Is it time for Dadaist finance?

19 Jan 20162 minutes read

Economics has long pursued the dream of being seen as a mathematical science, bounding itself in rational and logical neatness.

Today Google honours the 127th Birthday of Sophie Taeuber-Arp with their Google Doodle. The colourful abstraction of Google’s marque drew my eye and encouraged me to read a brief history of the abstract artist and her fellow Dadaists and led me to connect the movement’s underlying philosophy with the current state of finance.

Probably the most infamous piece of Dadaist art is Marcel Duchamp’s ‘Fountain’ — a standard urinal signed and dated R Mutt, 1917. The piece always generates heated debate about contemporary art and the use of art in general — and this is what the Dadaist movement wanted. This and other Dadaist pieces are an expression of disgust with society (in post-war 1918), a rebellious statement about a world led by rationality which, in their opinion, brought us to the brink of society’s destruction. The art was absurd, playful and purposefully meaningless to draw attention to the intellectual conformity that they felt was the root cause of the First World War.

And it’s this obsession with rationality which parallels to our financial world today. Historically, economics was viewed as a branch of psychology — specifically, the science of human decision making under conditions of scarcity.

However, economics has long pursued the dream of being seen as a mathematical science, bounding itself in rational and logical neatness. This physics-envy has pushed out any variable that cannot easily be numerically modelled or inserted into a formula, and unfortunately this means it has pushed out human behaviour.

It could be argued that this economic conformity and disinterest in the incredibly hard-to-model world of human decision making led to the latest economic crisis. A rational person who consistently behaves in a way to maximise their individual self-interest wouldn’t be interested in a mortgage that they couldn’t afford to pay back; but someone who is swayed more by instant gratification over the possibility of long-term pain would. Psychology would tell you that to our brains, the future can only ever be a pale shadow of the now.

Sometimes, it takes a movement to react in absurdist ways to draw attention to how absurd the current situation actually is. Whilst a Dadaist financial model would not directly achieve a purpose, there is merit to a movement which aims to bring economics back towards its psychological roots. By understanding how people react and behave, we can design financial products and services to go with the grain of how people behave rather than against it, both improving outcomes and respecting individual autonomy.