In a spirit of undue curmudgeonliness, however, there’s one point made by David Calnitsky I disagree with. He says:
For Marxists and fellow travelers, the power of wishful thinking is more seductive than it is for others without such normative commitments.
I disagree. We Marxists have by now learned from that most effective of teachers, the school of hard knocks, that our hopes are often disappointed. Wishful thinking is just as common – maybe more so – in other parts of the political spectrum.
we can do deals with our trading partners, and we can do them quickly. I would expect the new Prime Minister on September 9th to immediately trigger a large round of global trade deals with all our most favoured trade partners. I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months.
And Liam Fox famously said in 2017 that a free trade agreement with the EU should be "one of the easiest in human history."
It’s not just Brexiters, though, who have been guilty of wishful thinking. So too are many centrists. The idea that “structural reforms” can boost economic growth, or that managerialism can increase organizational efficiency, or that the right policies can stabilize macroeconomies all are all, I fear, over-optimistic.
Perhaps social democrats are also guilty. Maybe they overstate the extent to which ending austerity will restore the economy to health, and understate the extent to which capitalist stagnation has deeper causes. And maybe they exaggerate the extent to which greater equality and capitalism are compatible*.
It's not only in politics, where talk is cheap, that we find wishful thinking. We see it also in investors. A nice experiment by Guy Mayraz has shown how. He asked subjects to predict future moves in the price of wheat. Before doing so, he randomly divided them into two groups: "farmers" who would profit from a rising price, and "bakers" who would profit from a falling one. He found that farmers predicted higher prices than bakers. And they continued to do so even when they were given incentives for accurate predictions.
This is one experiment with plenty of external validity. Wishful thinking is probably one factor behind the disposition effect, the tendency for investors to hold onto losing stocks in the hope of breaking even. And it’s probably a factor behind bubbles: how much wishful thinking was there among Bitcoiners in 2017?
Wishful thinking then, is ubiquitous.
And here’s the thing. It is very often good for us. In Human Inference, one of the early books on cognitive biases, Richard Nisbett and Lee Ross wrote:
We probably would have few novelists, actors or scientists if all potential aspirants to these careers took action based on a normatively justifiable probability of success. We might also have few new products, new medical procedures, new political movements or new scientific theories.
Progress is founded upon wishful thinking. It might be that one reason for capitalist stagnation is that the tech crash of the early 00s and crisis of 2008 have depressed it.
Perhaps, therefore, our problem is that we have too much wishful thinking in politics and not enough in business.
* There’s a lot of “maybes” here. I’ll vote Labour in the next general election in the hope of being proven wrong, which of course might be another example of...