One day when I was a child, it occurred to me that the majority of the occupations humans pursue are of the imaginary kind, meaning that they cannot be observed and understood by a Martian looking through a telescope, no matter how powerful.
A Martian might observe a man breaking stone and understand what he is doing. But he cannot watch a woman negotiating and writing a contract, or making a municipal bond trade, and have any specific understanding based on what can be seen. I started to think about how humans make shit up, and other humans then agree to believe that it exists, and to conform their behavior to the consensual hallucination.
Like Peter Pan's fairy, Tinkerbelle, whose life could be saved only if enough of the audience clapped for her, the US constitution, an automobile lease agreement or a commodities future option only survive for as long as enough people believe in it. When people begin to acknowledge that any of these items is a fiction--particularly a bad, nonsuitable, dysfunctional fiction--then the arrangement stops working, and dies like Tinkerbelle threatened to.
A bank run, like the one which recently brought down Baer Sterns, is a fascinating example. Money itself of course is the foremost of the consensual hallucinations. Humans acted together in prehistory and agreed to let a thing--a stone, a cowry, a minted coin--represent value so that it could be "earned" by the sweat of one's brow and then traded for food or things. The gravest crises we know other than war or epidemic disease have to do with the malfunction or crash of the mass hallucination known as the economy, which actually consists of a meta-hallucination, one hallucination piled on top of another. First we have to believe in money, then in an imaginary institution we created to have a place to store our imaginary money. Having first made the change from valuable but heavy gold and silver coins to imagining money to be embodied in otherwise worthless pieces of paper, we then imagined it was inconvenient to keep those pieces of paper in our houses, where they might be stolen by other people who shared in the group hallucination of their value. So we imagined an even more insubstantial and loosely based concept, the bank. (An interesting sidelight is the solidity of bank architecture, designed to counter-act the imaginary nature of the institution.) We hallucinated a place where you could hand over your money and they would put it to work to make more money for themselves and for you. As a result of this use, however, your money became so much more imaginary that if you, and all the other bank customers demanded your money at the same time, they wouldn't be able to give it back to all of you at once. In a bank, your money becomes so imaginary that only a small part of the already imaginary paper and coin is available to return to the people who think they own it. The continued existence of a bank is utterly dependent on its customers continuing to believe that their money is there, when it is not. More succinctly, the continued existence of a bank, like Tinkerbelle, is dependent on people believing in it.
The ramifications of this proposition are quite astounding. Unlike an epidemic or a famine, economic crises and wars which bring down societies tend to be caused by a failure of belief. A bank run happens because people no longer believe their imaginary money is safe in the imaginary bank. Inflation happens because people no longer believe in the value of their imaginary money. Recessions and depressions happen because people no longer believe in the "invisible hand" of the imaginary economy. People lose wars in large part because they believe they can't win them (we could dub this the "French phenomenon"). Conversely, people tend to start wars because they imagine they can win them ("I can fight the Soviet Union and the United States simultaneously and win"). Which indicates that an over-appreciation of imaginary things (German racial purity leading to strength of character and body) can be quite as fatal as ceasing to believe in them at all. Manic or depressive, we're still screwed.
Reading about the economy is fascinating because the most intelligent business writers speak and think like people who are only immersed three quarters of the way in an illusion, like Beckett's Winnie in "Happy Days" who is only buried up to her waist, and then later her shoulders, in the sand. Their livelihood--being paid imaginary money to write about imaginary things--depends on them accepting the reality and importance of the things they cover, but only up to a point. Like all intellectuals, they establish their street cred by holding themselves a little out of the things they cover, and exercising a little irony. One sure sign of the ironic moment, the head above the sand, is when anyone cites Mackay's "Extraordinary Popular Delusions and the Madness of Crowds" or relates the story of the tulip bubble. This 1841 book about the destructive power of human imagining is still a gripping read, by the way. The worlds' greatest meta-imaginarian might well be the man who wrote the prospectus for the 18th century South Seas bubble:
"A company for carrying on an undertaking of great advantage, but nobody to know what it is."
He got a huge number of people to believe in something he did not even bother to describe.
As a child, I reached a moment, probably around my twelfth year, when I also had poked my head above the sand. I started dimly to perceive some frightening and dangerous things, about which I was helpless to do anything. One of the things I used to worry about was whether there could ever be another Great Depression. Would I myself ride the rails one day, sleep in hobo camps, line up for hours for a loaf of bread as I travled the country in search of work?
When I used to ask the grown-ups questions about this, the answers I received were unsatisfactory. "It could never happen again. We learned too much from the last time. The government won't let it." (This implicates another "triumph" of the human imagination, the idea of progress, that things more or less automatically get better over time.) But the more I observed the things that were going on in my own time, like the Vietnam war, the more I concluded that the adults who ran things were really children, capable of learning nothing and making the same mistakes endlessly.
In college and after, I read voraciously about the crash, and about Roosevelt and the New Deal, trying to understand why the depression happened and how we got out of it. I considered the conservative arguments, that the laissez faire which appeared to fail so miserably after 1929 is still the only way to operate an economy, and that what brought us back was not Roosevelt's economic initiatives, but the World War.
Certainly much of what Roosevelt did appeared makeshift: hiring writers to write, painters to make murals, theatre people to put on plays; there was a big element of pretend, of the provisional, of "lets all say we are doing something important so we can disperse some imaginary money back into the system." It is hard to believe in a job that isn't really a job; we want our imaginary things to be so real that they lend us dignity as we act upon them and are acted upon. If the alternative is starvation, however, few of us would refuse to take a too patently imaginary job.
I can boil all my reading about the Depression and its aftermath down into a couple of simple statements. The crash happened because people stopped believing in imaginary things. It ended because Roosevelt, first with the New Deal and then with the war, gave us new imaginary things and restored our beliefs. We needed a narrative; it faltered; a charismatic leader helped us identify a new one.
A fascinating apparent contradiction is that in 1941, a war showed us the way out of a depression; today we have a recession and a war at the same time. There is no real contradiction if you analyze it in terms, not of boosting the economy through wartime spending, but simply of belief. The Iraq war has failed to provide us with an exciting, sustaining narrative the way World War II did. We don't believe in our economy, our President, or his war.
Inspirational business speakers love to tell the story of the sociology experiment in which workers were divided into three groups. Each group was visited by a consultant, whose recommendations were as follows: Let us turn up the lights in Group One's office, so they will become more productive. In Group Two's office, we will turn the lights down, so they will be more productive. As to Group Three, no recommendation. The story goes that morale increased in Groups One and Two, and declined in Group Three. The specific action was less important than the belief, the restoration of hope in the imaginary.
This all ties in to what I wrote last month about the draft. Empires and nations end when people no longer believe in them enough for them to carry on--probably the best explanation which can be offered for the voluntary endings of the Soviet Union and the apartheid Republic of South Africa. The Roman Empire ended when its citizens no longer believed in it enough to fight for it--or became so lazy, they imagined it could continue without their sacrifice. That seems to be exactly where we are today: a combination of lack of confidence and self delusion.
The result is that we are fighting a global conflict, a world war really, against an enemy, Islamic fundamentalism, which believes much more fiercely in imaginary things than we do. They imagined that nineteen men with box cutters could bring down the World Trade Center, and made it come true. We much more weakly imagined we could capture bin Laden, but weren't willing to put American bodies on the line to do so at the last real opportunity we have had, at Tora Bora. Today, as al Qaeda expands and acquires converts and self confidence in the tribal areas of Pakistan, as people carried along on waves of the imaginary spread out world wide with suicide belts strapped to their bodies, the avatars of imagination, we Americans appear to me to be suffering from a failure of the imagination.
The current presidential election has been a particularly interesting one because it has been a battle of charisma and belief against caution and conservatism. In November we will go to the polls and decide whether to vote for a black candidate who gives us hope, or a white man who insists that not much needs to be changed. John McCain, while smart and decisive enough to be president, nevertheless stands for the proposition that our imaginary things are working fairly well and only need to be slightly tuned, under the leadership of a President smarter and more grown up than the last one. Barack Obama stands for the proposition that we need a new narrative, though he's not always specific enough about the details of what it will be. I'm voting for Obama, of course.
As a teenager, I wrote a science fiction story in which airplanes crashed if any passenger aboard stopped believing they could fly. I was fascinated by the story, which I have told many times in essays, fiction and plays, about the physicist who said the opposite, that supernatural things like good luck horseshoes tend to work whether you believe in them or not.
Only the things a Martian can see through a telescope work regardless of belief. Stones falling will crush things whether or not we believe they will. But our economy, and our nation itself, are more like the airplane in my story: a failure of belief leads directly to their failure.