‘Money is laughing gas to me’ (Freud): a critique of pure reason in economics and psychoanalysis (New Formations 72, Winter 2010)

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Publication date: July 1, 2011

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David Bennett

Economic theory, since the time of Smith and Hume, has been operating with a model of homo oeconomicus as an autonomous, rational, self-interested calculator of cost-for-benefit. This presumed rationality of ‘economic man’ supposedly guarantees, in turn, the fundamental rationality of the ‘self-regulating’, ‘efficient’ market. Classical political economy, neoclassical economics and neoliberalism have all operated with this model. But the recent ‘global financial crisis’ was yet another reminder that the psychology of markets and financial dealers can seem far from rational. Even Alan Greenspan had to admit of the 2008-9 financial crash: ‘Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity (myself especially) are in a state of shocked disbelief’. From its inception, psychoanalysis has viewed the psychology of money as profoundly irrational Рas a realm of illusion, neurosis, phantasy and psychopathology, both individual and collective. Freud, Ferenczi, Jones and Abraham were just the earliest psychoanalytic theorists to decode monetary transactions and relationships into their presumed unconscious motives. And yet, psychoanalysis itself has been notoriously reluctant to speak frankly of its own economics as a profession and business Рof how ‘filthy lucre’ is the indispensable stuff of its own transactions. This essay stages a confrontation between two discourses, psychoanalysis and economics, which for much of their history have been mutually indifferent and mutually opaque. By confronting the implied subjects of these discourses with each other’s models of reason or sanity in money matters, rather than of irrationality or psychopathology, it questions the equation of economic rationality with individuated self-interest while seeking to deconstruct the century-old dichotomy between homo oeconomicus and homo psychologicus.

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