for anybody in the population to be among this

unfavourably distinguished part> hence the inverse of pb!

@bF 1bF b,

'hus0 a stigmatiing value of my position may be calculated aslog10@b,

'he stigmatiing value of being the first e/uals0 of course0 D, :or the #nd place in a groupof S "D!

b-S "

b S 6

bS 6U"D

@bF 1bS "DU6

log1010A S D0D8;

By force of the same second place in a population of S "DDD!

b- S "

b S 666

bF 666U"DDD

@bF 1bF "DDDU666

log"DDDU666S D0DDD8*9

/ormula 9 :inally0 the summed up value of my position may be obtained by deducting the

stigmatiing value from the distinguishing value!log10@aE log10@b,'his formula then may be applied to our above problem of distinguishing from the E-value

of both a first and a second place that of the shared +ith someone else first and second places!the valuelog10b E log10a e/uals0 respectively!

", place! log"D"D O log"D" S " O D S "

#, place! log"D6 O log"D# S D069 O D0*D S D0;9

shared! log"D"D O log"D# S " O D0*D S D07D

6 Warning_b I a-0 because I myself am included in it0 together +ith those +hose position is neither

superior nor inferior to mine,

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance #7


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'he medium value for the shared position is resulted from its a value being e/ual to that ofthe second place and theb value to that of the first one,

alculaion an! inuiion8

It is +orth to compare values obtained by the application of the A%3I +ith those e.pectedintuitively, LetCs calculate0 e, g,0 the value of the shared # -8, place in a group of & S "D0 thenthe same value for a population of & S "DDD0 comparing those values +ith those of both the

preceding (", place) and the follo+ing (9, place) position!

F 10 F 1000

18 lace " *

share! 2-9-=8 Place D0*9 #08D

58 lace D0D< #0*D

'he difference * O #08D O #0*D +hat +e get for the values in & S "DDD is much moremoderate than the one " O D0*9 O D0D< for the va lues in & S "D, nd this is +hat +ould be

e.pected by our intuition0 the 9thplace +hen & S "DDD being almost as distinguished a

position as the shared #-*-8thplace0 +hile +hen & S "D the difference bet+een the /uite

mediocre 9th place and the shared #-*-8th one that is closer to the top must be moresignificant,

Ho+ever0 economic psychologists have kno+n for /uite a time that there may be also adivergence bet+een +hat is implied by the economic rationality as calculated by amathematical formula and the psychological intuition,

3uch divergence has already been described by Bernoulli in the 3t, Fetersburg parado.,llais took this a step further by describing the parado. named after him, ccording to this0

psychological intuition diverges not only from economic rationality0 but also from a psychological rationality0 +hich +ould mean that the divergence from a mathematically calculatedresult could itself be calculated mathematically,

'he basis for the latter calculation +ould be the e.pectation that psychological intuition isconsistent, In contrast0 llais found that the consistency assumed by Bernoulli and his follo+ersdoes not e.ist> our intuition diverges from the rational differently in the direct vicinity of fullcertainty (+here it prefers profit occurring at a greater level of probability even +hen theaggregate sum of all the positive cases is smaller) than in the domain that is far from certainty

(+here greater profits are preferred0 despite the fact that the aggregate is decreased by the smallprobability of occurrence),

'he measure of outstanding social identity to be discussed in this paper aims to give anappro.imation of such a divergence of second degree! from a degree rationally e.pected for adivergence from rational calculations, :or this reason +e attempt to trace deviant intuition+ith subse/uent corrections,

difficulty is0 for e.ample0 that the differences resulting from the comparisons of thepositions at the bottom end of a ranking +ithin a group as calculated in the +ay given aboveis not in accord +ith the estimates stemming from our intuition, &amely0 for such acalculation a population +ould be symmetrical0 +here differences bet+een the rankings at the

top of the scale should correspond to those at the bottom! in a group of & S "D0 for instance0

Laslo Garai! Reconsidering Identity Economics - Human Well-Being and Governance #


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social identity only insofar as it is a relation0 thus0 also the value of an identity maymeaningfully be calculated only as related to the one of another identity,

$an then the A%3I be employed to calculate the sum of money +orth paying for

promotion from 6thplace to 7thplace in a group of a hundred /ueuing up for something=

It depends, 'he A%3I is adapted to reckon +ith those relations as related to their historicalantecedents,

E,g,0 if previously I have got to the 6 thplace from the "*thone0 then it may be calculatedthat thereby my E-value got increased from BH to1090 that is0 by1K oin, 3uppose that the+ork0 money etc, I invested in this performance amounted to =00, 'hese antecedents altogether(and nothing but these) define for me (and for nobody else but me) the MduesN for " point of E-value increment as e/ualling to25, 'hus0 +e can ans+er the above /uestion! the E-value of the

7thplace being1150 i, e,0 larger by12 oin than the 6thplace0 the monetary e/uivalent of thispromotion on such a background of its prehistory proves to be 900,

When using the A%3I0 it should be taken into account that among competitors0 a missedeffort results not only in the lack of a rise in status0 but also in a lo+ering of status compared

to competitors +ho in the meantime have made their o+n efforts,

If in the previously evoked case I miss efforts to be done for acceding to the 7 thplace0 its

alternative +ill be not the getting bogged do+n at the 6thplace but a slipping back in relation+ith those others +ho do compete, If such an issue ranked me only at the ne.t place to the

background0 i,e,0 to the 6


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customersC entry to the +arehouse +as rendered crucial from the point of vie+ of purchasing!only the first three shoppers could be sure that they could get the goods they +anted,

fter being provided +ith this information0 the sub2ects +ere given the opportunity to buytheir place in the /ueue0 too0 from their "DDD ` spending money! a computer ranked theshoppers according to the sum of money they offered for the places, 3hoppers could improve

their positions by increasing their bid0 +hile similar offers by competitors diminished theeffectiveness of these increased bids,

In the first round of the sale #D out of the "DD sub2ects put "DD points0 almost as round asum0 9D and "9D points +as put by "D people each, In this round the first place +ould be

procured by "7D points0 but those t+o persons +ho bade ";D points +ould get a shared #-*rd

place0 +hile the above "D people +ith their "9D points shared the 8-"*thplace0 thus0 the pricesbeing almost the same +hile the places +ere /uite different, Hence0 a pressure +as verystrong for bettering the personCs offer in order to better hisUher place or prevent himUherselffrom being pushed more in the background by othersC overbidding, t the same time0 lo+ bidsgot still lo+er0 since those getting for their *D-8D dollars last places realied that they may

have it for (almost) nothing as +ell,In the meantime the sale +as restricted by the fact that the more a shopper spent on

securing full choice for his money0 the less money he +ould have to buy the goods he hadfreely chosen,

Instructions given to the sub2ects indicated the rule +hereby the final outcome of the game+ould be fi.ed by the computer at the moment +hen no more shared places e.isted bet+eenthe players, When this finally occurred through the raising and lo+ering of bids0 it +as veryinteresting to see that the ratios bet+een the bids closely corresponded to those proportionscalculable on the basis of the measure of outstanding social identity,

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F3@$H%L%G@ %: 3%$I%-E$%&%AI$ 3@3'EA3

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Theses on &uman aial"D

Frof, Laslo GRI0 ?r, cad, 3c,

", fter World War I fundamental changes occurred in the economic status of humanfaculties and needs,

#, Before that shift0 during the great O the "6thO century of its history the $apitalist economicsystem might have afforded to consider only the ma te ri alconditions of its running sto its humanconditions0 effective mechanisms provided the systemCs functioning +ith ama.imal independence from them! the machine in a large scale industry set free the

production from the producing faculties of the population> +hile the accumulationprocess gets its liberty from the populationCs need to consume due to the capital8sproperty relations,

*, s far as the systemCs functioning still kept0 ho+ever0 some sub2ection to human

conditions0 they +ere tri vial0 hence not created0 but merely e!tractedby the economicsystem, 'hus0 both the practice and the mentality of the system +ere that of e.ploi tation! hu man resources +ere treated as something that is available inde pen dent ly fromany economical efforts0 as if the profit that could be produced from it +ould be gratis0 notbrought in as the interest from a capital invested into human,

8, Aaterial conditions +ere managed by the $apitalist economic sys tem cor respondinglyto the moderniation paradigm! by artificial interven tion into na tural processes,

9, %n the other hand0 the modern dealing +ith material conditions +as ensured by investingcapital that got increased +hen the product of that manufacturing process +as marketed,

;, 'his +as so even +hen the investor into the manufacturing of an essential condition (e,g,0

into the development of net+orks of transport or public utilities) +as not some privateperson or company but the state! such processes +ere financed not necessarily from theciti9ens8 ta!es, but to an increasing e!tent from an investment which became profitable

+hen the state started to charge money for the use of the given infrastructure,

7, s far as for the systemCs functioning some human conditions +ere0 ho+ever0 stillneeded0 they +ere trivial0 hence0 unlike material conditions0 not manufactured, but merelye!tractedby the economic system, 'hus0 both the practice and the mentality of thesystem +ere that of e!ploitation"J! human resources +ere treated as something that isavailable independently from any economical efforts0 as if the profit that could be

produced from it +ould be gratis0 not brought in as the interest from a capital investedinto human,


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systemCs functioning0 +ill manufacture the human conditions0 too,

"D, :rom this time on0 the capital and +ork invested in cultivating facultiesare as productiveas investments into developing machinery,

"", In the period of the second moderniation0 any human potential will yield profit only ifthe costs re%uired to its production, allocation, maintenance, running and renewal are

really assigned O and this assignation +ill no longer be prescribed by pious moralimperatives (+ell-kno+n to be either hypocritic or impotent in the ninetieth century)0 but

by solid business calculations,

"#, In the light of these business calculations0 one may no longer hold the formerly evidentassumption that costs assigned to the human +ould +ithhold resources from the accu mulation and put them to the credit of the consumption O instead0 human assignations +illonly regroup resources from one side of account to another! M siable portion of +hat istermed consumption means nothing but investment into the human capitalN0 'heodore W,3chult argues,

"*, :or such an approach0 e.penditures on educationhas to be booked among thero!ucion

costs for the human potential0 healthe.penditures +ill appear as mainenance costs0housing and transport allo+ances as costs for the allocaion of the latter0 culturale.penditures as costs for the running of these specific capital assets0 and e.pendituresrelated to the management of unemployment+ill be regarded asamorizaion costs forthe human potential considered as fi.ed capital,

"8, key issue in human capital related calculations is to define +ho should be the investor!be it the householdof the individual +hose skills are developed by the investment> be itthe enterprise+ho intends to apply the trained kno+ledge0 or be it thestate,

"9, When the investor is the state0 a misinterpretation may be generated by the fact that bythis e.penditure a kind of providence is at issue, &evertheless0 this is not some ?ivine or

humanistic kind of providence0 but rather the pragmatism of the good craftsman0 +hoprovides for tools before he +ould start +orking,

";, ?uring the second moderniation0 in competition +ith the material and energy economyan information managementcomes to the front> in that information management the/ualified man is as important a device as the lathe for the material or the po+er plant forthe energy economy,

"7, It is immanent in the nature of information management that its factors become effectivein it not by each oneCs atributsbut by their relationsto each other,

particular person develops its communication potential only if the correlated potentialis similarly developed in other people as +ell! nobody ever may have a capacity to

communicate +ith others0 e,g,0 in +riting or in some foreign language if there is nobodyin his environment +ho has the corresponding capacity to communicate in +riting or inthat foreign language, Besides0 the communicated information0 too0 gets its meaningonlyagainst its background0 in correlation +ith it,

"


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not only by the input but to a not (or not significantly) less e.tent by e!ternalitiesas +ell,s regards such kind of processes0 the natural attitude is +hat the economic psychologycallsfree-riding, Hence0 the e.penses of cultivating faculties according to norms of theinformation management may only up to a rather limited e.tent be charged by marketmeasures to the individualCs account,

#D, 'hese inputs and their outputs can be managed rather in an organiation +hich has thepo+er to lay a charge0 impose certain share of risks to the related individuals and counter-balance it not e.clusively in the market +ay, 3uch an organiation can be0 for e.ample0the state,

#", What +as put in 'hesis 9about state investment into infrastructural development +illalso be true for the human e.penditures administered by the state! the investment into thehuman capital will not necessarily be financed from the citi9ens8 ta!es, but in various

possible forms of a profitable business enterprise,

##, Ho+ever0 if the investor into the human capital is the state (and so +hen it is a company)the /uestion of 'hesis "# +ill be supplemented by another one! Who profits from the

employment of the human potential produced by that investment=#*, 'his /uestion is related to its t+in /uestion formerly evoked by the 'hesis "# by an

intermediating third /uestion! who is the owner of the produced human potentialA

#8, 'he issue of o+nership has to be raised +ith particular emphasis because the capitalinvested by the state or by a company into the formation of a personCs potential +ill beorganically integrated in his body and mind0 and +ill be inseparable from the physicaland mental faculties that +ere originally given to him, &o+0 property means0 first of all0

po+er of disposing0 hence the /uestion is put for the human potential +hether thisindecomposable neoformation is dominantly disposed by the bearer of the endowments

or by the owner of the money invested into its %ualification,

#9, 'he /uestions raised in 'heses "# and #D are supplemented by a further one! who profitsfrom the human potential8s employmentA

#;, 'he correspondence of the ans+ers to the three /uestions is only an abstract possibility,'+o formulations are kno+n in +hich this abstract possibility is realied!

if the interested personinvests his o+n savings into the development of his o+n skillsand abilities it is he himself +ho disposes over his o+n developed potentials0 and it is hehimself +ho gains the profit of the accumulated capital>

if the totalitarian stateinvests into the human capital it does it in such a +ay that it hastotal control over the manufactured human potential0 and thereby ensures for itselfrecovering +ith profit its money tied up in living persons,

#7, 'he more highly /ualified human potential is involved the larger and larger amount ofcapital is re/uired for its manufacturingBand0 at the same time0 the largerand largerautonomy is re/uired for that human potentialCs running, 'his antinomy represents thebasic dilemma of the second moderni9ation! as far as the re/uired capital is ensured bythe involvement of a totalitarian 3tate the autonomy turns out to be in short supply O butif the aspect of the autonomy makes the 3tate get out from the human business bycharging the costs of human development to the individualCs account then capital +ill bescarce (if only by virtue of ),

#


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by its Bolshevik version constructed a psycho-economic structure that kept in operation(by 2oining in the5omenklaturathe status of the officialand that of the commissaryand

by running a self-establishing machinery of the democratic centralism) a peculiarprocessing industry +hose final mass-product +as a rather peculiar version of theautonomy (the victimCs complicity)""> and

by its social democrat version it dealt +ith the antinomy by adjusting the moderni9ation8sinterest and the socialist values in promoting in a capitalist 3tate the labour po+er ascapital! the welfare 0tatesucceeded in the optimal distribution of the capitalCs enlargedreproduction among the multiplied material and the e/ually multiplied human capital,

*D, 'he period of the socialismCs failure came about because

from the Bolshevik version everything but factors directly and plainly serving theconsolidation of po+er got e.tinct or eroded>

the +elfare 3tate0 being an investor into human capital +ithout being its o+ner or beneficiary (cf, 'heses "#0 #Dand#")0 turned out to be unable to function indeed (as it has

been stated in the ) as a profitable business enterprise and this e.perience reiterated the

accusation that here again (contrary to +hat is stated in )0 resources are +ithheld fromaccumulation,

*", 'he failure of these socialist attempts established a claim for the neo-liberal renaissance0although those attempts merely catalysed a trend that has not been originated from them

but from the compulsion referred at by the 'hesis


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employment of unskilled +ork into an information management (cf, 'hesis "8) demandingmuch less but /ualified human resources,

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economic activity into its means, 'his in turn can be effected by the mediation of the supply-and-demand mechanism in that the overproduction of cashe+ nuts +ould reduce their price+hile the overconsumption of +ater melons +ould push up the price of the latter, 'hen those+hose preference for +ater melon is the +eakest +ould tell themselves! Mfter all0 +atermelon is not that much better than cashe+ nuts that I should stick to it no+ that there is such a

big price difference,N t the same time those +hose negative preference for +ater melonproduction is the +eakest +ould realie! MWater melon production is after all not so much of anuisance that I should be reluctant to deal +ith it +ith the +age difference being as large as itis,N nd this price fluctuation +ould go on until the reorientation of the consumersC demandand the producersC +illingness reached a point +here e/uilibrium could be established,

%nly0 the psychological factor O the one that motivates selection0 for e.ample O infects thesystem of market economy0 too0 +ith a fundamental insecurity,

* commo!i$ 'ihou e""ecive rice

3o that the market system could function in the above manner0 every commodity must havean effective price0 one +hose reduction +ould indeed effectively reduce its supply andincrease the demand for it, Every commodity0 that is not only every product but also that most

peculiar of commodities! activity. Its peculiarity lies in the fact that unlike the product +hich Ipass on in e.change for money +hen I supply it and take into possession in return for money+hen I demand it0 the activity is al+ays e.erted by me0 +hether I supply it or demand it, lso0the activity that I am paid for as +ork0 and the activity for +hich I am to pay as entertainmentare identical as to their physical appearance but antithetical as to their psychological andeconomic substance,

Be that as it may0 in a commodity-producing society +ork is only done +hen it is remunerated0 and if this price decreases the +illingness to under ta ke the disagreeableness of theactivity for that much money must also de c rease, %n the other hand0 +e are +illing tocontinue +ith the entertain ment even if +e are made to pay its price0 but if this pricedecreases the demand to en2oy the agreeableness of this activity must increase,

When neither the number of those +ho are +illing to supply the +ork-type activity nor therelevant length of time decreases +ith a drop in the price of this activity0 then this activity +illno longer have an effective price, 3imilar is the case +hen neither the number of those +hofail to resist the temptation of the entertainment-type of activity nor the length of timeincreases +ith a decrease in the price of this activity,

Aost probably the lo+er limit of the effective price is over D! it is presumable that there

+ill be a price above D for +hich no one +ill be +illing to do a certain 2ob or at +hich acertain entertainment +ill reach saturation level so that further price cuts can no longer reducethe all-social time spent on the former and increase the time spent on the latter, What is evenmore likely0 ho+ever0 is that the price turned into the negative O that is0 +hen the person doingthe +ork is got to pay tribute or the one supplying the entertainment is a+arded a bonus Ocannot be the effective determinant of supply-and-demand,

&evertheless0 both phenomena e.ist! I described the former as the $om 0awyereffect andthe latter as the 1aptain uskaseffect in other papers,

It is about the story of 'om 3a+yer +ho passed on the 2ob of +hi te+ashing the fence that+as a punishment inflicted upon him to others +hom he even got to pay tribute to him O andthis fact alone tur ned +ork into entertainment, ust as entertainment becomes +ork the very

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moment it is paid for O as is depicted by a statement attri bu ted by the Hungarian people to thecaptain of the famous football team of the Mbelle epo/ueN Fusk\s csi +ho allegedly reposted toa cri ticism! MGood pay! good play O bad pay! bad playN, %ne can glean so ciopsychologicale.periments to bear out the e.istence of both the '3 and the $F effects +ith the authority ofscience (see e,g, ?eci0 "679> Lepper and ?eci0 "679),

'hus a rather odd function is produced for activity, It reveals that if +e are paid asufficiently high price0 thesupplyof a particular activity +ill be high enough! +e shall pursuethis activity in large numbers andUor for a con siderable length of time because although it isdisagreeable it is +orth +hi le as it is gainful> conversely0 if +e are made to paynot too high asum for t&e /ery sa$e acti/ity, the demand +ill be sufficiently high! +e shall pur sue thisactivity in large numbers andUor for a considerable length of ti me0 because although it is alittle costly0 it is +orth it as it is very agreeable,

nd ho+ does this function O too odd to be one either of supply or of demand O behavebet+een this t+o points=

&o less oddly,

If one is paid a sufficiently high price0 one +ill go on +ith the +ork according to theabove0 for although disagreeable0 the gain it yields is higher, %n the other hand0 commonsense+ould predict that if one is not paid a high enough price one +ill not continue the +ork0 foralthough still profitable its disagreeableness is greater, What happens0 ho+ever0 half+ay

bet+een these t+o points +here gain and disagreeableness are 2ust balanced=

$ommonsense and closely related behaviorismcan only repeat BuridanCs ans+er +ho0 as+e +ell kno+0 declared that his ass +ould starve to death bet+een t+o e/ually appetiing

bunches of hay placed at e/ual distances from him as he +as incapable of making a choice,'he cognitive dissonance theoryprovides a fundamentally different ans+er,

ccording to this theory if the e/uilibrium of a cognitive system is up set by the emergenceof an factor0 the e/uilibrium can be restored not only by a behavior +hich entails that what is

3 no longer e!ists (as is claimed by be haviorism) but also through a change in a cognition+hich entails that what e!ists is no longer34:or instance0 in a choice situation the balance can

be upset if out of all the stakes the one I choose as the end is not larger than that +hich I mustsacrifice as the means (e,g, the chosen gainfulness is not big ger than the sacrificedagreeableness0 or vice versa), In order to restore the balance it is not necessary that this kind ofinterrelation of the stakes should not e.ist O it is sufficient that +hat e.ists should not be thiskind of interrela tion of the stakes, In other +ords0 it is not necessary that the person shouldchoose +hatpreviously represents a larger value for him and sacrifi ce the smaller value> it issufficient that +hat the person chooses should be mo re valuable and +hat he sacrifices should

be less valuable for himsubse%uently.

3everal laboratory and field e.periments reveal that +hat a sub2ect chooses in a decision-

making situation +ill subse/uently be overestimated and +hat he sacrifices in the process +illbe underestimated by him, (3ee for e.amples ronson0 "67;0 and0 especially0 Foitou0 "6780 +hoconsiders situations ideologically evoking individualCs freedom as crucial in +hat he states to bethe mere illusion of cognitive dissonance),

Whenever a stalemate among the consciously deliberated motives brings about the situationof BuridanCs ass0 certain unconsciously +orking factors emerge +hich stimulate the individualto choose0 +ithout a preconsidered motive0 +hat he +ill subse/uently 2ustify to himself,

%ne such factor e.erting a po+erful unconscious effect is the imitation built into socialidentity, It has nothing to do +ith the physiological refle. of ya+ning +hen a +itness to aya+n feels the urge to ya+n himself, 'he refle. in /uestion is the one that makes sure that inaddition to the fact that observer can class those behaving in a specific +ay in the same social

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category (if0 for instance0 they gro+ cashe+ nuts they can be ranked among the cashe+-nutgro+ers as opposed to the +ater melon producers even though of them might be of thesame age0 se.0 religion as ,of the other category)0 those +ho belong to a distinct socialcategory imitate each other as to the behavior that is characteristic of the category,

3o do0 for e.ample0 the physicians +ho keep treating patients beyond the point from +here

this activity is no longer more profitable for them than it is disagreeable (e.hausting0 nerve-+recking etc,), 'his is the point +here cognitive dissonance enters and the upset cognitive balancemay be restored by the person subse/uently evaluating the activity e.erted even for less gain assomething that is not so disagreeable that it could not be recompensed by this reduced gain,

Imitation built into social identity may also be negative! often a per son refrains from anactivity lest he should become similar to the represen ta tives of the social category of +hichthis activity is typical, If0 for instance0 you are reluctant O 2ust because you are not a +indo+-cleaner O to clean hos pital +indo+s even if it earned you more gain than it is disagreeable0then cog nitive dissonance +ill emerge again0 resetting the tilted cognitive ba lance so thatyou subse/uently 2udge the activity you did not undertake as some thing so disagreeable that

even that much gain +ould be too little to remunerate it,3o +hen it comes about that the price of an activity-as-commodity O for e.ample medicaltreatment O gradually decreases against a background of a gradual increase in the price paidfor another activity0 for e.ample +indo+-cleaning0 +hat happens is not that individuals0completely independently from each other0 give up the activity one by one recogniing that itis no+ less profitable than it is disagreeable and that it is more lucrative to earn their living bythe other activity0 +hereas e.actly this +ould be the precondition for the price to be aneffective regulator of supply (and demand) in the activity-as-commodity,

What indeed happens +hen the gain obtainable through0 e, g,0 medical treatment decreasesis that it challenges the individuals one by one to face a real choice, Even if each of themdecided to give up this activity0 it +ould not be the reali9ation of the related interest,but achoice, for 2ust as much interest is vested in continuing the activity0 it being e/ually profitableand tiring at this point, 'he persons facing a choice ho+ever O although individually theiractivity burdens them to different e.tent0 thus the decrease of the recompense challenges themto face the choice in different moments O keep (perhaps unconsciously) their identity in mindwith reference to one another, as0 for instance0 doctors,and not window-cleaners.It follo+scharacteristically that the imitation0 +hether positive or negative0 built into this very socialidentity +ill s+ing them off the dead center of the deliberation of BuridanCs ass! the persongoes on doctoring like the other doctors do,instead of cleaning hospital +indo+s for higher

pay, %n the other hand0 the activity +hich one get engaged in even for less money +illsubse/uently be reinterpreted as less disagreeable0 +hile the one refused in spite of moremoney +ill subse/uently be felt more disagreeable,

&aturally0 the above outlined cognitive process cannot take the form of reasoning in +hichthe person0 a+are of the self-deceptio

Reconsidering Identity Economics - Human Well-Being and Governance (2)

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