The Happiness Industry (6 page)

While in Australia, Jevons continued to read widely in psychology, exploring Bentham's work and discovering the writings of another English psychologist, Richard Jennings. He showed comparatively little interest in economics, which was at the time dominated by the figure of John Stuart Mill, and remained within the tradition of ‘classical political economy' that had been initiated by Adam Smith in the 1770s. Classical political economists concerned themselves with weighty, material and political issues of how to increase the productive capacity of nations through free trade, division of labour, agricultural policy and population growth. They argued in favour of free markets, but principally because this was viewed as a way of increasing production. If wealth was the goal, they reasoned, then the resources that needed studying were physical ones: labour power, food, fixed
capital, land. The classical economists had no discernible concern with psychological questions of feelings or happiness. As far as they were concerned, the problems of economics were ultimately those of how best to harness nature.

But while Jevons was in Australia, there were signs that the core assumptions of political economy were about to change. Jennings was a psychologist, but his 1855 work
Natural Elements of Political Economy
suggested that economists could not ignore psychology any longer. Given that labour was central to the classical economic view of capitalism, it must surely be relevant that workers suffer different levels of pain as they go through their day, which then influences how much they are able to produce.

It is often said in circumstances of boring or monotonous work that ‘the last hour drags the longest'. Jennings made a similar observation, but specifically in relation to physical exertion: the longer one spends labouring on a task, the harder it gets. Fechner's observation, that weights feel heavier the longer they are held, picked up on the identical issue. Such insights spoke to an emerging concern among industrialists at the time, that workers were suffering from fatigue, and that the bourgeoisie's principal source of wealth, namely labor, was gradually becoming depleted. As the nineteenth century wore on, this worry led to an explosion of strange experiments on fatigue and possible ergonomic solutions.
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And so it was via the subjective experience of work, as an exercise that gradually increases in painfulness, that capitalists became interested in how we think and feel for the very first time.

Jevons was drawn into reading economics, thanks to Jennings's pioneering work. In 1856 he was also drawn into a dispute over the funding of a railway in New South Wales, and his interest in economic theory was piqued further.
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From Jevons's Unitarian perspective, economics, as passed down by Adam Smith, was not
strictly speaking a science: it lacked the mechanical and mathematical rigor. But by starting from a different premise, much as Jennings had already suggested, perhaps this was a domain that was amenable to truly scientific reasoning after all. If the economy could be understood as a mathematical problem, to be solved through the attainment of quasi-mechanical balance, then economics would be placed on genuinely scientific foundations. He wrote to his sister in 1858 letting her know that he was now determined to focus on extending mathematics to the study of society. In 1859, he returned to Britain and re-joined UCL to study economics.

Markets as balancing devices

Money is an extraordinary thing which can cause psychological havoc. In some psychosomatic situations such as whiplash, it may even cause physiological havoc. The central fact about money is that it must perform two contradictory functions at once: to serve as a store of value and as a medium of exchange. When acting as a store of value, it becomes something we cherish and want to hang onto, often by placing it in a bank account. When acting as a medium of exchange, it is something that opens up infinite possibilities to attain other, much more useful and desirable things. This contradiction is manifest in the physical design of money itself, which has to combine a high level of symbolic appeal (in its insignia and shininess) and minimal level of actual physical usefulness.

Interest rates are the main way in which capitalist societies strive to balance these two functions of money. When interest rates go up, our desire to hang onto money increases
accordingly; when they go down, our desire to spend it increases instead. Sometimes, we flip between viewing money as everything, and viewing it as nothing. The psychoanalyst Darian Leader has noted how money often plays a central role in the behaviour of bipolar disorder sufferers.
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When they are manically happy, they view money in purely liquid terms, of infinite possibility, with no intrinsic worth of its own. They give it away, spend rashly, revel in the freedom it grants. When they are later depressed, they become weighed down by money's ubiquitous importance once more, only more so due to the debts and costs they ran up during their mania.

Thus one way of understanding the history of liberal economics, from Smith onwards, is as an ongoing attempt to deal with the bipolar character of money. As we all instinctively recognize, markets are places where goods or services are exchanged for money of some sort. But what we tend to overlook is how odd such an exchange actually is.

How is that a £10 note can be deemed equivalent to, say, a pizza? In order for this exchange to take place, money's dual roles as both medium of exchange (I am willing to get rid of it) and as store of value (the pizza seller is willing to accept it) have to function simultaneously. How can a piece of pure, numerical symbolism serve as equivalent to a doughy, cheesy meal, without either side feeling hard done by? For if it can't, then the market system itself becomes completely impossible, and we would end up each having to produce our own food, clothes and shelter. The constant risk is that people either value money too highly (cue hoarding and price deflation) or not highly enough (cue barter and hyper-inflation). The solution offered by economists is to invent a mysterious entity that lurks magically inside the pizza, which they term ‘value'.

Often, we use the word ‘value' to mean ‘price', as when someone says, ‘This painting is valued at £1,000'. But it's quite clear from other uses of the term ‘value' that it doesn't mean price at all. If I describe the pizza as ‘bad value for money', that suggests it really shouldn't have been exchanged for as much as £10. The value and price of the pizza were not, in fact, equivalent to each other, and the customer was being ripped off. The idea of value allows us to view markets as balancing devices, whose outcome should in principle be fair. By suggesting that value is a quantity like money, economists are able to show how both sides of an exchange are, ultimately, equivalent. When the market for pizzas is working correctly, they argue, ten of these pounds will buy you an equivalent quantity of value. Rather than exchange a quantity (money) for a quality (pizza), both sides of the equation can be represented in numerical terms. The market becomes imagined as a set of scales, which weigh money and value against each other, until the two are in perfect balance. What the idea of value really says is this: money itself is not the most important thing in life, but it is the perfect measure for anything that we do consider important.

So what is value? How is this ubiquitous quantity to be conceived? The classical political economists argued that the value of a good or service derives from the amount of time that has gone into making it. In this case, the pizza's real worth resides in the amount of time spent producing its various ingredients and cooking it. In principle, if markets are working fairly, the price of the pizza should be equivalent to this quantity of labour time in some way. This ‘labour theory of value' dominated economics for nearly a century. By 1848, John Stuart Mill was confident enough to write that ‘happily there is nothing in the laws of value which remains for the present or any future writer to clear up;
the theory of the subject is complete'.
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But that particular version of the theory never interested Jevons.

On 19 February 1860, Jevons wrote the following entry in his diary:

At home all day and working chiefly at Economy, arriving as I suppose at a true comprehension of Value regarding which I have lately very much blundered.
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The book in which this ‘true comprehension of Value' would be articulated,
The Theory of Political Economy
, would not appear for another decade. By then, two continental economists, Léon Walras in France and Carl Menger in Austria, had ‘blundered' towards a similar discovery. In combination, these three economists unleashed a revolution within economics, eventually producing the narrower, more mathematical discipline that we recognize as economics today.

Shopping for pleasures

A number of English theorists, including Bentham, had wondered whether the mentality of consumers might actually be the decisive factor in determining the price of things. This idea even cropped up in Archbishop Whateley's children's book of economics that was read to Jevons as a child. But it took Jevons, Walras and Menger to establish this notion as the new foundation for economics. The question of value remained crucial, for how else could the market be represented as a place of fair exchange? Their novelty was to conceive of value from the perspective of the person spending the money, rather than the person producing
the goods. Value would become a matter of subjective perspective.

What marks out Jevons was his determination to build such a theory directly upon the psychology of pleasure and pain. He described his project in sharply Benthamite language:

To satisfy our wants to the utmost with the least effort – to procure the greatest amount of what is desirable at the expense of the least that is undesirable – in other words, to maximize pleasure, is the problem of economics.
¹¹

The centrifugal point of capitalism was being shifted. From Adam Smith through to Karl Marx, the factory and labourer were deemed to dictate the price things were sold for in the market. From 1870 onwards, all of this changed. Now it would be the inner ‘wants' of the consumer where the all-important question of value would be established. From this perspective, work is simply a form of ‘negative utility', the opposite of happiness, which is only endured so as to gain more money to spend on pleasurable experiences.
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Subjective sensation, and its interaction with markets, was elevated to a central question of economics.

In keeping with his Unitarian roots, Jevons was only prepared to engage in economics if he could find a way of doing so mathematically. ‘It is clear that economics, if it is to be a science at all, must be a mathematical science', he argued; ‘our science must be mathematical, simply because it deals with quantities'. It's not clear that Jevons was ever particularly good at maths himself, but his prejudice in favour of such an analysis held nevertheless. Economics could be founded on a science of pleasure and pain, but only on the basis that these psychic entities also obeyed
certain mathematical laws. For such a vision of economics to succeed, the mind itself would have to be treated like a calculator.

In the preface to the second edition of
The Theory of Political Economy
, Jevons expressed his regret that he had retained the term ‘political economy' in the book's title and not used ‘economics' in its place. The distinction is a significant one. He clearly saw his work as a new start for a more rigorous discipline than the political economists had been able to achieve. Once the correct mathematical foundations had been established, the study of the economy would be placed on new and objective foundations.

For Jevons, everything was a question of balance, gauged in terms of quantity. His fascination with the machine-like qualities of the mind made him a pioneer of the sort of cybernetic thinking that would later produce computer science. He even commissioned a Salford clockmaker to build him a primitive calculator out of wood, or what he termed his Logical Abacus, as a mechanical model for rational thought.
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The mind resembled the toy balance he'd played with as a child, or the gold-assaying device he'd used in Sydney.

When deciding whether or not to eat a pizza, I am performing a balancing act, with the pleasures on one side and the pains on the other. How much pleasure will it give me, versus how much pain? Whichever quantity is greatest will dictate what I decide to do. As Bentham had proposed, our minds work like mathematical calculators, constantly trading off the pros against the cons.
¹⁴

Jevons's landmark contribution was to plant this vision of a calculating hedonist firmly in the marketplace. Bentham was seeking mainly to reform government policy and punitive institutions, which acted on the public in general. But Jevons converted utilitarianism into a theory of rational consumer
choice. The mechanics of the mind, where value resided, and the mechanics of the market, which generated prices, could be perfectly attuned to each other. As he suggested:

Just as we measure gravity by its effect in the motion of a pendulum, so we may estimate the equality or inequality of feelings by the decisions of the human mind. The will is our pendulum, and its oscillations are minutely registered in the price lists of the markets.
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The market was a vast psychological audit, discovering and representing the desires of society.

This granted money an exceptional psychological status, as it allowed others to peer into people's private desires. Bentham had idly wondered if money might serve as a proxy through which to measure pleasure, but never quite extrapolated this into a theory of economics. Jevons was effectively turning the market into one vast mind-reading device, with prices – that is, money – as the instrument that made this possible. This being the case, money was no ordinary instrument, and economics was no ordinary science. The ideal of bringing the invisible realm of emotions and desires into the open was now bound up with the ideal of the free market.