ECONOMIC PSYCHOLOGY
II. Special Economic Psychology
The second volume is a sample of application of the general economic psychology’s above findings to various issues of both market and organization behavior.
The THIRD CHAPTER “Managing Material and Human Resources” deals with the economic psychology of manufacturing and purchasing goods, marketing and financing activity, management and development transactions, organizational and socializational behavior. Information management and knowledge economy are dealt with in more details, as approached by economic psychology. In contrast to economics, economic psychology does not consider information management as a merely control process but as one of the real processes in that system; on the other hand, in contrast to psychology, the economic psychology considers the knowledge economy a social and not an individual performance, the monograph argues. While the social identity is considered to be the main factor mediating between individual and social matters, as well as between control and real processes, it is argued that at the same time it creates a new duality: between information and knowledge, on one hand, identity itself and the deed investing someone with that identity. This duality becomes consummate in that of contemporary universities with their bifurcation of the knowledge supply and the diploma supply.
The FOURTH CHAPTER “Managing Human Resources: The Second Modernization”.
The modernization is defined as a generalized tendency of artificial intervention by the socio-economic system into natural processes in order to manufacture conditions that are necessary for its own functioning. During a first period, in the 18-19th century the modernization meant,
on one hand, manufacturing the material factors the system depended on, and, on the other, making the system independent of the human phenomena that had not been produced by itself. However, from the end of the 19th century onwards the actual socio-economic system’s running has no longer been independent of the faculties and needs effective in the population, hence a second modernization imposed upon the socio-economic system the necessity of manufacturing (and not only exploiting) human (and not only material) conditions of its functioning.
This necessity is analyzed in terms of human capital invested either by one of the interes-ted parties (whether the one supplying the human potential or the one demanding it) or the state. Possession relations of human capital are analyzed in details, since the capital invested by the state into the formation of a person’s potential will be organically integrated in his bo-dy and mind, and will be inseparable from the physical and mental faculties that were origi-nally given to him.
In the aspect of manufacturing human conditions are investigated the totalitarian states.
They are claimed to directly apply the strategies of the 19-century large scale material proces-sing industry in establishing a large scale human procesproces-sing industry in 20th century. It deals with that human condition, too, that is represented by the social identity marked by either competition or monopoly, a perfect (i.e. e., not disturbed by any monopoly) competition being as important a condition for a market economic system as is a perfect (i.e. e., not disturbed by any competition) monopoly for a planned economic organization.
Paradoxical consequences of such a human processing industry are evoked. When the relations of either competition or monopoly are concerned, the intact juxtaposition of both of them without any bias is nothing but their competition. On the other hand, when either the competition gets eradicated from a socio-economic system (considering the necessities of a planned organization, as is the case for the Bolshevik type totalitarian state), or the monopoly gets extirpated (in order to fit the needs of a market, as in case of a Fascist, a national-socialist kind totalitarian state), the manufactured product is straight a monopoly.
However, the main difference between two types of totalitarian states is dealt with in terms of difference between issues of that human processing industry: those of a fascist type are claimed to establish a large scale industry for peoples attributes, while in Bolshevik type totalitarian societies their relations, too, get manufactured.
The FIFTH CHAPTER “The Bolshevik-Type Version of the Second Modernization”.
Bolshevik type societies, instead of being investigated from either an ideological or a politological aspect, are approached, too, by the economic psychology. For such an approach, both structure and functioning of those societies are tested from the point of view of a human capital economy within the frame of the second modernization.
The second modernization’s basic dilemma is presented: the more highly qualified human potential is involved the larger and larger amount of capital is required for its manufac-turing – and, at the same time, the larger and larger autonomy is required for that human potential’s running. As far as the required capital is ensured by the involvement of the State the autonomy turns out to be in short supply, but if the aspect of the autonomy makes the state get out from the human business by charging the costs of human development to the individual’s account then capital will be scarce.
Therefore the organizing principle of these societies are not only bureaucracy setting social power 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 20th century’s radical anti-bureaucratic (illegal) mass movements, the charisma provides not only a leader but the whole headquarter of the revolutionary movement and even the whole party as its vanguard with a social power independently from anyone’s office. On the other hand, as far as this collective
charisma is concerned, in Bolshevik-type structures the person gets (and loses) his glamour by being invested with (and, resp., dismissed from) a charisma just like with (from) an office:
in order to get the social identity that is independent from any appointment one has to be appointed. This procedure of bureaucratically appointing someone to a collective charisma gets institutionalized in the Nomenklatura that links to each other the status of the functionary and the identity of the commissar. Such features of the Bolshevik type social structures, together with a self-establishing machinery of the democratic centralism for the identity of those belonging to the Bolshevik type Party are claimed by the monograph to be psycho-economic devices for keeping in operation a peculiar processing industry whose final mass-product was, for a totalitarian state supplying the capital needed, a rather peculiar version of the autonomy needed: the complicity of the system’s victims. Both the functioning and crash of the Bolshevik type system are analyzed from the point of view of a paradoxical self-establishing psychosocial effect (as opposed to a self-undermining paradoxical effect of the fascist type totalitarian states’ functioning).
Treating the Bolshevik-type organizations’ structural dualism (that used to be best known as a “state and party leadership”) leads on to the closing SIXTH CHAPTER “From the Post-Bolshevik Structures toward an Information-Processing Large-Scale Industry”. The Bolshevik-type twin-features are compared to the twin-structures of the information-processing (e.g., to the duality of the information’s bearer and its place value). The Bolshevik-type structure that is made up of concentric circles is studied as an information processing device in which information may travel exclusively in centripetal and centrifugal directions while its path is strictly blocked between the neighboring but separate peripheral units of each ring (e.g. the primary party organizations). In such a structure the center has a perfect control over the totality of the output informations; hence, this center is enabled to provide 1., the perfect protection of data; 2., the total control of addressees and 3., a virtual periphery set up around any of the concentric rings which can at any moment be substituted by the center for the real one (it is the function of the Ministry of Truth in Orwell’s 1984).
In this closing chapter of the monograph psycho-economical conditions of an information economics are analyzed. The economic psychology
in contrast to economics, does not consider information processing as a merely control process but as one of the real processes in that system; and
in contrast to psychology, it considers information processing a social and not an individual performance,
the monograph argues. Psycho-economical peculiarities of information’s property relations, as well as appropriation and alienation operations are analyzed within modern information management. The social identity processed by social categorization is considered the main factor mediating between social and individual issues, as well as between control and real processes.
A new general tendency of materializing that social categorization in societies’ new splitting in an elite and a mass is critically analyzed as a kind of a radical settling of the second modernization’s basic dilemma: this time both the capital required for manufacturing a highly qualified human potential and the autonomy that is required for its running get focused on the side of the elite, while on the side of the mass there is both factor’s lack. This asymmetry of identities within organization is paralleled by the monograph to markets with asymmetric information (Akerlof–Spence–Stiglitz).
The structure of the monograph
1. The Economic Psycho-Sociology Approach 1.1. Modeling Economic Behavior
1.1.1. The Market Behavior 1.1.2. The Organization Behavior 1.2. The Apport of the Psychology 1.2.1. Behaviorism
1.2.2. Cognitivism 1.2.3. Social psychology 1.2.4. Psychoanalysis
1.2.5. A Synthesis: Is It Possible?
2. Mediating Economic Transactions: The Social Identity
2.1. The Antecedents of Social Identity in Ethology: The Territorial and the Signifying Behavior 2.1.1. The Human Specificity of Social Identity
2.2. Elaborating Social Identity 2.2.1. Substantial and Formal Identity 2.2.1.1. Social Status
2.2.1.2. Formal Features
2.2.1.2.1. Similarity and Differences 2.2.1.2.2. Competition and Ranking 2.2.2. Social Categorization
2.2.2.1. Symbolizing Social Categorization 2.2.2.2. Criteria of the Social Identity
2.2.2.3. Being Disposed vs. Indisposed by the Identity 2.2.2.4. The Taboo
2.2.3. Social Categorization and Social Listing 2.2.3.1. Attributes and Relations
2.2.3.2. „An”-type Identity and „The”-type Identity 2.3. Elaborating the Economic Identity
2.3.1. The Paradoxical Nature of Economic Behavior 2.3.2. Property Rights and Identity
2.3.2.1. Property 2.3.2.2. Office
2.3.2.3. Competency and Competence 2.3.2.4. Capital and Networking Capital
2.3.3. Economic Psychology of Outstanding Social Identity 2.3.2.1. Measuring Value of Outstanding Social Identity (VOSI)
2.3.2.2. Racer’s costs and profits: Converting Money into VOSI and vice versa 2.3.2.2.1. Investing into VOSI
2.3.2.2.2. Return from VOSI
2.3.2.2.3. Asymmetric Market and Outstanding Social Identity 2.3.2.3. Applying VOSI in Human Resource Management 3. Managing Human Resources: The Second Modernization 3.1. The Modernization: Manufacturing Resources
3.1.1. The First Periode of Modernization: Manufacturing Material Resources and Independency from Human Resources
3.1.2. The Second Modernization: Manufacturing Human Resources
3.2. A Plant for the Large Scale Manufacturing of Human Resources: the Totalitarian State 3.3. The Human Potential as Capital
3.3.1. Investing and Profiting
3.3.2. Three Principal Questions of Human Capital 3.3.2.1. Who Should Be the Investor in Human Capital 3.3.2.2. Who Profits from Running the Human Capital?
3.3.2.3. Who is the Owner of the Human Potential?
3.4. A Rather Strange Manufactured Product: The Relation 4. The Bolshevik-Type Version of The Second Modernization 4.1. (Bolshevik (= Majority): A Relational Identity
4.2. Manufacturing Substantial vs Formal Identity
4.3. The Bureaucratic State Governed by an Illegal Movement: Soviet-Type societies and Bolshevik-Type Parties
4.3.1. Office and Charisma 4.3.1.1. A Collective Charisma 4.3.1.2. Official and Commissary 4.3.1.3. The Nomenklatura
4.3.2. A Large Scale Manufacturing of Relations 4.3.2.1. Why crushed it down?
5. A Dilemma for the Post-Socialist Period’s Economy: Knowledge-Based or Identity-Based?
5.1. Manufacturing Knowledge and Skill 5.2. Manufacturing Identity and Qualification 5.3. Know-How or Diploma?
5.3.1. Distant Teaching and Diploma Mills
Key words: social identity; social categorization; identity markers; document; Behaviorism vs.
Cognitive Psychology; Psychoanalysis vs. Social Psychology; psychosocial relations vs.
attributes; market behavior vs. organizational economic behavior; money vs. social status; second modernization; human resources processing; human capital; Bolshevik type vs. fascist type totalitarian societies; information management
Chapters of the monograph and some further texts related to its topics and available in non-Hungarian
To the first chapter: The Economic Psychology Approach Problems of specifically human needs.
French version: Recherches Internationales: Psychologie. 1966/9. (51). 42-60.
Russian version: Voprosy Psikhologii. 1966/3. 61-73.
Spanish version In: A. Luria, A. Massucco Costa, R. Zazzo and B. Teplov: Problemática científica de la psicología actual. Editorial Orbelus. Buenos Aires, 1968. 63-85)
Interpretation of needs in foreign language psychology and the question of motives of a scientific activity [in Russian]. In: M. Iaroshevsky (ed.): Problems of the scientific creativity in the contemporary psychology, “Nauka” Publisher [Publishing house of the Soviet Academy of Sciences]. Moscow, 1971. 224-233.
Hypothesis on the Motivation of Scientific Creativity. XIII International Congress of the History of Science. USSR, Moscow, August 18-24, 1971. “Nauka” Publisher [Publishing house of the Soviet Academy of Sciences], Moscow, 1971. 224-233.
An invited lecture to the Congress’ symposium “On the personality of the scientist in the history of science”. Applying the theory presented by the Personality dynamics to the analysis of parallel discoveries of Bolyai and Lobachevsky it argues for the individual creative idea being determined by the social history even in the most abstract mathematics.
Strength and Weakness of Psychological Science. International Social Science Journal.
25. (1973). 447-460. French version: La puissance et l’impuissance de la science psychologique. Revue Internationale des Sciences Sociales. 25 (1973). 491-504.
The destiny of the contemporary psychological science is considered by the paper on the background of the socio-economic system’s necessity of manufacturing (and not only exploiting) human (and not only material) conditions of its functioning (second modernization hypothesis). A technological application of this science (in cultivating skills) is compared to its ideological application (in cultivating attitudes).
Conflict and the Economic Paradigm. Dialectics and Humanism. 2. (1977). 47-58.
Class conflicts are represented at two levels simultaneously: at an object-level about the distribution of resources and at a meta-level about the rules of dealing with conflicts of object-level. The paper argues for all macro- and micro-social conflicts in the society being constructed according to this paradigm.
Marx’ Social Theory and the Concept of Man in Social Psychology. (Co-author: Ferenc Eros) Studia Psychologica. 20/1. (1978). 5-10.
Towards a Social Psychology of Personality: Development and Current Perspectives of a School of Social Psychology in Hungary (Co-authors: F. Eros, K. Jaro, M. Kocski and S.
Veres). Social Science Information. 18/1. (1979). 137-166.
Report on the research work of the authors’ team in ‘70s in the Institute for Psychology of Hungarian Academy of Sciences. Main arguments of a production-centered meta-theory as opposed to the both naturalistic and spiritualistic one and of a theory elaborated by that team in a Vygotskian frame of reference.
Paradoxes of the social categorization [in French]. Recherches de Psychologie Sociale. 3.
(1981). 131-141. (Comments of R. Pagès: Recherches de Psychologie Sociale. 3. [1981]. 143-151)
Marxian Personality Psychology. In: Harré-Lamb (eds.): The Encyclopedic Dictionary of Psychology. Basil Blackwell Publisher. 1983. 364-366.
Toward a psycho-economic theory of social identity [in French]. Recherches Socio-logiques. 1984. 313-335.
Social Identity: Cognitive Dissonance or Paradox? New Ideas in Psychology. 4:3. (1986) 311-322. (Comments: G. Jahoda. New Ideas in Psychology. 6:2. [1988] 211-212. Reply: The case of Attila József: A reply to Gustav Jahoda. New Ideas in Psychology. 6:2. [1988] 213-217.
Determining economic activity in a post-capitalist system. Journal of Economic Psychology. 8. [1987] 77-90.)
Contends that the main tendency of (both planned and market) post-capitalist system is considered to be the production of personal (and not only material) conditions of func-tioning of that system. That includes not only production of technical disposition to master things but also that of social disposition to master (or, at least, be superior to) other persons.
These are as important organizing factors for an economic system producing its personal conditions as are value in use and value in exchange for the one producing its material conditions. Typical cases are cited when the economic activity is not determined by the price of the item produced by it, but, rather, by the social identity of the producing person.
To the psychology of economic rationality. In: Understanding economic behavior. 12th Annual Colloquium of IAREP, the International Association for Research in Economic Psy-chology. Handelhøjskolen I Århus, 1987. Vol. I. 29-41.
Argues for the impossibility of deriving rationality criteria from substantionally given human needs. Instead, it proposes a Lewin-type formal approach to the structure of human activity whose ends, whatever they are, become quasi-need and determine the value of other objects becoming means or barriers, depending on their position in that field. For the specifically human activity taking into consideration a further factor structuring the field is proposed: taboos. Thus, the formal rationality criterion is: gaining ends in spite of barriers that are surmounted by means got in spite of taboos.
Why bureaucratic control over economy is not that rational? Paper presented to the 13th Annual Colloquium of IAREP [International Association for Research in Economic Psychology] (Louvain, 1988).
While production of material resources is determined only by technical attributes of both producing and produced factors, effects of production by a modern socio-economic system of its personal resources depends on those factors social relations as well. Bureaucracy is considered as a power of mastering the production of personal resources through the institu-tionalization of these relations.
Foundation of an economic psychology. In: T. Tyszka and P. Gasparsky [eds]: Homo Oeconomicus: Presuppositions & Facts. Proceedings of the 14thIAREP Annual Colloquium.
International Association for Research in Economic Psychology. September 24-27, 1989.
Kazimierz Dolny, Poland. 333-346.
Claims that the “human nature” in various socio-economic systems is different: 1. In a strict market economy it is close to the one described by the notion of “homo oeconomicus”
and scientifically investigated by a behaviorist psychology: in any choice situation the individual chooses what s/he has preferred the most. 2. In an economic system shifting from the strict market toward a mixed economy the agents’ “nature” comes much closer to what the cognitivistic psychology considers as such: the individual starts to prefer what s/he has previously chosen. 3. In a strictly planned economy the human content expressed by the economic behavior corresponds to the description by the psychoanalysis: individuals instead of consciously making choices unconsciously consent to being chosen by a supra-individual system that is hold by the “father” but interiorized by the super-ego of the “sons”. 4. Finally, for an economic system that is shifting from this strict planning toward a mixed economy
instead of agents’ “nature” we have their “culture” described by the social psychology: there turns out not to be any valid possibility of establishing an order of preference among them.
Another crisis in the psychology: A possible motive for the Vygotsky-boom (co-author: M.
Kocski). Journal of Russian and East-European Psychology. 33:1. [1994] 82-94. – Full text.
Italian version: Ancora una crisi nella psicologia: una possibile spiegazione per il “boom” di Vygotskij. Studi di Psicologia dell’Educazione. 1994/1-2-3. 141-150. Enlarged Russian version: Voprosy Filosofii. 1997/4. 86-96. – Full text
Vygotskian implications: On the meaning and its brain. A keynote paper. In: Mezhdu-narodnaia konferentsiia “Kul’turno-istorichesky podkhod: Razvitiie gumanitarnykh nauk I obrazovaniia”. Proceedings. Rossiiskaia Akademiia obrazovaniia i Rossiisky Gosudarstvenny gumanitarny universitet. Moskva, 21-24 oktiabria 1996. No. 3. – Full text. Russian version:
In: Subject, Cognition, Activity: Dedicated to V. A. Lektorsky’s 70th anniversary. Moscow:
Canon+, 2002. 590-612.
Vassily Davydov and vicissitudes of our theory [in Russian]. Bulletin of the International Association “Developmental Education”. 5. 20-26. – Full text
To the second chapter: Mediating Economic Transactions – The Psycho-Social Identity Conflict and the Economic Paradigm. Dialectics and Humanism. 2. (1977). 47-58.
Class conflicts are represented at two levels simultaneously: at an object-level about the distribution of resources and at a meta-level about the rules of dealing with conflicts of object-level. The paper argues for all macro- and micro-social conflicts in the society being constructed according to this paradigm.
Paradoxes of the social categorization [in French]. Recherches de Psychologie Sociale. 3.
(1981). 131-141. (Comments of R. Pagès: Recherches de Psychologie Sociale. 3. [1981]. 143-151)
Toward a psycho-economic theory of social identity [in French]. Recherches Sociolo-giques. 1984. 313-335.
Social Identity: Cognitive Dissonance or Paradox? New Ideas in Psychology. 4:3. (1986) 311-322. Comments: G. Jahoda. New Ideas in Psychology. 6:2. [1988] 211-212. Reply: The case of Attila József: A reply to Gustav Jahoda. New Ideas in Psychology. 6:2. [1988] 213-217.
On the cognitive dissonance as emerging between the social identity of persons and that of their acts. Paradoxical consequences of the two identities’ double bind are analyzed: without
On the cognitive dissonance as emerging between the social identity of persons and that of their acts. Paradoxical consequences of the two identities’ double bind are analyzed: without