Tuesday, April 28, 2009

Cognitive Capture

The idea that Washington is mentally enslaved to Wall Street has a hoary pedigree, and has received any number of articulations, ranging from socialist taunt that the state is the "executive committee of the bourgeoisie"; to the more rigorous concept of (more or less corrupt) regulatory capture; to the fashionable claim that the real reason why Washington won't cut off Wall Street's balls is not a result of "financial capture" (i.e. bribes, ahem, political contributions) but the rather because of some more sloppy kind of "cognitive capture." 

I say "sloppy" because I think this phrase is rarely defined, and in fact is confusing. The concept of "cognitive capture" is already present in psychology, but is used to refer to a different phenomenon altogether, namely the way that, when an individual focuses mental energy on one issue, it can cause her to miss out other important things. Also called "inattention blindness," this explains why, for example, drivers talking on cell phones are more likely to crash. By contrast, the idea of "cognitive capture," as applied to Washington's relationship to Wall Street, signals not that DC policymakers are distracted from or inattentive to Wall Street, but rather that they suffer from a kind of slavish worship of financiers, who they see as the rightful titans of our society whose interests must therefore be identical with those of society.

My old colleague James Kwak is doing signal work in trying to provide the latter thought with a more substantive theoretical basis. Why, Kwak asks, is Treasury Secretary Timothy Geithner apparently unable to envision that the economic interests of the country might not be full aligned with the economic interests of Wall Street financiers? Why is he unwilling to consider solutions to the current crisis that would involve dethroning these oligarchs? Invoking Pierre Bourdieu's concept of "cultural capital" to suggest the mechanism by which this mental slavery is achieved, Kwak answers that Geithner has
internalized a worldview in which Wall Street is the central pillar of the American economy, the health of the economy depends on the health of a few major Wall Street banks, the importance of those banks justifies virtually any measures to protect them in their current form, large taxpayer subsidies to banks (and to bankers) are a necessary cost of those measures - and anyone who doesn't understand these principles is a simple populist who just doesn't understand the way the world really works.
This pithily captures the main mental problem in Washington these days: policymakers simply can't imagine any solution that involves the defanging of Wall Street, even though the only meaningful solutions are precisely the ones that do that. The Democrats are every bit as useless as the Republicans on this score.

Read the whole thing.

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