Saturday, September 27, 2008

The Psychology of Change

Economics and all economic activity are the result [the symptom] of the psychology of human interactions. There is no economy without human interaction, and the psychology behind these interactions creates the standard for markets and exchange.

Very simply, if you and I are exchanging goods and one of us finds it acceptable to cheat or lie to the other - this deception effects the outcome of the trade between us. When trader A sells 100 tons of fake gold to buyer B, and buyer B innocently sends the fake gold into the markets - the psychology of the transaction leads back to the complete lack of integrity of trader A.

Markets and market behaviour will not change until there is a basic human value of honesty and integrity between traders and buyers. Basic greed, multiplied by the numbers of traders suffering from this breakdown in human value, ultimately destroys markets, trades, trust and economies. This is the basic psychology behind the fall of world markets throughout history. You can take this back to ancient Egypt, where rules of interaction called on all parties to be honest and true.

The psychology and operation of a healthy market system is based on the principle that when the whole is healthy, the individual is healthy. In Celtic economics this means that all parts of the community cooperate to create a healthy society in which each individual benefits from the whole. If trader A is greedy and rich, while the rest of the community are poor and suffering - how can trader A be healthy? Equally, if a monolithic institution seeks to benefit itself at the expense of the greater economy, the monolith will fall no matter what; because the psychology behind its behaviour is essentially flawed.

An ideal world would be that no human being lies to another, people do not cheat one another, that there is a high spirit of goodness behind all interactions. Only then will communities work together in a way that people do not self-destruct their own lives and their economies. In a society where everyone is greedy and self-serving, future events will reflect this behaviour - because each person will hoard their gains and fear any outside interactions with the face in the mirror.

Add to this an inherent disrespect for the planet we live on, and the attitude that the more resources one has the more powerful one is. To prove the power means to destroy the planetary resources we depend upon for life. This is where the current psychology becomes insanity. When you have to destroy the planet to prove you are in control, then market economics become a black hole feeding itself.

Keywords: Ancient Economics - Wiki: Behavioral Economics - Dark Pools